DEF: Donegal Group Inc. Announces Details for 2025 Annual Stockholders Meeting and Highlights 2024 Financial Performance

Donegal Group Inc. will hold its 2025 annual meeting virtually on April 17, 2025, and the proxy statement details the agenda, voting procedures, director nominations, and ratification of the independent auditor, while also summarizing the company's improved financial performance in 2024.

Summary

• Donegal Group Inc. (DGI) has announced its 2025 Annual Meeting of Stockholders, which will be held virtually on April 17, 2025.
• The meeting will include voting on the election of two Class C directors and the ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
• The proxy statement was first mailed to stockholders on or about March 17, 2025.
• Stockholders of record as of March 3, 2025, are entitled to notice of and to vote at the meeting.
• The company's advance notice by-laws require stockholders to submit nominations and proposals between November 17, 2025, and December 17, 2025, for the 2026 annual meeting.
• For 2024, DGI reported total revenues of $989.6 million, a 6.7% increase compared to $927.3 million in 2023.
• Net income for 2024 was $50.9 million, or $1.53 per diluted Class A share, compared to $4.4 million, or $0.14 per diluted Class A share, in 2023.
• Donegal Mutual Insurance Company owns approximately 70% of the combined voting power of DGI's outstanding common stock and intends to vote in favor of the director nominees and the auditor ratification.
• The company's business strategies focus on sustained financial performance, operational modernization, profitable growth, and superior experiences for agents, policyholders, and employees.
• The company's executive compensation program includes base salary, annual cash incentives, and long-term stock options, with incentives tied to commercial lines growth, underwriting results, and operating return on equity.

Sentiment

Score: 8

Explanation: The document presents a positive outlook due to improved financial performance in 2024 and strategic initiatives for future growth. However, the controlling interest of Donegal Mutual and the dependence on achieving sustained underwriting profitability introduce some uncertainty.

Positives

• Total revenues increased by 6.7% to $989.6 million in 2024.
• Net income significantly improved to $50.9 million in 2024 from $4.4 million in 2023.
• Net income per diluted Class A share increased to $1.53 in 2024 from $0.14 in 2023.
• The company is focused on modernizing operations and processes through technology.
• The company is committed to providing superior experiences to agents, policyholders, and employees.
• The company's executive compensation program is designed to align the interests of executives with those of stockholders.

Risks

• Donegal Mutual's controlling interest (approximately 70% of voting power) could influence decisions against the interests of minority shareholders.
• The company's future performance is dependent on achieving sustained underwriting profitability.
• The company's future performance is dependent on capitalizing on opportunities to grow profitably.
• The company's future performance is dependent on providing superior experiences to agents, policyholders, and employees.

Future Outlook

The company plans to continue focusing on organic growth and is in the midst of a multi-year effort to modernize its key technology infrastructure and application systems, projecting full completion in 2026.

Management Comments

• Our board of directors believes that Donegal Mutuals majority voting control of us is in our long-term best interests and the long-term best interests of Donegal Mutual.
• Our board of directors reaffirmed in March 2025 that preservation of the relationship between Donegal Mutual and us and our status as a public company of which Donegal Mutual owns approximately 70% of the combined voting power of our Class A common stock and our Class B common stock is in the collective best interests of the constituencies that we and Donegal Mutual serve.

Industry Context

The Donegal Insurance Group ranked as the 88th largest property and casualty insurance group in the United States based on its net premiums written in 2023, according to A.M. Best Company.

Comparison to Industry Standards

• The company informally considers Cincinnati Financial Corporation, Erie Indemnity Company, The Hanover Insurance Group, Inc., Horace Mann Educators Corporation, Kemper Corporation, ProAssurance Corporation, RLI Corp., Selective Insurance Group, Inc. and United Fire Group, Inc. as its peer group.
• The company's peer group consists of Cincinnati Financial Corporation, The Hanover Insurance Group, Inc., Horace Mann Educators Corporation, Kemper Corporation, Selective Insurance Group Inc. and United Fire Group, Inc.

Management Changes

Related Party Transactions

• Donegal Mutual and Atlantic States contribute substantially all of their direct written business to the pool and receive an allocated percentage of the pooled underwriting results, excluding certain reinsurance Donegal Mutual assumes from our insurance subsidiaries.
• Donegal Mutual has a 100% quota-share reinsurance agreement with Southern Mutual Insurance Company, or Southern Mutual, and Donegal Mutual places its assumed business from Southern Mutual into the underwriting pool.
• Atlantic States has an 80% share of the results of the pool, and Donegal Mutual has a 20% share of the results of the pool.
• Our insurance subsidiaries, in the ordinary course of their businesses, had a catastrophic reinsurance agreement with Donegal Mutual in place during 2024.
• Donegal Mutual provides facilities, management and other services to us and our insurance subsidiaries.
• Donegal Mutual purchases and maintains the information technology systems that support the business of Donegal Mutual and our insurance subsidiaries.
• Donegal Mutual allocates certain related expenses to Atlantic States in accordance with the relative participation of Donegal Mutual and Atlantic States in the pooling agreement.
• Our insurance subsidiaries other than Atlantic States reimburse Donegal Mutual for allocated costs of services Donegal Mutual provides on their behalf based on their proportion of the total direct premiums written of the Donegal Insurance Group and other metrics.
• Allocated expenses from Donegal Mutual for services it provided to Atlantic States and our other insurance subsidiaries totaled $224.6 million in 2024, compared to $219.0 million in 2023.
• Donegal Mutual allocated $12.3 million and $10.5 million of related costs to our insurance subsidiaries in 2024 and 2023, respectively.
• Over the next five years, Donegal Mutual will allocate to our insurance subsidiaries their proportionate share of the remaining $29.4 million of its costs for releases already placed into service.
• Donegal Mutual incurred an additional $14.4 million of deferred costs related to releases under development that were not yet ready for their intended use at December 31, 2024.

Stakeholder Impact

• Stockholders will have the opportunity to vote on key corporate governance matters.
• Policyholders of Donegal Mutual and its insurance subsidiaries will benefit from the stable management and consistent underwriting discipline.
• Employees will benefit from the company's commitment to providing rewarding careers.
• Independent insurance agents will benefit from the company's commitment to providing superior experiences.
• Local communities will benefit from the company's commitment to maintaining offices in those communities.

Next Steps

• Stockholders are encouraged to vote on the election of directors and the ratification of the independent auditor.
• The company will continue to focus on its strategic initiatives, including modernizing operations and processes.
• The company will continue to focus on its strategic initiatives, including capitalizing on opportunities to grow profitably.
• The company will continue to focus on its strategic initiatives, including providing superior experiences to agents, policyholders, and employees.

Key Dates