Donegal Group Inc.

For second quarter 2026, net premiums earned decreased 4% to $222.6 million and net premiums written decreased 3.2%. The combined ratio improved to 95.6% from 97.7% in the prior-year quarter, while the core loss ratio was 51% versus 50.1%. Weather-related losses were $11.9 million, or 5.3 points of the loss ratio, compared with $25.8 million, or 11.1 points, a year ago. Large fire losses contributed 6.7 points, up from 5.2 points. The company reported $7.8 million of net favorable prior-year reserve development versus $3 million last year. The expense ratio was 35.8% versus 32.2% last year. After-tax net income was $22.3 million, up 32% from $16.9 million. Net investment income rose 16% to $14.5 million from $12.5 million, and net investment gains were $3.3 million versus $1.5 million. Book value was $17.98 at June 30, 2026, up 3.8% from $17.33 at December 31, 2025. Management did not provide explicit next-quarter or full-year earnings guidance; instead, it said it expects continued focus on underwriting discipline, gradual improvement in personal lines momentum, and Guidewire Cloud migration in the first half of 2027. Tony Viozzi said the company expects about $90 million in portfolio cash flow over the next 12 months, with a current average yield of 4.25% versus a current investment rate of 5%-5.25%.

Kevin Burke said the quarter reflected excellent underwriting results despite a softening market, with core loss ratios showing solid underlying performance in both commercial and personal lines. He emphasized stronger agent engagement, targeted new business growth, and discipline on pricing and retention as the company balances growth with profitability. He also highlighted ongoing technology initiatives, especially the planned migration to Guidewire Cloud in the first half of 2027 and the potential use of GenAI to improve claims efficiency.

Jeff Miller highlighted that net premiums earned fell 4% to $222.6 million and net premiums written fell 3.2%, but underwriting results improved materially. He walked through the drivers of the 95.6% combined ratio: lower weather losses, favorable reserve development of $7.8 million, and higher large fire losses and expense ratio, which rose to 35.8% from 32.2%. He also noted after-tax net income of $22.3 million, up 32%, and stronger investment income, with net investment income up 16% to $14.5 million.

There was no live analyst Q&A; management said questions were submitted in advance and answered within the prepared remarks. The main issues addressed were the soft market, pressure on retention and rate achievement, higher commercial fire losses, and the elevated expense ratio. Management said it is standing firm on underwriting and pricing discipline, that the farm exit weighed on commercial retention, and that technology-related expenses should moderate over time as legacy systems are decommissioned.