Donegal Group Inc. (NASDAQ:) has launched its second quarter 2024 earnings, revealing each challenges and development. The insurer reported an 8.3% improve in internet premiums earned, reaching $234.3 million, regardless of dealing with over $20 billion in extreme convective storm damages. The mixed ratio stood at 103%, with weather-related losses totaling $24.7 million. Nonetheless, the corporate achieved a internet revenue of $4.2 million after taxes, due to funding revenue offsetting underwriting losses. Donegal Group is pushing ahead with a concentrate on small industrial enterprise and software program modernization, alongside a method to prioritize worthwhile development within the upcoming 12 months.
Key Takeaways
- Donegal Group’s internet premiums earned grew by 8.3% to $234.3 million.
- Extreme climate occasions led to vital losses, however funding revenue helped keep profitability.
- The corporate is concentrating on small industrial enterprise underwriting and software program system upgrades.
- Optimistic momentum in new industrial enterprise and robust coverage retention had been reported.
- Donegal Group is implementing revenue enchancment and focused geographic methods.
Firm Outlook
- Donegal Group plans to prioritize worthwhile development in its 2025 marketing strategy.
- The corporate is making progress in diversifying the geographic unfold of its threat portfolio.
- Focus stays on executing revenue enchancment initiatives.
Bearish Highlights
- The corporate confronted extreme weather-related losses amounting to $24.7 million.
- The mixed ratio was reported at 103%, indicating an underwriting loss.
- Staff’ compensation confronted challenges attributable to bureau-mandatory price reductions.
Bullish Highlights
- Achieved a constructive momentum in new enterprise throughout the industrial strains section.
- Web premiums written in private strains noticed a 12.1% improve.
- The private auto loss ratio confirmed enchancment.
Misses
- The owners loss ratio deteriorated attributable to an energetic twister and hail season.
- Unfavorable growth in staff’ compensation attributable to larger severity of reported losses.
Q&A Highlights
- Jeff Hay mentioned the corporate’s dedication to being an all-lines account author, with a concentrate on small industrial development.
- Premium development variance will probably be influenced by market price dynamics, notably in staff’ compensation.
- The corporate has shifted to writing six-month insurance policies for brand new private auto enterprise to rapidly earn price adjustments and enhance margins.
- Jeff Miller famous favorable reserve growth in industrial and private auto, however unfavorable in staff’ compensation.
- Tony Viozzi defined the mortgage-backed securities portfolio technique, emphasizing diversification and avoidance of high-risk states.
Donegal Group’s second quarter earnings name highlighted the resilience of their enterprise mannequin within the face of great storm-related losses. With a strategic concentrate on small industrial enterprise and software program enhancements, the corporate is poised to navigate market challenges whereas searching for worthwhile development. Regardless of the impression of extreme climate, Donegal Group stays optimistic about its monetary efficiency and initiatives aimed toward enhancing underwriting outcomes and increasing its market presence.
InvestingPro Insights
Donegal Group Inc. (DGICA) has demonstrated a commendable potential to take care of dividends and navigate via market fluctuations. In line with current information and InvestingPro Ideas, the corporate’s dedication to shareholder returns is clear because it has raised its dividend for 23 consecutive years, a sign of stability and confidence in its monetary administration.
InvestingPro Information highlights a market capitalization of $408.4M, which, whereas reasonable, displays a steady firm dimension throughout the business. The P/E ratio, at a excessive of 93.72, means that traders are prepared to pay a premium for the corporate’s earnings, probably as a result of constant dividend funds and the expectation of revenue development this 12 months. That is additional underscored by a PEG ratio of 0.63, indicating that the corporate’s earnings development price is favorable when in comparison with its P/E ratio.
Traders ought to observe the constructive short-term efficiency, with a major return during the last week, and a powerful return over the previous month. These metrics could also be indicative of the market’s response to the corporate’s newest earnings and strategic initiatives.
For these focused on deeper evaluation, InvestingPro Ideas provides further insights, together with the corporate’s low P/E ratio relative to near-term earnings development and its potential to take care of dividend funds over an prolonged interval. There are 12 extra InvestingPro Ideas out there that present a complete outlook on Donegal Group’s monetary well being and future prospects. To entry these invaluable ideas, go to https://www.investing.com/professional/DGICB and think about using the coupon code PRONEWS24 to stand up to 10% off a yearly Professional and a yearly or biyearly Professional+ subscription.
Full transcript – Donegal Group (B) (DGICB) Q2 2024:
Karin Daly: Good morning and thanks for becoming a member of us right this moment. This morning, Donegal Group issued its Second Quarter 2024 Earnings Launch outlining its outcomes. The discharge and a supplemental investor presentation can be found within the Investor Relations part of Donegal’s web site at www.donegalgroup.com. Please be suggested that right this moment’s convention was pre-recorded, and all individuals are in listen-only mode. Talking right this moment will probably be President and Chief Government Officer, Kevin Burke; Chief Monetary Officer, Jeff Miller; Chief Underwriting Officer, Jeff Hay; Chief Working Officer, Dan DeLamater; and Chief Funding Officer, Tony Viozzi. Please bear in mind that statements made throughout this name that aren’t historic information, are forward-looking statements and essentially contain dangers and uncertainties that might trigger precise outcomes to differ materially. These elements could be present in Donegal Group’s filings with the Securities and Trade Fee, together with its annual report on Kind 10-Ok and quarterly stories on Kind 10-Q. The Firm disclaims any obligation to replace or publicly announce the outcomes of any revisions that they might make to any forward-looking statements to replicate the prevalence of anticipated or unanticipated occasions or circumstances after the date of such statements. With that, it’s my pleasure to show it over to Mr. Kevin Burke. Kevin?
Kevin Burke: Thanks Karin, and welcome everybody. In right this moment’s name, we’ll present commentary on our quarterly monetary outcomes and an replace on quite a lot of strategic initiatives that we count on will proceed to drive improved ends in future intervals. Above-average extreme convective storm exercise continued into the second quarter of 2024, with hail, twister and wind occasions reported throughout the nation. There have been greater than 1,200 tornadoes reported for the primary half of 2024, which is the best quantity on file since 2011. Specialists predict that these occasions have resulted in damages exceeding $20 billion. Whereas we’re working to revive properties for quite a lot of policyholders who incurred twister losses, we’re happy that selections that we made as a part of our state and regional methods lately, in addition to our ongoing administration of geographic threat concentrations, served us properly in mitigating the climate loss impression to our second quarter outcomes. We are going to focus on extra particulars about weather-related losses and different key earnings drivers as the decision progresses. Our top-line development storyline is much like the one which we now have been sharing over the previous 12 months. Industrial strains premiums earned and written within the second quarter continued to replicate the impression of the strategic non-renewals of all industrial insurance policies within the states of Georgia and Alabama, which is now basically accomplished. We continued to realize larger ranges of economic strains new enterprise relative to prior-year quarter in focused states and courses of enterprise. We’re making stable progress in refining our small industrial enterprise underwriting methods and the capabilities to speed up small enterprise development. We’re wanting ahead to our annual state technique classes that may happen in early August, when our gross sales, underwriting and claims leaders throughout our group will collaborate to refine our methods and motion plans in every of the 23 states by which we conduct enterprise. We count on that small industrial development will probably be a major emphasis inside our 2025 marketing strategy, as we prioritize alternatives for worthwhile development inside up to date state-specific motion plans within the subsequent few months. For private strains, our technique stays to implement renewal premium price will increase to additional enhance margins and actively management new enterprise development. Earned premiums now replicate vital price will increase we applied over the previous a number of years, and we count on additional margin enlargement inside this section in future intervals. As we reported in our first quarter name, we’re engaged on the ultimate two main software program releases inside our methods modernization challenge. Improvement efforts are on observe for a significant industrial strains system launch that may embody a brand new industrial bundle coverage and modernize the opposite industrial merchandise remaining on our legacy methods. Different members of our challenge crew are working diligently on a significant launch to transform all remaining private strains insurance policies on our legacy methods. The primary part of this launch consists of owners and dwelling and fireplace insurance policies, and the second part will embody all remaining private auto insurance policies. We’re persevering with to progress properly in the direction of the implementation dates starting in 2025 for each of those main releases. I’ll now flip the decision over to Jeff Miller to evaluation our second quarter monetary outcomes.
Jeff Miller: Thanks Kevin. For the second quarter of 2024, internet premiums earned elevated 8.3% to $234.3 million. Web premiums written elevated by 9.1%, as sturdy premium price will increase and retention had been offset partially by deliberate attrition in states and courses of enterprise we’re exiting or have focused for revenue enchancment. Charge will increase achieved throughout the second quarter of 2024 remained in double-digit percentages, averaging 11% in complete, and 13% when excluding staff’ comp. The mixed ratio was 103% for the second quarter of 2024, in comparison with 104.7% for the prior-year quarter, with a decline within the expense ratio primarily accounting for the lower. The core loss ratio was unchanged from the prior-year quarter. Climate-related losses of $24.7 million, or 10.6 proportion factors of the loss ratio for the second quarter of 2024, in comparison with $19.7 million, or 9.1 proportion factors for the second quarter of 2023. The upper impression was primarily attributable to severity of economic property losses, with $8.2 million of losses contributing 15.9 proportion factors to the quarterly industrial multi-peril loss ratio, in comparison with 9.2 proportion factors of the loss ratio for that line of enterprise within the second quarter of 2023. The climate impression to the owners line was $11.2 million, or 31.7 proportion factors of the owners loss ratio, which in comparison with 30 factors within the prior-year quarter. In complete, the quarterly climate declare impression was larger than the earlier five-year common for the second quarter of 8.8 proportion factors. Our insurance coverage subsidiaries incurred $6 million in losses from a Might twister occasion that prompted vital industrial property losses in Indiana and Michigan and exceeded their combination disaster reinsurance retention with Donegal Mutual. Massive fireplace losses, which we outline as over $50,000 in damages, contributed 5.3 proportion factors to the loss ratio for the second quarter of 2024, which was barely decrease than 5.9 proportion factors for the prior-year quarter. Regardless of a handful of New Mexico wildfire claims for industrial properties, we skilled modest decreases within the frequency of each industrial and owners fireplace losses in comparison with the prior-year quarter. Our insurance coverage subsidiaries skilled minimal growth of reserves for losses incurred in prior accident years, with nearly no impression on the loss ratio, for the second quarters of 2024 and 2023. The expense ratio of 31.9% for the second quarter of 2024 represented a significant lower in comparison with 34.2% for the prior-year quarter. The lower primarily mirrored ongoing impacts of expense discount initiatives that Dan will spotlight in a couple of minutes, offset partially by larger know-how prices associated to our ongoing methods modernization initiatives. In abstract, the underwriting loss we incurred for the second quarter of 2024 was greater than offset by $11.1 million of funding revenue and modest internet funding positive aspects, leading to after-tax internet revenue of $4.2 million, in comparison with $2 million for the second quarter of 2023. I’ll now flip the decision over to Chief Underwriting Officer, Jeff Hay, for extra particulars about our industrial and private strains section outcomes and associated initiatives.
Jeff Hay: Thanks, Jeff. Beginning with industrial strains, internet premiums written elevated 7.1% throughout the quarter, with the execution of our go-forward technique producing constructive momentum in new enterprise and robust renewal price achievement that exceeded intentional attrition associated to our non-renewal of much less worthwhile enterprise as we mentioned in prior quarters. At June thirtieth, we had basically accomplished our exit of economic strains enterprise in Georgia and Alabama. We’re very excited to realize this vital milestone within the execution of our revenue enchancment initiatives. Excluding these two states, our industrial strains internet premium written development was 10.4% for the second quarter. Our success in writing new enterprise is extremely aligned with the focused geographic and sophistication of enterprise methods that I’ve outlined beforehand. Actually, 66% of the brand new enterprise we wrote throughout the quarter was inside extremely focused courses the place we count on larger profitability, which exceeded our goal of 60% and improved over 59% for the prior-year quarter. We’ve continued to execute a number of different revenue enchancment initiatives inside our industrial strains e-book of enterprise, together with: the introduction of a Possible Most Loss underwriting instruments that now present, to our underwriters, a complete evaluation of fireside threat elements as they evaluation and worth industrial properties; revised underwriting pointers for sure profit-challenged courses of enterprise; and the introduction of necessary wind/hail deductibles throughout our footprint, whether or not or not a state has been traditionally recognized as a CAT-prone state. We’re additionally taking additional actions to extend the precision of our threat choice and pricing, equivalent to utilizing third-party information to make sure applicable property valuations, using aerial imagery for roof evaluations, and integrating superior disaster modeling to drive applicable adjustments to phrases and situations on extra uncovered properties. We’re persevering with to emphasise renewal price will increase in areas which might be most challenged when contemplating the intersections of sophistication, line of enterprise, and geography. Excluding staff’ compensation, we achieved a mean of 11.8% renewal price and publicity improve throughout our industrial strains e-book, led by industrial multi-peril at 13.8% and industrial auto at 10.2%. Turning from top-line development to outcomes, the industrial strains statutory mixed ratio for the second quarter was 104.9%, a slight deterioration from 103.6% for the prior-year quarter due primarily to the impression of a really energetic climate sample throughout this quarter as Jeff and Kevin talked about earlier. There was a twister or hail occasion reported someplace in the USA in every single day throughout the month of Might. So, we’re not shocked that weather-related losses had been elevated throughout the quarter, with industrial property losses from climate growing 90% over the prior-year quarter, primarily attributable to a handful of extreme claims from tornadoes and enormous hail within the states of Michigan, Indiana, Ohio and South Carolina. Regardless of this improve, we consider our ongoing geographic diversification technique served us properly, because the climate impression on our loss ratio was considerably decrease than different firms throughout the business have reported. It additionally bears mentioning that we obtained no claims to this point associated to Hurricane Beryl. Massive industrial fireplace losses incurred had been comparatively flat for the quarter, and we count on a discount within the probability of huge fires going ahead as we proceed to execute on particular actions to mitigate fireplace peril threat. Inside our staff’ compensation line of enterprise, we added to our loss reserves for prior accident years, primarily associated to larger medical loss estimates on beforehand reported claims in our flagship state of Pennsylvania. These changes relate largely to medical developments requiring longer remedies inside particular person instances, as we proceed to see comparatively steady medical inflation tendencies. Each industrial auto and industrial multi-peril strains skilled favorable reserve growth that basically offset the employees’ compensation growth. We’re intently monitoring our reserving exercise throughout all strains of enterprise and are persevering with to investigate the underlying elements that drove the bizarre improve in staff’ compensation reserves. Drilling down into loss tendencies for industrial auto, we consider the post-pandemic will increase in claims frequency have abated and have famous moderation in auto bodily injury severity will increase as properly. Legal responsibility severity remained typically in-line with historic ranges. For industrial multi-peril, general severity seems to be moderating, and favorable frequency tendencies proceed. We’re persevering with to see upward stress on legal responsibility severity tendencies, however that improve has been partially offset by favorable frequency tendencies for this line. We’re persevering with to execute our offensive technique in Industrial Strains, and we’re happy that our small enterprise initiatives proceed to achieve traction. We count on to see additional enhancements in our straight via processing and hit charges on our new and improved small industrial merchandise and repair choices going ahead. Shifting to our private strains enterprise section, we achieved a 12.1% improve in internet premiums written for the second quarter, primarily pushed by a continuation of aggressive premium price will increase, coupled with sturdy coverage retention. Private auto and owners price and publicity will increase had been 13.4% and 16.3%, respectively, for the present quarter. We are actually seeing earned price will increase relative to responsive actions we took starting as early as 2022. Earned price improve ranges are actually exceeding loss value tendencies, leading to margin enlargement for the non-public strains section. Our technique stays to speed up our return to profitability by actively controlling new enterprise quantity, which led to a 3.7% decline in insurance policies in pressure in comparison with a 12 months in the past and a 2.3% decline from year-end 2023. Policyholders are accepting larger renewal premiums, with our actual retention remaining sturdy and constant at 89.1% for the quarter. Premium retention additionally continued to be very sturdy at 104.7% for the quarter, once more pushed by price will increase in all states. The private strains auto loss ratio improved by 6.5 proportion factors from the prior-year interval, pushed by core loss ratio enchancment and a continuation of favorable prior 12 months reserve growth that contributed to a worthwhile 95.6% statutory mixed ratio for the quarter. Much like industrial auto, we’re seeing moderating will increase in auto bodily injury severity, as used automotive costs and components costs have begun to degree off. Declare frequency tendencies have shifted from post-pandemic will increase to reasonable decreases as properly. Moreover, legal responsibility declare severity remained comparatively steady throughout the present quarter. The owners loss ratio deteriorated by almost 4 proportion factors, as a result of unusually energetic twister and hail season I discussed earlier, whereas non-weather tendencies proceed to be largely in examine. The statutory mixed ratio for the quarter was 103.1%, with no impression from prior 12 months reserve growth. We’re making stable progress in diversifying the geographic unfold of threat in our property e-book, lowering exposures by 8.8% in geographies we now have recognized as extra liable to extreme climate and rising modestly in different areas we view as much less climate inclined. We’re happy to see the advance in our private strains underwriting outcomes attributable to many strategic actions we now have taken throughout our portfolio, and we stay assured in our potential to take care of that constructive momentum as we proceed to execute on our methods. With that, I’ll flip the decision over to Dan DeLamater. Dan?
Dan DeLamater: Thanks, Jeff. As we assess our operational efficiency within the first half of the 12 months, I’ll in the beginning present an replace on our expense discount initiative mentioned in earlier calls. For the second quarter, we operated at an expense ratio of 31.9%, which compares favorably to our quarterly expense ratio of 34.2% for the second quarter of 2023. We’re happy to acknowledge vital enchancment, and we are actually working, mid-year, at an expense ratio of 33.8% via June thirtieth. This compares favorably to our expense ratio of 35.3% via the primary half of 2023. These expense reductions are much more noteworthy contemplating we’re realizing the height expense impression of Mission Nautilus, our methods modernization challenge, in 2024. By way of a number of focused initiatives throughout each division within the group, we’re clearly on tempo towards our expectation to scale back our expense ratio by one full level in 2024 and two factors by the tip of 2025. As acknowledged earlier than, these initiatives vary from the discount of our regional footprint from six working areas to 4, adjustments to our underwriting report technique in Private Strains comparative raters, use of analytics to enhance underwriting report methods in Industrial Strains, the implementation of a bank card surcharge to offset the elevated prices of bank card funds by our policyholders, revisions to company incentive packages to make sure they align with our personal company profitability, reductions in commissions paid for mono-line home-owner insurance policies to acknowledge the challenges of that line of enterprise, focused reductions in employees, hiring restrictions for a lot of open positions throughout the corporate, and extra. I’m happy with our management and colleagues throughout Donegal for the dedication and resilience they’ve proven. A number of of those initiatives are tough. However it is a critical effort and has full visibility throughout the corporate. And for each excessive profile initiative, there are dozens of smaller ones that every one contribute to significant and sustainable expense enchancment. We acknowledge the acute want for enchancment in 2024 and 2025 to offset the height expense years of our Nautilus infrastructure challenge. We additionally acknowledge the necessity for broader efficiencies and long-lasting expense enchancment to contribute to our working profitability. Except for our expense initiative, we additionally proceed to work via our state technique initiatives that outline our product combine, price technique, advertising technique, and development aims in each state and line of enterprise the place we write. These are particularly vital as we underwrite property books in weather-prone states, however in addition they assist steer our regional advertising and underwriting groups, product groups, and nationwide accounts crew towards applicable product combine and applicable development plans in all strains and courses. Our groups are aligned and extremely engaged, and our month-to-month portfolio conferences present transparency and accountability towards state-by-state aims. As a matter of reality, we consider that these efforts helped us considerably mitigate publicity to Midwestern storms in Might and New Mexico wildfires in June. Whereas this work will not be full, we’re inspired by the achievements already acknowledged. Whereas the primary half of 2024 wasn’t with out problem, we consider it units a stable basis and offers ample alternative within the second half of the 12 months. We are going to proceed to acquire price to offset inflation, giant loss exercise, social inflation, and claims prices typically; and we’ll proceed in our expense discount efforts. Executing on each of those are paramount to the achievement of sustained wonderful monetary efficiency. For added perception into our funding outcomes, I am going to now flip it over to Tony.
Tony Viozzi: Thanks, Dan. In our ongoing effort to protect and develop our capital, our funding strategy stays conservatively opportunistic. We’re persevering with to purchase high-quality securities whereas profiting from traditionally excessive reinvestment charges that we count on will present ongoing energy in our funding portfolio. Through the second quarter of 2022 [ph], internet funding revenue elevated 9% from the prior-year quarter to $11.1 million. The common tax-equivalent yield for the quarter was 3.40%, up from 3.21% for the second quarter of 2023. Market rates of interest proceed to be favorable, and we proceed to speculate portfolio money stream into a lot higher-yielding bonds. Through the quarter, we continued our transfer out of tax-exempt municipal bonds and shifted into larger unfold merchandise, equivalent to company debt and fixed-rate mortgage-backed securities. We count on to extend our place in equities at a conservative tempo as market alternatives present entry factors. Whereas nonetheless at a modestly conservative fairness allocation, we now have elevated our fairness place 25% year-to-date. Web funding positive aspects for the second quarter of 2024 had been roughly $700,000, in comparison with $2.5 million for the prior 12 months interval. These positive aspects had been primarily unrealized positive aspects inside our fairness portfolio for each intervals. We are going to proceed to selectively modify our portfolio allocations in response to market tendencies and situations shifting ahead. Total, our common reinvestment price of 5.76% throughout the second quarter represented a 142 foundation level enchancment over the bond money stream throughout the quarter. As of June 30, 2024, our e-book worth per share was $14.48, a $0.09 improve in comparison with $14.39 as of December 31, 2023. The rise in e-book worth was pushed by funding revenue and positive aspects that had been partially offset by a internet underwriting loss, declared money dividends and modest internet unrealized losses in our available-for-sale bond portfolio throughout the first half of 2024. With that, I’ll now flip it again to Kevin for closing remarks.
Kevin Burke: Thanks Tony. As you heard all through the decision right this moment, our varied initiatives are starting to generate enhancements in our underlying outcomes, and our complete crew stays targeted on profitable execution to realize sustained wonderful monetary outcomes. I’m happy with our crew’s efforts and the progress we now have made to this point, and we look ahead to offering additional updates in our subsequent quarterly name. I am going to now flip the decision again to Karin to reasonable our question-and-answer session.
A – Karin Daly: Thanks, Kevin. Prematurely of right this moment’s name, we requested and obtained questions from events, and whereas we answered lots of the questions inside administration’s ready remarks, we’ll handle just a few of the questions instantly. The primary query pertains to premium development. How ought to we be enthusiastic about development by line in industrial? Extra particularly, what kind of trajectory would you wish to see for industrial auto and staff’ compensation shifting ahead?
Jeff Hay: That is Jeff Hay. I can take that one. We’re and count on to proceed to be an all-lines account author. And, once we write an account, we ask our brokers for the chance to put in writing all the insurance policies inside that account that match our underwriting urge for food. So, from an publicity or coverage depend foundation, we count on comparable development charges throughout strains of enterprise in industrial strains. The premium development variance between strains will largely be pushed by the market price dynamics. For instance, we count on to proceed to see challenges in staff’ comp charges attributable to bureau-mandated reductions, however we do count on constructive price tendencies for the industrial multi-peril and industrial auto strains. We’re pushing for outsized development in Small Industrial, as I discussed in earlier calls, and consequently, we count on to see outsized development in our BOP bundle insurance policies relative to center market CPP insurance policies as our Small Industrial technique positive aspects momentum.
Karin Daly: The following query pertains to private strains. Are you able to quantify the growing proportion of auto insurance policies written on a six month foundation, in comparison with 12 months in the past?
Jeff Hay: Jeff Hay right here once more. We now write six month insurance policies just for all new enterprise insurance policies for private auto, however we proceed to resume our legacy e-book on the identical phrases as they had been initially written, with most of these being 12-month insurance policies, in order that we might restrict disruption inside that seasoned e-book of enterprise. Over the previous 12 months, our mixture of phrases inside our auto e-book has shifted from 28% being six-month insurance policies to 40% being six-month insurance policies now. We count on that blend will proceed shifting naturally over the following a number of years, which is useful as a result of a better proportion of six-month insurance policies permits us to extend the pace at which we will earn price adjustments to extra rapidly enhance margins. However having mentioned that, we don’t have any long-term targets for shifting the e-book, as we do want to retain as a lot of our worthwhile legacy enterprise as potential and can convert most of these insurance policies on 12-month phrases.
Karin Daly: Thanks, Jeff. The following query pertains to reserving. Are you able to present further shade on the shifting items on reserve growth this quarter?
Jeff Miller: That is Jeff Miller. Particular line of enterprise element for the second quarter of 2024 included favorable growth of $3 million for industrial auto, $1.6 million for private auto, offset by unfavorable growth of $4.7 million for staff’ compensation. As Jeff Hay shared earlier, we attribute the unfavorable growth in staff’ compensation to higher-than- anticipated severity for a comparatively small variety of beforehand reported losses, primarily in accident years 2022 and 2023, but in addition unfold throughout older accident years. That growth added 17.4 proportion factors to the present quarter loss ratio for the employees’ compensation line of enterprise.
Karin Daly: Thanks, Jeff. The ultimate query pertains to our investments. Are you able to present extra particulars on the make-up of your mortgage-backed securities portfolio? Are you able to cut up it between Industrial versus Residential, or any particulars on geographical splits?
Tony Viozzi: That is Tony. Our MBS portfolio consists virtually solely of fastened price company residential mortgages. We usually purchase giant main swimming pools with a diversified geographical publicity and keep away from states equivalent to New York, Florida, and California when potential.
Karin Daly: Thanks, Tony. If there are any further questions, please be at liberty to achieve out to us.
Karin Daly: This now concludes the Donegal Group second quarter 2024 earnings webcast. Thanks and have an awesome day.
This text was generated with the help of AI and reviewed by an editor. For extra data see our T&C.