Donegal Group, Inc.

Good morning and thank you for joining us today. This morning, Donegal Group issued its first quarter 2022 earnings release outlining its results. The release and the supplemental investor presentation are available in the investor relations section of Donegal's website at www.donegalgroup.com. Please be advised that today's conference was pre-recorded and all participants are in listen-only mode. After management remarks, There will be a question and answer session for questions submitted ahead of the call. Speaking today will be President and Chief Executive Officer Kevin Burke, Chief Financial Officer Jeffrey Miller, Chief Underwriting Officer Jeffrey Hay, and Chief Investment Officer Tony Viazzi. Please be aware that statements made during this call that are not historical facts are forward-looking statements and necessarily involve risk and uncertainties that could cause actual results to vary materially. These factors can be found in Donovan Group's filings with the Securities and Exchange Commission, including its annual report on Form 10-K and quarterly reports on Form 10-Q. The company disclaims any obligation to update or publicly announce the results of any revisions that they may make towards any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. With that, it's my pleasure to turn it over to Kevin Burke. Kevin?

Thank you, Karen, and welcome, everyone. I will focus my remarks on the progress that we've made in several strategic initiatives. Jeff Miller will then provide details on our key financial results for the first quarter of 2022 Jeff Hay will then highlight our commercial and personal line segment results, followed by Tony Biazzi with an update of our investment portfolio. I will then return for some closing remarks before we address the questions that were submitted to us in advance. We continue to make solid progress in modernizing our systems and transforming our business. The new operating platform we have implemented for our workers' compensation and our new personal lines products increases our ability to be nimble, and pivot quickly to respond to changes in the marketplace. Leveraging the new technology will continue to provide opportunities for increased efficiencies and customer experience enhancements. And we look forward to bringing additional products onto the new platform over the next few years. The successful launch of our new personalized products in six states is a great example of how the new systems are enabling our ongoing business transformation. While we remain diligent in our strategic emphasis of commercial lines and emphasizing the growth, we are pleased to report modest growth in our personal lines premiums for the first time since the onset of our strategic plan to restore personal lines to profitability starting back in 2018. In addition to the rollout of our new products with significant enhancements on our pricing segmentation and capabilities, we launched the new personal lines agency portal, that integrates third-party data providers to pre-fill information and it gives us additional underwriting insights and further enhances the user experience for our agents. We view our strong relationship with our independent agents as a key component to our continued success. Whether we're working directly with an independent agency or building relationships with large national agency groups, our mission remains the same, to deliver real value to our agents by being highly accessible, and responsive to them. Protecting and building upon the Donegal franchise value for our agents is and will always be a focal point for us. Part of that mission is finding ways that we can help our agents and agency groups grow their books of business with us for our mutual success. We have added dedicated team members to work with the national agency group leaders and their affiliate agents to further enhance our opportunities for profitable growth in the years ahead. Since implementing our enterprise analytics unit back in 2019, we've made excellent progress in enhancing our capabilities to capture and utilize data in order to improve our operating results and stay attuned to market developments. The exponential increase in our use of data has truly changed our operating routines and has greatly enhanced our ability to forecast the future impact of actions we have implemented support our strategic and business plans. We will continue to add expertise and make capital expenditures as required to further leverage data to help us effectively navigate challenging economic conditions and drive further improvements in our overall operating results. At this point, I'll turn the call over to Jeff Miller for a review of our financial results for the first quarter.

Thank you, Kevin. We are pleased with the solid premium growth and underwriting results we achieved in the first quarter of 2022. For the first quarter, net premiums earned grew by 6.4% to $199 million. I'd like to remind you that starting in January 2021, we began to include the commercial business from our Mountain States region in the underwriting pool. and those additional premium writings in 2021 will contribute to increases in net earned premiums throughout 2022. The overall combined ratio was 95.8% for the first quarter of 2022 compared to 98.5% in the prior year quarter. The solid underwriting results reflected continued net favorable development of reserves for losses incurred in prior accident years, lower weather-related loss activity compared to our five-year historical average for the first quarter, and a lower quarterly impact of large fire losses than we experienced on average during 2021. These favorable trends were partially offset by inflationary pressures on loss costs in certain lines of business. There were no unusually severe weather events or conditions in our operating regions during the first quarter of 2022, With weather-related losses totaling $8 million, we're approximately $2 million lower than the previous five-year first quarter run rate and representing four percentage points of the loss ratio. The non-weather loss ratio improved 480 basis points, reflecting a lower incidence of large fire losses and favorable prior year loss reserve development during the period. Fire losses over $50,000 totaled $9.6 million or 4.8 points of the loss ratio compared to 10.3 million or 5.5 points of the loss ratio for the prior year quarter. The decrease was largely due to a lower frequency of large commercial fires as we had only two fire claims in excess of $500,000 compared to eight in the prior year quarter. Conversely, there were six homeowners fire claims in excess of $500,000 in the first quarter of 2022 compared to only one in the prior year quarter. Net development of reserves for losses incurred in prior accident years of $16.5 million reduced the loss ratio for the first quarter of 2022 by 8.3 points compared to $8.2 million or 4.4 points of the loss ratio for the first quarter of 2021. Our insurance subsidiaries experienced favorable development in all lines of business in the first quarter of 2022 which has been a consistent trend over the past several years. We were especially pleased that we experienced $6.1 million of favorable development in our commercial auto line of business, a line that we have been diligently working to build up reserves and restore rate adequacy for several years. That favorable development generally resulted from lower than expected emergence of claims severity that we projected for accident years 2021 and 2020. We also had 3.6 million of favorable development in personal auto, which was primarily in the 2020 accident year when the pandemic conditions disrupted our historical loss patterns. The majority of the remaining favorable development was spread across the commercial multi-parallel, workers' compensation, and other commercial lines. We increased our actuarially determined reserves during the quarter to reflect additional exposures particularly those related to the additional Mountain States exposures included in the underwriting pool. The expense ratio was 35.8% for the first quarter of 2022 compared to 34.1% for the first quarter of 2021. We primarily attribute the expense ratio increase to higher underwriting-based incentives for our agents and employees and technology systems related expenses associated with our ongoing systems modernization project. From a capital perspective, we did not declare any dividends in the first quarter of 2022, which follows our historical practice. We announced during our annual stockholder meeting on April 21st that our board of directors approved a 3.1% increase in our quarterly class A dividend rate to 16.5 cents per share and a 3.5% increase in our quarterly Class B dividend rate to $0.1475 per share, and we declared quarterly dividends payable on May 16th to stockholders of record on May 2nd. With that, let me turn it to Jeff Hay to provide more details about our commercial and personal lines results.