MARIETTA, PA — Donegal Group Inc. (Nasdaq: DGICA, DGICB) recently reported lower first-quarter 2026 earnings as higher weather-related and large-loss claims drove a deterioration in underwriting results despite modest investment income gains.
Net income fell to $11.5 million, or $0.31 per diluted Class A share, from $25.2 million, or $0.71 per share, a year earlier.
Net premiums earned declined 4.9% to $221.4 million, while the combined ratio rose to 99.8% from 91.6%, reflecting higher loss costs and expenses.
The loss ratio increased to 64.1% from 56.7%, driven by $17.2 million in weather-related losses and $12.2 million in large fire losses, both higher than the prior-year quarter.
Weather-related losses accounted for 7.8 percentage points of the loss ratio, compared with 3.7 points a year earlier. Large fire losses added 5.5 percentage points, up from 3.3 points.
Net favorable reserve development declined to $5.7 million from $10.5 million, reducing the benefit to underwriting results compared with the prior year.
The expense ratio rose to 35.4% from 34.6%, partly due to lower earned premiums and costs associated with a systems modernization project.
Net premiums written decreased 3.2%, reflecting a 13.1% drop in personal lines that offset a 2.2% increase in commercial lines.
Commercial lines growth was driven by new business and renewal rate increases, while personal lines declined due to reduced new business activity.
Net investment income increased 19.2% to $14.3 million, supported by higher yields and larger invested assets. The company maintained a conservative investment portfolio, with 95.3% allocated to fixed-maturity securities.
Book value per share rose to $17.54 at March 31 from $16.24 a year earlier, while annualized return on average equity declined to 7.1% from 17.8%.
Chief Executive Officer Kevin Burke said results reflected “solid underlying operating performance” despite a softening insurance market and higher catastrophe-related losses.
Donegal declared quarterly cash dividends of $0.1925 per Class A share and $0.175 per Class B share, payable May 15 to shareholders of record as of May 1.
The company provides property and casualty insurance across Mid-Atlantic, Southern, Midwestern and Southwestern U.S. markets.
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