Q4 2022 Donegal Group Inc Earnings Call (Pre-Recorded)

122 earnings release outlining its results.

The release and the supplemental investor presentation are available in the Investor Relations section of <unk> website at Www Dot Donegal group Dot com.

Please be advised that today's conference was prerecorded and all participants are in listen only mode. After management remarks, there'll be a question and answer session for questions submitted ahead of the call.

<unk> today will be president and Chief Executive Officer, Kevin Burke, Chief Financial Officer, Jeff Miller, Chief Underwriting Officer, Jeff, Hey, Senior Vice President and field Operation, Dan Delamater, and Chief Investment Officer, Tony VIP.

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 Donegal 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 from a growth and profitability perspective, our performance in the fourth quarter of 2022, largely reflected the continuation of the trends we experienced throughout the year.

Anyone following the insurance industry knows how impactful the current inflationary environment has been for insurance carriers.

Historically unprecedented spike in loss cost is cause, particularly harsh impacts to carriers with substantial volumes of personal lines business, where the process of obtaining regulatory approvals extends the timeline for implementing rate actions that are necessary to respond to rapid increases in loss costs and general profit improvement.

While our 2022 financial results did not meet our long term profitability targets I am proud of the diligent efforts of the entire Donegal team as we continue to navigate through the inflationary challenges and took aggressive actions to position our company for future growth and success, we made significant progress in a number of strategic initiatives.

During the year and I will provide a summary overview of our accomplishments during the year on the call today I will then hand, the call over to Jeff Miller for a review of our financial details who will then be followed by Jeff Hey for a deeper dive into our commercial and personal lines segment performance.

You will also hear from Dan Delamater, the head of our field operations for the Donegal Insurance group, who will provide you his perspective on our sales and marketing efforts and opportunities as we move into 2023.

Tony <unk> will end, our prepared remarks with an investment update before we respond to questions. We received in advance of this call.

We had several strategic areas of focus for 2022 and I am pleased with the progress we made in each first we maintain growth momentum within our commercial mortgage segment. We've made substantial progress in rebalancing our commercial risk portfolio through the successful execution of state specific strategies that Jeff Hey will cover in more.

Later in the call.

While the level of commercial new business writings fell short of our business plan that shortfall was more than offset by excellent premium retention that was supported by solid renewal premium increases we achieved throughout the year.

<unk> been providing regular quarterly updates on our multi year systems modernization project. Following the successful launch of new personal lines products in three states in the fourth quarter of 2021, we continued our new product rollout and six additional states throughout 2022.

While we are waiting final regulatory approval to introduce new products in Michigan, which will be the 10th and final state to complete this initiative.

We are pleased that the new product launch and rollout has been successful to date and our agents have responded favorably to what was essentially a reentry into the personal lines market.

We are actively monitoring the pricing of our new products and the underlying risk characteristics of the policies. We are writing as well as carefully managing our growth in the current environment.

The systems modernization project team has been working for over the past two years on the next software release, which is on track for deployment at the end of March. This release will include a new sophisticated business owners product along with modernized commercial auto and umbrella products that incorporate advanced predictive models for refined risk.

<unk> pricing and underwriting the release will also enable enhanced straight through processing capabilities that we expect will allow us to attract a higher volume of small commercial accounts, we will be focusing our efforts on the small commercial market as our primary source of profitable commercial lines growth over the next few years in terms of timing.

We plan to introduce the new systems and products in three states in the second quarter of 2023, followed by the remaining 22 states in the third quarter. We are currently offering commercial lines products in 24 States and we'll add the state of Arizona to our service area as part of this rollout we added experienced leadership.

Talent to augment our team during the past several years and we're making great strides towards moving the organization forward at a rapid pace.

In addition to forward progress in data analytics business intelligence on underwriting portfolio management, we are focusing on operational excellence process improvement and data driven decision, making we have enhanced our analysis of loss trends and rate indications as well as our regional business planning and performance monitoring process.

Does that include detailed state strategy reviews and monthly monitoring.

We remain committed to our strategic plan that we believe will help us achieve sustained excellent financial performance, we have more work to do but I look forward to reporting to you the favorable impact of these efforts in future.