Donegal net income jumps 32% on underwriting, investment gains

Donegal Group Inc. posted second-quarter net income of $22.3 million, or 60 cents a share, up from $16.9 million, or 46 cents a share, a year earlier. The property and casualty insurer's combined ratio improved to 95.6% from 97.7% in the same period of 2025. Net premiums earned fell 4% to $222.6 million, a drop CEO Kevin G. Burke attributed to "challenging trends and market conditions" that persisted from the first quarter.

Investment gains after tax added $2.6 million, or 7 cents a share, versus $1.2 million, or 3 cents a share, in the prior-year quarter. That lift, combined with a lower loss ratio, drove the earnings beat. Burke said commercial lines net premiums written grew 0.8%, helped by new business production that mostly offset lower renewal increases and retention. Personal lines premiums continued to decline, a trend Burke expects "will gradually taper over the course of 2026" as pricing actions take hold.

The underwriting improvement came from favorable core loss ratios in both commercial and personal lines, lower-than-average weather losses and favorable prior-year reserve development, Burke said. Those were partly offset by a moderate increase in large fire losses. The net result: an annualized return on average equity of 13.6% in the quarter, up from 11.3% a year earlier. Book value rose to $17.98 a share at June 30 from $17.54 at March 31.