Good morning. My name is Nicole and I will be your conference operator today. At this time, I would like to welcome everyone to the Donegal Group Inc's Q1 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session [Operator Instructions] Thank you. Jeff Miller, Chief Financial Officer, you may begin your conference.

Thank you good morning everyone and welcome to the Donegal Group conference call on March 31, 2016. So we are getting an echo on our end. I don’t know if that's a technical difficulty with listening at your end. I'm Jeff Miller, Chief Financial Officer and I will begin today's conference call with commentary on our quarterly financial result. Kevin Burke, our President and Chief Executive Officer, will then provide his comments on the quarter and provide an update on our business operations. Don Nikolaus, our Chairman, will then provide his perspective on the quarter before we open the line for questions. You should be aware that certain statements made in our news release today and in this conference call are forward-looking in nature and involve a number of risks and uncertainties. Please refer to our news release for more information about forward-looking statements. Further information on risk factors that could cause actual results to differ materially from those projected in the forward-looking statements is available in the report on Form 10-K that we submitted to the SEC for 2015. You can find a copy of our Form 10-K in the Investors section of our website under the SEC Filings link and reconciliation of non-GAAP information, as required by SEC regulation G, was provided in our news release which is also available on our website. We are very pleased to report net income of $11.8 million or $0.46 per share of our Class A common stock on a diluted basis for the first quarter of 2016. That net income compares favorably to the $6.9 million or $0.25 per share of our Class A common stock on a diluted basis for the first quarter of 2015. Operating income for diluted Class A share also compares favorably at $0.44 compared to $0.23…

Thank you Jeff, good morning everyone, we are very pleased with the continued growth and profitable results we achieved for the first quarter of 2016. Our focus on our long-term business goals including our commitment to sound underwriting discipline, our focus on providing best-in-class technology, being responsive to our agents and customers and our strong relationships with our independent agents have contributed to these positive results. Maintaining our competitive position within the markets that we serve is a priority for us. We routinely review rate indications and market data to maintain our focus on rate adequacy and quality underwriting, which are critical in achieving our targeted profitability levels in both commercial lines and personal lines. I will review the commercial and personal lines underwriting segments of our business, as well as touch upon our agency distribution system and provide a brief update on our technology initiatives. The commercial lines segment of our business performed very well in the first quarter, we are pleased with the new business growth that we are seeing and a consistent flow of new commercial opportunity is being presented to us. While we appreciate the increase in new business opportunities, we remain focused on our strong underwriting philosophy just to ensure long-term profitability. Our commercial lines retention levels remain strong and we believe we are in an excellent position within the marketplace to continue to grow profitably in commercial lines. In the personal lines segment of our business, we are pleased to report an increase of 5.4% net premiums written compared to the first quarter of 2015. This steady increase in premium growth along with the improved loss ratio highlights our commitments to improving a profitability level of our personal lines segments. We have implemented and we will continue to file rate increases where appropriate, we…

Thank you Kevin. Good morning everyone. Welcome to our earnings conference call. You have heard the comments of both Jeff and Kevin. I think they have summarized things very well. I'm simply going to add some brief remarks. Our significant increase in net income from the quarter totally benefitted from improved weather, but in our judgment it is substantially the result of implementing effectively our business plan and strategies over a period of years. As stated previously, we believe Donegal Group will continue to benefit from these strategies in the future and some of you might say “well, what are these strategies?” We have said it many times, but it’s extremely important. We have a strong focus on underwriting profitability and in order to do that what is in involved in addition to the rates, you need to have a very good understanding of the risk that you are ensuring and we believe that we have honed that process very well and that its certainly an important part of why our frequencies are down and our severities is somewhat better than it has been. Second, rate adequacy, I think Kevin talked about rate adequacy. Clearly we have a very strong what we call research and development department, which is part of our actuarial staff that looks at all of our lines of business to make sure that we have the right rate in the right territory for the particular risk whatever it might be. Growth and strengthening of our distribution system, Kevin gave a nice overview of that and clearly those that are selling your products and the emphasis they places upon your company is extremely important if you want to do well. Superior technology, I think that we would say that we don’t think we are second to any…

Okay, thank you Don. Nicole we are ready to open the lines for questions. Can you give some instructions there please?

[Operator Instruction] Your first question comes from the line of Meyer Shields from KBW. Your line is open.

Am I coming through?

Good morning Meyer, you are coming through now.

Okay I’m sorry. It's got a bit of an echo. So strong results right through. One quick question I had is there is almost a $3 million increase in other underwriting expenses on a year-to-year basis. Is that incentive related, or is there something unusual going on there?

It is primarily related to increased profit sharing for the agents based upon the excellent profitability on the loss ratio side. So at least half of that increase would be related to profit sharing expenses. There is also some increase to salaries expense related to employee incentive accruals as well, but it’s all underwriting based increases.

Okay. That is helpful. One thing, Jeff, I want to make sure I understood your comments. When you are talking about workers compensation, did you mention there that there was favorable settlements is that a reserve related issue or something else or did you mean something else?

It would be a favorable settlement of claims during the first quarter and those are actual settlements that were at a lesser amount than the reserves that would have been in place for those particular claims at the end of the year. The dollar amount is not a very significant number, I think for the quarter, the development was somewhere in the $1 million to $2 million range for those favorable settlements. But they were across a couple of our subsidiaries and it just happened us to go to the right direction as far as some of those were in litigation, others were just favorable settlement that we were able to reach with the claimants.

Okay. Fantastic, one last question if I can. Is it possible to get any sort of update on specific rate changes within the workers compensation book?

Well in workers’ comp as you know most rate changes are controlled by the rating bureau for the states for workers comp, and then we as a company have the right to change what is known as our loss cost multiplier and you have varying states that are may be going in opposite direction, some of the states are minor decreases, some of the states are increases. But what we do as we look at what our loss experience is, and we take the opportunity either to leave our loss cost multiplier where it is or to increase it if that appropriate. And generally, we could say that our increases in workers' comp maybe somewhere in the 2% to 3% range, because there are some state where there is actually some modest decrease and that’s caused as I said by the action of the rating bureau.

Okay. Fantastic. Thank you very much.

There are no further questions at this time.

We want to thank everyone for participating in the conference call and we are pleased to report a nice positive quarter and look forward to talking to you in July. Thank you everyone.

Thank you.

Thank you everybody, we appreciate it.

This concludes today’s conference. You may now disconnect.