DGICB

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Excellent underwriting results with combined ratio improving to 95.6% from 97.7% year-over-year, driven by lower weather-related losses and favorable prior-year reserve development. Net income surged 32% to $22.3 million in Q2 2026, supported by strong investment income growth of 16% and net investment gains. Commercial lines new business volume met growth goals, with 69% of new business in highly targeted classes, and retention improved to 82.3% excluding the farm exit impact. Personal lines new business written increased 118% year-over-year, signaling a reversal in premium decline and improving momentum. Investment portfolio yield improved to 3.99% tax-equivalent, with strategic bond swaps and reinvestment at 5.45% projected to boost future income. Net premiums earned decreased 4% and net premiums written fell 3.2%, reflecting softening market conditions and lower retention levels. Expense ratio rose to 35.8% from 32.2% due to higher incentive compensation, legacy system costs, and a lower premium base. Large fire losses increased severity by 45%, contributing 6.7 points to the loss ratio, with one claim exceeding the $4 million reinsurance retention. Personal lines net premiums written declined 9.7% in Q2, though improving from a 15.3% drop a year ago. Commercial lines rate increases slowed to 7.8% (excluding workers' comp), and retention remains challenged by competitive pressures. Warning! GuruFocus has detected 5 Warning Sign with BOM:530549. Is DGICA fairly valued? Test your thesis with our free DCF calculator. Q: What drove the significant improvement in underwriting results for the second quarter of 2026?A: Kevin Burke (CEO) reported excellent underwriting results, with the combined ratio improving to 95.6% from 97.7% in the prior year quarter. This was largely due to lower-than-average weather-related losses, which were $11.9 million (5.3 points) compared to $25.8 million (11.1 points) in Q2 2025, and more favorable prior-year reserve development of $7.8 million (3.5 points), offset partially by higher large fire losses and an elevated expense ratio. Q: How is the company addressing the softening market conditions and competitive pressures?A: Kevin Burke (CEO) emphasized that despite competitive pressures, the company achieved its commercial lines new business premium growth goals for the first half of 2026, with positive momentum building in personal lines. He stressed a commitment to maintaining underwriting and pricing discipline to achieve target profitability levels, focusing on retention and rate achievement metrics, which are the areas facing the greatest challenges in the current market. Q: What were the key drivers behind the increase in the expense ratio to 35.8%?A: Dan DeLamater (COO) explained that the elevated expense ratio was due to several intentional factors: higher projected incentive compensation for agents and employees based on improved underwriting performance, ongoing costs to maintain the legacy mainframe platform until conversion is complete, allocated depreciation costs from the multi-year systems transformation project, and the impact of a lower net premiums earned base. He projected technology-related expenses will moderate over the next few years as legacy systems are decommissioned. Q: Can you provide details on the commercial lines segment performance and the impact of large fire losses?A: Jeffery Hay (Chief Underwriting Officer) noted commercial lines net premiums written grew 0.8%, with new business volume up slightly and 69% written in highly targeted classes. The segment's results improved due to lower weather impact, favorable prior-year reserve development, and a stable core loss ratio. However, large fire losses contributed 7 points to the commercial multi-peril loss ratio, with a 45% increase in severity due to a few large claims, one exceeding the $4 million reinsurance retention, though no specific underwriting deficiencies were identified. Q: What progress is being made in the personal lines segment to reverse premium declines?A: Jeffery Hay (Chief Underwriting Officer) reported an excellent quarter of profitability driven by strong personal auto results and favorable weather in homeowners. New business written totaled $2.6 million, a 63% increase over Q1 2026 and a 118% increase over Q2 2025. This helped improve net premiums written from a 15.3% decline in the prior year quarter to a 9.7% decline in Q2 2026, with the real retention rate holding steady at a healthy 89%. Q: How is the company's investment portfolio performing and what is the outlook for investment income?A: Tony Viozzi (Chief Investment Officer) reported net investment income increased 16% to $14.5 million, with the average tax-equivalent yield rising to 3.99% from 3.64%. The company reinvested about $90 million in bonds at 5.45%, projected to increase net investment income by upwards of $1 million annually. He also noted a strategic bond swap that increased yield by 225 basis points on $30 million, and projected about $90 million in portfolio cash flow over the next 12 months at a current average yield of 4.25%. Q: What is the company's strategy regarding umbrella liability limits and casualty exposures?A: Jeffery Hay (Chief Underwriting Officer) stated that an ongoing initiative to reduce net retained umbrella liability limits is well underway, resulting in significant reductions in casualty exposures during the second quarter. He expects these reductions in net retained limits to continue throughout the remainder of the year as part of the company's risk management strategy. Q: What are the current rate increase trends and how do they compare to loss cost trends?A: Jeffrey Miller (CFO) reported that rate increases achieved in Q2 2026 averaged 5.2% in total and 6% excluding workers' compensation. Jeffery Hay added that commercial lines rate and exposure increases, excluding workers' comp, slowed to 7.8%, while personal lines rate exposure increases held steady at 3.6%. The company considers itself generally rate-adequate across lines of business and continues to drive rate increases in challenging areas to keep pace with loss costs. Q: How are the company's technology and efficiency initiatives progressing?A: Kevin Burke (CEO) confirmed that the planned migration of Guidewire claims and billing systems to the cloud platform is on track for the first half of 2027, with several GenAI solutions expected to be implemented to increase claims operations efficiency. Dan DeLamater (COO) added that two systems enhancements were launched in the first half of 2026, including the RightBiz Express system and an agency portal refresh, to improve ease of doing business for independent agents. Q: What was the impact of prior-year reserve development on the quarterly results?A: Jeffrey Miller (CFO) detailed that the insurance subsidiaries experienced $7.8 million of net favorable development, a 3.5-point reduction in the loss ratio, compared to $3 million (1.3 points) in the prior year quarter. The favorable development was spread across personal auto ($2.6 million), workers' compensation ($2.4 million), commercial auto ($1.2 million), homeowners ($1.1 million), and commercial multi-peril ($700,000). For the complete transcript of the earnings call, please refer to the full earnings call transcript.

MARIETTA, Pa., July 30, 2026 (GLOBE NEWSWIRE) -- Donegal Group Inc. (NASDAQ: DGICA) and (NASDAQ: DGICB) today reported its financial results for the second quarter and first half of 2026. Significant Items for Second Quarter of 2026 (all comparisons to second quarter of 2025): Net premiums earned decreased 4.0% to $222.6 million Combined ratio of 95.6%, compared to 97.7% Net income of $22.3 million, or 60 cents per diluted Class A share, compared to $16.9 million, or 46 cents per diluted Class A share Net investment gains (after tax) of $2.6 million, or 7 cents per diluted Class A share, compared to $1.2 million, or 3 cents per diluted Class A share, are included in net income Annualized return on average equity of 13.6%, compared to 11.3% Book value per share of $17.98 at June 30, 2026, compared to $16.62 at June 30, 2025 Financial Summary 1The “Definitions of Non-GAAP Financial Measures” section of this release defines and reconciles data that we prepare on an accounting basis other than U.S. generally accepted accounting principles (“GAAP”). Management Commentary Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., stated, “Our net premiums earned for the second quarter of 2026 reflected a continuation of challenging trends and market conditions we experienced last quarter. Against that backdrop, we are pleased to report solid quarterly results that provided further growth in our book value to $17.98 per share at June 30, 2026, compared to $17.54 at the end of the first quarter of 2026. “Net premiums written1 for our commercial lines business segment grew by 0.8% compared to the prior-year quarter, resulting primarily from improved new business production that was mostly offset by lower renewal premium increases and retention levels. As expected, we experienced a continuing decline in our personal lines net premiums written that we expect will gradually taper over the course of 2026 as actions we have taken to slow and eventually reverse the decline take effect. We remain committed to maintaining underwriting and pricing discipline as we pursue new, high-quality accounts and seek to retain existing accounts at adequate pricing levels. “On the whole, our underwriting results for the second quarter of 2026 were solid, which we primarily attribute to favorable core loss ratios in both our commercial and personal lines segments, lower-than-average weather-related losses and favorable prior-year reserve development, offset partially by a moderate increase in large fire losses. Solid underwriting performance and enhanced investment income allowed us to continue growing our book value in the second quarter. “While we face a softening phase of the insurance cycle, we have established a strong foundation over the past several years, and we continue to believe that the effective ongoing execution of our strategies will enhance stockholder value over time. For example, we are beginning to realize benefits from our ongoing emphasis on enhanced engagement with our independent agents as a means of attracting profitable growth opportunities.” Insurance Operations Donegal Group Inc. is an insurance holding company whose insurance subsidiaries and affiliates offer property and casualty lines of insurance in three Mid-Atlantic states (Delaware, Maryland and Pennsylvania), five Southern states (Georgia, North Carolina, South Carolina, Tennessee and Virginia), eight Midwestern states (Illinois, Indiana, Iowa, Michigan, Nebraska, Ohio, South Dakota and Wisconsin) and five Southwestern states (Arizona, Colorado, New Mexico, Texas and Utah). Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group Inc. conduct business together as the Donegal Insurance Group. Net Premiums Written The 3.2% decrease in net premiums written for the second quarter of 2026 compared to the second quarter of 2025, as shown in the table above, represents the net combination of a 0.8% increase in commercial lines net premiums written and a 9.7% decrease in personal lines net premiums written. The $7.4 million decrease in net premiums written for the second quarter of 2026 compared to the second quarter of 2025 included: Commercial Lines: $1.2 million increase that we attribute primarily to new business writings, offset partially by a lower level of renewal premium increases and retention. Personal Lines: $8.6 million decrease that we attribute primarily to modestly higher attrition, offset partially by more modest renewal premium rate increases and incremental growth in new business writings. Underwriting Performance We evaluate the performance of our commercial lines and personal lines segments primarily based upon the underwriting results of our insurance subsidiaries as determined under statutory accounting practices. The following table presents comparative details with respect to the GAAP and statutory combined ratios1 for the three and six months ended June 30, 2026 and 2025: Loss Ratio For the second quarter of 2026, the loss ratio decreased to 59.5%, compared to 65.1% for the second quarter of 2025. For the commercial lines segment, the core loss ratio, which excludes weather-related losses, large fire losses and net development of reserves for losses incurred in prior accident years, of 54.0% for the second quarter of 2026 remained relatively consistent with 54.5% for the second quarter of 2025. For the personal lines segment, the core loss ratio of 45.8% for the second quarter of 2026 increased modestly from 43.3% for the second quarter of 2025. Weather-related losses were $11.9 million, or 5.3 percentage points of the loss ratio, for the second quarter of 2026, compared to $25.8 million, or 11.1 percentage points of the loss ratio, for the second quarter of 2025. Weather-related loss activity for the second quarter of 2026 was much lower than our previous five-year average of $20.3 million, or 9.4 percentage points of the loss ratio, for second-quarter weather-related losses. Large fire losses, which we define as individual fire losses in excess of $50,000, for the second quarter of 2026 were $15.0 million, or 6.7 percentage points of the loss ratio. That amount was higher than the large fire losses of $12.1 million, or 5.2 percentage points of the loss ratio, for the second quarter of 2025. We experienced an increase in commercial property fire losses that was partially offset by a decrease in homeowners fire losses compared to the prior-year quarter. Net favorable development of reserves for losses incurred in prior accident years reduced the loss ratio by 3.5 percentage points for the second quarter of 2026 compared to 1.3 percentage points for the second quarter of 2025. Our insurance subsidiaries experienced favorable development primarily in the personal automobile, workers’ compensation, commercial automobile and homeowners lines of business. Expense Ratio The expense ratio was 35.8% for the second quarter of 2026, compared to 32.2% for the second quarter of 2025. The increase in the expense ratio primarily reflected the impacts of higher underwriting-based incentive costs for agents and employees as well as higher technology-related expenses and a lower base of net premiums earned compared to the prior-year quarter. Investment Operations Our investment strategy is to generate an appropriate amount of after-tax income on its invested assets while minimizing credit risk through investment in high-quality securities. As a result, we had invested 95.0% of our consolidated investment portfolio in diversified, highly rated and marketable fixed-maturity securities at June 30, 2026. Net investment income of $14.5 million for the second quarter of 2026 increased 15.6% compared to $12.5 million for the second quarter of 2025. The increase in net investment income primarily reflected an increase in average investment yield and higher average invested assets relative to the prior-year second quarter. Net investment gains of $3.3 million for the second quarter of 2026 were primarily related to unrealized gains in the fair value of equity securities held at June 30, 2026, offset partially by net realized investment losses on the sale of available-for-sale fixed-maturity securities. Net investment gains of $1.5 million for the second quarter of 2025 were primarily related to unrealized gains in the fair value of equity securities held at June 30, 2025, offset partially by net realized investment losses on the sale of available-for-sale fixed-maturity securities. Our book value per share was $17.98 at June 30, 2026, compared to $17.33 at December 31, 2025, with the increase related to net income, offset partially by cash dividends declared as well as $3.3 million of after-tax unrealized losses within our available-for-sale fixed-maturity portfolio during 2026 that decreased our book value by $0.09 per share. Definitions of Non-GAAP Financial Measures We prepare our consolidated financial statements on the basis of GAAP. Our insurance subsidiaries also prepare financial statements based on statutory accounting principles state insurance regulators prescribe or permit (“SAP”). In addition to using GAAP-based performance measurements, we also utilize certain non-GAAP financial measures that we believe provide value in managing our business and for comparison to the financial results of our peers. These non-GAAP measures are net premiums written, operating income or loss and statutory combined ratio. Net premiums written and operating income or loss are non-GAAP financial measures investors in insurance companies commonly use. We define net premiums written as the amount of full-term premiums our insurance subsidiaries record for policies effective within a given period less premiums our insurance subsidiaries cede to reinsurers. We define operating income or loss as net income or loss excluding after-tax net investment gains or losses, after-tax restructuring charges and other significant non-recurring items. Because our calculation of operating income or loss may differ from similar measures other companies use, investors should exercise caution when comparing our measure of operating income or loss to the measure of other companies. The following table provides a reconciliation of net premiums earned to net premiums written for the periods indicated: The following table provides a reconciliation of net income to operating income for the periods indicated: The statutory combined ratio is a non-GAAP standard measurement of underwriting profitability that is based upon amounts determined under SAP. The statutory combined ratio is the sum of: the statutory loss ratio, which is the ratio of calendar-year incurred losses and loss expenses, excluding anticipated salvage and subrogation recoveries, to premiums earned; the statutory expense ratio, which is the ratio of expenses incurred for net commissions, premium taxes and underwriting expenses to premiums written; and the statutory dividend ratio, which is the ratio of dividends to holders of workers’ compensation policies to premiums earned. The statutory combined ratio does not reflect investment income, federal income taxes or other non-operating income or expense. A statutory combined ratio of less than 100% generally indicates underwriting profitability. Dividend Information On July 16, 2026, we declared a regular quarterly cash dividend of $0.1925 per share for our Class A common stock and $0.175 per share for our Class B common stock, which are payable on August 14, 2026 to stockholders of record as of the close of business on July 31, 2026. Pre-Recorded Webcast At approximately 8:30 am ET on Thursday, July 30, 2026, we will make available in the Investors section of our website a pre-recorded audio webcast featuring management commentary on our quarterly results and general business updates. You may listen to the pre-recorded webcast by accessing the link on our website at http://investors.donegalgroup.com. A supplemental investor presentation is also available via our website. About the Company Donegal Group Inc. is an insurance holding company whose insurance subsidiaries and affiliates offer property and casualty lines of insurance in certain Mid-Atlantic, Midwestern, Southern and Southwestern states. Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group Inc. conduct business together as the Donegal Insurance Group. The Donegal Insurance Group has an A.M. Best rating of A (Excellent). The Class A common stock and Class B common stock of Donegal Group Inc. trade on the NASDAQ Global Select Market under the symbols DGICA and DGICB, respectively. We are focused on several primary strategies, including achieving sustained excellent financial performance, advancing our operational and digital capabilities, capitalizing on opportunities to grow profitably and providing superior experiences to our agents, policyholders and employees. Safe Harbor We base all statements contained in this release that are not historic facts on our current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Forward-looking statements we make may be identified by our use of words such as “will,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “seek,” “estimate” and similar expressions. Our actual results could vary materially from our forward-looking statements. The factors that could cause our actual results to vary materially from the forward-looking statements we have previously made include, but are not limited to, adverse litigation and other industry trends that could increase our loss costs (including distracted driving, higher rates of litigation, higher judicial awards and escalating medical, automobile and property repair costs, including due to tariffs), adverse and catastrophic weather events and other natural disasters (including from changing climate conditions), man-made disasters (such as terrorism), our ability to maintain profitable operations (including our ability to underwrite risks effectively and charge adequate premium rates), the adequacy of the loss and loss expense reserves of our insurance subsidiaries, the successful operation (including cost, security and availability) of the information technology systems our insurance subsidiaries utilize, the successful development and deployment of new technologies (including artificial intelligence, data modernization and cloud migration) to allow our insurance subsidiaries to compete effectively, the loss or significant restriction of the use of specific rating attributes, analytical models or technologies our insurance subsidiaries use in their pricing and underwriting, increases in assessments pursuant to guaranty fund laws, business and economic conditions in the areas in which we and our insurance subsidiaries operate (including from pandemics), interest rates and other factors impacting the investment portfolios of our insurance subsidiaries, competition from various insurance and other financial businesses (including changes in consumer preferences for insurance distribution channels), the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements, our ability to attract and retain independent insurance agents (and their ability to maintain adequate levels of premium volume and quality), changes in our A.M. Best rating and the other risks that we describe from time to time in our filings with the Securities and Exchange Commission. We disclaim any obligation to update such statements or to announce publicly the results of any revisions that we may make to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. Investor Relations Contacts Jeremy Hellman, Vice President, The Equity Group Inc.Phone: (212) 836-9626E-mail: [email protected] Jeffrey D. Miller, Executive Vice President & Chief Financial Officer Phone: (717) 426-1931E-mail: [email protected] Financial Supplement

MARIETTA, Pa., April 30, 2026 (GLOBE NEWSWIRE) -- Donegal Group Inc. (NASDAQ: DGICA) and (NASDAQ: DGICB) today reported its financial results for the first quarter of 2026. Significant Items for First Quarter of 2026 (all comparisons to first quarter of 2025): Net premiums earned decreased 4.9% to $221.4 million Combined ratio of 99.8%, compared to 91.6% Net income of $11.5 million, or $0.31 per diluted Class A share, compared to $25.2 million, or $0.71 per diluted Class A share Annualized return on average equity of 7.1%, compared to 17.8% Book value per share of $17.54 at March 31, 2026, compared to $16.24 at March 31, 2025 Financial Summary 1 The “Definitions of Non-GAAP Financial Measures” section of this release defines and reconciles data that we prepare on an accounting basis other than U.S. generally accepted accounting principles (“GAAP”). Management Commentary Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., stated, “Our first quarter of 2026 results reflected solid underlying operating performance despite softening conditions in the insurance markets we serve. At a high level, the past few years have been characterized by generally favorable conditions for our industry, and, as is often the case, a softening market has emerged as the availability of capital has led industry participants to reduce rates to win and retain accounts. Against this challenging backdrop, we remain committed to maintaining underwriting and pricing discipline as we pursue new, high-quality accounts and seek to retain existing accounts at adequate pricing levels. “Net premiums written1 for our commercial lines business segment grew by 2.2% compared to the prior-year quarter, as we began to gain traction in new business production despite competitive market conditions, supported by solid retention and continued renewal premium increases in lines other than workers’ compensation. We experienced a continued decline in our personal lines net premiums written, which we believe will gradually taper over the course of 2026 as actions we have taken to slow the decline take effect. “While our underwriting results for the first quarter of 2026 lagged the unusually favorable results we achieved for the prior-year quarter, we primarily attribute the lower profitability to higher-than-average weather-related losses and the impact of several large current-year and prior-year losses. We are pleased that our core loss ratios for both the commercial and personal lines segments improved modestly compared to the first quarter of 2025, reflecting solid underlying performance within our book of business. “We believe we are well positioned to build value for all of our constituents as we navigate the current market cycle. Coupling excellent service to our independent agents and policyholders with prudent underwriting and advancing operational capabilities, we expect to build upon the strong foundation we have established over the past several years. We believe that the effective ongoing execution of our strategies will enhance stockholder value over time.” Insurance Operations Donegal Group is an insurance holding company whose insurance subsidiaries and affiliates offer property and casualty lines of insurance in three Mid-Atlantic states (Delaware, Maryland and Pennsylvania), five Southern states (Georgia, North Carolina, South Carolina, Tennessee and Virginia), eight Midwestern states (Illinois, Indiana, Iowa, Michigan, Nebraska, Ohio, South Dakota and Wisconsin) and five Southwestern states (Arizona, Colorado, New Mexico, Texas and Utah). Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group conduct business together as the Donegal Insurance Group. Net Premiums Written The 3.2% decrease in net premiums written for the first quarter of 2026 compared to the first quarter of 2025, as shown in the table above, represents the net combination of a 2.2% increase in commercial lines net premiums written and a 13.1% decrease in personal lines net premiums written. The $7.8 million decrease in net premiums written for the first quarter of 2026 compared to the first quarter of 2025 included: Commercial Lines: $3.5 million increase that we attribute primarily to new business writings, solid retention and a continuation of renewal premium increases in lines other than workers’ compensation. Personal Lines: $11.3 million decrease that we attribute primarily to lower new business writings, offset partially by modest renewal premium rate increases and solid retention. Underwriting Performance We evaluate the performance of our commercial lines and personal lines segments primarily based upon the underwriting results of our insurance subsidiaries as determined under statutory accounting practices. The following table presents comparative details with respect to the GAAP and statutory combined ratios1 for the three months ended March 31, 2026 and 2025: Loss Ratio For the first quarter of 2026, the loss ratio increased to 64.1%, compared to 56.7% for the first quarter of 2025. The core loss ratio, which excludes weather-related losses, large fire losses and net favorable development of reserves for losses incurred in prior accident years, was 53.4% for the first quarter of 2026, compared to 54.2% for the first quarter of 2025. For the commercial lines segment, the core loss ratio of 57.6% for the first quarter of 2026 decreased modestly from 58.3% for the first quarter of 2025, primarily as the result of ongoing premium rate increases in all lines except workers’ compensation. For the personal lines segment, the core loss ratio of 46.5% for the first quarter of 2026 decreased from 48.7% for the first quarter of 2025, due largely to the favorable impact of premium rate increases on net premiums earned for that segment. Weather-related losses were $17.2 million, or 7.8 percentage points of the loss ratio, for the first quarter of 2026, compared to $8.6 million, or 3.7 percentage points of the loss ratio, for the first quarter of 2025. The weather-related loss ratio for the first quarter of 2026 was well above our previous five-year first-quarter average of 4.5 percentage points of the loss ratio. Large fire losses, which we define as individual fire losses in excess of $50,000, for the first quarter of 2026 were $12.2 million, or 5.5 percentage points of the loss ratio. That amount was substantially higher than the large fire losses of $7.7 million, or 3.3 percentage points of the loss ratio, for the first quarter of 2025. We primarily attribute the increase to higher loss frequency and severity compared to the prior-year quarter. We experienced a $2.3 million increase in commercial property fire losses and a $2.2 million increase in homeowner fire losses. Net favorable development of reserves for losses incurred in prior accident years of $5.7 million decreased the loss ratio for the first quarter of 2026 by 2.6 percentage points, compared to $10.5 million that decreased the loss ratio for the first quarter of 2025 by 4.5 percentage points. Our insurance subsidiaries experienced favorable development primarily in the commercial automobile and personal automobile lines of business, offset partially by unfavorable development in commercial multi-peril and commercial other liability for the first quarter of 2026. Expense Ratio The expense ratio was 35.4% for the first quarter of 2026, compared to 34.6% for the first quarter of 2025. The increase in the expense ratio primarily reflected the impact of lower net premiums earned upon which the ratio is based. The impact from costs that Donegal Mutual Insurance Company allocated to our insurance subsidiaries related to its systems modernization project represented approximately 1.6 percentage points of the expense ratio for the first quarter of 2026. We expect that the expense ratio impact of allocated costs related to the project will be 1.4 percentage points for the full year of 2026, subsiding gradually over the next several years. Investment Operations Donegal Group’s investment strategy is to generate an appropriate amount of after-tax income on its invested assets while minimizing credit risk through investment in high-quality securities. As a result, we had invested 95.3% of our consolidated investment portfolio in diversified, highly rated and marketable fixed-maturity securities at March 31, 2026. Net investment income of $14.3 million for the first quarter of 2026 increased 19.2% compared to $12.0 million for the first quarter of 2025. The increase in net investment income reflected an increase in average investment yield and higher average invested assets relative to the prior-year first quarter. Net investment losses were minimal for the first quarters of 2026 and 2025. We attribute the losses to a decrease in the market value of the equity securities we held at the end of the respective periods. Our book value per share was $17.54 at March 31, 2026, compared to $17.33 at December 31, 2025, with the increase partially related to net income, offset partially by $4.1 million of after-tax unrealized losses within our available-for-sale fixed-maturity portfolio during 2026 that decreased our book value by $0.12 per share. Consistent with our historical practice, we did not declare any cash dividends in the first quarter of 2026 or 2025. Definitions of Non-GAAP Financial Measures We prepare our consolidated financial statements on the basis of GAAP. Our insurance subsidiaries also prepare financial statements based on statutory accounting principles state insurance regulators prescribe or permit (“SAP”). In addition to using GAAP-based performance measurements, we also utilize certain non-GAAP financial measures that we believe provide value in managing our business and for comparison to the financial results of our peers. These non-GAAP measures are net premiums written, operating income or loss and statutory combined ratio. Net premiums written and operating income or loss are non-GAAP financial measures investors in insurance companies commonly use. We define net premiums written as the amount of full-term premiums our insurance subsidiaries record for policies effective within a given period less premiums our insurance subsidiaries cede to reinsurers. We define operating income or loss as net income or loss excluding after-tax net investment gains or losses, after-tax restructuring charges and other significant non-recurring items. Because our calculation of operating income or loss may differ from similar measures other companies use, investors should exercise caution when comparing our measure of operating income or loss to the measure of other companies. The following table provides a reconciliation of net premiums earned to net premiums written for the periods indicated: The following table provides a reconciliation of net income to operating income for the periods indicated: The statutory combined ratio is a non-GAAP standard measurement of underwriting profitability that is based upon amounts determined under SAP. The statutory combined ratio is the sum of: the statutory loss ratio, which is the ratio of calendar-year incurred losses and loss expenses, excluding anticipated salvage and subrogation recoveries, to premiums earned; the statutory expense ratio, which is the ratio of expenses incurred for net commissions, premium taxes and underwriting expenses to premiums written; and the statutory dividend ratio, which is the ratio of dividends to holders of workers’ compensation policies to premiums earned. The statutory combined ratio does not reflect investment income, federal income taxes or other non-operating income or expense. A statutory combined ratio of less than 100% generally indicates underwriting profitability. Dividend Information On April 16, 2026, we declared regular quarterly cash dividends of $0.1925 per share for our Class A common stock and $0.175 per share for our Class B common stock, which are payable on May 15, 2026 to stockholders of record as of the close of business on May 1, 2026. Pre-Recorded Webcast At approximately 8:30 am EDT on Thursday, April 30, 2026, we will make available in the Investors section of our website a pre-recorded audio webcast featuring management commentary on our quarterly results and general business updates. You may listen to the pre-recorded webcast by accessing the link on our website at http://investors.donegalgroup.com. A supplemental investor presentation is also available via our website. About the Company Donegal Group Inc. is an insurance holding company whose insurance subsidiaries and affiliates offer property and casualty lines of insurance in certain Mid-Atlantic, Midwestern, Southern and Southwestern states. Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group Inc. conduct business together as the Donegal Insurance Group. The Donegal Insurance Group has an A.M. Best rating of A (Excellent). The Class A common stock and Class B common stock of Donegal Group Inc. trade on the NASDAQ Global Select Market under the symbols DGICA and DGICB, respectively. We are focused on several primary strategies, including achieving sustained excellent financial performance, advancing our operational and digital capabilities, capitalizing on opportunities to grow profitably and providing superior experiences to our agents, policyholders and employees. Safe Harbor We base all statements contained in this release that are not historic facts on our current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Forward-looking statements we make may be identified by our use of words such as “will,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “seek,” “estimate” and similar expressions. Our actual results could vary materially from our forward-looking statements. The factors that could cause our actual results to vary materially from the forward-looking statements we have previously made include, but are not limited to, adverse litigation and other industry trends that could increase our loss costs (including distracted driving, higher rates of litigation, higher judicial awards and escalating medical, automobile and property repair costs, including due to tariffs), adverse and catastrophic weather events and other natural disasters (including from changing climate conditions), man-made disasters (such as terrorism), our ability to maintain profitable operations (including our ability to underwrite risks effectively and charge adequate premium rates), the adequacy of the loss and loss expense reserves of our insurance subsidiaries, the successful operation (including cost, security and availability) of the information technology systems our insurance subsidiaries utilize, the successful development and deployment of new technologies (including artificial intelligence, data modernization and cloud migration) to allow our insurance subsidiaries to compete effectively, the loss or significant restriction of the use of specific rating attributes, analytical models or technologies our insurance subsidiaries use in their pricing and underwriting, increases in assessments pursuant to guaranty fund laws, business and economic conditions in the areas in which we and our insurance subsidiaries operate (including from pandemics), interest rates and other factors impacting the investment portfolios of our insurance subsidiaries, competition from various insurance and other financial businesses (including changes in consumer preferences for insurance distribution channels), the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements, our ability to attract and retain independent insurance agents (and their ability to maintain adequate levels of premium volume and quality), changes in our A.M. Best rating and the other risks that we describe from time to time in our filings with the Securities and Exchange Commission. We disclaim any obligation to update such statements or to announce publicly the results of any revisions that we may make to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. Investor Relations Contacts Jeremy Hellman, Vice President, The Equity Group Inc. Phone: (212) 836-9626 E-mail: [email protected] Jeffrey D. Miller, Executive Vice President & Chief Financial Officer Phone: (717) 426-1931 E-mail: [email protected] Financial Supplement

This article first appeared on GuruFocus. Release Date: February 19, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Donegal Group Inc (NASDAQ:DGICA) achieved a record net income of $79.3 million for the full year of 2025, marking a 56% increase compared to 2024. The company reported a combined ratio of 95.4% for 2025, showing improvement from 98.6% in 2024, indicating better underwriting results. Net investment income increased by 17.2% for the full year of 2025, driven by strategic bond portfolio management and higher market rates. The company completed its multi-year systems transformation project, which is expected to enhance operational efficiency and customer service. Donegal Group Inc (NASDAQ:DGICA) maintained strong retention rates and achieved rate adequacy across its lines of business, supporting long-term profitability. Net premiums earned decreased by 4.1% in the fourth quarter of 2025, reflecting challenges in premium growth. The expense ratio increased to 34.9% in the fourth quarter of 2025, up from 32.8% in the prior year quarter, due to higher performance-based incentives and lower premium volume. The company experienced a 12.7% decrease in personal lines net premiums written, indicating challenges in this segment. Large fire losses contributed significantly to the loss ratio, with a 6.2% point impact in the fourth quarter of 2025. Net income for the fourth quarter of 2025 decreased to $17.2 million from $24 million in the same quarter of 2024, primarily due to lower net premiums earned and higher expenses. Warning! GuruFocus has detected 8 Warning Sign with DE. Is DGICA fairly valued? Test your thesis with our free DCF calculator. Q: How did Donegal Group perform financially in the fourth quarter of 2025 compared to the previous year? A: Jeff Miller, CFO, reported that net premiums earned decreased by 4.1% to $226.9 million, and net premiums written decreased by 3.4%. The combined ratio increased to 96.3% from 92.9% in the prior year, primarily due to a 1.3% increase in the loss ratio and a 2.1% increase in the expense ratio. Net income for the quarter was $17.2 million, down from $24 million in the fourth quarter of 2024. Q: What were the key factors affecting Donegal Group's underwriting results in 2025? A: Jeff Hay, Chief Underwriting Officer, highlighted that the improvement in underwriting results was due to strategic actions and disciplined underwriting. The commercial lines saw a modest increase in net premiums written, while personal lines experienced a decline. The core loss ratio improved by 2.6% points, and weather-related losses were lower than the five-year average. Q: What are Donegal Group's plans for technology transformation? A: Kevin Burke, CEO, stated that the company completed its multi-year systems transformation project and is now focusing on migrating its GuideWire claims, billing, and policy administration applications to cloud-based versions. This migration is expected to be completed by early 2027 and will enable the company to leverage Gen AI tools and applications. Q: How did Donegal Group's investment portfolio perform in 2025? A: Tony Viazzi, Chief Investment Officer, reported a 17.5% increase in net investment income for the fourth quarter, reaching $14.2 million. For the full year, net investment income increased by 17.2% to $52.6 million. The company strategically increased its bond portfolio yield and optimized its portfolio mix, resulting in a 12.8% increase in book value to $17.33. Q: What are Donegal Group's strategic priorities for 2026? A: Dan Delamere, COO, outlined that the company is focused on profitable growth through rate achievement, underwriting focus, and expense discipline. The company plans to engage with independent agents to build new business and policy retention plans, emphasizing pricing discipline and identifying profitable opportunities in targeted states and classes. For the complete transcript of the earnings call, please refer to the full earnings call transcript.