Segment Highlights

The personal lines segment recorded net premiums earned of $86.0 million, a 13.9% decrease from $99.9 million in the prior-year quarter. The segment’s statutory combined ratio was 88.5%, an improvement from 89.5% in the fourth quarter of 2024. The core loss ratio for personal lines decreased to 46.8% from 48.4%.

Full-Year Results

For the full year of 2025, Donegal Group reported net income of $79.3 million, a 56.0% increase from $50.9 million in 2024. Annual total revenue reached $978.0 million, representing a 1.2% directional contraction from $989.6 million the previous year. Net premiums earned for the year decreased 1.7% to $921.2 million. The full-year return on average equity rose to 13.4% from 9.9% in 2024.

Business and Operations Update

The company continued its systems modernization project, with costs allocated from Donegal Mutual Insurance Company representing 1.5 percentage points of the expense ratio in the fourth quarter of 2025. This project reached a milestone in the third quarter of 2025 with the placement of the final two software releases into service.

In the personal lines segment, the company is executing an incremental conversion of legacy policies to a new platform, with a scheduled completion date of June 2027. For the commercial lines segment, new business writings missed the 2025 business plan target following a refinement in underwriting appetite.

Strategic Moves

Donegal Group has introduced new compensation incentives for independent agents, effective in 202,6 to encourage increased submissions of quality accounts. The company declared quarterly cash dividends of $0.1825 per Class A share and $0.165 per Class B share, paid on February 17, 2026. No M&A transactions were announced in the reporting period.

Guidance and Outlook

Management indicated that the pursuit of modest premium growth through independent agency partners is a focus for 2026. Factors to watch include the expected gradual subsidence of the decline in personal lines premiums throughout 2026. The company expects the expense ratio impact of systems modernization costs to be 1.3 percentage points for the full year 2026.

Performance Summary

Fourth-quarter net income was $17.2 million as total revenue contracted 3.9%. Commercial premiums grew 3.0% while personal lines premiums fell 13.9%. Full-year profit rose 56.0% despite a 1.2% decline in total annual revenue. Book value per share ended 2025 at $17.33.