third quarter of 2026
Filed Oct 29, 2026Filed under $DGICADonegal Group Inc. Announces Third Quarter and First Nine Months of 2026 Results
Third-quarter underwriting remained profitable and investment income increased, but net premiums earned, net premiums written, net income, operating income, earnings per share and return on average equity declined from the prior-year quarter.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net premiums earned, three months ended September 30, 2026GAAP | $222.9M | – | -3.0 % |
| Investment income, net, three months ended September 30, 2026GAAP | $14.69M | – | 5.4 % |
| Net investment losses, three months ended September 30, 2026GAAP | $(701) | – | NM |
| Total revenues, three months ended September 30, 2026GAAP | $237.7M | – | -3.4 % |
| Total expenses, three months ended September 30, 2026GAAP | $215.6M | – | – |
| Income before income tax expense, three months ended September 30, 2026GAAP | $22.05M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | $3.89M | – | – |
| Net income, three months ended September 30, 2026GAAP | $18.16M | – | -9.6 % |
| Non-GAAP operating income, three months ended September 30, 2026non-GAAP | $18.64M | – | -2.3 % |
| Net income – Class A (diluted), three months ended September 30, 2026GAAP | $0.49 | – | -10.9 % |
| Non-GAAP operating income – Class A (diluted), three months ended September 30, 2026non-GAAP | $0.50 | – | -3.8 % |
| Net income – Class B, three months ended September 30, 2026GAAP | $0.45 | – | -11.8 % |
| Non-GAAP operating income – Class B, three months ended September 30, 2026non-GAAP | $0.46 | – | -4.2 % |
| GAAP combined ratio, three months ended September 30, 2026GAAP | 96.5 % | – | – |
| GAAP loss ratio, three months ended September 30, 2026GAAP | 61.5 % | – | – |
| GAAP expense ratio, three months ended September 30, 2026GAAP | 34.8 % | – | – |
| Statutory combined ratio, total lines, three months ended September 30, 2026non-GAAP | 96.5 % | – | – |
| Net premiums written, three months ended September 30, 2026non-GAAP | $209.7M | – | -4.5 % |
| Annualized return on average equity, three months ended September 30, 2026other | 10.9 % | – | -2.1 pts |
| Net premiums earned, nine months ended September 30, 2026GAAP | $666.8M | – | -4.0 % |
| Investment income, net, nine months ended September 30, 2026GAAP | $43.47M | – | 13.0 % |
| Net investment gains, nine months ended September 30, 2026GAAP | $2.09M | – | -11.0 % |
| Total revenues, nine months ended September 30, 2026GAAP | $714.8M | – | -3.1 % |
| Total expenses, nine months ended September 30, 2026GAAP | $651.1M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $51.97M | – | -16.4 % |
| Non-GAAP operating income, nine months ended September 30, 2026non-GAAP | $50.23M | – | -16.7 % |
| Net income – Class A (diluted), nine months ended September 30, 2026GAAP | $1.40 | – | -18.6 % |
| Non-GAAP operating income – Class A, nine months ended September 30, 2026non-GAAP | $1.35 | – | -19.2 % |
| Net premiums written, nine months ended September 30, 2026non-GAAP | $675.4M | – | -3.6 % |
| GAAP combined ratio, nine months ended September 30, 2026GAAP | 97.3 % | – | – |
| Annualized return on average equity, nine months ended September 30, 2026other | 10.6 % | – | -3.5 pts |
| Book value per common share at September 30, 2026other | $17.70 | – | 3.3 % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Commercial lines net premiums earned, three months ended September 30, 2026Commercial-lines net premiums written decreased due primarily to modestly higher attrition and a lower level of renewal premium increases, offset partially by incremental growth in new business writings. | $142.9M | – | 1.9 % |
| Personal lines net premiums earned, three months ended September 30, 2026Personal-lines net premiums written decreased primarily because of a lower level of renewal premium increases, offset partially by incremental new business writings that included the 12-month automobile policy term option. | $79.97M | – | -10.7 % |
| Commercial lines net premiums earned, nine months ended September 30, 2026Commercial lines net premiums written were $435,739 for the nine months ended September 30, 2026, compared to $435,916 for the prior-year period. | $423.4M | – | 2.0 % |
| Personal lines net premiums earned, nine months ended September 30, 2026Personal lines net premiums written were $239,695 for the nine months ended September 30, 2026, compared to $264,605 for the prior-year period. | $243.4M | – | -12.8 % |
Capital returns
- On October 15, 2026, Donegal Group declared a regular quarterly cash dividend of $0.1925 per share for Class A common stock, payable on November 16, 2026 to stockholders of record as of November 2, 2026.
- On October 15, 2026, Donegal Group declared a regular quarterly cash dividend of $0.175 per share for Class B common stock, payable on November 16, 2026 to stockholders of record as of November 2, 2026.
What drove it
- Net investment income increased 5.4% in the third quarter, primarily reflecting an increase in average investment yield relative to the prior-year third quarter.
- Weather-related losses were $19.1 million, or 8.6 percentage points of the loss ratio, compared to $14.3 million, or 6.2 percentage points, in the prior-year quarter.
- Large fire losses were $5.8 million, or 2.6 percentage points of the loss ratio, compared to $10.0 million, or 4.4 percentage points, in the prior-year quarter.
- Net favorable development of reserves for losses incurred in prior accident years was $3.5 million and decreased the third-quarter loss ratio by 1.5 percentage points.
- The personal-lines core loss ratio decreased to 42.2% from 46.6%, primarily attributable to the homeowners line of business.
Concerns
- Net premiums written declined 4.5% as pricing discipline amid increased rate competition contributed to higher-than-planned attrition.
- The GAAP combined ratio increased to 96.5% from 95.9% because the expense ratio increased to 34.8% from 33.5%.
- The commercial-lines core loss ratio increased to 57.2% from 54.0%, due largely to higher workers' compensation and casualty loss severity.
- Workers' compensation statutory combined ratio was 128.1%, compared to 103.9%.
- Net income included after-tax net investment losses of $0.6 million, compared to after-tax net investment gains of $1.0 million in the prior-year quarter.
What to watch
- Management's action plans with independent agency partners to achieve profitable premium growth at a modest pace amid current market conditions.
- The effect of the 12-month automobile policy term option, which customers selected for the vast majority of new automobile policies written during the quarter.
- Weather-related loss activity, workers' compensation claim severity and the commercial-lines core loss ratio.
- Whether renewal pricing, attrition and selectively enhanced competitiveness improve net premiums written growth.
- Expense-ratio performance as net premiums earned remain below the prior-year quarter.
Balance sheet and cash flow
- Cash was $32,503 at September 30, 2026, compared to $26,786 at December 31, 2025.
- Total investments were $1,492,872 at September 30, 2026, compared to $1,500,253 at December 31, 2025.
- Borrowings under lines of credit were $35,000 at September 30, 2026 and $35,000 at December 31, 2025.
- Total stockholders' equity was $661,284 at September 30, 2026, compared to $640,418 at December 31, 2025.
- After-tax net unrealized losses within the available-for-sale fixed-maturity portfolio were $24.1 million during 2026 and decreased book value by $0.65 per share.
Analysis
Donegal Group reported a softer third quarter on premium volume and earnings. Net premiums earned declined 3.0% to $222,883, total revenues declined 3.4% to $237,658 and net premiums written declined 4.5% to $209,733. Management attributed the written-premium decline to competitive market conditions, including pricing discipline on renewals, higher attrition and lower renewal premium increases. Commercial lines net premiums earned increased 1.9%, while personal lines net premiums earned decreased 10.7%.
Profitability remained positive but was below the prior-year quarter. Net income was $18,157, down 9.6%, and diluted Class A earnings were $0.49, down 10.9%. Non-GAAP operating income decreased 2.3% to $18,639, a smaller decline than GAAP net income because the current quarter included after-tax investment losses while the prior-year quarter included after-tax investment gains. Annualized return on average equity decreased to 10.9% from 13.0%.
Underwriting performance was profitable, with a GAAP combined ratio of 96.5%, but it worsened from 95.9%. The loss ratio improved to 61.5% from 62.1%, aided by lower large fire losses and favorable prior-year reserve development. This was offset by a higher expense ratio of 34.8% versus 33.5%, which management said primarily reflected the lower base of net premiums earned. Weather-related losses rose to $19.1 million from $14.3 million, and commercial-lines core loss severity increased, particularly in workers' compensation and casualty.
Investment income provided an offset, increasing 5.4% to $14,689 as average investment yield increased. Net investment results shifted to a $701 loss from a $1,272 gain. The investment portfolio totaled $1,492,872 at September 30, 2026, and 95% of the consolidated portfolio was invested in diversified, highly rated and marketable fixed-maturity securities. Book value per common share was $17.70, while after-tax net unrealized losses within the available-for-sale fixed-maturity portfolio during 2026 decreased book value by $0.65 per share.
For the first nine months, the decline was broader: net premiums earned fell 4.0%, net income fell 16.4%, non-GAAP operating income fell 16.7% and the GAAP combined ratio increased to 97.3% from 95.1%. No numerical forward guidance was issued. Management is pursuing profitable premium growth at a modest pace and highlighted selectively enhanced competitiveness for desired accounts, including a 12-month automobile policy term option that doubled net premiums written related to those new policies.
Management, verbatim
As expected, we continued to experience soft market conditions throughout our operating regions in the third quarter of 2026. Although those conditions continued to impede our ability to achieve our premium growth plan, we were able to deliver solid profitability, as demonstrated by earnings per diluted Class A share of $0.49 and an annualized return on equity of 10.9%.
Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc.
Our underwriting results for the third quarter were generally favorable despite an increase in weather-related losses compared to the prior-year quarter and a handful of unusually severe workers’ compensation claims during the quarter. We were pleased with the relative consistency of our core loss ratio compared to the prior-year quarter.
Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc.
Not in the filing
stated, not guessed- Forward numerical guidance was not provided.
- Previous-period outlook was not provided.
- Operating cash flow was not provided.
- Free cash flow was not provided.
- Share repurchases during the reported period were not provided.
- GAAP operating income was not provided.
- Gross margin was not provided.
- Quarterly sequential comparisons were not provided for the reported metrics.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.