Donegal Group Inc (DGICB) 2023 Q1 法說會逐字稿

Good morning, and thank you for joining us today. This morning, Donegal Group issued its first quarter 2023 earnings release outlining its results. The release and the 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 prerecorded. (Operator Instructions) Speaking today will be President and Chief Executive Officer, Kevin Burke; Chief Financial Officer, Jeff Miller; Chief Underwriting Officer, Jeff Hay; and Chief Investment Officer, Tony Viozzi.

早安，感謝您今天加入我們。今天上午，Donegal Group 發布了 2023 年第一季財報，概述了其業績。本新聞稿和補充投資者介紹資料可在 Donegal 網站 www.donegalgroup.com 的投資者關係欄位查閱。請注意，今天的會議是預先錄製的。 (操作員指示) 今天發言的將是總裁兼首席執行官凱文·伯克 (Kevin Burke)；首席財務官 Jeff Miller；首席承保官 Jeff Hay；和首席投資官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.

請注意，本次電話會議中所作的非歷史事實的陳述均為前瞻性陳述，必然涉及可能導致實際結果發生重大差異的風險和不確定性。這些因素可以在 Donegal Group 提交給美國證券交易委員會的文件中找到，包括其 10-K 表年度報告和 10-Q 表季度報告。本公司不承擔更新或公開宣布對任何前瞻性陳述所做的任何修改結果的義務，以反映此類陳述日期之後發生的預期或意外事件或情況。

With that, it's my pleasure to turn it over to Mr. Kevin Burke. Kevin?

現在，我很高興將發言權交給凱文伯克先生。凱文？

Thank you, Karin, and welcome, everyone.

謝謝你，卡琳，歡迎大家。

I will begin the call with an update on several strategic initiatives before turning it over to Jeff Miller for a review of our quarterly financial results. Jeff Hay will then provide details about the segment performance and action plans for the remainder of 2023, followed by Tony Viozzi who will provide an investment update.

我將在電話會議上首先介紹幾項戰略舉措的最新情況，然後將其交給傑夫米勒來審查我們的季度財務業績。隨後，Jeff Hay 將提供有關該部門業績和 2023 年剩餘時間行動計劃的詳細信息，隨後 Tony Viozzi 將提供投資更新。

I reported in our year-end earnings call just a couple of months ago that we successfully launched new personal lines products in 9 of the 10 states where we offered personal lines during 2022, and we were awaiting approvals of our product filings from regulatory authorities in Michigan. I am pleased to report that we have now received those approvals and are preparing to implement new products in Michigan, thus completing the 10-state rollout. We are actively monitoring our personal lines new business growth, which has exceeded our expectations. Jeff Hay will provide more commentary about the actions we are taking to control the pace of our growth and ensure rate adequacy in light of ongoing inflationary pressures on loss costs.

就在幾個月前的年終財報電話會議上，我報告稱，我們在 2022 年成功在提供個人險服務的 10 個州中的 9 個州推出了新的個人險產品，我們正在等待密西根州監管機構批准我們的產品備案。我很高興地報告，我們現在已經獲得這些批准，並準備在密西根州推出新產品，從而完成 10 個州的推廣。我們正在積極監控個人險新業務的成長，這已經超出了我們的預期。傑夫·海伊 (Jeff Hay) 將對我們為控製成長速度和確保利率充足性而採取的行動提供更多評論，以應對持續的通膨壓力。

We successfully deployed our third major software release as planned at the end of March. This release includes new business owner product and modernized commercial auto and umbrella products with new advanced pricing models and enhanced straight-through processing capabilities. These products and systems will allow us to focus on the small commercial market as our primary source of profitable growth over the next few years. The products are currently available for new business in 3 states for policies effective beginning in June, and we are on track to implement them in our 19 remaining states in the third quarter.

我們於三月底按計畫成功部署了第三個主要軟體版本。此版本包括新的企業主產品和現代化的商業汽車和傘產品，具有新的先進定價模型和增強的直通式處理能力。這些產品和系統將使我們能夠專注於小型商業市場作為未來幾年的主要獲利成長來源。目前，這些產品已在 3 個州向新業務推出，政策將於 6 月開始生效，我們將在第三季在其餘 19 個州實施這些產品。

We also plan to begin converting our legacy policies on the new platform in the fourth quarter of 2023. The renewal conversion process will continue throughout 2024. Our commercial lines footprint will include 22 states after the completion of strategic actions that Jeff Hay will discuss further in a few moments. Looking ahead to releases remaining in our systems modernization project, the next major commercial lines release will include the development of a new commercial lines package policy and migration of our remaining commercial lines products to the new platform.

我們也計劃於 2023 年第四季開始在新平台上轉換我們的舊保單。續保轉換過程將持續到 2024 年。在完成策略行動後，我們的商業保險覆蓋範圍將涵蓋 22 個州，Jeff Hay 稍後將對此進行進一步討論。展望我們系統現代化專案中剩餘的版本，下一個主要商業線路版本將包括制定新的商業線路包政策以及將我們剩餘的商業線路產品遷移到新平台。

Considering the significant business resources dedicated to the ongoing rollout and monitoring of the recent commercial lines release and the renewal conversion activities during the remainder of 2023, we expect to begin working on the next commercial lines release in early 2024. In the meantime, the project team is now focused on migrating our dwelling fire product and beginning the process of preparing to migrate our remaining legacy personal lines products to the new platform as they renew. Due to the relatively short time frame before kicking off the next major commercial lines release, we have limited the scope of this interim release to development of a dwelling fire product in a base state and converting legacy homeowners policies in Virginia, where required regulatory changes led us to prioritize that migration. We are currently planning to continue personal lines legacy conversion activities on a parallel track with the commercial lines release in 2024 as project resources allow.

考慮到我們將投入大量業務資​​源持續推出和監控最近的商業保險產品線的發布以及 2023 年剩餘時間的續訂轉換活動，我們預計將在 2024 年初開始著手下一個商業保險產品的發布。同時，專案團隊現在專注於遷移我們的住宅消防產品，並開始準備將我們剩餘的傳統個人保險產品在更新時遷移到新平台。由於距離啟動下一個主要商業產品線發布的時間相對較短，我們將此臨時版本的範圍限制為在基礎州開發住宅火災產品和轉換弗吉尼亞州的傳統房主政策，而弗吉尼亞州所需的監管變化導致我們優先考慮這一遷移。目前，我們計劃在專案資源允許的情況下，與 2024 年發布的商業線路同時繼續進行個人線路遺留轉換活動。

I'm very proud of the Donegal team that has shown remarkable resilience and perseverance over the past 5 years. They have been working to develop and implement new systems, products, reporting systems and advancements in data analytics. These initiatives have transformed our business processes and refined our underwriting and pricing sophistication and capabilities. While there is more to accomplish over the next few years, I'm looking forward to seeing favorable results from all of the team's efforts. We expect to begin to realize the return of our significant investment in talent and technology through improved operating results over time.

我為多尼戈爾隊在過去五年裡表現出非凡的韌性和毅力感到非常自豪。他們一直致力於開發和實施新系統、產品、報告系統和數據分析的進步。這些措施改變了我們的業務流程，提高了我們的核保和定價的複雜性和能力。儘管未來幾年還有更多工作要做，但我期待看到團隊的所有努力都取得良好成果。我們期望隨著時間的推移，透過改善營運績效開始實現對人才和技術的大量投資的回報。

At this point, I'll turn the call over to Jeff Miller for a review of our quarterly financial results.

現在，我將把電話轉給傑夫米勒，以審查我們的季度財務結果。

Thank you, Kevin. Net premiums earned increased 8% to $215.2 million for the first quarter of 2023. Net premiums written grew by 8.6%, with premium rate increases and continuing strong retention contributing to growth across our lines of business despite planned attrition in several regions where we are working to improve profitability.

謝謝你，凱文。 2023 年第一季度，淨保費收入成長 8%，至 2.152 億美元。淨承保保費增長 8.6%，儘管我們正努力提高盈利能力的多個地區進行計劃性裁員，但保費率上漲和持續強勁的留存率推動了我們整個業務線的增長。

The combined ratio of 101.2% for the first quarter of 2023 was higher than we targeted due primarily to a 5 percentage point increase in the loss ratio compared to the first quarter of 2022. The core loss ratio decreased by over 2 percentage points from the prior year quarter, but that improvement was more than offset by the impact of higher weather-related and large fire losses as well as lower net favorable reserve development from prior year losses. Weather-related losses were $14.1 million or 6.5 percentage points of the loss ratio for the first quarter of 2023 compared to $8 million or 4 percentage points for the first quarter of 2022.

2023 年第一季的綜合比率為 101.2%，高於我們的目標，主要原因是損失率與 2022 年第一季相比增加了 5 個百分點。核心損失率較去年同期下降了 2 個百分點以上，但這一改善被天氣相關損失和大型火災損失增加以及去年同期損失導致的淨盈餘準備金減少的影響所抵消。 2023 年第一季的天氣相關損失為 1,410 萬美元，佔損失率的 6.5 個百分點，而 2022 年第一季的天氣相關損失為 800 萬美元，佔損失率的 4 個百分點。

Homeowners impact was $7.3 million, and commercial property impact was $5.3 million, with the remainder in the auto lines. We incurred close to $4 million in losses from severe wind and hailstorm activity on March 31. As a result, the first quarter weather claim impact was higher than the previous 5-year average for the first quarter of 4.8 percentage points. Large fire losses, which we define as over $50,000 in damages contributed 5.1 percentage points to our first quarter of 2023 loss ratio, slightly higher than 4.8 percentage points for the prior year quarter, with an increase in commercial fire severity due in part to our higher per risk reinsurance retention for 2023 as well as inflationary repair cost increases.

房主損失為 730 萬美元，商業房地產損失為 530 萬美元，其餘部分涉及汽車保險。 3 月 31 日的強風和冰雹天氣給我們造成了近 400 萬美元的損失。因此，第一季天氣索賠影響比前五年第一季的平均值高出 4.8 個百分點。大型火災損失（我們將其定義為損失超過 50,000 美元）占我們 2023 年第一季損失率的 5.1 個百分點，略高於去年同期的 4.8 個百分點，商業火災嚴重程度的增加部分原因是我們 2023 年每筆風險再保險留存率以及通貨膨脹導致的維修成本增加較高。

Our insurance subsidiaries experienced net favorable development of reserves for losses incurred in prior accident years of $8.3 million or a 3.9 percentage point reduction in the loss ratio for the first quarter of 2023 compared to $16.5 million or an 8.3 percentage point reduction in the loss ratio for the prior year quarter. Favorable development was primarily related to lower-than-expected claim emergence for accident years 2020 and 2021 with approximately $3.8 million in commercial auto, $3.6 million in workers' compensation and $800,000 in commercial multi-peril.

我們的保險子公司對前幾起事故年度損失的準備金淨增長為 830 萬美元，即 2023 年第一季的損失率下降了 3.9 個百分點，而去年同期的損失準備金為 1,650 萬美元，即損失率下降了 8.3 個百分點。有利的發展主要與 2020 年和 2021 年事故年度的索賠低於預期有關，其中商業汽車索賠約為 380 萬美元、工傷賠償約為 360 萬美元、商業多重危險索賠約為 80 萬美元。

The expense ratio was 36.4% for the first quarter of 2023, with an increase in technology systems-related expenses primarily driving the increase over the prior year quarter. The quarterly expense ratio was slightly above our expected run rate for the full year. Premium writings are seasonably higher in the first quarter of the year when many of our commercial policies renew. As a result, certain nondeferrable variable costs are incurred in the first quarter, while the premium writings will be earned throughout the remainder of the year.

2023 年第一季的費用率為 36.4%，其中技術系統相關費用的增加主要推動了費用較去年同期的成長。季度費用率略高於我們預期的全年運行率。每年第一季度，當我們的許多商業保單續保時，保費都會出現季節性上漲。因此，某些不可遞延的變動成本將在第一季產生，而額外的承保收入將在今年剩餘時間內獲得。

In summary, the underwriting loss we incurred for the first quarter of 2023 was more than offset by $9.4 million of investment income, resulting in after-tax net income of $5.2 million, which declined from $13.1 million for the first quarter of 2022 when our results benefited from milder weather conditions and unusually favorable loss reserve development.

總而言之，我們在 2023 年第一季發生的承保損失被 940 萬美元的投資收益所抵消，導致稅後淨收入為 520 萬美元，低於 2022 年第一季的 1,310 萬美元，當時我們的業績受益於溫和的天氣條件和異常有利的損失準備金發展。

With that, I will turn the call over to Jeff Hay to provide more details about our commercial and personal lines segments results.

接下來，我將把電話轉給 Jeff Hay，以提供有關我們的商業和個人線路部門業績的更多詳細資訊。

Thanks, Jeff. Overarching, we have remained focused on our long-term profit objectives by taking the actions to improve our underwriting performance and responding to the macroeconomic trends that have continued to impact our results. As we continue to take these aggressive pricing actions and implement go-forward strategic initiatives, we expect to generate more favorable underwriting performance in the future. Starting with commercial lines specifically, we are diligently pursuing profitable growth while also striving to improve profitability in certain identified geographies by implementing significant rate increases in areas and segments of our book that are the most challenged. Rate increases across commercial lines of business averaged 11%, excluding workers' compensation during the first quarter.

謝謝，傑夫。整體而言，我們始終專注於我們的長期利潤目標，採取行動提高承保績效並應對持續影響我們績效的宏觀經濟趨勢。隨著我們繼續採取這些積極的定價行動並實施前瞻性的策略舉措，我們預計未來將取得更為有利的承保業績。具體來說，從商業險種開始，我們努力追求獲利性成長，同時也透過在最具挑戰性的地區和領域大幅提高費率，努力提高某些特定地區的獲利能力。第一季度，不包括工人賠償，商業業務的費率平均上漲 11%。

Premium retention remained strong at just over 90% despite our intentional pullback in areas targeted for profit improvement. Our claim severity trends reflect ongoing macroeconomic trends and the impact of higher cost of labor as well as parts and materials, especially in commercial property and auto physical damage. Our commercial multi-peril line of business was impacted by several fire losses in the quarter, contributing 6.1 points to the first quarter commercial lines loss ratio. While it's in the nature of our business to insure for fire losses, we have implemented a number of specific actions and underwriting guideline changes that are designed to reduce the likelihood and frequency of these large fire occurrences.

儘管我們有意撤出旨在提高利潤的領域，但保費保留率仍保持在 90% 以上的強勁水平。我們的索賠嚴重程度趨勢反映了當前的宏觀經濟趨勢以及勞動力、零件和材料成本上漲的影響，尤其是在商業財產和汽車物理損壞方面。本季度，我們的商業多險種業務受到多起火災損失的影響，導致第一季商業險種損失率上升 6.1 個百分點。雖然承保火災損失符合我們的業務性質，但我們已經實施了一系列具體行動並修改了承保指南，旨在降低大型火災的可能性和頻率。

Weather-related losses in the quarter contributed 4.8 percentage points to the commercial lines loss ratio. These losses were primarily driven by 3 storms. In late February, ice and winter storms toured through Michigan, leaving our insureds without power for several days. In the first week of March, a wind event impacted Pennsylvania, Tennessee, Ohio and Indiana. And then on the last day of March, a wind and hail event caused losses that we estimated to be approximately $4 million. And while that storm event impacted our regions for the first 2 days of April, we expect a minimal impact to our second quarter results as the March 31 impact was close to our intercompany catastrophe retention with Donegal Mutual.

本季天氣相關損失導致商業線路損失率上升了 4.8 個百分點。這些損失主要是由 3 場風暴造成的。二月底，冰雪和冬季風暴席捲密西根州，導致我們的被保險人連續數天斷電。三月第一周，一場風暴影響了賓州、田納西州、俄亥俄州和印第安納州。然後在三月的最後一天，一場風和冰雹造成了損失，我們估計損失約為 400 萬美元。雖然這場風暴事件在 4 月的前兩天影響了我們所在地區，但我們預計對第二季業績的影響將微乎其微，因為 3 月 31 日的影響接近我們與 Donegal Mutual 之間的公司間災難留存率。

Excluding the large fire and weather-related losses, however, and the favorable loss reserve development Jeff Miller discussed earlier, our core loss ratio in every commercial line of business has begun to reflect the positive impact of the rate and underwriting actions we've taken over the past 12 to 18 months, improving more than 200 basis points over the prior year first quarter for the commercial segment as a whole. And in addition to ongoing rate increases in commercial lines, we continued execution on several profit improvement initiatives that I'll quickly summarize now.

然而，除去大規模火災和天氣相關損失以及傑夫米勒先前討論過的有利的損失準備金發展外，我們每個商業業務線的核心損失率都開始反映出我們在過去 12 到 18 個月採取的利率和承保行動的積極影響，整個商業部門的損失率比去年同期第一季度提高了 200 多個基點。除了商業險種的持續漲價外，我們還繼續執行了幾項利潤提升計劃，我現在就來簡要總結一下。

First, we recently announced our decision to exit the commercial lines of business in the states of Georgia and Alabama due to profitability challenges we've had in those states. We will continue to be a viable market for Georgia for personal lines as this is a strategic commercial lines move only. We are no longer writing new commercial business in these 2 states and will begin nonrenewing existing accounts beginning in July. Second, we are also exiting or re-underwriting several nonstrategic or profit-challenged classes of business. Third, we're enhancing the data we provide to our underwriters to assist them in underwriting and pricing catastrophe-exposed properties. And finally, we're expanding the use of advanced analytics in our new business and renewal decisions. For example, as I mentioned in prior quarters, we introduced a new pricing guidance model for our commercial package policies earlier in the first quarter.

首先，我們最近宣布決定退出喬治亞州和阿拉巴馬州的商業業務，因為我們在這兩個州面臨著獲利挑戰。由於這只是一項策略性商業保險舉措，我們將繼續成為喬治亞個人保險的可行市場。我們不再在這兩個州開展新的商業業務，並將從 7 月開始不再續簽現有帳戶。其次，我們也退出或重新承保幾類非策略性或獲利能力較差的業務。第三，我們正在增強向承保人提供的數據，以協助他們承保和定價遭受災難的財產。最後，我們正在擴大高階分析在新業務和續約決策中的使用。例如，正如我在前幾個季度提到的，我們在第一季早些時候為我們的商業套餐政策引入了新的定價指導模型。

Kevin mentioned the planned rollout of a new agency facing portal with enhanced small commercial products and straight-through processing capabilities. This enhancement was 2 years in the making, and we believe it will significantly improve our ability to compete for quality accounts in the small commercial market. We expect the rollout to be completed in the third quarter of this year, and we look forward to engaging with our agents to grow the small commercial segment of our business.

凱文提到計劃推出一個面向機構的新入口網站，該網站具有增強的小型商業產品和直通式處理能力。這次改進歷時兩年，我們相信它將顯著提高我們在小型商業市場爭取優質客戶的能力。我們預計將於今年第三季完成推出，我們期待與我們的代理商合作，擴大我們業務的小型商業部門。

Turning to personal lines. The double-digit premium growth during the first quarter reflected new premium growth that exceeded our expectations as well as rate increases that contributed to 100% premium retention. Our agents have reengaged with us since we introduced new personal lines products in 9 of our 10 personal line states. Having recently received regulatory approval for our new products in Michigan, our 10th and final state for the rollout, we expect to begin issuing policies in that state in June. While we are pleased with the successful launch of our new product, we are taking actions to control the pace of our growth as we continue to monitor our pricing relative to current loss trends. While the personal lines loss ratio was elevated for the first quarter, it was generally in line with our expectations due to our projected time line for rate increases to be reflected in our net earned premium.

轉向個人線路。第一季兩位數的保費增長反映了超出我們預期的新保費增長以及有助於 100% 保費保留的費率上漲。自從我們在 10 個個人險州中的 9 個州推出新的個人險產品以來，我們的代理商已經重新與我們合作。我們最近剛獲得了密西根州對我們新產品的監管批准，密西根州是我們推出新產品的第十個也是最後一個州，我們預計將於六月開始在該州發布政策。雖然我們對新產品的成功推出感到高興，但我們正在採取行動來控製成長速度，同時我們將繼續監控相對於當前損失趨勢的定價。雖然第一季個人險損失率有所上升，但由於我們預計費率上漲的時間表將反映在我們的淨保費收入中，因此總體而言，該數據符合我們的預期。

Compared to the prior year quarter, large fire losses within the homeowners line of business moderated significantly from both a frequency perspective, declining more than 50% and contributing only 3.5 points to the personal lines loss ratio. On the other hand, weather-related losses contributed 9.2 percentage points to the loss ratio for the first quarter compared to only 5.3% in the prior year period. While elevated compared to the prior year quarter, we fared relatively well considering the severity of weather events during the quarter. We're continuing to manage our geographic spread of risk and are implementing several tools to help underwriters manage concentrations and ensure appropriate risk-adjusted pricing in weather-prone areas.

與去年同期相比，房主業務線內的大型火災損失從頻率角度均顯著下降，下降了 50% 以上，並且僅對個人線路損失率貢獻了 3.5 個百分點。另一方面，天氣相關損失佔第一季損失率的 9.2 個百分點，而去年同期僅為 5.3%。雖然與去年同期相比有所上升，但考慮到本季天氣狀況的嚴重程度，我們的表現相對較好。我們將繼續管理風險的地理分佈，並實施多種工具來幫助核保人管理集中度並確保在天氣多發地區進行適當的風險調整定價。

We've accelerated planned personal lines rate increases for 2023, both in our new and our legacy personal lines products. Filed homeowners rate increases averaged 9.5% for the first quarter, and we continue to automatically increase insured values north of 8% at renewal. Overall, achieved rate and exposure impact for the first quarter surpassed 11%. Achieved personal automobile rate increases for the first quarter averaged 5%, but filed rate increases with future effective dates were higher, averaging 13%. In both lines of business, we plan to take additional rate throughout the remainder of the year. And similar to the comments I made earlier about our commercial lines business, we're beginning to see favorable impact of our rate and underwriting actions on our personal lines core loss ratio with nearly a 200 basis point improvement compared to the prior year quarter, although the improvement was primarily from our homeowners line of business.

我們已加快計劃中的 2023 年個人險費率上調，包括新個人險產品和傳統個人險產品。第一季度，房主提交的保險費率平均上漲 9.5%，並且我們在續保時繼續自動將保險價值提高 8% 以上。整體來看，第一季的實現利率和風險敞口影響超過 11%。第一季個人汽車費率平均上漲 5%，但未來生效日期的已申報費率上漲幅度更高，平均為 13%。對於這兩條業務線，我們計劃在今年剩餘時間內提高利率。與我之前對我們的商業險業務所發表的評論類似，我們開始看到我們的利率和承保行動對我們的個人險核心損失率產生了有利的影響，與去年同期相比，核心損失率改善了近 200 個基點，儘管這一改善主要來自我們的房主險業務。

As the year progresses, we'll continue to fine-tune our state strategies. We're refining the granularity of our strategies to a substate level, with a goal of achieving a more balanced book of business, greater spread of risk and ultimately improving our profitability.

隨著時間的推移，我們將繼續調整我們的國家戰略。我們正在將策略的粒度細化到州以下級別，目標是實現更平衡的業務、更大的風險分散，並最終提高我們的獲利能力。

At this time, I'd like to turn it over to Tony Viozzi for an update on our investments portfolio.

現在，我想將話題轉給 Tony Viozzi，請他介紹我們的作品集的最新情況。

Thank you, Jeff. We are pleased to report another quarter of higher investment income driven by an increase in average investment yield. The first quarter of 2023 was our fifth consecutive quarter with increased portfolio rates with the quarterly average tax equivalent yield of 3%, up 42 basis points from the prior year quarter. Rising market rates and attractive spreads in certain fixed income sectors have contributed to our investment performance. The average reinvestment yield of 4.91% was approximately 133 basis points higher than the yield of bonds that were called or matured in the quarter.

謝謝你，傑夫。我們很高興地報告，由於平均投資收益率的提高，投資收益又一個季度上漲。 2023 年第一季是我們連續第五個季度增加投資組合利率，季度平均稅收等值收益率為 3%，比去年同期上升了 42 個基點。某些固定收益領域的市場利率上升和利差吸引為我們的投資績效做出了貢獻。平均再投資收益率為 4.91%，比本季贖回或到期的債券收益率高出約 133 個基點。

Net investment income increased 20% to $9.4 million during the first quarter. The increase was the result of higher cash equivalent yields and higher market reinvestment rates as we made strategic allocations into U.S. treasuries and wider spread agency debt and mortgage-backed securities. We continue to expect improvement in our investment income throughout 2023, with the assumption that short term and fixed income rates remain elevated. Net investment losses were $331,000 in the quarter compared to $76,000 in the prior year quarter.

第一季淨投資收入成長 20%，達到 940 萬美元。這一增長是由於我們對美國國債和更廣泛的機構債務和抵押貸款支持證券進行了戰略配置，導致現金等價收益率上升和市場再投資率上升。我們繼續預期 2023 年全年的投資收入將會改善，假設短期和固定收益利率維持在高位。本季淨投資損失為 331,000 美元，去年同期為 76,000 美元。

While we maintain a modest percentage of our portfolio in equity securities, our equity performance was in line with the S&P Index. We consciously decreased our equity exposure in late 2022 and will continue to have a lower emphasis on equities through 2023 based on our expectation for volatility in the equity markets. We continue to maintain a conservative investment approach and given uncertainties in the macro environment, we believe our portfolio is well positioned.

雖然我們的投資組合中只保留了一定比例的股票證券，但我們的股票表現與標準普爾指數一致。我們在 2022 年底有意識地減少了股票投資，並且根據我們對股票市場波動的預期，到 2023 年我們將繼續降低對股票的重視程度。我們繼續保持保守的投資方式，鑑於宏觀環境的不確定性，我們相信我們的投資組合處於有利地位。

We had a $4 million increase in our after-tax available-for-sale bond market value, contributing a $0.13 improvement in book value per share. Coupled with our operating results in the first 3 months, book value per share increased 1.5% to $15.01 compared to $14.79 at December 31, 2022.

我們的稅後可供出售債券市場價值增加了 400 萬美元，每股帳面價值提高了 0.13 美元。加上我們前 3 個月的經營業績，每股帳面價值從 2022 年 12 月 31 日的 14.79 美元增加 1.5% 至 15.01 美元。

I will now turn it back to Kevin.

現在我將話題轉回給凱文。

Thanks, Tony. While the first quarter earnings did not meet our targeted profitability, we are pleased with the solid execution of various strategic initiatives and the favorable impacts we are beginning to recognize. We remain confident that the transformational improvements and enhancements will lead to improved results and shareholder value in the years ahead. Thank you for your continued interest and support, and I'll now turn it over to Karin.

謝謝，托尼。雖然第一季的收益沒有達到我們的獲利目標，但我們對各項策略舉措的穩健執行以及我們開始認識到的有利影響感到滿意。我們堅信，轉型改善和提升將在未來幾年帶來更好的績效和股東價值。感謝您一直以來的關注與支持，現在我將發言權交給卡琳 (Karin)。

Thank you, Kevin. While we requested and received questions in advance of today's call, we have worked answers to these questions into our prepared remarks as appropriate. If there are any additional questions, please feel free to reach out to us. This now concludes our first quarter 2023 earnings webcast. You may now disconnect.

謝謝你，凱文。雖然我們在今天的電話會議之前請求並收到了問題，但我們已在準備好的發言中適當地回答了這些問題。如果您還有其他問題，請隨時與我們聯絡。我們的 2023 年第一季財報網路直播到此結束。您現在可以斷開連線。