"Risk" is Donegal Group's middle name. Through its subsidiaries, including Atlantic States Insurance and Southern Insurance Company of Virginia, Donegal Group provides clients in 22 mid-Atlantic, midwestern, and southeastern states with personal, farm, and commercial property/casualty insurance products. The group's personal insurance offerings range from auto and boat policies to homeowners and fire coverage; its commercial insurance products include business owners, multiperil, and workers' compensation. Donegal's financial services arm owns Union Community Bank with 13 branches in Pennsylvania. Donegal Mutual Insurance controls two-thirds of the company's voting stock.
Donegal Group's subsidiaries provide insurance cooperatively with Donegal Mutual. The collective insurance businesses target customers in small to midsized regional communities to allow for local market knowledge and more personal services. Pennsylvania is the company's largest market, accounting for more than a third of revenues; personal auto policies are account for 40% of its written net premiums. It distributes it products through some 2,500 independent agencies.
Donegal Group's growth strategy is to acquire property/casualty insurance companies to augment its organic growth in existing markets and to expand into new markets. The company has completed a half-dozen acquisitions since 1995. In 2011 the company began writing business in Indiana as part of its organic geographic expansion.
While Donegal Group's revenues from premiums and investments have climbed steadily across the years, so have its expenses and underwriting losses, resulting in a tumbling net income. It brought in revenues of $475 million in 2011 but saw its net income drop from $11.5 million 2010 down to $0.45 million in 2011. Much of that year's loss can be tied to an 80% jump in claims due to adverse weather events and an increase in litigation as a result of the economic recession.
Donegal Group (along with Donegal Mutual) already held Province Bank, with three branches in Pennsylvania, when it acquired Union National Financial in 2011. Province Bank was merged into Union National's Union Community Bank, with more than a dozen branches in Lancaster County, Pennsylvania.
To expand in the Midwest, the firm also acquired the outstanding stock of property/casualty insurer Michigan Insurance Company from West Bend Mutual Insurance for some $39 million in late 2010. Previous growth in the region included the 2008 acquisition of Wisconsin-based mutual property/casual insurer Sheboygan Falls Insurance Company. Donegal Group also expanded in the Atlantic states in 2009 by forming an affiliation with Southern Mutual Insurance Company. – less