Donegal Group Inc 10-Q for FY2025 Q1

Donegal Group Inc (DGICA)

10-Q 2025-05-06 For: 2025-03-31

Added on April 12, 2026

About this 10-Q

Donegal Group Inc filed this 10-Q on May 6, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).

Headline figures

Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $245.17M; up 1.7% from $241.14M a year earlier
Net income: $25.21M; up 323.2% from net income of $5.96M a year earlier

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Delaware	23-2424711
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Large accelerated filer ☐	Accelerated filer ☑	Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered

Class A Common Stock, $.01 par value	DGICA	The NASDAQ Global Select Market

Class B Common Stock, $.01 par value	DGICB	The NASDAQ Global Select Market

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults upon Senior Securities	31
Item 4.	Mine Safety Disclosure	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signatures		33

	March 31, 2025			December 31, 2024
	(Unaudited)
Assets
Investments
Fixed maturities
Held to maturity, at amortized cost (net of allowance for expected credit losses of $1,350,820 and $1,388,240)	$	706,097,889		$	705,713,916
Available for sale, at fair value		640,456,492			617,891,862
Equity securities, at fair value		40,206,038			36,807,810
Short-term investments, at cost, which approximates fair value		20,621,831			24,558,744
Total investments		1,407,382,250			1,384,972,332
Cash		64,315,113			52,925,931
Accrued investment income		11,108,128			10,361,959
Premiums receivable		193,975,126			181,106,519
Reinsurance receivable (net of allowance for expected credit losses of $433,614 and $391,432)		403,381,615			420,741,855
Deferred policy acquisition costs		76,194,332			73,346,967
Deferred tax asset, net		17,069,472			18,769,861
Prepaid reinsurance premiums		182,859,682			176,161,872
Property and equipment, net		2,441,407			2,479,183
Accounts receivable - securities		21,612			24,924
Due from affiliate		2,898,217			8,410,090
Goodwill		5,625,354			5,625,354
Other intangible assets		958,010			958,010
Other		46,861			147,126
Total assets	$	2,368,277,179		$	2,336,031,983
Liabilities and Stockholders’ Equity
Liabilities
Losses and loss expenses	$	1,092,623,564		$	1,120,985,050
Unearned premiums		633,564,371			612,476,068
Accrued expenses		2,978,390			2,916,705
Reinsurance balances payable		3,829,775			4,345,426
Borrowings under lines of credit		35,000,000			35,000,000
Cash dividends declared to stockholders		—			6,031,078
Federal income taxes payable		6,465,068			356,103
Other		9,092,996			8,145,422
Total liabilities		1,783,554,164			1,790,255,852
Stockholders’ Equity
Preferred stock, $0.01 par value, authorized 2,000,000 shares; none issued		—			—
Class A common stock, $0.01 par value, authorized 50,000,000 shares, issued 33,429,227 and 32,954,347 shares and outstanding 30,426,639 and 29,951,759 shares		334,293			329,544
Class B common stock, $0.01 par value, authorized 10,000,000 shares, issued 5,649,240 shares and outstanding 5,576,775 shares		56,492			56,492
Additional paid-in capital		376,863,917			369,679,946
Accumulated other comprehensive loss		(21,472,236	)		(28,200,481	)
Retained earnings		270,166,906			245,136,987
Treasury stock, at cost		(41,226,357	)		(41,226,357	)
Total stockholders’ equity		584,723,015			545,776,131
Total liabilities and stockholders’ equity	$	2,368,277,179		$	2,336,031,983

	Three Months Ended March 31,
	2025			2024
Revenues:
Net premiums earned	$	232,701,889		$	227,748,679
Investment income, net of investment expenses		11,983,574			10,972,327
Net investment (losses) gains (includes $57,103 and ($77,051) accumulated other comprehensive income reclassifications)		(470,861	)		2,113,378
Lease income		76,827			81,823
Installment payment fees		882,195			224,662
Total revenues		245,173,624			241,140,869
Expenses:
Net losses and loss expenses		132,033,147			150,896,415
Amortization of deferred policy acquisition costs		39,231,000			39,602,000
Other underwriting expenses		41,194,994			41,739,868
Policyholder dividends		759,389			1,054,659
Interest		333,045			154,597
Other expenses, net		461,100			444,934
Total expenses		214,012,675			233,892,473
Income before income tax expense		31,160,949			7,248,396
Income tax expense (includes $11,992 and ($16,181) income tax expense (benefit) from reclassification items)		5,955,775			1,292,845
Net income	$	25,205,174		$	5,955,551
Net income per share:
Class A common stock - basic	$	0.72		$	0.18
Class A common stock - diluted	$	0.71		$	0.18
Class B common stock - basic and diluted	$	0.65		$	0.16

	Class A Shares		Class B Shares		Class A Amount		Class B Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock			Total Stockholders’ Equity
Balance, December 31, 2024		32,954,347		5,649,240	$	329,544	$	56,492	$	369,679,946	$	(28,200,481	)	$	245,136,987		$	(41,226,357	)	$	545,776,131
Issuance of common stock (stock compensation plans)		36,500		—		365		—		444,142		—			—			—			444,507
Share-based compensation		438,380		—		4,384		—		6,571,130		—			—			—			6,575,514
Net income		—		—		—		—		—		—			25,205,174			—			25,205,174
Cash dividends declared		—		—		—		—		—		—			(6,556	)		—			(6,556	)
Grant of stock options		—		—		—		—		168,699		—			(168,699	)		—			—
Other comprehensive income		—		—		—		—		—		6,728,245			—			—			6,728,245
Balance, March 31, 2025		33,429,227		5,649,240	$	334,293	$	56,492	$	376,863,917	$	(21,472,236	)	$	270,166,906		$	(41,226,357	)	$	584,723,015

	Carrying Value			Allowance for Credit Losses			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Held to Maturity
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	86,119		$	51		$	86,170		$	49		$	6,856		$	79,363
Obligations of states and political subdivisions			369,481			264			369,745			653			51,774			318,624
Corporate securities			239,967			1,030			240,997			461			11,261			230,197
Mortgage-backed securities			10,531			6			10,537			36			265			10,308
Totals		$	706,098		$	1,351		$	707,449		$	1,199		$	70,156		$	638,492

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Available for Sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	89,394	$	266	$	2,779	$	86,881
Obligations of states and political subdivisions	$	42,642		13		4,249		38,406
Corporate securities		210,863		373		6,208		205,028
Mortgage-backed securities		323,759		1,117		14,735		310,141
Totals	$	666,658	$	1,769	$	27,971	$	640,456

	Carrying Value			Allowance for Credit Losses			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Held to Maturity
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	86,579		$	52		$	86,631		$	—		$	8,484		$	78,147
Obligations of states and political subdivisions			371,896			260			372,155			650			54,062			318,743
Corporate securities			236,550			1,070			237,621			273			13,608			224,286
Mortgage-backed securities			10,689			6			10,695			—			302			10,393
Totals		$	705,714		$	1,388		$	707,102		$	923		$	76,456		$	631,569

	Cost		Gross Gains		Gross Losses		Estimated Fair Value
	(in thousands)
Equity securities	$	28,686	$	11,592	$	72	$	40,206

	Less Than 12 Months				More Than 12 Months
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	15,685	$	40	$	112,772	$	9,595
Obligations of states and political subdivisions		38,566		995		289,182		55,028
Corporate securities		59,540		607		304,416		16,862
Mortgage-backed securities		46,849		349		149,315		14,651
Totals	$	160,640	$	1,991	$	855,685	$	96,136

	Three Months Ended March 31, 2025
	Investments			Commercial Lines			Personal Lines		Total
	(in thousands)
Revenues:
Net premiums earned	$	—		$	136,216		$	96,486	$	232,702
Net investment income		11,984			—			—		11,984
Investment losses		(471	)		—			—		(471	)
Total segment revenues		11,513			136,216			96,486		244,215
Other										959
Total revenues									$	245,174
Segment expenses:
Net losses and loss expenses		—			81,321			50,708		132,029
Other underwriting expenses		—			55,514			27,485		82,999
Policyholder dividends		—			759			—		759
Total segment expenses		—			137,594			78,193		215,787
SAP underwriting (loss) income		—			(1,378	)		18,293		16,915
GAAP adjustments										2,568
GAAP underwriting income										19,483
Net investment income										11,984
Investment losses										(471	)
Other										165
Income before income tax expense									$	31,161

	Three Months Ended March 31, 2024
	Investments		Commercial Lines			Personal Lines			Total
	(in thousands)
Revenues:
Net premiums earned	$	—	$	132,092		$	95,657		$	227,749
Net investment income		10,972		—			—			10,972
Investment gains		2,113		—			—			2,113
Total segment revenues		13,085		132,092			95,657			240,834
Other										307
Total revenues									$	241,141
Segment expenses:
Net losses and loss expenses		—		87,230			65,499			152,729
Other underwriting expenses		—		54,178			30,690			84,868
Policyholder dividends		—		1,055			—			1,055
Total segment expenses		—		142,463			96,189			238,652
SAP underwriting loss		—		(10,371	)		(532	)		(10,903	)
GAAP adjustments										5,359
GAAP underwriting loss										(5,544	)
Net investment income										10,972
Investment gains										2,113
Other										(293	)
Income before income tax expense									$	7,248

FHLB of Pittsburgh stock purchased and owned	$	1,605,000
Collateral pledged, at par (carrying value $44,095,307)		46,733,730
Borrowing capacity currently available		6,614,599

	Three Months Ended March 31,
	2025			2024
Cash Flows from Operating Activities:
Net income	$	25,205,174		$	5,955,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other non-cash items		1,020,039			966,911
Net investment losses (gains)		470,861			(2,113,378	)
Changes in assets and liabilities:
Losses and loss expenses		(28,361,486	)		(1,704,647	)
Unearned premiums		21,088,303			34,725,153
Premiums receivable		(12,868,607	)		(13,568,339	)
Deferred acquisition costs		(2,847,365	)		(3,813,704	)
Deferred income taxes		(88,129	)		474,439
Reinsurance receivable		17,360,240			5,926,208
Prepaid reinsurance premiums		(6,697,810	)		(11,033,297	)
Accrued investment income		(746,169	)		(551,627	)
Due from affiliate		5,511,873			(6,933,651	)
Reinsurance balances payable		(515,651	)		(4,742,896	)
Current income taxes		6,108,965			830,906
Accrued expenses		61,685			(261,440	)
Other, net		1,047,840			661,955
Net adjustments		544,589			(1,137,407	)
Net cash provided by operating activities		25,749,763			4,818,144
Cash Flows from Investing Activities:
Purchases of fixed maturities, held to maturity		(8,795,740	)		(11,911,672	)
Purchases of fixed maturities, available for sale		(37,872,046	)		(46,490,362	)
Purchases of equity securities, available for sale		(2,502,170	)		(786,680	)
Maturity of fixed maturities:
Held to maturity		7,057,175			8,008,034
Available for sale		23,253,617			30,922,241
Sales of fixed maturities:
Available for sale		—			2,995,648
Net purchases of property and equipment		(100	)		—
Net sales of short-term investments		3,936,913			13,445,378
Net cash used in investing activities		(14,922,351	)		(3,817,413	)
Cash Flows from Financing Activities:
Cash dividends paid		(6,037,634	)		(5,578,880	)
Issuance of common stock		6,599,404			590,916
Net cash provided by (used in) financing activities		561,770			(4,987,964	)
Net increase (decrease) in cash		11,389,182			(3,987,233	)

	Amortized Cost		Estimated Fair Value
	(in thousands)
Held to maturity
Due in one year or less	$	27,291	$	27,192
Due after one year through five years		135,440		129,487
Due after five years through ten years		256,131		239,308
Due after ten years		278,050		232,197
Mortgage-backed securities		10,537		10,308
Total held to maturity	$	707,449	$	638,492

Available for sale
Due in one year or less	$	40,789	$	40,437
Due after one year through five years		157,989		153,196
Due after five years through ten years		119,738		115,449
Due after ten years		24,383		21,233
Mortgage-backed securities		323,759		310,141
Total available for sale	$	666,658	$	640,456

	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury securities and obligations of U.S.government corporations and agencies	$	86,881	$	—	$	86,881	$	—
Obligations of states and political subdivisions		38,406		—		38,406		—
Corporate securities		205,028		—		205,028		—
Mortgage-backed securities		310,141		—		310,141		—
Equity securities		40,206		38,106		2,100		—
Total investments in the fair value hierarchy	$	680,662	$	38,106	$	642,556	$	—

	At and For the Three Months Ended March 31, 2025					At and For the Three Months Ended March 31, 2024
	Held-to-Maturity, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses			Held-to-Maturity, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
	(in thousands)
Balance at beginning of period	$	705,714	$	1,388		$	679,497	$	1,326
Current period change for expected credit losses				(37	)				3
Balance at end of period	$	706,098	$	1,351		$	683,399	$	1,329

	At and For the Three Months Ended March 31, 2025				At and For the Three Months Ended March 31, 2024
	Reinsurance Receivable, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses		Reinsurance Receivable, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
	(in thousands)
Balance at beginning of period	$	420,742	$	391	$	441,431	$	1,394
Current period change for expected credit losses				43				(368	)
Balance at end of period	$	403,382	$	434	$	435,505	$	1,026

Percentage Change in Loss and Loss Expense Reserves Net of Reinsurance	Adjusted Loss and Loss Expense Reserves Net of Reinsurance at March 31, 2025	Percentage Change in Stockholders’ Equity at March 31, 2025(1)	Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2024	Percentage Change in Stockholders’ Equity at December 31, 2024(1)
(dollars in thousands)
(10.0)%	$626,577	9.4%	$633,928	10.2%
(7.5)	643,982	7.1	651,537	7.6
(5.0)	661,387	4.7	669,146	5.1
(2.5)	678,792	2.4	686,755	2.5
Base	696,197	—	704,364	—
2.5	713,602	(2.4)	721,973	(2.5)
5.0	731,007	(4.7)	739,582	(5.1)
7.5	748,412	(7.1)	757,191	(7.6)
10.0	765,817	(9.4)	774,800	(10.2)

	Commercial Lines		Personal Lines			Total
(in thousands)
Net premiums earned	$	136,216	$	96,486		$	232,702
Change in net unearned premiums		24,402		(10,012	)		14,390
Net premiums written	$	160,618	$	86,474		$	247,092

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 January 1-31, 2025	Class A – None Class B – None	Class A – None Class B – None	Class A – None Class B – None	(1)

Month #2 February 1-28, 2025	Class A – 51,901 Class B – None	Class A – $16.96 Class B – None	Class A – 51,901 Class B – None	(1)

Month #3 March 1-31, 2025	Class A – 130,109 Class B – None	Class A – $17.93 Class B – None	Class A – 130,109 Class B – None	(1)

Total	Class A – 182,010 Class B – None	Class A – $17.65 Class B – None	Class A – 182,010 Class B – None

Exhibit No.	Description	Reference

Management Contracts and Compensatory Plans or Arrangements

10.1	Form of Employment Agreement dated as of October 1, 2020 among Donegal Mutual Insurance Company, Donegal Group Inc. and Our Executive Officers Other Than Kevin G. Burke and Jeffrey D. Miller	Filed herewith

Other Exhibits

31.1	Certification of Chief Executive Officer.	Filed herewith

31.2	Certification of Chief Financial Officer.	Filed herewith

32.1	Statement of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of Title 18 of the United States Code.	Filed herewith

32.2	Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of Title 18 of the United States Code.	Filed herewith

Exhibit 101.INS	XBRL Instance Document	Filed herewith

Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith

Exhibit 101.PRE	XBRL Taxonomy Presentation Linkbase Document	Filed herewith

Exhibit 101.CAL	XBRL Taxonomy Calculation Linkbase Document	Filed herewith

Exhibit 101.LAB	XBRL Taxonomy Label Linkbase Document	Filed herewith

Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

Exhibit 104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)	Filed herewith

	DONEGAL GROUP INC.

May 6, 2025	By:	/s/ Kevin G. Burke
		Kevin G. Burke, President and Chief Executive Officer

May 6, 2025	By:	/s/ Jeffrey D. Miller
		Jeffrey D. Miller, Executive Vice President and Chief Financial Officer

	DONEGAL MUTUAL INSURANCE COMPANY

	By:
	Its:

	DONEGAL GROUP INC.

	By:
	Its:


	Executive

Name	Donegal Mutual Title	DGI Title	Annual Base Salary
Kristi S. Altshuler	Senior Vice President and Chief Analytics Officer	Senior Vice President and Chief Analytics Officer	$325,000
David B. Bawel (4)	Senior Vice President and Chief Accounting Officer	Senior Vice President and Chief Accounting Officer	$260,000
Noland R. Deas, Jr. (4)	Senior Vice President of Field Operations and National Accounts	Senior Vice President	$335,000
W. Daniel DeLamater (1)	Senior Vice President, Field Operations and National Accounts	Senior Vice President	$350,000
William A. Folmar	Senior Vice President, Claims	Senior Vice President	$290,000
Jeffrey T. Hay (2)	Senior Vice President and Chief Underwriting Officer	Senior Vice President	$425,000
Rick J. Hecker (4)	Senior Vice President and General Counsel	Senior Vice President and General Counsel	$250,000
Christina M. Hoffman	Senior Vice President and Chief Risk Officer	Senior Vice President and Chief Risk Officer	$305,000
Sanjay Pandey	Senior Vice President and Chief Information Officer	Senior Vice President and Chief Information Officer	$425,000
David W. Sponic (3)	Senior Vice President, Personal Lines	Senior Vice President	$260,000
V. Anthony Viozzi	Senior Vice President and Chief Investment Officer	Senior Vice President and Chief Investment Officer	$330,000
Daniel J. Wagner	Senior Vice President and Treasurer	Senior Vice President and Treasurer	$405,000

Date:	May 6, 2025	/s/ Kevin G. Burke
		Kevin G. Burke,
		President and Chief Executive Officer

Date: May 6, 2025	/s/ Kevin G. Burke
	Kevin G. Burke, President and Chief Executive Officer