Donegal Group, Inc.

Good day and thank you for standing by. Welcome to the Donegal Group, Inc. Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Mr. Jeff Miller, Chief Financial Officer. Thank you. Please go ahead.

Thank you very much. Good morning and welcome to the Donegal Group conference call for the third quarter ended September 30th, 2021. Yesterday afternoon, we issued a news release outlining our financial results. For a copy of that release, please visit the investor relations section of our website at donegalgroup.com. In addition, we have made available a supplemental investor presentation on our website. In today's call, Kevin Burke, President and Chief Executive Officer, will provide a business update and overview. I will follow Kevin's comments with highlights of the quarterly results, and then Kevin will return with closing comments before we open the line for any questions you may have. Before we get started, please be aware that our commentary today includes forward-looking statements that involve a number of risks and uncertainties. We described forward-looking statements in our news release, and we provided further information about risk factors that could cause actual results to differ materially from those we project in the forward-looking statements in the report on Form 10-K that we submitted to the SEC. We expect to file our Form 10-Q for the third quarter on or around November 5th. You can access our SEC filings through the Investors section of our website. We use certain non-GAAP financial measures to analyze our business results, and we refer you to the reconciliation of non-GAAP information included in the news release we issued yesterday. With that, I will turn it over to Kevin.

Thanks, Jeff, and welcome, everyone. Donegal Group's results for the third quarter of 2021 were impacted by a number of factors that prevented us from achieving our underwriting profit expectations during the third quarter. A combination of higher-than-normal weather-related losses large fire and large workers' compensation losses led to an increase in the combined ratio to a 107.7% and a quarterly net loss of $6.7 million, or 22 cents per share of our Class A common stock. Jeff will provide greater detail about the elevated loss activity later in the call. On a positive note, net premiums written increased 9% due to a continuation of strong commercial lines premium growth and smaller decline in personal lines premiums than we had experienced in the first half of the year. For the third quarter, commercial lines represented approximately 59% of the total premiums and personal lines represented approximately 41%, generally consistent with prior periods and in line with our 2021 objectives. Commercial lines net premiums written grew by 17.6% for the third quarter. As we discussed in the first half of the year, that growth reflects in large part the impact of the additional commercial premiums from four southwestern states that we began to include in the Donegal Mutual underwriting pool in 2021. Atlantic States Insurance Company, our largest insurance subsidiary, now receives an 80% allocation of the underwriting results of the Mountain States Insurance Group which Donegal Mutual acquired back in 2017. For the third quarter, Mountain State's premiums accounted for approximately $10.4 million, or 60% of our overall commercial growth. For the first nine months of 2021, Mountain State's premiums added approximately $34.5 million to our net premiums written. The remaining 40% of the commercial growth in the third quarter came from a continuation of new business opportunities and solid premium retention at 91%. That was bolstered by premium rate increases that averaged 5.6% across our commercial lines book of business. Excluding workers' compensation, where rates remain under regulatory pressure, the commercial premium rate increases averaged 7.4%. Moving to personal lines, our net premiums written declined by 1.3% during the period, which was an improvement over recent quarterly declines. While new business writings increased modestly and rate increases averaged 4.6%, the main driver of the improvement was related to an anomaly that affected the prior year quarter. Personal auto net premiums written in the third quarter of 2020 reflected premium reductions related to Michigan's no-fault auto insurance reform legislation that was effective on July 1, 2020. A substantial number of Michigan policyholders requested a rewrite of their auto policies at lower premiums during the third quarter of 2020. Although the impact of that legislation distorted the comparability of personal auto premium production in the second half of 2020, and continuing through the first half of 2021, that impact is now fully behind us, and we expect further stabilization of our personal auto premium levels from this point forward. As an update to our technology modernization project, we are pleased to report the successful deployment of the second major release of our new software systems in late August. This release will primarily facilitate the introduction of new personal lines products in the 10 states we believe represent compelling opportunities for profitable personal lines growth. The new products will provide diversified coverage as well as pricing segmentation based on enhanced analytical models and the utilization of external data that will allow us to better compete for personal lines customers, especially those customers who appreciate the advice of a trusted independent agent and recognize the value of excellent service from their insurance carrier. We began the new product rollout with the state of Indiana, effective October 1st. We have received a manageable volume of quoting activity that has allowed us to ensure that all of our systems and integrations are working as designed. We recently added the availability of new products in Ohio for policies effective in December, and we'll begin to offer new products in our lead state of Pennsylvania for policies effective in January. After achieving successful product launches in these three states, we will continue the phased rollout in the remaining seven states. Upon full completion of the rollout, which will occur later in 2022, we expect to be in a position to achieve modest growth and sustain profitability in our personal line segment. With that, I'll turn a call over to Jeff to provide more details related to our quarterly underwriting results.