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Donegal Group
(NASDAQ:DGICA)
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Rating:71Outperform
Price Target:
$21.50
â–²(12.39% Upside)
Action:Reiterated
Date:08/05/26
DGICA scores as above-average primarily due to improved profitability and a strong, conservatively levered balance sheet, supported by constructive technical momentum and an attractive P/E plus dividend yield. The score is held back by weak/uncertain top-line trends and inconsistent/volatile cash flow signals, with earnings-call headwinds around premium softness and elevated expense ratio tempering the otherwise positive underwriting and investment backdrop.
Positive Factors
Underwriting Profitability
A sub-100% combined ratio indicates profitable underwriting before investment income. Continued pricing discipline, selective growth in targeted commercial classes and favorable reserve development can support earnings quality over the medium term.
Negative Factors
Premium and Revenue Contraction
Shrinking premiums weaken scale, limit operating leverage and make it harder to grow underwriting income. Persistent personal-lines softness, market pressure and retention challenges could offset profitability improvements if selective growth does not recover.
Read all positive and negative factors
Positive Factors
Negative Factors
Underwriting Profitability
A sub-100% combined ratio indicates profitable underwriting before investment income. Continued pricing discipline, selective growth in targeted commercial classes and favorable reserve development can support earnings quality over the medium term.
Read all positive factors
Donegal Group (DGICA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$732.46M
Dividend Yield3.89%
Average Volume (3M)120.60K
Price to Earnings (P/E)9.8
Beta (1Y)0.27
Revenue Growth-3.10%
EPS Growth-18.44%
CountryUS
Employees851
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)1.97
Shares Outstanding31,542,507
10 Day Avg. Volume86,064
30 Day Avg. Volume120,602
Financial Highlights & Ratios
PEG Ratio0.20
Price to Book (P/B)0.96
Price to Sales (P/S)0.63
P/FCF Ratio8.75
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$20.00Price Target Upside4.55% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)1.73
Revenue Forecast (FY)$887.62M
Donegal Group Business Overview & Revenue Model
Company Description
Donegal Group, Inc. is an insurance holding company, which engages in the provision of property and casualty insurance to businesses and individuals. It operates through the following segments: Investment Function, Personal Lines of Insurance, and...
How the Company Makes Money
Donegal Group makes money primarily through (1) underwriting income and (2) investment income. Underwriting income is earned when the company collects more in net premiums (premiums written/earned on policies, after the cost of reinsurance) than i...
Donegal Group Earnings Call Summary
Earnings Call Date:Jul 30, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 22, 2026
Earnings Call Sentiment Positive
The quarter shows a generally positive financial and operational trajectory: solid underwriting profitability and a lower combined ratio, strong year-over-year net income growth (+32%), and improved investment income and portfolio yields. Key achievements include favorable reserve development, materially lower weather losses, meeting commercial new business goals, and early signs of recovery in personal lines new business. Offsetting challenges include top-line pressure from declining premiums (personal lines down 9.7%), an elevated expense ratio (+3.6 pts) due to transformation and incentive costs, and heightened large-fire severity that increased loss volatility. Management is pursuing targeted underwriting discipline, technology migrations (Guidewire Cloud, GenAI), and agency engagement to address market softness and operational inefficiencies. Overall, positive momentum in profitability and investments outweighs the headwinds from premium softness and temporary elevated expenses.Positive Updates
Net Income Growth
After-tax net income of $22.3 million for Q2 2026, up 32% from $16.9 million in Q2 2025, driven by underwriting income and stronger investment results.
Negative Updates
Top-Line Pressures and Premium Declines
Net premiums earned decreased 4% to $222.6 million; net premiums written decreased 3.2% year-over-year. Personal lines net premiums written declined 9.7%, reflecting ongoing market softness and retention/rate challenges.
Read all updates
Q2-2026 Updates
Positive
Negative
Net Income Growth
After-tax net income of $22.3 million for Q2 2026, up 32% from $16.9 million in Q2 2025, driven by underwriting income and stronger investment results.
Read all positive updates
Company Guidance
Management's guidance focused on disciplined growth, technology migration, and investment optimization: they plan to migrate Guidewire claims and billing to Guidewire Cloud in the first half of 2027 and roll out GenAI claims and coding tools to improve efficiencies, with technology-related expenses expected to moderate over the next few years as legacy systems are decommissioned and transformation costs are fully depreciated. On investments, they reinvested about $90M in bonds at 5.45% (a ~100 bps boost projected to add >$1M of annual net investment income), reported Q2 net investment income up 16% to $14.5M and net investment gains of $3.3M (after a $1.2M one‑time loss on a $30M swap that increased yield 225 bps), project roughly $90M of portfolio cash flow over the next 12 months with a current average yield of 4.25% (below the 5–5.25% reinvestment range), and book value rose to $17.98 (+3.8% vs $17.33 at 12/31/25). Underwriting guidance emphasized maintaining pricing and retention discipline to hit target profitability while growing selectively: Q2 net premiums earned were $222.6M (NWP down 3.2%), personal lines NWP down 9.7% vs commercial lines up 0.8%, average rate increases of 5.2% (6.0% excl. workers’ comp) and commercial rate/exposure up 7.8% (ex‑WC), combined ratio 95.6% (core loss ratio 51%), expense ratio elevated at 35.8% but expected to decline, commercial real retention 82.3% (82.9% ex farm exit) with 69% of new commercial business in targeted classes, personal new business $2.6M (noted as +63 pp QoQ and +118 pp YoY) with real retention 89%, and reported after‑tax net income of $22.3M in Q2 (up 32% YoY).Donegal Group Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
78
Positive
Cash Flow
45
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 963.18M | 978.01M | 989.61M | 927.34M | 848.22M | 816.47M |
| Gross Profit | 260.77M | 260.90M | 225.18M | 163.95M | 141.71M | 167.02M |
| EBITDA | 91.54M | 102.02M | 67.16M | 10.01M | 1.82M | 37.07M |
| Net Income | 71.09M | 79.34M | 50.86M | 4.43M | -1.96M | 25.25M |
Balance Sheet | ||||||
| Total Assets | 2.48B | 2.39B | 2.34B | 2.27B | 2.24B | 2.26B |
| Cash, Cash Equivalents and Short-Term Investments | 492.61M | 521.17M | 695.38M | 645.45M | 606.24M | 603.03M |
| Total Debt | 35.00M | 35.00M | 35.00M | 35.00M | 35.00M | 35.00M |
| Total Liabilities | 1.82B | 1.75B | 1.79B | 1.79B | 1.76B | 1.72B |
| Stockholders Equity | 666.11M | 640.42M | 545.78M | 479.75M | 483.59M | 531.04M |
Cash Flow | ||||||
| Free Cash Flow | 58.39M | 70.20M | 67.44M | 28.58M | 67.11M | 76.73M |
| Operating Cash Flow | 58.39M | 70.20M | 67.44M | 28.62M | 67.11M | 76.73M |
| Investing Cash Flow | -74.06M | -91.13M | -48.04M | -16.71M | -98.50M | -62.20M |
| Financing Cash Flow | -18.04M | -5.21M | 9.73M | -13.25M | -1.20M | -59.92M |
Donegal Group Technical Analysis
Positive
19.13
Price Trends
18.91
Positive
18.04
Positive
18.08
Positive
Market Momentum
0.12
Negative
55.78
Neutral
53.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGICA, the sentiment is Positive. The current price of 19.13 is above the 20-day moving average (MA) of 18.98, above the 50-day MA of 18.91, and above the 200-day MA of 18.08, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 55.78 is Neutral, neither overbought nor oversold. The STOCH value of 53.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DGICA.
Donegal Group Risk Analysis
Donegal Group disclosed 23 risk factors in its most recent earnings report. Donegal Group reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Donegal Group Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
87 Outperform | $1.01B | 4.90 | 42.41% | 6.76% | 1.45% | 102.69% | |
81 Outperform | $1.21B | 5.59 | 38.78% | 1.74% | 3.96% | 234.26% | |
80 Outperform | $1.38B | 10.01 | 14.96% | 1.39% | 11.18% | 52.50% | |
74 Outperform | $1.52B | 22.08 | 7.79% | 3.56% | 7.04% | -18.57% | |
71 Outperform | $732.46M | 9.78 | 11.01% | 3.89% | -3.10% | -18.44% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
61 Neutral | $450.23M | 4.50 | 30.43% | 6.59% | 3.29% | 21.74% |
* Financial Sector Average
DGICA
Donegal Group
19.26
0.33
1.73%
SAFT
Safety Insurance Group
103.32
31.74
44.35%
UFCS
United Fire Group
54.76
23.25
73.78%
UVE
Universal Insurance Holdings
44.22
19.11
76.10%
ACIC
American Coastal Insurance
9.35
-1.05
-10.12%
HRTG
Heritage Insurance Holdings
34.53
10.65
44.60%
Donegal Group Corporate Events
Business Operations and StrategyDividends
Donegal Group Declares Quarterly Cash Dividend for Shareholders
Positive
Jul 17, 2026
On July 16, 2026, Donegal Group Inc.’s board of directors declared a regular quarterly cash dividend of $0.1925 per share for its Class A common stock and $0.175 per share for its Class B common stock. The dividends, payable on August 14, 20...
Business Operations and StrategyFinancial Disclosures
Donegal Group Schedules Second-Quarter 2026 Results Release
Positive
Jul 7, 2026
Donegal Group Inc., a regional property and casualty insurance holding company operating in 21 states under the Donegal Insurance Group banner and carrying an A (Excellent) rating from A.M. Best, continues to emphasize financial performance, digit...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.