Good morning, and thank you for joining us today. This morning, Donegal Group issued its second quarter 2022 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 is prerecorded. [Operator Instructions] Speaking today will be President and Chief Executive Officer, Kevin Burke; Chief Financial Officer, Jeffrey Miller; Chief Underwriting Officer, Jeffery Hay; and Chief Investment Officer, Tony Viozzi. 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.

Thank you, Karin, and welcome, everyone. I will start the call with an update on our strategic initiatives and then ask Jeff Miller to provide details on our financial results for the second quarter of 2022. Jeff Hay will then highlight our Commercial and Personal Lines segment results followed by Tony Viozzi with an update on our activities and results within our investment portfolio. I will then provide a few closing remarks before we address the questions that were submitted to us. As we have now passed the midpoint of 2022, I am pleased to report that we continue to make solid progress in our ongoing business transformation. We have now launched our new Personal Lines products in 8 of the 10 states in which we offer Personal Lines and expect to have the new product suite available in all 10 of those states for policies effective in 2023. While our new business expectations remain modest as we closely monitor the competitiveness and performance of these products relative to our expectations, we are pleased with the initial agency engagement and early results. New business volumes are growing each month, and we are working diligently to encourage our agents to reengage with us in the quoting of our new products, whether it's through our state-of-the-art online portal or the competitive rating systems. The focus of our new systems development efforts has now shifted to Commercial Lines as we work towards our 2023 release of our new BOP product as well as migrating our commercial auto and commercial umbrella business lines to our new operating platform. The new platform will enable enhanced straight-through processing capabilities to streamline our agents' experience and improve the efficiency of our internal operations. This release of our new systems is a heavy lift for us as we…

Thank you, Kevin. I'll provide a brief overview of the quarterly results and then turn the call over to Jeff Hay for more information specific to our Commercial and Personal Lines segments. We're pleased with the continued modest premium growth in the second quarter, which was mostly related to strong retention results and premium rate increases that averaged 8.5% for all lines, excluding workers' compensation. While underwriting results were heavily impacted by weather-related and large fire losses in the quarter, they also reflected inflationary pressures on loss costs in certain lines of business. For the second quarter, net premiums earned grew by 6% to $204 million with 10% growth in Commercial Lines, which was primarily related to the additional premiums from our Mountain States region that were included in the pooling agreement beginning in 2021. The overall combined ratio was 105% for the second quarter of 2022 compared to 96.1% for the prior year quarter. The deterioration of the combined ratio was primarily driven by higher weather-related losses and a lower level of net favorable development of reserves for losses incurred in prior accident years compared to the prior year quarter. Similar to the broader insurance industry, our results were significantly impacted by numerous severe weather events that occurred in our operating regions during the second quarter, with weather-related losses totaling $19.6 million or 9.6 percentage points on the loss ratio. While we did not incur significant losses from any single catastrophe event, the accumulation of losses from smaller events led to a weather claim impact that was higher than our previous 5-year average for the second quarter. Our non-weather loss ratio increased 6.7 percentage points from the prior year quarter. The differential included 3 points from lower favorable reserve development, 50 basis points from large fire losses and a…

Thank you, Jeff. I'm first going to start with our Commercial Lines segment where we continue to execute on a number of strategies to achieve profitable growth. Net premium written growth increased 4.3% in the segment, continuing our momentum in several states that we have targeted for growth. And that's being offset by reductions in several states where we've intentionally reduced exposures in today's challenging environment. We've strategically decreased our emphasis on new business premiums in the quarter to appropriately allow our premium rates to catch up with the inflationary loss cost increases. Now as these renewal rates increase and returns to adequacy, our market analysis suggests that producers are also spending less time on new business opportunities, which is evident in our submission volume quarter-over-quarter. Offsetting the strategic decline in new business, however, our retention does remain strong, holding in the low to mid-90s across most lines of our business and most of our regions. So from a margin perspective, retaining a better class of accounts proved to be a better trade-off than accepting potentially underpriced new business in our current macroeconomic environment. Speaking of rate, we have successfully achieved nearly twice the rate increases that we achieved in the second quarter of 2021 at high single digits to low double digits across all major lines of business and policy size bands with the exception of workers' compensation where we continue to feel downward pressure from the filed bureau loss cost decreases that we are working hard to mitigate where possible based on our own experience. It is important to note that we continue to execute our strategic initiative to provide more refined rate guidance to our underwriters that consider both price adequacy, loss experience as well as rate characteristics correlated to that loss experience. We began this approach…

Thank you, Jeff. Over the course of the last 12 months, we have been able to take advantage of widening spreads in certain fixed income sectors, which resulted in a few modest asset allocation adjustments. It is important to note, the last quarter, we announced that our average reinvestment rate exceeded the rate we were receiving on bond cash flow, which consists of maturities, calls and mortgage-backed security prepayments. We are happy to note that this positive development continued in Q2 and appears to be trending positively again in the third quarter. Total investments increased by $22.4 million from December 31, 2021, as new funds invested were partially offset by $41.5 million of unrealized losses within our available-for-sale fixed income portfolio due to rising market interest rates. Net investment income of $8.2 million is an increase of 7.2% from the second quarter of 2021. Investing new money from premium growth and profitable operating results had allowed us to consistently maintain and increase our investment income. If market rates remain stable, we expect to experience a lift on new investments and see the end of market value declines. Our short-term investment yields have improved from 1 basis point a year ago to approximately 1.25%, and we expect short-term rates will continue to move higher in 2022 as the Fed continues its tightening plan to fight inflation. Net investment losses of $8.4 million for the second quarter of 2022 were primarily related to unrealized losses in the fair value of the equity securities held as of June 30, 2022. Equity values have begun to rebound somewhat in the last few weeks. In the second quarter, an increase in interest rates resulted in a decrease in the market value of our available-for-sale bonds, with the tax-adjusted unrealized loss impacting our stockholders' equity by $32.8 million and impacting our book value by $1.02 per share. That decrease, coupled with the loss events impacting our quarterly results, contributed to a 6% decline in book value per share from year-end 2021 to $15.87 as of June 30, 2022. I will now turn it back to Kevin for closing remarks.

Thanks, Tony. We are excited about Donegal's future as our strategic Commercial Lines focus, new Personal Lines product suites and ongoing underwriting and rate actions combined to yield favorable results over time. While a single quarter's results may be tempered by significant weather and ongoing economic volatility, we remain encouraged by the path that we're on. We know our work is not complete and each day brings a new set of challenges. Donegal's hard-working staff remains determined and continuing the transformation to a better future at Donegal. Thank you to our employees and shareholders for your continuing support of those efforts. At this time, I'll ask Karin, our Investor Relations Consultant and Vice President at The Equity Group to moderate our question-and-answer session.

Thank you, Kevin. I'd like to take a moment to discuss the format for the question-and-answer section. Along with the announcement of Donegal's second quarter 2022 earnings and webcast schedule, we requested and received questions from interested parties in advance. While we have worked the answers to some of these questions into our prepared remarks, where appropriate, there were a few questions that we will address directly. The first question relates to the losses in the quarter. Can you please provide additional detail in the fire losses and weather-related losses in terms of geographical location or segment impact?

I can take that one, this is Jeff Hay, and thank you for the question. On the weather side of the equation, we were hit across our footprint from the widely publicized tornadoes in Michigan and Wisconsin. We had a derecho event in Ohio. We had hail and wildfires in New Mexico, hail and wind in the Northeast, and those events occurred across April, May and June. On the fire side of the equation, as I mentioned earlier in my commentary, there's really nothing out of trend from a year-to-date perspective and the experience was pretty random across our geographic footprint, maybe with a notable exception of a large Personal Lines fire in Northern Virginia and wildfire-related loss in New Mexico.

Great. Thank you. Following up on those comments, we have several related questions about the loss ratio impact of weather and fire losses by segment.

Sure, Karin. I can provide some more granular details as to the loss ratio impact, starting with the weather and fire losses. The weather impact was weighted more heavily to our Personal Lines segment, representing 14.5 percentage points of our personal lines loss ratio versus 6.6 percentage points of our commercial lines loss ratio. For fire losses, there was a $1.5 million increase in commercial property fires compared to the prior year quarter, with fire losses representing 5.9 percentage points of our commercial lines loss ratio. While the overall dollar impact of homeowners fires was comparable to the prior year quarter, we had 2 large home fires that exceeded $1.5 million in damages and contributed to a total 7.6 percentage point large fire impact on our personal lines loss ratio.

Thank you for those details. The next question is on the Commercial Lines state-specific strategy to exit or grow in targeted areas. Can you give us an idea of the progress that has been made? And when should we expect to see target areas to be fully assembled or disassembled?

Jeff Hay here again, and thank you for that question. Our state-specific strategies developed late last year are being successfully utilized to support the growth in our most profitable states. In this quarter, we grew our states with a growth posture at more than twice the rate of our overall growth in the commercial segment. And those states had lower-than-average loss ratios as well. And our profit improvement states are shrinking in the double digits, and we're seeing improved loss ratios as a result of the underwriting actions that we're taking there. This reshaping of our book, I would say, is more of a journey than a destination as we want to continually look to steer our portfolio growth in our most opportune geographies and industries, actively seeking out ways to play offense in the right classes and lines of business even in our less profitable states.

The next question is on Personal Lines. What percentage of total Personal Lines premium is currently coming from your new Personal Lines product? And where do you expect this number to be by 2024?

Thanks for that question. I'll take that one, Jeff Hay here again. As we roll out our new states, we are only allowing new business writings in the new product. So from a new business perspective, we're already writing about 2/3 plus of our new business in the new product with the states we have live now. And that would increase to 100% with the final rollout of states late this year and early into 2023. In total, we're really at less than 5% of our total book today, and that may grow to as much as 1/4 of our total book over the next couple of years. However, we're being very deliberate about our growth of the new product, especially in today's dynamic environment. And while our new business production is up significantly over recent prior years, it's now only at a level to allow us to stay the shrinking of our book that we've experienced over the past several years and will allow us the moderate single-digit growth that we need from the Personal Lines business segment overall to complement our Commercial Lines of business.

The next question relates to favorable reserve development. Can you provide the impact of reserve development on loss ratios for individual lines of business? And the related question, are the significant reserve releases from personal and commercial auto related to the lower-than-expected frequency due to the pandemic behind you at this point in time?

This is Jeff Miller. I can address those questions. Favorable reserve development for the quarter was split among major lines of business with workers' compensation at $3.6 million, commercial auto at $3.5 million and personal auto at $2.7 million, offset partially by commercial multi-peril and other commercial that had, combined, an adverse development of $2.8 million related to a handful of specific case reserves. As to the reserve releases related to the pandemic period, we did experience a slowdown in the favorable development for our automobile lines in the second quarter compared to the first quarter, which we fully expected. My expectation is I do think the favorable development related to the lower frequency and the accident years influenced by the pandemic is largely behind us as the impact was primarily in the 2020 accident year for which we now have substantial reported claim data that underlies the actuarial estimates. For the relatively immature 2021 accident year, we continue to carry a fairly substantial amount of actuarially determined reserves for the auto lines. Considering that the assumptions that go into the selection of actuarial estimates are largely based on recent loss experience and trends, and the fact that the effect of many of the underwriting actions we've taken is not yet fully reflected in that recent loss history, particularly in commercial auto, I believe it's reasonable to expect that our auto reserves will continue to develop favorably, within a reasonable range in future periods.

The final question is regarding the investment portfolio. How have you changed your portfolio thus far in 2022 to create a better performing portfolio in today's market?

Thank you, Karin. We have gradually moved excess cash this year into higher-performing, yet cash-flowing, mortgage-backed security product. This allows us to pick up income today, yet provide cash flow for reinvesting at higher rates in the future. In addition to MBS purchases, we've been able to take advantage of spread product in both agency debt and taxable municipal bonds. We continue to ladder the portfolio and use a barbell approach when appropriate. With these slight changes and the fact that the market is moving off of historical lows, we feel positive about our current and projected investment income.

Thank you. And that wraps up the questions received in advance of the call. If there are any further questions, please feel free to reach out to us. Thank you to all interested parties for submitting questions and listening in today. I will now turn it back to Kevin for any final remarks.

Thanks, Karin. We will continue to execute our strategic and tactical initiatives to generate and sustain positive financial results. We appreciate the ongoing support, and thank you for joining us today.

This now concludes the second quarter of 2022 earnings webcast. You may now disconnect.