DONEGAL GROUP INC

Previous wording

The following table provides a reconciliation of our net premiums earned to our net premiums written for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table provides a reconciliation of our net premiums earned to our net premiums written for the three and nine months ended September 30, 2024 and 2023:

Previous wording

The following table presents comparative details with respect to our GAAP and statutory combined ratios for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents comparative details with respect to our GAAP and statutory combined ratios for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Net Premiums Earned. Our insurance subsidiaries’ net premiums earned for the second quarter of 2024 were $234.3 million, an increase of $18.0 million, or 8.3%, compared to $216.3 million for the second quarter of 2023, primarily reflecting solid premium retention and renewal premium increases.

Current wording

Net Premiums Earned. Our insurance subsidiaries’ net premiums earned for the third quarter of 2024 were $238.0 million, an increase of $13.6 million, or 6.0%, compared to $224.4 million for the third quarter of 2023, primarily reflecting solid premium retention and renewal premium increases.

Previous wording

Net Premiums Written. Our insurance subsidiaries’ net premiums written for the second quarter of 2024 were $247.2 million, an increase of $20.7 million, or 9.1%, from the $226.5 million of net premiums written for the second quarter of 2023. Commercial lines net premiums written increased $9.4 million, or 7.1%, for the second quarter of 2024 compared to the second quarter of 2023. Personal lines net premiums written increased $11.3 million, or 12.1%, for the second quarter of 2024 compared to the second quarter of 2023. We attribute the increase in commercial lines net premiums written primarily to higher new business writings and a continuation of renewal premium increases in lines other than workers’ compensation, offset partially by planned attrition in states we are exiting or have targeted for profit improvement. We attribute the increase in personal lines net premiums written primarily to renewal premium increases and strong policy retention.

Current wording

Net Premiums Written. Our insurance subsidiaries’ net premiums written for the third quarter of 2024 were $232.2 million, an increase of $13.0 million, or 5.9%, from the $219.2 million of net premiums written for the third quarter of 2023. Commercial lines net premiums written increased $7.6 million, or 6.4%, for the third quarter of 2024 compared to the third quarter of 2023. Personal lines net premiums written increased $5.4 million, or 5.4%, for the third quarter of 2024 compared to the third quarter of 2023. We attribute the increase in commercial lines net premiums written primarily to new business writings, strong premium retention and a continuation of renewal premium increases in lines other than workers’ compensation, offset partially by planned attrition in states in which we are executing ongoing profit improvement initiatives as part of our state-specific strategies. We attribute the increase in personal lines net premiums written primarily to renewal premium increases and strong policy retention, offset partially by planned attrition due to non-renewal actions.

Previous wording

Investment Income. Our net investment income was $11.1 million for the second quarter of 2024, an increase of $911,040, or 9.0%, compared to $10.2 million for the second quarter of 2023. We attribute the increase primarily to an increase in the average investment yield relative to the second quarter of 2023.

Current wording

Investment Income. Our net investment income was $10.8 million for the third quarter of 2024, an increase of $290,503, or 2.8%, compared to $10.5 million for the third quarter of 2023. We attribute the increase primarily to an increase in the average investment yield relative to the third quarter of 2023.

Previous wording

Net Investment Gains. Net investment gains for the second quarter of 2024 were $736,669, compared to $2.5 million for the second quarter of 2023. The net investment gains for the second quarter of 2024 and 2023 resulted primarily from the net change in unrealized gains and losses within our equity securities portfolio at June 30, 2024 and 2023, respectively. We did not recognize any impairment losses for individual securities in our investment portfolio during the second quarter of 2024 or 2023.

Current wording

Net Investment Gains (Losses). Net investment gains for the third quarter of 2024 were $1.9 million, compared to net investment losses of $1.2 million for the third quarter of 2023. The net investment gains (losses) for the third quarter of 2024 and 2023 resulted primarily from the net change in unrealized gains and losses within our equity securities portfolio at September 30, 2024 and 2023, respectively. We did not recognize any impairment losses for individual securities in our investment portfolio during the third quarter of 2024 or 2023.

Previous wording

Losses and Loss Expenses. Our insurance subsidiaries’ loss ratio, which is the ratio of incurred losses and loss expenses to premiums earned, was 70.6% for the second quarter of 2024, an increase from our insurance subsidiaries’ loss ratio of 69.9% for the second quarter of 2023. We attribute this increase primarily to increased weather-related losses, offset partially by decreased large fire losses, which we define as individual fire losses in excess of $50,000. The core loss ratio, which excludes weather-related losses, large fire losses and net favorable development of reserves for losses incurred in prior accident years, was 55.0% for the second quarter of 2024 and 2023. For the commercial lines segment, the core loss ratio of 54.8% for the second quarter of 2024 increased modestly from 54.0% for the second quarter of 2023. For the personal lines segment, the core loss ratio of 55.3% for the second quarter of 2024 decreased from 56.5% for the second quarter of 2023. Weather-related losses were $24.7 million, or 10.6 percentage points of the loss ratio, for the second quarter of 2024, compared to $19.7 million, or 9.1 percentage points of the loss ratio, for the second quarter of 2023. The impact of weather-related loss activity to the loss ratio for the second quarter of 2024 was higher than our previous five-year average of 8.8 percentage points for second quarter weather-related losses. Large fire losses for the second quarter of 2024 were $12.5 million, or 5.3 percentage points of the loss ratio, compared to $12.7 million, or 5.9 percentage points of the loss ratio, for the second quarter of 2023. On a statutory basis, our insurance subsidiaries’ commercial lines loss ratio was 70.9% for the second quarter of 2024, compared to 67.9% for the second quarter of 2023, primarily due to an increase in the workers’ compensation loss ratio. The personal lines statutory loss ratio of our insurance subsidiaries decreased to 71.3% for the second quarter of 2024, compared to 73.4% for the second quarter of 2023. We attribute this decrease primarily to a decrease in the personal automobile loss ratio. Our insurance subsidiaries experienced favorable loss reserve development for the second quarter of 2024 of $757,866 that decreased the loss ratio by 0.3 percentage points, compared to negligible favorable loss reserve development for the second quarter of 2023. Our insurance subsidiaries experienced favorable development primarily in the commercial automobile and personal automobile lines of business for the second quarter of 2024, offset partially by unfavorable development in the workers’ compensation line of business that we attribute to higher-than-expected severity for a relatively small number of previously reported claims.

Current wording

Losses and Loss Expenses. Our insurance subsidiaries’ loss ratio, which is the ratio of incurred losses and loss expenses to premiums earned, was 61.5% for the third quarter of 2024, a decrease from our insurance subsidiaries’ loss ratio of 69.8% for the third quarter of 2023. We attribute this decrease primarily to decreased core losses, offset partially by decreased favorable loss reserve development. The core loss ratio, which excludes weather-related losses, large fire losses and net favorable development of reserves for losses incurred in prior accident years, was 50.1% for the third quarter of 2024, compared to 56.7% for the third quarter of 2023. For the commercial lines segment, the core loss ratio of 48.5% for the third quarter of 2024 decreased from 53.7% for the third quarter of 2023. For the personal lines segment, the core loss ratio of 52.5% for the third quarter of 2024 decreased from 61.8% for the third quarter of 2023. Weather-related losses were $24.4 million, or 10.3 percentage points of the loss ratio, for the third quarter of 2024, compared to $25.7 million, or 11.5 percentage points of the loss ratio, for the third quarter of 2023. The impact of weather-related loss activity to the loss ratio for the third quarter of 2024 was higher than our previous five-year average of 9.4 percentage points for third quarter weather-related losses. Large fire losses, which we define as individual fire losses in excess of $50,000, for the third quarter of 2024 were $8.8 million, or 3.7 percentage points of the loss ratio, compared to $11.0 million, or 4.9 percentage points of the loss ratio, for the third quarter of 2023. On a statutory basis, our insurance subsidiaries’ commercial lines loss ratio was 52.5% for the third quarter of 2024, compared to 60.9% for the third quarter of 2023, primarily due to a decrease in the commercial multi-peril loss ratio. The personal lines statutory loss ratio of our insurance subsidiaries decreased to 74.5% for the third quarter of 2024, compared to 86.8% for the third quarter of 2023. We attribute this decrease primarily to a decrease in the personal automobile and homeowners loss ratios. Our insurance subsidiaries experienced favorable loss reserve development for the third quarter of 2024 of $6.2 million that decreased the loss ratio by 2.6 percentage points, compared to favorable loss reserve development for the third quarter of 2023 of approximately $7.3 million that decreased the loss ratio by 3.3 percentage points. Our insurance subsidiaries experienced favorable development primarily in the commercial multi-peril and other commercial lines of business for the third quarter of 2024.

Previous wording

Underwriting Expenses. The expense ratio for an insurance company is the ratio of policy acquisition costs and other underwriting expenses to premiums earned. The expense ratio of our insurance subsidiaries was 31.9% for the second quarter of 2024, compared to 34.2% for the second quarter of 2023. The decrease in the expense ratio primarily reflected impacts of expense reduction initiatives, including agency incentive program revisions, commission schedule adjustments, targeted staffing reductions, and deferred replacement of open employment positions, among others, offset partially by higher technology costs related to our ongoing systems modernization initiatives for the second quarter of 2024 compared to the prior-year quarter. We expect the impact from allocated costs from Donegal Mutual to our insurance subsidiaries related to the ongoing systems modernization project will peak at approximately 1.3 percentage points of the expense ratio for the full year of 2024 before beginning to subside gradually in subsequent years.

Current wording

Underwriting Expenses. The expense ratio for an insurance company is the ratio of policy acquisition costs and other underwriting expenses to premiums earned. The expense ratio of our insurance subsidiaries was 34.5% for the third quarter of 2024, compared to 34.1% for the third quarter of 2023. We attribute the modest increase to higher technology costs related to our ongoing systems modernization initiatives and an increase in underwriting-based incentive costs for the third quarter of 2024 compared to the prior-year quarter. These increases were offset partially by impacts of various expense reduction initiatives, including agency incentive program revisions, commission schedule adjustments, targeted staffing reductions, and deferred replacement of open employment positions, among others. We expect the impact from allocated costs from Donegal Mutual to our insurance subsidiaries related to the ongoing systems modernization project will peak at approximately 1.3 percentage points of the expense ratio for the full year of 2024 before beginning to subside gradually in subsequent years.

Previous wording

Combined Ratio. The combined ratio represents the sum of the loss ratio, the expense ratio and the dividend ratio, which is the ratio of policyholder dividends incurred to premiums earned. Our insurance subsidiaries’ combined ratios were 103.0% and 104.7% for the second quarter of 2024 and 2023, respectively. We attribute the decrease in the combined ratio primarily to a decrease in the expense ratio for the second quarter of 2024 compared to the second quarter of 2023.

Current wording

Combined Ratio. The combined ratio represents the sum of the loss ratio, the expense ratio and the dividend ratio, which is the ratio of policyholder dividends incurred to premiums earned. Our insurance subsidiaries’ combined ratios were 96.4% and 104.5% for the third quarter of 2024 and 2023, respectively. We attribute the decrease in the combined ratio primarily to a decrease in the loss ratio for the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

Income Tax Expense. We recorded income tax expense of $859,665 for the second quarter of 2024, representing an effective tax rate of 17.2%. We recorded income tax expense of $256,055 for the second quarter of 2023, representing an effective tax rate of 11.4%. The income tax expense for the second quarter of 2024 and 2023 represented estimates based on our projected annual taxable income and effective tax rates.

Current wording

Income Tax Expense (Benefit). We recorded income tax expense of $3.7 million for the third quarter of 2024, representing an effective tax rate of 17.9%. We recorded an income tax benefit of $199,613 for the third quarter of 2023. The income tax expense (benefit) for the third quarter of 2024 and 2023 represented estimates based on our projected annual taxable income and effective tax rates.

Previous wording

Net Income and Net Income Per Share. Our net income for the second quarter of 2024 was $4.2 million, or $.13 per share of Class A common stock on a diluted basis and $.11 per share of Class B common stock, compared to $2.0 million, or $.06 per share of Class A common stock on a diluted basis and $.05 per share of Class B common stock, for the second quarter of 2023. We had 27.9 million and 27.5 million Class A shares outstanding at June 30, 2024 and 2023, respectively. We had 5.6 million Class B shares outstanding at the end of both periods.

Current wording

Net Income (Loss) and Net Income (Loss) Per Share. Our net income for the third quarter of 2024 was $16.8 million, or $.51 per share of Class A common stock on a diluted basis and $.46 per share of Class B common stock, compared to a net loss of $805,301, or $.02 per share of Class A common stock and $.02 per share of Class B common stock, for the third quarter of 2023. We had 28.2 million and 27.6 million Class A shares outstanding at September 30, 2024 and 2023, respectively. We had 5.6 million Class B shares outstanding at the end of both periods.

Previous wording

Net Premiums Earned. Our insurance subsidiaries’ net premiums earned for the first half of 2024 were $462.1 million, an increase of $30.6 million, or 7.1%, compared to $431.5 million for the first half of 2023, primarily reflecting solid premium retention and renewal premium increases.

Current wording

Net Premiums Earned. Our insurance subsidiaries’ net premiums earned for the first nine months of 2024 were $700.0 million, an increase of $44.1 million, or 6.7%, compared to $655.9 million for the first nine months of 2023, primarily reflecting solid premium retention and renewal premium increases.

Previous wording

Net Premiums Written. Our insurance subsidiaries’ net premiums written for the first half of 2024 were $498.6 million, an increase of $34.8 million, or 7.5%, from the $463.8 million of net premiums written for the first half of 2023. Commercial lines net premiums written increased $8.5 million, or 3.0%, for the first half of 2024 compared to the first half of 2023. Personal lines net premiums written increased $26.3 million, or 15.1%, for the first half of 2024 compared to the first half of 2023. We attribute the increase in commercial lines net premiums written primarily to higher new business writings and a continuation of renewal premium increases in lines other than workers’ compensation, offset partially by planned attrition in states we are exiting or have targeted for profit improvement. We attribute the increase in personal lines net premiums written primarily to renewal premium increases and strong policy retention.

Current wording

Net Premiums Written. Our insurance subsidiaries’ net premiums written for the first nine months of 2024 were $730.8 million, an increase of $47.8 million, or 7.0%, from the $683.0 million of net premiums written for the first nine months of 2023. Commercial lines net premiums written increased $16.1 million, or 4.0%, for the first nine months of 2024 compared to the first nine months of 2023. Personal lines net premiums written increased $31.7 million, or 11.5%, for the first nine months of 2024 compared to the first nine months of 2023. We attribute the increase in commercial lines net premiums written primarily to new business writings, strong premium retention and a continuation of renewal premium increases in lines other than workers’ compensation, offset partially by planned attrition in states we exited or have targeted for profit improvement. We attribute the increase in personal lines net premiums written primarily to renewal premium increases and strong policy retention.

Previous wording

Investment Income. Our net investment income was $22.0 million for the first half of 2024, an increase of $2.4 million, or 12.4%, compared to $19.6 million for the first half of 2023. We attribute the increase primarily to an increase in the average investment yield relative to the first half of 2023.

Current wording

Investment Income. Our net investment income was $32.9 million for the first nine months of 2024, an increase of $2.7 million, or 9.0%, compared to $30.1 million for the first nine months of 2023. We attribute the increase primarily to an increase in the average investment yield relative to the first nine months of 2023.

Previous wording

Net Investment Gains. Net investment gains for the first half of 2024 were $2.9 million, compared to $2.2 million for the first half of 2023. The net investment gains for the first half of 2024 and 2023 resulted primarily from the net change in unrealized gains and losses within our equity securities portfolio at June 30, 2024 and 2023, respectively. We did not recognize any impairment losses for individual securities in our investment portfolio during the first half of 2024 or 2023.

Current wording

Net Investment Gains. Net investment gains for the first nine months of 2024 were $4.7 million, compared to $930,302 for the first nine months of 2023. The net investment gains for the first nine months of 2024 and 2023 resulted primarily from the net change in unrealized gains and losses within our equity securities portfolio at September 30, 2024 and 2023, respectively. We did not recognize any impairment losses for individual securities in our investment portfolio during the first nine months of 2024 or 2023.

Previous wording

Losses and Loss Expenses. Our insurance subsidiaries’ loss ratio, which is the ratio of incurred losses and loss expenses to premiums earned, was 68.4% for the first half of 2024, an increase from our insurance subsidiaries’ loss ratio of 67.1% for the first half of 2023. We attribute this increase primarily to increased core losses and large fire losses, which we define as individual fire losses in excess of $50,000. The core loss ratio, which excludes weather-related losses, large fire losses and net favorable development of reserves for losses incurred in prior accident years, was 56.8% for the first half of 2024, compared to 55.8% for the first half of 2023. For the commercial lines segment, the core loss ratio of 56.9% for the first half of 2024 increased modestly from 56.1% for the first half of 2023. For the personal lines segment, the core loss ratio of 56.6% for the first half of 2024 increased from 55.1% for the first half of 2023. Weather-related losses were $35.5 million, or 7.7 percentage points of the loss ratio, for the first half of 2024, compared to $33.8 million, or 7.8 percentage points of the loss ratio, for the first half of 2023. The impact of weather-related loss activity to the loss ratio for the first half of 2024 was higher than our previous five-year average of 6.7 percentage points for first half weather-related losses. Large fire losses for the first half of 2024 were $27.4 million, or 5.9 percentage points of the loss ratio, compared to $23.6 million, or 5.5 percentage points of the loss ratio, for the first half of 2023. On a statutory basis, our insurance subsidiaries’ commercial lines loss ratio was 68.5% for the first half of 2024, compared to 65.5% for the first half of 2023, primarily due to an increase in the workers’ compensation loss ratio. The personal lines statutory loss ratio of our insurance subsidiaries decreased slightly to 69.9% for the first half of 2024, compared to 70.0% for the first half of 2023. We attribute this decrease primarily to a decrease in the personal automobile loss ratio, offset partially by an increase in the homeowners loss ratio. Our insurance subsidiaries experienced favorable loss reserve development for the first half of 2024 of approximately $9.2 million that decreased the loss ratio by 2.0 percentage points, compared to $8.5 million that decreased the loss ratio for the first half of 2023 by 2.0 percentage points. Our insurance subsidiaries experienced favorable development primarily in the commercial automobile, commercial multi-peril and personal automobile lines of business for the first half of 2024, offset partially by unfavorable development in the workers’ compensation line of business that we attribute to higher-than-expected severity for a relatively small number of previously reported claims.

Current wording

Losses and Loss Expenses. Our insurance subsidiaries’ loss ratio, which is the ratio of incurred losses and loss expenses to premiums earned, was 66.1% for the first nine months of 2024, a decrease from our insurance subsidiaries’ loss ratio of 68.0% for the first nine months of 2023. We attribute this decrease primarily to lower core and weather-related losses. The core loss ratio, which excludes weather-related losses, large fire losses and net favorable development of reserves for losses incurred in prior accident years, was 54.5% for the first nine months of 2024, compared to 56.0% for the first nine months of 2023. For the commercial lines segment, the core loss ratio of 54.1% for the first nine months of 2024 decreased from 55.2% for the first nine months of 2023. For the personal lines segment, the core loss ratio of 55.2% for the first nine months of 2024 decreased from 57.3% for the first nine months of 2023. Weather-related losses were $60.0 million, or 8.6 percentage points of the loss ratio, for the first nine months of 2024, compared to $59.5 million, or 9.1 percentage points of the loss ratio, for the first nine months of 2023. The impact of weather-related loss activity to the loss ratio for the first nine months of 2024 was modestly higher than our previous five-year average of 7.6 percentage points for first nine months weather-related losses. Large fire losses, which we define as individual fire losses in excess of $50,000, for the first nine months of 2024 were $36.2 million, or 5.2 percentage points of the loss ratio, compared to $34.7 million, or 5.3 percentage points of the loss ratio, for the first nine months of 2023. On a statutory basis, our insurance subsidiaries’ commercial lines loss ratio was 63.0% for the first nine months of 2024, compared to 63.9% for the first nine months of 2023, primarily due to a decrease in the commercial multi-peril loss ratio. The personal lines statutory loss ratio of our insurance subsidiaries decreased to 71.5% for the first nine months of 2024, compared to 75.2% for the first nine months of 2023. We attribute this decrease primarily to a decrease in the personal automobile loss ratio. Our insurance subsidiaries experienced favorable loss reserve development for the first nine months of 2024 of approximately $15.4 million that decreased the loss ratio by 2.2 percentage points, compared to $15.8 million that decreased the loss ratio for the first nine months of 2023 by 2.4 percentage points. Our insurance subsidiaries experienced favorable development primarily in the commercial multi-peril, commercial automobile, personal automobile and other lines of business for the first nine months of 2024, offset partially by unfavorable development in the workers’ compensation line of business that we attribute to higher-than-expected severity for a relatively small number of previously reported claims.

Previous wording

Underwriting Expenses. The expense ratio for an insurance company is the ratio of policy acquisition costs and other underwriting expenses to premiums earned. The expense ratio of our insurance subsidiaries was 33.8% for the first half of 2024, compared to 35.3% for the first half of 2023. The decrease in the expense ratio primarily reflected impacts of expense reduction initiatives, including agency incentive program revisions, commission schedule adjustments, targeted staffing reductions, and deferred replacement of open employment positions, among others, offset partially by higher technology costs related to our ongoing systems modernization initiatives for the first half of 2024 compared to the prior-year quarter. We expect the impact from allocated costs from Donegal Mutual to our insurance subsidiaries related to the ongoing systems modernization project will peak at approximately 1.3 percentage points of the expense ratio for the full year of 2024 before beginning to subside gradually in subsequent years.

Current wording

Underwriting Expenses. The expense ratio for an insurance company is the ratio of policy acquisition costs and other underwriting expenses to premiums earned. The expense ratio of our insurance subsidiaries was 34.0% for the first nine months of 2024, compared to 34.9% for the first nine months of 2023. The decrease in the expense ratio primarily reflected impacts of expense reduction initiatives, including agency incentive program revisions, commission schedule adjustments, targeted staffing reductions, and deferred replacement of open employment positions, among others, offset partially by higher technology costs related to our ongoing systems modernization initiatives for the first nine months of 2024 compared to the first nine months of 2023. We expect the impact from allocated costs from Donegal Mutual to our insurance subsidiaries related to the ongoing systems modernization project will peak at approximately 1.3 percentage points of the expense ratio for the full year of 2024 before beginning to subside gradually in subsequent years.

Previous wording

Combined Ratio. The combined ratio represents the sum of the loss ratio, the expense ratio and the dividend ratio, which is the ratio of policyholder dividends incurred to premiums earned. Our insurance subsidiaries’ combined ratios were 102.7% and 103.0% for the first half of 2024 and 2023, respectively. We attribute the decrease in the combined ratio primarily to a decrease in the expense ratio for the first half of 2024 compared to the first half of 2023.

Current wording

Combined Ratio. The combined ratio represents the sum of the loss ratio, the expense ratio and the dividend ratio, which is the ratio of policyholder dividends incurred to premiums earned. Our insurance subsidiaries’ combined ratios were 100.6% and 103.5% for the first nine months of 2024 and 2023, respectively. We attribute the decrease in the combined ratio primarily to a decrease in the loss and expense ratios for the first nine months of 2024 compared to the first nine months of 2023.

Previous wording

Income Tax Expense. We recorded income tax expense of $2.2 million for the first half of 2024, representing an effective tax rate of 17.6%. We recorded income tax expense of $1.3 million for the first half of 2023, representing an effective tax rate of 15.8%. The income tax expense for the first half of 2024 and 2023 represented estimates based on our projected annual taxable income and effective tax rates.

Current wording

Income Tax Expense. We recorded income tax expense of $5.8 million for the first nine months of 2024, representing an effective tax rate of 17.8%. We recorded income tax expense of $1.1 million for the first nine months of 2023, representing an effective tax rate of 15.2%. The income tax expense for the first nine months of 2024 and 2023 represented estimates based on our projected annual taxable income and effective tax rates.

Previous wording

Net Income and Net Income Per Share. Our net income for the first half of 2024 was $10.1 million, or $.31 per share of Class A common stock on a diluted basis and $.28 per share of Class B common stock, compared to $7.2 million, or $.22 per share of Class A common stock on a diluted basis and $.20 per share of Class B common stock, for the first half of 2023. We had 27.9 million and 27.5 million Class A shares outstanding at June 30, 2024 and 2023, respectively. We had 5.6 million Class B shares outstanding at the end of both periods.

Current wording

Net Income and Net Income Per Share. Our net income for the first nine months of 2024 was $26.9 million, or $.81 per share of Class A common stock on a diluted basis and $.74 per share of Class B common stock, compared to $6.4 million, or $.20 per share of Class A common stock on a diluted basis and $.17 per share of Class B common stock, for the first nine months of 2023. We had 28.2 million and 27.6 million Class A shares outstanding at September 30, 2024 and 2023, respectively. We had 5.6 million Class B shares outstanding at the end of both periods.

Previous wording

Our operations have historically generated sufficient net positive cash flow to fund our commitments and add to our investment portfolio, thereby increasing future investment returns and enhancing our liquidity. The impact of the pooling agreement between Donegal Mutual and Atlantic States has historically been cash-flow positive because of the consistent underwriting profitability of the pool. Donegal Mutual and Atlantic States settle their respective obligations to each other under the pool monthly, thereby resulting in cash flows substantially similar to the cash flows that would result from each company writing the business directly. We have not experienced any unusual variations in the timing of claim payments associated with the loss reserves of our insurance subsidiaries. We maintain significant liquidity in our investment portfolio in the form of readily marketable fixed maturities, equity securities and short-term investments. We structure our fixed-maturity investment portfolio following a “laddering” approach, so that projected cash flows from investment income and principal maturities are evenly distributed from a timing perspective, thereby providing an additional measure of liquidity to meet our obligations should an unexpected variation occur in the future. Our operating activities provided net cash flows in the first six months of 2024 and 2023 of $26.5 million and $13.1 million, respectively.

Current wording

Our operations have historically generated sufficient net positive cash flow to fund our commitments and add to our investment portfolio, thereby increasing future investment returns and enhancing our liquidity. The impact of the pooling agreement between Donegal Mutual and Atlantic States has historically been cash-flow positive because of the consistent underwriting profitability of the pool. Donegal Mutual and Atlantic States settle their respective obligations to each other under the pool monthly, thereby resulting in cash flows substantially similar to the cash flows that would result from each company writing the business directly. We have not experienced any unusual variations in the timing of claim payments associated with the loss reserves of our insurance subsidiaries. We maintain significant liquidity in our investment portfolio in the form of readily marketable fixed maturities, equity securities and short-term investments. We structure our fixed-maturity investment portfolio following a “laddering” approach, so that projected cash flows from investment income and principal maturities are evenly distributed from a timing perspective, thereby providing an additional measure of liquidity to meet our obligations should an unexpected variation occur in the future. Our operating activities provided net cash flows in the first nine months of 2024 and 2023 of $39.2 million and $26.0 million, respectively.

Previous wording

At June 30, 2024, we had no outstanding borrowings under our line of credit with M&T and had the ability to borrow up to $20.0 million at an interest rate equal to the then-current Term SOFR rate plus 2.11%. At June 30, 2024, Atlantic States had a $35.0 million outstanding advance with the FHLB of Pittsburgh that carries a fixed interest rate of 1.74%.

Current wording

At September 30, 2024, we had no outstanding borrowings under our line of credit with M&T and had the ability to borrow up to $20.0 million at an interest rate equal to the then-current Term SOFR rate plus 2.11%. At September 30, 2024, Atlantic States had a $35.0 million outstanding advance with the FHLB of Pittsburgh that carries a fixed interest rate of 3.81%.

Previous wording

On July 18, 2013, our board of directors authorized a share repurchase program pursuant to which we have the authority to purchase up to 500,000 shares of our Class A common stock at prices prevailing from time to time in the open market subject to the provisions of applicable rules of the SEC and in privately negotiated transactions. We did not purchase any shares of our Class A common stock under this program during the six months ended June 30, 2024 or 2023. We have purchased a total of 57,658 shares of our Class A common stock under this program from its inception through June 30, 2024.

Current wording

On July 18, 2013, our board of directors authorized a share repurchase program pursuant to which we have the authority to purchase up to 500,000 shares of our Class A common stock at prices prevailing from time to time in the open market subject to the provisions of applicable rules of the SEC and in privately negotiated transactions. We did not purchase any shares of our Class A common stock under this program during the nine months ended September 30, 2024 or 2023. We have purchased a total of 57,658 shares of our Class A common stock under this program from its inception through September 30, 2024.

Previous wording

On July 18, 2024, our board of directors declared quarterly cash dividends of $.1725 per share of our Class A common stock and $.155 per share of our Class B common stock, payable on August 15, 2024 to our stockholders of record as of the close of business on August 1, 2024. We are not subject to any restrictions on our payment of dividends to our stockholders, although there are state law restrictions on the payment of dividends by our insurance subsidiaries to us. Dividends from our insurance subsidiaries are our principal source of cash for payment of dividends to our stockholders. Our insurance subsidiaries are subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval of their domiciliary insurance regulatory authorities. Our insurance subsidiaries are also subject to risk based capital (“RBC”) requirements that limit their ability to pay dividends to us. Our insurance subsidiaries’ statutory capital and surplus at December 31, 2023 exceeded the amount of statutory capital and surplus necessary to satisfy regulatory requirements, including the RBC requirements, by a significant margin. Our insurance subsidiaries paid $5.0 million in dividends to us during the first six months of 2024. Amounts remaining available for distribution to us as dividends from our insurance subsidiaries without prior approval of their domiciliary insurance regulatory authorities in 2024 are $22.4 million from Atlantic States, $7.2 million from MICO and $5.0 million from Peninsula, or a total of approximately $34.6 million.

Current wording

On October 17, 2024, our board of directors declared quarterly cash dividends of $.1725 per share of our Class A common stock and $.155 per share of our Class B common stock, payable on November 15, 2024 to our stockholders of record as of the close of business on November 1, 2024. We are not subject to any restrictions on our payment of dividends to our stockholders, although there are state law restrictions on the payment of dividends by our insurance subsidiaries to us. Dividends from our insurance subsidiaries are our principal source of cash for payment of dividends to our stockholders. Our insurance subsidiaries are subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval of their domiciliary insurance regulatory authorities. Our insurance subsidiaries are also subject to risk based capital (“RBC”) requirements that limit their ability to pay dividends to us. Our insurance subsidiaries’ statutory capital and surplus at December 31, 2023 exceeded the amount of statutory capital and surplus necessary to satisfy regulatory requirements, including the RBC requirements, by a significant margin. Our insurance subsidiaries paid $10.0 million in dividends to us during the first nine months of 2024. Amounts remaining available for distribution to us as dividends from our insurance subsidiaries without prior approval of their domiciliary insurance regulatory authorities in 2024 are $22.4 million from Atlantic States and $7.2 million from MICO, or a total of approximately $29.6 million.