Donegal Group Inc. Q1 FY2026 earnings call

• Navigating through softening insurance market conditions, maintaining underwriting and pricing discipline and pursuing new business at adequate pricing levels, with specific action plans and renewed engagement strategy with independent agents. • Successful modernization of policy systems providing foundation for technology transformation, with migration of on-premises Guidewire claims, billing, and policy administration systems to cloud platform beginning first phase in February, expecting to increase agility and speed to market and leverage GenAI solutions. • Operational strategies including collaborative state strategy planning process, internal alignment between marketing, underwriting, and product teams, enhanced pricing sophistication, and company-wide expense optimization, working with independent agents on segmented efforts in different lines of business.

Net premiums earned for the first quarter of 2026 decreased 4.9% to $221.4 million. Net premiums written decreased by 3.2%, with a 13.1% decrease in personal lines net premiums written offset partially by 2.2% growth in commercial lines. The combined ratio was 99.8% for the first quarter of 2026 compared to 91.6% for the prior year quarter. Core loss ratios reflected solid underlying performance within both commercial and personal line segments. In commercial lines, net premiums written increased by 2.2% for the first quarter of 2026, with a real retention rate of 82.3% and overall commercial rate and exposure increase (excluding workers' compensation) steady at 9%. In personal lines, net premiums written declined 13.1% for the first quarter of 2026, new business written increased, real retention rate was 88.7%, rate and exposure slowed to 2.4%, personal auto line saw a 3.6 percentage point decrease in loss ratio, while homeowner's loss ratio deteriorated 14.6 percentage points due to weather activity and large fire impact.

• Migration of on-premises Guidewire claims, billing, and policy administration systems to cloud platform to continue, with first phase started in February and claims and billing applications to move to cloud in early 2027. • Expect to further leverage GenAI solutions from cloud migration to enhance underwriting, pricing, and risk selection capabilities in next phase. • Projecting investment income growth with $14.3 million net investment income in first quarter of 2026, expecting continuation of higher reinvestment yields.

• Higher-than-average weather-related losses and large fire and casualty losses impacting underwriting results. • Softening insurance market conditions posing challenges. • Economic inflation as a persistent industry-specific challenge. • Uncertainty related to cloud migration and GenAI implementation progress.

No specific Q&A pairs as questions were worked into prepared remarks