Daniel DeLamater: Thank you, Jeff. To follow those comments, I will add a bit more context around several important operational initiatives that support the underwriting efforts Jeff just described. As we discussed last quarter, we launched our newly realigned regional structure effective January 1, 2024, after solidifying the regional leadership in each operation. We had previously managed our business in six distinct regions, but with these changes have reduced our regional footprint to four regional operations. We expect to achieve improved operating efficiencies, increased effectiveness and greater economies of scale in this structure. Leaders in these four regions are working collaboratively with marketing, underwriting, product development and claims resources to drive a consistent strategy and working environment.
We expect this concentrated structure will drive improvement now and well into the future. And it’s within these four regions that we are executing our state strategy action plans that Jeff Hay has elaborated on just before and in previous calls. These state strategies not only guide our growth line and class of business objectives, but they also include sub-state initiatives to effectively manage the weather exposure of our property book of business. I’d like to take a moment to highlight the developing success story that originated through our state strategy sessions. We entered the state of Arizona last summer and began building relationships with independent agents across the state. We are extremely pleased with the engagement of these agency partners and thank our local team for their energy and their efforts.
The team is aligned on our strategic plan for the state of Arizona. And while our 2024 premium growth goals are modest in relation to our overall book, early results are promising. In the first three months of 2024, we have nearly surpassed the amount of new quote activity seen in the final five months of 2023. Even more impressive, we have already surpassed the amount of new premium written in this same time period. All the while, our team remains engaged on the quality of submissions, quality of new business written and continued engagement with our independent agency partners for book management and profitable growth. We expect Arizona will contribute to the growth and success of our Southwest region over time. The execution by our team is tangible and we are recognizing disproportionate growth in our 13 growth states, modest growth in our six states labeled maintain and significant premium reduction in the five states identified for profit improvement or exit.
And likewise, our loss ratios continue to track in those states, confirming our desire to grow in our growth states and deemphasize our profit improvement states. Our national account team supports our regional teams and these state strategies. We have built an engaging, small national accounts marketing team to work alongside our regional marketing, underwriting and product teams to accomplish our unified state and regional objectives. This team is a dedicated contact and valuable resource for the various local, state, regional and national leaders in our 12 strategically identified national relationships. Agencies from these groups accounted for over 37% of our new business in the first quarter and nearly 35% of our overall in-force book of business.
We’re thankful for the support and commitment from all of our independent agency partners and these national account groups certainly provide a significant opportunity for future profitable growth as we strive to become the regional carrier of choice in their organizations. Before I turn it to Tony, I would like to provide an update on our targeted expense reduction initiative. As we expect to reach the peak expense impact related to our multiyear systems modernization project in 2024 with approximately 1.3 points of expense ratio impact from that project this year, we expect to achieve meaningful offsetting cost reductions throughout this year and beyond through intentional and targeted expense management efforts. Our senior leadership team has worked together to identify tangible expense savings in several areas of our organization.
We have created an accountability framework so that each of our senior leaders can track and report their progress toward their committed expense reductions. The planning process for this initiative has been significant and we view the execution as paramount to the achievement of our long-term goal to achieve sustained excellent financial performance. In the end, I’m pleased with the many ways our team continues to refine our focus on operational efficiencies and excellence. And with that, I’ll turn it over to Tony for an investment update. Tony?
Anthony Viozzi: Thank you, Dan. Our current investment strategy is to minimize credit risk by purchasing high-quality securities and taking advantage of the higher reinvestment interest rates that have continued to provide strength in our investment portfolio. During the first quarter of 2024, net investment income of $11 million increased 16.1% from the prior year quarter. The average tax equivalent yield was 3.40%, up from 3% for the first quarter of 2023. This is the highest average portfolio yield we have seen in over a decade due to increased market rates as well as our ongoing shift out of U.S. treasuries, municipal bonds and equities into higher-yielding cash equivalents, mortgage-backed securities and agency debt. Portfolio reinvestments in the first quarter resulted in an incremental boost in the average yield on those funds of approximately 85 basis points compared to maturing investments.
We are currently investing new funds at rates close to 5.50%, representing a spread of more than 100 basis points from the yield on the second quarter maturities. We are projecting approximately $115 million of bond reinvestment cash flow for the next 12 months that is currently invested at an average yield of 3.85%. Net investment gains of $2.1 million for the first quarter of 2024 compared to net losses of $331,000 for the first quarter of 2023, with both amounts reflecting the change in market value of modest equity investment holdings at the end of their respective quarters. As a reminder, we reduced our equity holdings in 2023 to capitalize on strong fixed income rates. We remain opportunistic in our investment allocation decisions. And depending on market dynamics, we may consider increasing our investment allocation and equities in the future.
At March 31, 2024, our book value per share was $14.53 compared to $14.39 at December 31, 2023, for a $0.14 increase from year-end. The increase in book value was driven by our quarterly net income that was slightly offset by unrealized losses and our available for sale fixed income portfolio during the quarter that decreased our book value by $0.05 per share from December 31, 2023. We expect to maintain our historically conservative investment approach, emphasizing preservation and expansion of capital, while seeking to limit volatility and ensure the investment portfolio’s resiliency to support our insurance operations. With that, I will now turn it back to Kevin for closing remarks.
Kevin Burke: Thanks, Tony. As you’ve heard throughout the call today, our entire team is focused on execution. We have developed clear strategic goals. And there are many tactical initiatives in various stages of completion, all of which we expect will help us achieve growth and performance objectives as they are fully implemented. This is a critical time for Donegal as we are working diligently to complete the final releases of our systems modernization project that began over five years ago. The significant efforts our team has put forth over the past few years to reinvent our company and provide a stable modern platform are beginning to support our future growth. We truly believe we are at an inflection point where those efforts will translate into improved operating performance. We look forward to providing further updates on the progress in our next quarterly call. Thank you for joining us today. I’ll turn the call back over to Karin.
Karin Daly: 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. If there are any additional questions, please feel free to reach out to us. This now concludes the Donegal Group first quarter 2024 earnings webcast. You may now disconnect.
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