Donegal Group Inc. Announces First Quarter 2025 Results
Rhea-AI Summary
Donegal Group Inc. (NASDAQ: DGICA) reported strong Q1 2025 financial results with significant improvements across key metrics. Net income surged to $25.2 million ($0.71 per diluted Class A share), up from $6.0 million in Q1 2024. The company achieved a combined ratio of 91.6%, improving from 102.4% year-over-year.
Net premiums earned increased 2.2% to $232.7 million, while net premiums written declined 1.7%. Commercial lines saw a 3.3% growth in premiums written, offset by a 9.9% decrease in personal lines. The loss ratio improved to 56.7% from 66.3%, with core loss ratio decreasing to 54.2%.
Book value per share increased to $16.24 at March 31, 2025, compared to $14.53 year-over-year. The company's annualized return on average equity reached 17.8%, up from 4.9% in Q1 2024.
Positive
- Net income increased 323.2% to $25.2 million
- Combined ratio improved significantly to 91.6% from 102.4%
- Commercial lines premiums written grew 3.3%
- Book value per share increased 11.8% year-over-year
- Return on average equity improved to 17.8% from 4.9%
- Net investment income rose 9.2% to $12.0 million
Negative
- Net premiums written declined 1.7% overall
- Personal lines premiums written decreased 9.9%
- Workers' compensation premiums declined 7.5%
- Net investment losses of $0.4 million compared to gains of $1.7 million in prior year
News Market Reaction 1 Alert
On the day this news was published, DGICA gained 5.39%, reflecting a notable positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
MARIETTA, Pa., April 24, 2025 (GLOBE NEWSWIRE) -- Donegal Group Inc. (NASDAQ: DGICA) and (NASDAQ: DGICB) today reported its financial results for the first quarter of 2025.
Significant Items for First Quarter of 2025 (all comparisons to first quarter of 2024):
- Net premiums earned increased
2.2% to$232.7 million - Combined ratio of
91.6% , compared to102.4% - Net income of
$25.2 million , or$0.71 per diluted Class A share, compared to$6.0 million , or$0.18 per diluted Class A share - Net investment losses (after tax) of
$0.4 million , or 1 cent per diluted Class A share, compared to net investment gains (after tax) of$1.7 million , or 5 cents per diluted Class A share, are included in net income - Annualized return on average equity of
17.8% , compared to4.9% - Book value per share of
$16.24 at March 31, 2025, compared to$14.53 at March 31, 2024
Financial Summary
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | % Change | |||||||||
| (dollars in thousands, except per share amounts) | |||||||||||
| Income Statement Data | |||||||||||
| Net premiums earned | $ | 232,702 | $ | 227,749 | 2.2 | % | |||||
| Investment income, net | 11,984 | 10,972 | 9.2 | ||||||||
| Net investment (losses) gains | (471 | ) | 2,113 | NM2 | |||||||
| Total revenues | 245,174 | 241,141 | 1.7 | ||||||||
| Net income | 25,205 | 5,956 | 323.2 | ||||||||
| Non-GAAP operating income1 | 25,577 | 4,286 | 496.8 | ||||||||
| Annualized return on average equity | 17.8 | % | 4.9 | % | 12.9 pts | ||||||
| Per Share Data | |||||||||||
| Net income – Class A (diluted) | $ | 0.71 | $ | 0.18 | 294.4 | % | |||||
| Net income – Class B | 0.65 | 0.16 | 306.3 | ||||||||
| Non-GAAP operating income – Class A (diluted) | 0.72 | 0.13 | 453.8 | ||||||||
| Non-GAAP operating income – Class B | 0.66 | 0.12 | 450.0 | ||||||||
| Book value | 16.24 | 14.53 | 11.8 | ||||||||
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”).
2Not meaningful.
Management Commentary
Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., stated, “We are pleased that positive momentum, which began to emerge in the second half of 2024, continued into the first quarter of 2025 with our achievement of record earnings for the second straight quarter. We believe this accomplishment reflects the deliberate actions and strong operational discipline of our team in prioritizing sustained profitability while pursuing targeted premium growth.
“Net premiums earned rose by
“In our commercial lines business, we are actively promoting our small commercial products and capabilities while actively seeking to grow our middle market business segment. In our personal lines business, our strategic focus remains on maintaining profitability through rate adequacy. Our personal lines growth in the first quarter of 2025 was constrained by two intentional strategies. We limited new business volume and continued the non-renewal of a legacy Maryland book of business. We are taking proactive steps to stabilize personal lines premium level as the year progresses, and we will continue to emphasize higher levels of profitable growth in commercial lines that we believe will lead to long-term success.”
Mr. Burke concluded, “We believe we are well positioned to navigate the evolving insurance landscape, as we continue to enhance and refine our systems and operational capabilities. We are confident in our ability to achieve sustainable excellent financial performance and capitalize on future growth opportunities that will further enhance shareholder 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.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | % Change | |||||||||
| (dollars in thousands) | |||||||||||
| Net Premiums Earned | |||||||||||
| Commercial lines | $ | 136,216 | $ | 132,092 | 3.1 | % | |||||
| Personal lines | 96,486 | 95,657 | 0.9 | ||||||||
| Total net premiums earned | $ | 232,702 | $ | 227,749 | 2.2 | % | |||||
| Net Premiums Written | |||||||||||
| Commercial lines: | |||||||||||
| Automobile | $ | 56,525 | $ | 53,514 | 5.6 | % | |||||
| Workers' compensation | 28,754 | 31,074 | -7.5 | ||||||||
| Commercial multi-peril | 60,790 | 57,503 | 5.7 | ||||||||
| Other | 14,549 | 13,403 | 8.6 | ||||||||
| Total commercial lines | 160,618 | 155,494 | 3.3 | ||||||||
| Personal lines: | |||||||||||
| Automobile | 55,192 | 61,381 | -10.1 | ||||||||
| Homeowners | 28,788 | 31,759 | -9.4 | ||||||||
| Other | 2,494 | 2,808 | -11.2 | ||||||||
| Total personal lines | 86,474 | 95,948 | -9.9 | ||||||||
| Total net premiums written | $ | 247,092 | $ | 251,442 | -1.7 | % | |||||
Net Premiums Written
The
- Commercial Lines:
$5.1 million increase that we attribute primarily to solid retention and a continuation of renewal premium increases in lines other than workers’ compensation, offset partially by lower new business writings. - Personal Lines:
$9.5 million decrease that we attribute primarily to planned attrition due to lower new business writings and non-renewal actions, offset partially by a continuation of 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, 2025 and 2024:
| Three Months Ended | |||||||
| March 31, | |||||||
| 2025 | 2024 | ||||||
| GAAP Combined Ratios (Total Lines) | |||||||
| Loss ratio - core losses | 54.4 | % | 58.7 | % | |||
| Loss ratio - weather-related losses | 3.7 | 4.7 | |||||
| Loss ratio - large fire losses | 3.1 | 6.6 | |||||
| Loss ratio - net prior-year reserve development | -4.5 | -3.7 | |||||
| Loss ratio | 56.7 | 66.3 | |||||
| Expense ratio | 34.6 | 35.7 | |||||
| Dividend ratio | 0.3 | 0.4 | |||||
| Combined ratio | 91.6 | % | 102.4 | % | |||
| Statutory Combined Ratios | |||||||
| Commercial lines: | |||||||
| Automobile | 91.4 | % | 99.6 | % | |||
| Workers' compensation | 117.6 | 111.2 | |||||
| Commercial multi-peril | 90.3 | 102.7 | |||||
| Other | 80.8 | 82.2 | |||||
| Total commercial lines | 94.7 | 101.6 | |||||
| Personal lines: | |||||||
| Automobile | 85.0 | 99.8 | |||||
| Homeowners | 83.8 | 102.9 | |||||
| Other | 56.6 | 85.2 | |||||
| Total personal lines | 83.6 | 100.3 | |||||
| Total lines | 90.3 | % | 101.2 | % | |||
Loss Ratio
For the first quarter of 2025, the loss ratio decreased to
Weather-related losses were
Large fire losses, which we define as individual fire losses in excess of
Net favorable development of reserves for losses incurred in prior accident years of
Expense Ratio
The expense ratio was
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 95.7% of our consolidated investment portfolio in diversified, highly rated and marketable fixed-maturity securities at March 31, 2025.
| March 31, 2025 | December 31, 2024 | ||||||||||||||
| Amount | % | Amount | % | ||||||||||||
| (dollars in thousands) | |||||||||||||||
| Fixed maturities, at carrying value: | |||||||||||||||
| U.S. Treasury securities and obligations of U.S. | |||||||||||||||
| government corporations and agencies | $ | 176,090 | 12.5 | % | $ | 170,423 | 12.3 | % | |||||||
| Obligations of states and political subdivisions | 412,304 | 29.3 | 409,560 | 29.6 | |||||||||||
| Corporate securities | 442,275 | 31.4 | 440,552 | 31.8 | |||||||||||
| Mortgage-backed securities | 317,236 | 22.5 | 304,459 | 22.0 | |||||||||||
| Allowance for expected credit losses | (1,351 | ) | -0.1 | (1,388 | ) | -0.1 | |||||||||
| Total fixed maturities | 1,346,554 | 95.6 | 1,323,606 | 95.6 | |||||||||||
| Equity securities, at fair value | 40,206 | 2.9 | 36,808 | 2.6 | |||||||||||
| Short-term investments, at cost | 20,622 | 1.5 | 24,558 | 1.8 | |||||||||||
| Total investments | $ | 1,407,382 | 100.0 | % | $ | 1,384,972 | 100.0 | % | |||||||
| Average investment yield | 3.4 | % | 3.3 | % | |||||||||||
| Average tax-equivalent investment yield | 3.5 | % | 3.4 | % | |||||||||||
| Average fixed-maturity duration (years) | 5.2 | 5.2 | |||||||||||||
Net investment income of
Net investment losses were
Our book value per share was
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:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | % Change | |||||||||
| (dollars in thousands) | |||||||||||
| Reconciliation of Net Premiums | |||||||||||
| Earned to Net Premiums Written | |||||||||||
| Net premiums earned | $ | 232,702 | $ | 227,749 | 2.2 | % | |||||
| Change in net unearned premiums | 14,390 | 23,693 | -39.3 | ||||||||
| Net premiums written | $ | 247,092 | $ | 251,442 | -1.7 | % | |||||
The following table provides a reconciliation of net income to operating income for the periods indicated:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | % Change | |||||||||
| (dollars in thousands, except per share amounts) | |||||||||||
| Reconciliation of Net Income | |||||||||||
| to Non-GAAP Operating Income | |||||||||||
| Net income | $ | 25,205 | $ | 5,956 | 323.2 | % | |||||
| Investment losses (gains) (after tax) | 372 | (1,670 | ) | NM | |||||||
| Non-GAAP operating income | $ | 25,577 | $ | 4,286 | 496.8 | % | |||||
| Per Share Reconciliation of Net Income | |||||||||||
| to Non-GAAP Operating Income | |||||||||||
| Net income – Class A (diluted) | $ | 0.71 | $ | 0.18 | 294.4 | % | |||||
| Investment losses (gains) (after tax) | 0.01 | (0.05 | ) | NM | |||||||
| Non-GAAP operating income – Class A | $ | 0.72 | $ | 0.13 | 453.8 | % | |||||
| Net income – Class B | $ | 0.65 | $ | 0.16 | 306.3 | % | |||||
| Investment losses (gains) (after tax) | 0.01 | (0.04 | ) | NM | |||||||
| Non-GAAP operating income – Class B | $ | 0.66 | $ | 0.12 | 450.0 | % | |||||
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
Dividend Information
On April 17, 2025, we declared regular quarterly cash dividends of
Pre-Recorded Webcast
At approximately 8:30 am EST on Thursday, April 24, 2025, 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, strategically modernizing our operations and processes to transform our business, 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 trends that could increase our loss costs (including social inflation, labor shortages and escalating medical, automobile and property repair costs, including due to tariffs), adverse and catastrophic weather events (including from changing climate conditions), 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 availability and successful operation of the information technology systems our insurance subsidiaries utilize, the successful development of new information technology systems to allow our insurance subsidiaries to compete effectively, business and economic conditions in the areas in which we and our insurance subsidiaries operate, interest rates, competition from various insurance and other financial businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements, our ability to attract and retain independent insurance agents, 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
Karin Daly, Vice President, The Equity Group Inc.
Phone: (212) 836-9623
E-mail: kdaly@equityny.com
Jeffrey D. Miller, Executive Vice President & Chief Financial Officer
Phone: (717) 426-1931
E-mail: investors@donegalgroup.com
Financial Supplement
| Donegal Group Inc. | |||||||
| Consolidated Statements of Income | |||||||
| (unaudited; in thousands, except share data) | |||||||
| Quarter Ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Net premiums earned | $ | 232,702 | $ | 227,749 | |||
| Investment income, net of expenses | 11,984 | 10,972 | |||||
| Net investment (losses) gains | (471 | ) | 2,113 | ||||
| Lease income | 77 | 82 | |||||
| Installment payment fees | 882 | 225 | |||||
| Total revenues | 245,174 | 241,141 | |||||
| Net losses and loss expenses | 132,033 | 150,896 | |||||
| Amortization of deferred acquisition costs | 39,231 | 39,602 | |||||
| Other underwriting expenses | 41,195 | 41,740 | |||||
| Policyholder dividends | 760 | 1,055 | |||||
| Interest | 333 | 155 | |||||
| Other expenses, net | 461 | 445 | |||||
| Total expenses | 214,013 | 233,893 | |||||
| Income before income tax expense | 31,161 | 7,248 | |||||
| Income tax expense | 5,956 | 1,292 | |||||
| Net income | $ | 25,205 | $ | 5,956 | |||
| Net income per common share: | |||||||
| Class A - basic | $ | 0.72 | $ | 0.18 | |||
| Class A - diluted | $ | 0.71 | $ | 0.18 | |||
| Class B - basic and diluted | $ | 0.65 | $ | 0.16 | |||
| Supplementary Financial Analysts' Data | |||||||
| Weighted-average number of shares | |||||||
| outstanding: | |||||||
| Class A - basic | 30,120,649 | 27,811,312 | |||||
| Class A - diluted | 30,430,042 | 27,846,313 | |||||
| Class B - basic and diluted | 5,576,775 | 5,576,775 | |||||
| Net premiums written | $ | 247,092 | $ | 251,442 | |||
| Book value per common share | |||||||
| at end of period | $ | 16.24 | $ | 14.53 | |||
| Annualized operating return on average equity | 17.8 | % | 4.9 | % | |||
| Donegal Group Inc. | |||||||
| Consolidated Balance Sheets | |||||||
| (in thousands) | |||||||
| March 31, | December 31, | ||||||
| 2025 | 2024 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Investments: | |||||||
| Fixed maturities: | |||||||
| Held to maturity, at amortized cost | $ | 706,098 | $ | 705,714 | |||
| Available for sale, at fair value | 640,456 | 617,892 | |||||
| Equity securities, at fair value | 40,206 | 36,808 | |||||
| Short-term investments, at cost | 20,622 | 24,558 | |||||
| Total investments | 1,407,382 | 1,384,972 | |||||
| 64,315 | 52,926 | ||||||
| Premiums receivable | 193,975 | 181,107 | |||||
| Reinsurance receivable | 403,382 | 420,742 | |||||
| Deferred policy acquisition costs | 76,194 | 73,347 | |||||
| Prepaid reinsurance premiums | 182,860 | 176,162 | |||||
| Other assets | 40,169 | 46,776 | |||||
| Total assets | $ | 2,368,277 | $ | 2,336,032 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Liabilities: | |||||||
| Losses and loss expenses | $ | 1,092,624 | $ | 1,120,985 | |||
| Unearned premiums | 633,564 | 612,476 | |||||
| Borrowings under lines of credit | 35,000 | 35,000 | |||||
| Other liabilities | 22,366 | 21,795 | |||||
| Total liabilities | 1,783,554 | 1,790,256 | |||||
| Stockholders' equity: | |||||||
| Class A common stock | 334 | 329 | |||||
| Class B common stock | 56 | 56 | |||||
| Additional paid-in capital | 376,864 | 369,680 | |||||
| Accumulated other comprehensive loss | (21,472 | ) | (28,200 | ) | |||
| Retained earnings | 270,167 | 245,137 | |||||
| Treasury stock | (41,226 | ) | (41,226 | ) | |||
| Total stockholders' equity | 584,723 | 545,776 | |||||
| Total liabilities and stockholders' equity | $ | 2,368,277 | $ | 2,336,032 | |||
FAQ
What was Donegal Group's (DGICA) earnings per share in Q1 2025?
How much did DGICA's net premiums earned grow in Q1 2025?
What was DGICA's combined ratio for Q1 2025?
How did DGICA's commercial lines perform in Q1 2025?
What was DGICA's book value per share as of March 31, 2025?
