DONEGAL GROUP INC - FORM 8-K/A - EX-99.4 - February 17, 2011

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EXHIBIT 99.4
Michigan Insurance Company
Balance Sheet
September 30, 2010
(Unaudited)
         
Assets
        
 
        
Investments
        
Fixed maturities, available for sale, at fair value
   $ 59,207,740  
Equity securities, available for sale, at fair value
     8,238,774  
 
      
Total investments
     67,446,514  
Cash
     641,066  
Accrued investment income
     627,573  
Premiums receivable
     29,561,117  
Reinsurance receivable
     78,209,217  
Deferred policy acquisition costs
     8,734,206  
Deferred tax asset, net
     2,202,234  
Prepaid reinsurance premiums
     37,279,911  
Other
     3,878,148  
 
      
Total assets
   $ 228,579,986  
 
      
 
        
Liabilities and Stockholders’ Equity
        
 
        
Liabilities
        
Losses and loss expenses
   $ 98,853,383  
Unearned premiums
     50,077,379  
Accrued expenses
     11,396,139  
Reinsurance balances payable
     16,705,458  
Subordinated debentures
     5,000,000  
Unearned commission income
     10,783,566  
Other
     1,134,174  
 
      
Total liabilities
     193,950,099  
 
      
 
        
Stockholders’ Equity
        
Common stock
     2,107,390  
Additional paid-in capital
     18,995,382  
Retained earnings
     13,627,075  
Treasury stock
     (99,960 )
 
      
Total stockholders’ equity
     34,629,887  
 
      
Total liabilities and stockholders’ equity
   $ 228,579,986  
 
      

1

 

Michigan Insurance Company
Statement of Income
(Unaudited)
                 
    Nine Months Ended September 30,  
    2010     2009  
Revenues:
                
Net premiums earned
   $ 19,997,658     $ 20,443,696  
Investment income, net of investment expenses
     1,192,419       1,371,849  
Realized gain
     143,952       106,111  
Other income
     1,222,643       990,183  
 
            
Total revenues
     22,556,672       22,911,839  
 
            
 
                
Expenses:
                
Net losses and loss expenses
     14,071,052       14,056,472  
Other underwriting expenses
     6,799,875       6,768,441  
Other expenses
     480,845       661,579  
 
            
Total expenses
     21,351,772       21,486,492  
 
            
 
                
Income before income taxes
     1,204,900       1,425,347  
Income taxes
     144,340       305,835  
 
            
 
                
Net income
   $ 1,060,560     $ 1,119,512  
 
            

2

 

Michigan Insurance Company
Statement of Income
(Unaudited)
                 
    Three Months Ended September 30,  
    2010     2009  
Revenues:
                
Net premiums earned
   $ 6,825,146     $ 6,755,364  
Investment income, net of investment expenses
     463,378       471,409  
Realized gain
     71,458       63,718  
Other income
     431,879       341,804  
 
            
Total revenues
     7,791,861       7,632,295  
 
            
 
                
Expenses:
                
Net losses and loss expenses
     4,927,691       4,188,417  
Other underwriting expenses
     2,047,326       2,224,389  
Other expenses
     161,059       181,650  
 
            
Total expenses
     7,136,076       6,594,456  
 
            
 
                
Income before income taxes
     655,785       1,037,839  
Income taxes
     108,685       270,548  
 
            
 
                
Net income
   $ 547,100     $ 767,291  
 
            

3

 

Michigan Insurance Company
Consolidated Statements of Cash Flows
(Unaudited)
                 
    Nine Months Ended September 30,  
    2010     2009  
Cash Flows from Operating Activities:
                
Net income
   $ 1,060,560     $ 1,119,512  
 
            
Adjustments to reconcile net income to net cash used in operating activities:
                
Depreciation and amortization
     263,901       (92,837 )
Net realized investment gains
     (143,952 )     (106,111 )
Changes in assets and liabilities:
                
Losses and loss expenses
     4,326,222       (2,072,924 )
Unearned premiums
     2,580,606       1,344,721  
Premiums receivable
     (1,630,533 )     (1,874,964 )
Deferred acquisition costs
     (11,337 )     (490,277 )
Deferred income taxes
     (179,887 )     (100,899 )
Reinsurance receivable
     (3,060,346 )     2,154,619  
Prepaid reinsurance premiums
     (1,373,960 )     (398,664 )
Accrued investment income
     35,516       (35,957 )
Reinsurance balances payable
     (338,237 )     (1,197,560 )
Current income taxes
     (458,798 )     (261,393 )
Accrued expenses
     (2,690,624 )     (65,476 )
Other, net
     328,813       (2,036,602 )
 
            
Net adjustments
     (2,352,616 )     (5,234,324 )
 
            
Net used in operating activities
     (1,292,056 )     (4,114,812 )
 
            
 
                
Cash Flows from Investing Activities:
                
Purchase of fixed maturities, available for sale
     (11,913,770 )     (36,908,218 )
Purchase of equity securities, available for sale
     (780,466 )     (1,137,796 )
Maturity of fixed maturities, available for sale
     9,821,991       32,795,668  
Sale of equity securities, available for sale
     574,233       794,809  
 
            
Net cash used in investing activities
     (2,298,012 )     (4,455,537 )
 
            
 
                
Cash Flows from Financing Activities:
                
Issuance of common stock
     41,339       161,794  
 
            
Net cash provided by financing activities
     41,339       161,794  
 
            
 
                
Net decrease in cash
     (3,548,729 )     (8,408,555 )
Cash at beginning of period
     4,189,795       8,740,475  
 
            
Cash at end of period
   $ 641,066     $ 331,920  
 
            

4

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