In a new filing with the Securities and Exchange Commission, Lancaster-County based Donegal Group Inc. says it has agreed to meet with activist shareholder Gregory Shepard to discuss his latest stock-buying offer — an offer the company rejected.
John J. Lyons, chairman of the special committee of Donegal Group Inc.’s board of directors, wrote July 9 that the committee would meet with Shepard to discuss “why (he) believe(s) such an amicable transaction would be in the best interests of Donegal Mutual and (Donegal Group), and their policyholders, shareholders, employees and other constituencies.”
Shepard has termed his latest offer to spin the company in what he believes would be a more profitable direction as an “amicable” resolution to the battle he has waged against the company’s executive leadership and board of directors for about 16 months.
He made it in mid-June, and Donegal announced in an SEC filing Friday it had rejected that offer and would not consider installing Shepard or one of his representatives to a board position as he requested.
However, Monday’s filing with the SEC announced the special committee of the board would agree to meet with Shepard at the Philadelphia law offices of Ballard Spahr LLP.
David Pittinsky, listed as the contact for the meeting and counsel for the committee, did not return a message asking whether Shepard has accepted the invitation.
The company then announced today a second consecutive sluggish quarter, which officials again blamed partly on a string of severe weather events during the spring.
Donegal reported a net income of $1.9 million, compared to net income of $2.6 million in the second quarter of 2013. Earnings per diluted share were 7 cents, off from the 10 cents of 2013 and from the 12-cent analyst estimate, according to Yahoo Finance.
“An unusually severe May hail storm in eastern Pennsylvania and surrounding areas resulted in the largest financial impact, prior to reinsurance, for the Donegal Insurance Group of any weather event in our 125-year history,” said Donegal Group President and CEO Donald H. Nikolaus.
It was a slight bounce-back from the first quarter of 2014, when the company posted a more than $634,000 loss, which company officials blamed on the number of insurance claims from the unusually harsh winter. For the year to date, the company is far behind its 2013 pace, posting a net income of about $1.3 million against the 2013 mark of about $9.1 million. Diluted earnings per share of its Class A stock are at 5 cents compared to 35 cents in 2013.
Net income of the company’s Class B stock is at 4 cents per diluted share for the year, compared with 32 cents for the first six months of 2013.
Donegal Group Inc. is the parent company of Donegal Mutual Insurance Co. and other Mid-Atlantic insurance companies. The company also owns 48.2 percent of Donegal Financial Services Corp., which owns all of the outstanding capital stock of Mount Joy-based Union Community Bank. Donegal Mutual owns the remaining 51.8 percent of the outstanding stock.
The company trades its Class A stock on the NASDAQ at DGICA and its Class B stock there at DGICB.