Donegal Group, Inc.

Good morning, and thank you for joining us today. This morning, Donegal Group issued its first quarter 2024 earnings release outlining its results. The release and a 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. Speaking today will be President and Chief Executive Officer Kevin Burke, Chief Financial Officer Jeff Miller, Chief Underwriting Officer Jeff Hay, Chief Operating Officer Dan Delamater, and Chief Investment Officer Tony Viasi. Please be aware that statements made during this call that are not historical facts are forward-looking statements and necessarily involve risks and uncertainties that could cause actual results to vary materially. These factors can be found in Donal 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 to 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 Mr. Kevin Burke. Kevin?

Thank you, Karen, and welcome, everyone. We will provide some details on our quarterly financial results and an update on the progress of a number of initiatives that we expect will generate incremental improvement in our results as the year progresses. We saw significant improvement in our results for the first quarter of 2024 relative to the fourth quarter of 2023, but we will discuss a few factors that prevented us from achieving our targeted level of under-earning profit and overall earnings as the call progresses. From a top-line growth perspective, our commercial lines premiums earned and written continue to reflect the impact of the strategic non-renewals of all commercial policies in the state of Georgia and Alabama. That initiative will be largely completed in the second quarter of 2024, and we are pleased that we were successful in achieving higher levels of Commercial Line's new business relative to prior year quarter in states and classes of business we have targeted for growth. Our dedicated small business underwriting team is also making great progress working with our marketing team to communicate our value proposition to specific agency partners and executing a strategy designed to accelerate small business growth in targeted geographic areas and classes of business in the years to come. We expect to see more meaningful increases in small business premiums as we continue to refine and expand our operating capabilities throughout the remainder of this year to enable us to effectively capitalize on profitable growth opportunities in 2025. In personal lines, we are continuing to implement significant rate increases that account for virtually all of the premium increases in that segment, as we actively control new business growth levels to essentially maintain overall exposures within that segment. Earned premiums will reflect even higher levels of rate increases in future quarters, which we expect will continue to drive performance improvements as loss trends continue to stabilize and we get closer to rate adequacy. We are making solid progress on our last two major software releases within our systems modernization project. We've begun the development phase of the major commercial systems release that will include a new commercial package policy and modernize other commercial products remaining on our legacy systems. We have submitted all the regulatory filings to convert all remaining homeowners and dwelling fire policies included in the first phase of the last major personalized software release. Both of these efforts will continue to run in parallel over the next two years, with the phased rollout of implementations beginning in 2025. Jeff Hay and Dan Delamere will provide further details on our strategic initiatives that give us optimism that we will see further margin expansion, and Tony Viasi will provide an update on our investment portfolio that is providing increased levels of investment income. Before we get to those operational updates, I'm going to turn a call over to Jeff Miller for a review of our quarterly financial results.

Thanks, Kevin. For the first quarter of 2024, net premiums earned increased 5.8% to $227.7 million. Net premiums written increased by 6%, with similar drivers to those we experienced in the second half of 2023. As strong premium rate increases and retention increased, offset partially by planned attrition in states and classes of business we are exiting or have targeted for profit improvement rate increases achieved during the first quarter of 2024 were consistent with those we reported for the fourth quarter of 2023 averaging 12 in total and 14 when excluding workers comp the combined ratio was 102.4 percent for the first quarter of 2024 compared to 101.2% for the prior year quarter, with a higher impact of large fire losses primarily accounting for the increase. The core loss ratio increased modestly from the prior year quarter, primarily due to a higher personal lines core loss ratio compared to that quarter, despite a 16.6% increase in net premiums earned for that segment. Weather-related losses of 10.8 million or 4.7 percentage points of the loss ratio for the first quarter of 2024 were down from 14.1 million or 6.5 percentage points for the first quarter of 2023. The lower impact was primarily due to lower commercial property losses, with $2.1 million of losses contributing 4.3 percentage points to the quarterly commercial multi-parallel loss ratio comparing favorably to 10.5 percentage points of the loss ratio for that line of business in the first quarter of 2023. The weather impact of the homeowners line was 7.3 million, or 21.3 percentage points of the homeowners loss ratio, which improved modestly compared to 23.9 points in the prior year quarter. In total, the quarterly weather claim impact was in line with the previous five-year average for the first quarter of 4.7 percentage points. Our insurance subsidiaries did not incur losses from any single event during the first quarter of 2024 that exceeded their individual $3 million catastrophe reinsurance retention with Donegal Mutual. Large fire losses, which we define as over $50,000 in damages, contributed 6.6 percentage points to the loss ratio for the first quarter of 2024, which was higher than 5.1 percentage points for the prior year quarter. An increase in the frequency and severity of both commercial and homeowners' prior losses contributed to the increase. Our insurance subsidiaries experienced $8.4 million of net favorable development of reserves for losses incurred in prior accident years, representing a 3.7 point reduction in the loss ratio for the first quarter of 2024, which was comparable to $8.3 million, or a 3.9 point reduction in the loss ratio for the prior year quarter. Specific line of business detail for the first quarter of 2024 included favorable development of $5 million for commercial multi-peril, $2.7 million for commercial auto, $1.1 million for homeowners, and $2.5 million spread across other lines. That favorable development was partially offset by unfavorable development of $2.9 million for workers' compensations. We attribute the unfavorable development in workers' compensation to higher-than-expected severity for a relatively small number of previously reported losses in accident years 2022 and 2023. The expense ratio of 35.7% for the first quarter of 2024 decreased modestly compared to 36.4% for the prior year quarter. The decrease primarily reflected early impacts of expense reduction initiatives, offset partially by higher technology costs related to our ongoing systems modernization initiatives. In summary, the underwriting loss we incurred for the first quarter of 2024 was more than offset by $11 million of investment income and $2.1 million of net investment gains, resulting in after-tax net income of $6 million, which was modestly higher compared to $5.2 million, the first quarter of 2023. To provide more details about our commercial and personal lines segment results and related initiatives, I will turn the call over to our Chief Underwriting Officer, Jeff Hay.