DGICB

• Systems modernization: Progress on commercial line systems release in July 2025, first phase of personal lines software release deployed in February, with conversion of legacy policies ongoing.
• Underwriting discipline: Strong performance in core loss ratios; commercial lines net premiums written up 3.3% with strategic pruning of less profitable classes; personal lines net premiums written down 9.9% due to limiting new business and non-renewal of Maryland book.
• Rate increases: Average rate increase 9.6% total, 10.6% excluding workers' compensation; commercial lines renewal rate increases led by commercial multi-peril, commercial umbrella, and commercial auto; personal lines renewal rate increases averaged 5.8% for auto and 15.9% for homeowners.
• Operational alignment: Collaboration between product, underwriting, and marketing teams; analytics team providing insights for data-driven decisions; expense reduction initiatives with modest decrease in technology costs offset by some increase in underwriting-based incentives.
• Investment update: Net investment income $12 million, up 9.2% from prior year; average tax equivalent yield 3.50%; defensive equity positioning and focus on high-quality fixed income.

• Announced increase in quarterly cash dividend, reflecting confidence in business strategies.
• Confidence in continued positive momentum from three sequential quarters of favorable operating performance; focus on maintaining excellent financial performance through ongoing strategies.

For the first quarter of 2025, net premiums earned increased 2.2% to $232.7 million. Net premiums written decreased by 1.7%, with personal lines net premiums written down 9.9% and commercial lines up 3.3%. The combined ratio was 91.6% for Q1 2025, a substantial improvement from 102.4% in the prior year quarter. The core loss ratio improved 4.5 percentage points compared to the prior year quarter, with commercial lines core loss ratio down 0.7 percentage points and personal lines down 9.4 percentage points. Weather-related losses were lower, and large fire losses decreased. Net favorable development of reserves for prior accident years reduced the loss ratio by 4.5 percentage points.

• Economic uncertainty: Tariff policies could affect auto pricing, repair costs, and construction costs, impacting claims costs.
• Social inflation: Impacts from attorney advertising, jury anchoring, third-party litigation financing, and nuclear verdicts affecting the industry.
• Medical utilization: Increase in medical visits, testing, and prescription medications putting upward pressure on claim costs.