Donegal Group (DGICA) investor relations material

Executive summary

• Net income for Q2 2026 rose 32% year-over-year to $22.3 million, with diluted EPS for Class A shares at $0.60, driven by improved underwriting from lower weather-related losses and higher investment income.

• Net premiums earned decreased 4% to $222.6 million, reflecting lower retention and renewal premium increases, partially offset by higher new business writings.

• Combined ratio improved to 95.6% from 97.7% in Q2 2025, reflecting better underwriting performance and lower weather-related losses.

• Book value per share increased to $17.98 at June 30, 2026, up 8.2% year-over-year.

• Annualized return on average equity was 13.6%, up from 11.3% in the prior-year quarter.

Financial highlights

• Net premiums written declined 3.2% year-over-year, with commercial lines up 0.8% and personal lines down 9.7%.

• Net investment income grew 15.6% to $14.5 million, with net investment gains of $3.3 million, including a $1.2 million one-time realized loss.

• Non-GAAP operating income increased 25.9% to $19.7 million for the quarter.

• Book value per share rose to $17.98, up from $16.62 a year ago.

• Weather-related losses were $11.9 million, significantly below the five-year average and prior-year quarter.

Outlook and guidance

• Management expects the decline in personal lines net premiums written to gradually taper as corrective actions take effect.

• Continued focus on underwriting and pricing discipline, with an emphasis on profitable growth and agent engagement.

• Technology-related expenses expected to moderate as legacy systems are decommissioned and major investments are depreciated.

• Projecting $90 million in portfolio cash flow over the next 12 months at a current average yield of 4.25%.

• The company anticipates ongoing benefits from strategic initiatives to enhance stockholder value.