Donegal Group reported lower earnings and revenue for the third quarter and first nine months of 2026 as soft insurance-market conditions constrained premium growth. The Pennsylvania-based insurer said it continued to prioritize pricing discipline on renewals, accepting higher policy attrition amid rate competition while selectively pursuing new business.
Underwriting remained generally favorable in the quarter, despite higher weather-related losses and several unusually severe workers’ compensation claims. Investment income rose, but that did not fully offset the decline in premiums and earnings.
Key details
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Third-quarter revenue and earnings declined year over year. Net premiums earned fell 3.0% to $222.9 million, and total revenue decreased 3.4% to $237.7 million. Net income was $18.2 million, down 9.6%; non-GAAP operating income was $18.6 million, down 2.3%.
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Nine-month results were also lower. For the first nine months, net premiums earned declined 4.0% to $666.8 million, while total revenue fell 3.1% to $714.8 million. Net income dropped 16.4% to $52.0 million, and non-GAAP operating income fell 16.7% to $50.2 million.
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Per-share earnings followed the same pattern. Third-quarter diluted earnings were 49 cents for Class A shares and 45 cents for Class B, compared with 55 cents and 51 cents, respectively, a year earlier. For the first nine months, diluted earnings were $1.40 per Class A share and $1.29 per Class B share, down from $1.72 and $1.58.
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Operating return on equity declined. Annualized return on average equity was 10.9% in the quarter, versus 13.0% a year earlier. For the first nine months, it was 10.6%, compared with 14.1%.
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Investment income provided some support. Net investment income increased 5.4% to $14.7 million in the quarter and rose 13.0% to $43.5 million for the nine-month period. Donegal recorded a net investment loss of $701,000 in the quarter, compared with a $1.3 million gain a year earlier. For the first nine months, net investment gains were $2.1 million, down from $2.3 million.
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Book value per share increased. It stood at $17.70 at Sept. 30, up 3.3% from $17.14 a year earlier.
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Management attributed weaker premium growth to renewal attrition. Net premiums written declined modestly in both commercial and personal lines. Donegal said higher-than-planned attrition reflected its decision to maintain pricing discipline on renewals as competitors became more aggressive. Selectively improved pricing or competitiveness for desired accounts helped lift new-business writings somewhat.
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A change in auto policy terms boosted written premium on new policies. Most customers choosing Donegal’s reintroduced 12-month auto policy selected it over the prior six-month term. The longer term effectively doubled the net premiums written associated with those new policies, the company said; the policy-term change is distinct from growth in the number of customers.
Plain-English implications
Donegal’s results show a trade-off between maintaining renewal pricing discipline and retaining policies in a competitive market: management said attrition weighed on premium growth even as it pursued selected new business. The longer auto policy term also increased premium written per new policy, while the company’s reported underwriting results remained generally favorable despite some higher claims.