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March 19, 2025 Property and Casualty News

2024 Annual Report

U.S. Markets via PUBT

A N N U A L R E P O R T

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, Southeand Southwestestates. Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group Inc. conduct business together as the Donegal Insurance Group.

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.

The Donegal Insurance Group has an A.M. Best rating of A (Excellent).

Building Tomorrow

Together

Financial Highlights

Year Ended December 31,

2024

2023

2022

2021

2020

Income Statement Data

Premiums earned	$ 936,651,480	$ 882,071,386	$ 822,489,450	$ 776,015,201	$ 742,040,339
Investment income, net	44,918,162	40,853,215	34,016,112	31,125,631	29,504,466
Investment gains (losses)	4,981,072	3,172,807	(10,184,797)	6,477,286	2,777,919
Total revenues	989,605,050	927,337,984	848,220,546	816,465,791	777,819,910
Income (loss) before income tax expense (benefit)	62,338,932	5,063,476	(3,638,099)	30,338,508	63,272,503
Income tax expense (benefit)	11,476,680	637,972	(1,678,694)	5,084,334	10,457,251
Net income (loss)	50,862,252	4,425,504	(1,959,405)	25,254,174	52,815,252
Basic earnings (loss) per share - Class A	1.53	0.14	(0.06)	0.83	1.84
Diluted earnings (loss) per share - Class A	1.53	0.14	(0.06)	0.83	1.83
Cash dividends per share - Class A	0.69	0.68	0.66	0.64	0.60
Basic earnings (loss) per share - Class B	1.38	0.11	(0.07)	0.74	1.65
Diluted earnings (loss) per share - Class B	1.38	0.11	(0.07)	0.74	1.65
Cash dividends per share - Class B	0.62	0.61	0.59	0.57	0.53

Balance Sheet Data at Year End

Total investments	$ 1,384,972,332	$ 1,327,053,645	$ 1,304,657,242	$ 1,276,845,897	$ 1,221,201,784
Total assets	2,336,031,983	2,266,293,888	2,243,349,335	2,255,175,399	2,160,520,324
Debt obligations	35,000,000	35,000,000	35,000,000	35,000,000	90,000,000
Stockholders' equity	545,776,131	479,745,354	483,593,012	531,036,087	517,774,120
Book value per share	15.36	14.39	14.79	16.95	17.13

Total Revenues

[ in millions ]

$950
$850
$750
$650
$550	24	23	22	21	20

Net Income (Loss)

[ in millions ]

$50
$40
$30
$20
$10	24	23	22	21	20

Stockholders' Equity

[ in millions ]

$550
$525
$500
$475
$450	24	23	22	21	20	1

To Our Stockholders

A Year of Progress

The year 2024 was one of continuing strategic execution, and we were pleased to realize incremental improvement in our financial performance. These "green shoots" resulted from all of the dedicated collaborative efforts our team has expended over the past several years. We have been working relentlessly to refine our strategies, modernize our infrastructure and product offerings and, most importantly, position Donegal Group to thrive in the future. Truly, we are building tomorrow together.

Many of the actions we implemented in the past several years converged to positively impact our underwriting results in 2024. While the work of building tomorrow is still in progress, we are pleased to share with you some highlights of our accomplishments during the past year. We continued to diversify the geographic footprint of our insured property risks to improve our mix of business and reduce the overall impact of losses from severe weather events. We further operationalized analytical tools to enhance underwriting decision- making when evaluating individual risks and classes of business. We successfully executed targeted expense reduction and expense management actions to achieve meaningful cost reductions in 2024, with more to come in 2025 and beyond. We continued to make great strides in our systems modernization project, and those efforts are on schedule to allow us to sunset our legacy systems when the last remaining legacy policies expire in 2027.

We made great progress during the year on a multi-year data modernization initiative to implement a comprehensive cloud-based data infrastructure that will support critical future business processes and strategies. This agile infrastructure will scale dynamically based on business demands and deliver real-time insights. The platform will enable highly efficient data processing, ensuring accelerated and reliable future data delivery. It will also facilitate seamless integration with analytics functions, artificial intelligence and machine learning models, and enable innovative business use cases for technologies such as Generative Artificial Intelligence ("Gen AI"). We believe these data-related investments will ensure easily accessible data for management reporting, position us to further enhance our data analytics, enable the future addition of new data sources and mitigate data integrity risk.

During 2024, we began exploring Gen AI capabilities by engaging with third-party experts to evaluate and identify potential opportunities to adopt this transformative technology. We focused our initial activities on fostering awareness of associated risks, developing expertise, establishing strategic partnerships and preparing for future advancements. We expect to leverage capabilities that already exist within our new data infrastructure platform and prioritize solutions that allow traceability, auditability and explainability of outputs in selective use cases that enhance the efficiency of our internal processes.

Financial Summary

Total revenues increased 6.7% for 2024 compared to 2023, reflecting a 6.2% increase in net premiums earned and a 10.0% increase in net investment income. Net investment gains of $5.0 million for 2024, compared to $3.2 million for 2023, were primarily related to an increase in the market value of equity securities we held at December 31, 2024.

The combined ratio improved significantly to 98.6% for 2024, compared to 104.4% for 2023, primarily due to the favorable impact of earned premium rate increases that reduced our core loss ratios for both our commercial and personal lines segments.

Weather-related losses for 2024 were 7.1% lower than we experienced for 2023, representing 7.2 percentage points of the loss ratio for 2024, compared to 8.3 percentage points of the loss ratio for 2023. We experienced this improvement despite our insurance subsidiaries incurring $6 million in net losses from Hurricane Helene in September 2024. We are continuing to work diligently to proactively diversify our geographic spread of risk throughout our regions to mitigate the impact of severe weather activity.

Net favorable development for losses incurred in prior accident years totaled $15.0 million for 2024, reducing the loss ratio by 1.6 percentage points, compared to $16.7 million for 2023, reducing the loss ratio by 1.9 percentage points.

The expense ratio was 33.7% for the full year of 2024, compared to 34.7% for the full year of 2023, reflecting the benefits of various expense-reduction initiatives we implemented during 2024, offset partially by higher underwriting-based incentive costs and increased technology expenses.

Net investment income of $44.9 million for 2024 grew by 10.0% over 2023 due to an increase in average invested assets as well as a higher average investment yield from increased average reinvestment interest rates in 2024. We are continuing to follow a conservative investment approach, applying disciplined risk management and asset allocation strategies to maintain an investment portfolio that generates consistent growth and stable returns to support our underwriting activities.

Our net income for 2024 surged to $50.9 million, or $1.53 per diluted Class A share, compared to $4.4 million, or 14 cents per diluted Class A share, for 2023. We attribute the increase primarily to substantial improvement in our underwriting results.

Our book value per share was $15.36 at December 31, 2024, compared to $14.39 at year-end 2023. After-tax unrealized gains within our available-for-sale fixed-maturity portfolio due to a decline in market interest rates increased our book value by 18 cents per share during 2024. Additional positive contributions to our book value per share from net income and other increases were partially offset by the cash dividends we declared during the year.

Commercial Lines

Segment

Commercial lines net premiums written increased

3.7% compared to 2023, as new business writings and solid renewal premium increases were partially offset by planned attrition related to our exit from the commercial markets in Georgia and Alabama that ended in mid-2024 and targeted non-renewals in selected classes in other states. Our commercial lines segment generated a statutory combined ratio of 98.2% for 2024, comparing favorably to 101.6% for 2023. Strong performance of our commercial multi-peril line of business drove the improvement, with a 4.5 percentage point improvement in the core loss ratio, lower weather-related and large fire loss impacts, as well as 7.2 percentage points of more favorable net development for losses incurred in prior accident years for that line of business.

We expect that our longstanding middle-market focus will continue to yield most of our commercial premium growth, augmented by the rollout of new products and capabilities targeted to this market segment beginning in the second half of 2025, when we expect to deploy our final major commercial lines systems release. This release will include a new commercial package policy and modernize the other commercial products remaining on our legacy systems. During 2024, we conducted a thorough process review of our commercial lines workflows and implemented a large number of process changes to enhance the efficiency of our underwriting operations and the experience of our team members. We also continued to execute our small business strategy to supplement our middle market strengths. This strategy includes numerous enterprise, agency distribution and operational initiatives designed to accelerate the pace of growth in this profitable market segment over the next few years.

We developed a comprehensive interactive commercial underwriting appetite guide to ensure that we grow market share intentionally and profitably in the years ahead. This guide provides our independent agents, as well as our sales, marketing and underwriting personnel, with an enhanced level of clarity on the classes of business and types of commercial accounts we are seeking to write in each of our operating regions. We expect to leverage this tool in our agency interactions in 2025 to accelerate new business growth in targeted regions and classes.

Personal Lines

Segment

Similar to our stance in 2023, we continued to limit new business and implement additional renewal rate increases throughout 2024 to enhance further the profitability of our personal lines segment. Personal lines net premiums written increased 7.4% from 2023, primarily reflecting rate increases that were partially offset by planned attrition. The number of personal lines policies-in-force at December 31, 2024 was down 11.6% compared to the prior year-end. This accelerated rate of reduction was in part the result of our decision to non-renew the legacy business of one of our insurance subsidiaries in the state of Maryland, which began in September.

Renewal rate increases averaged in double-digit percentages for both personal automobile and homeowners lines of business throughout 2024. Our personal lines segment generated a statutory combined ratio of 98.3% for 2024, a notable improvement compared to 108.2% for 2023. The decrease was attributable to a 5.7 percentage point improvement in the core loss ratio, lower weather- related losses and large fire losses as well as a 2.2 percentage point decrease in the personal lines statutory expense ratio due to targeted expense reductions, compared to 2023.

We project net premiums earned for 2025 will continue to benefit from the rate increases we implemented over the past two years, further enhancing our performance in this segment. We expect to increase gradually the amount of targeted new business writings across our personal lines footprint beginning in the latter half of 2025, desiring to grow our personal lines segment in a measured fashion while ensuring the achievement of targeted returns.

"Working as a team with a proactive approach and renewed energies

Looking Ahead

The noteworthy improvement in our 2024 results compared to those of the past several years has generated increased confidence that the continued execution of our strategies will achieve our long-term objective of sustained excellent financial performance.

Our key priorities for 2025 include the completion of development and testing efforts as we near the end of our major systems transformation project, execution of ongoing profit-focused initiatives and the achievement of measured, intentional growth. Our focus has gradually transitioned from defensively addressing legacy challenges and areas of underperformance to an increasingly clear vision for the future - working as a team with a proactive approach and renewed energies in building tomorrow together. We value the support and commitment of our independent agents and look forward to continuing to build those relationships to gain market share and grow our business.

We extend our sincere appreciation to our stockholders for your support, as we strive every day to increase the long-term value of your investment.

Kevin G. Burke

PRESIDENT AND CHIEF EXECUTIVE OFFICER

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________

Commission file number 0-15341

DONEGAL GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware		23-2424711
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
1195 River Road, Marietta, Pennsylvania		17547
(Address of principal executive offices)		(Zip code)
Registrant's telephone number, including area code: (800)877-0600
Securities registered pursuant to Section 12(b) of the Act:
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

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act: Yes o. No þ. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o. No þ.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ. No o.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ. No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Act. (Check one):

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes þ. No o.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to Section 240.10D-1(b). o.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o. No þ.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. $207,861,925.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 30,062,059 shares of Class A common stock and 5,576,775 shares of Class B common stock outstanding on March 3, 2025.

Documents Incorporated by Reference

The registrant incorporates by reference portions of the registrant's definitive proxy statement relating to registrant's annual meeting of stockholders to be held April 17, 2025 into Part III of this report.

Attachments

Disclaimer

Donegal Group Inc. published this content on March 19, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 19, 2025 at 12:37:38.910.