What changed in this filing

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Item 1. Business

2024-03-06 compared with 2023-03-06 · 385 added, 380 removed, 544 unchanged (58% of the section changed)

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and its insurance subsidiaries.

Class A common stock and our Class B common stock trade on the NASDAQ Global Select Market under the symbols “DGICA” and “DGICB,” respectively.

A common stock and our Class B common stock trade on the NASDAQ Global Select Market under the symbols “DGICA” and “DGICB,” respectively.

Donegal Mutual Insurance Company, or Donegal Mutual, organized us as an insurance holding company on August 26, 1986.

At December 31, 2022, Donegal Mutual held approximately 43% of our outstanding Class A common

stock and approximately 84% of our outstanding Class B common stock.

Donegal Mutual’s ownership provides Donegal Mutual with approximately 71% of the combined voting power of our outstanding shares of Class A common stock and our outstanding

shares of Class B common stock.

Our insurance subsidiaries and Donegal Mutual have interrelated operations due to an intercompany pooling agreement and other intercompany agreements and transactions we describe in Note 3 of the Notes to

Consolidated Financial Statements.

At December 31, 2023, Donegal Mutual held approximately 44% of our outstanding Class A common stock

and approximately 84% of our outstanding Class B common stock.

Donegal Mutual’s ownership provides Donegal Mutual with approximately 71% of the combined voting power of our outstanding shares of Class A common stock and our outstanding shares of

Class B common stock.

Financial Statements.

While maintaining the separate corporate existence of each company, our insurance subsidiaries conduct business together with Donegal Mutual and its insurance subsidiaries as the Donegal Insurance Group.

Donegal Insurance Group is not a legal entity, is not an insurance company and does not issue or administer insurance policies.

The Donegal Insurance

Group is not a legal entity, is not an insurance company and does not issue or administer insurance policies.

Rather, it is a trade name that refers to the group of insurance companies that are affiliated with Donegal Mutual.

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our investment function, our commercial lines of insurance and our personal lines of insurance.

We set forth financial information about these segments in Note 19 of

the Notes to Consolidated Financial Statements.

We set forth financial information about these segments in Note 19 of the

Notes to Consolidated Financial Statements.

The commercial lines products of our insurance subsidiaries consist primarily of commercial automobile, commercial multi-peril and workers’ compensation policies.

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underwriting, claims servicing and policyholder service.

At the same time, we believe our insurance subsidiaries have cost advantages over many smaller regional insurers that result from economies of scale our insurance subsidiaries realize

through centralized accounting, administrative, data processing, investment and other services.

At the same time, we believe our insurance subsidiaries have cost advantages over many smaller regional insurers that result from economies of scale our insurance subsidiaries realize through

centralized accounting, administrative, data processing, investment and other services.

We believe we have a substantial opportunity, as a well-capitalized regional insurance holding company with a solid business strategy, to grow profitably and compete effectively with larger national property and

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Our downstream holding company structure, with Donegal Mutual holding approximately 71% of the combined voting power of our common stock, has proven its effectiveness and success over the 37 years of our existence.

time period, we have grown significantly in terms of revenue and financial strength, and the Donegal Insurance Group has developed an excellent reputation as a regional group of property and casualty insurers.

We have been an effective consolidator of smaller “main street” property and casualty insurance companies.

While we are currently placing less emphasis on pursuing acquisitions due to several ongoing major

initiatives to enhance our technology infrastructure as well as our analytical and processing capabilities, we expect to continue to acquire other insurance companies to expand our business in a given region over time.

Since 1998, we and Donegal

Mutual have completed seven transactions involving acquisitions of property and casualty insurance companies or participation in the business of property and casualty insurance companies through Donegal Mutual’s entry into quota-share reinsurance

agreements with them.

Over that time

period, we have grown significantly in terms of revenue and financial strength, and the Donegal Insurance Group has developed an excellent reputation as a regional group of property and casualty insurers.

Since 1998, we and Donegal Mutual have completed seven transactions involving acquisitions of property and casualty insurance companies or participation in the business of property and casualty insurance companies

through Donegal Mutual’s entry into quota-share reinsurance agreements with them.

While we are currently placing less emphasis on pursuing acquisitions due to several ongoing major initiatives to enhance our technology infrastructure as well as our

analytical and processing capabilities, we expect to continue to acquire other insurance companies to expand our business in a given region over time.

Donegal Mutual completed the merger of Mountain States Mutual Casualty Company, or Mountain States, with and into Donegal Mutual effective May 25, 2017.

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Beginning with policies effective in 2021, Donegal Mutual

began to place the business of the Mountain States Insurance Group into the underwriting pool we describe in “History and Organizational Structure.” As a result, our consolidated financial results through December 31, 2020 excluded the results of

the Mountain States Insurance Group operations in those Southwestern states.

began to place the business of the Mountain States Insurance Group into the underwriting pool we describe in “History and Organizational Structure.”

Available Information

You may obtain our Annual Reports on Form 10-K, including this Form 10-K Report, our quarterly reports on Form 10-Q, our current reports on Form 8-K, our proxy statement and our other filings pursuant to the

Securities Exchange Act of 1934, or the Exchange Act, without charge by viewing our website at www.donegalgroup.com .

You may also view our Code of Business Conduct and Ethics and the charters of

the executive committee, the audit committee, the compensation committee and the nominating committee of our board of directors on our website.

Upon request to our corporate secretary, we will also provide printed copies of any of these documents

to you without charge.

Exchange Act of 1934, or the Exchange Act, without charge by viewing our website at www.donegalgroup.com .

You may also view our Code of Business Conduct and Ethics and the charters of the executive

committee, the audit committee, the compensation committee and the nominating committee of our board of directors on our website.

Upon request to our corporate secretary, we will also provide printed copies of any of these documents to you without

We have provided the address of our website solely for the information of investors.

We do not intend the reference to our website address to be an active link or to otherwise incorporate the contents of our website into

this Form 10-K Report.

In addition to our website, the Securities and Exchange Commission (the “SEC”) maintains an Internet site at www.sec.gov that contains our reports, proxy and information

statements and other information that we electronically file with, or furnish to, the SEC.

We do not intend the reference to our website address to be an active link or to otherwise incorporate the contents of our website into this Form 10-K

In addition to our website, the Securities and Exchange Commission (the “SEC”) maintains an Internet site at www.sec.gov that contains our reports, proxy and information statements and other

information that we electronically file with, or furnish to, the SEC.

History and Organizational Structure

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holding company, and we incorporated in the state of Delaware as Donegal Group Inc.

After Donegal Mutual formed us, we in turn formed Atlantic States as our wholly owned property and casualty insurance company subsidiary.

After Donegal Mutual formed us, we in turn formed Atlantic States Insurance Company, or Atlantic States, as our wholly owned property and casualty insurance company

In connection with the formation of Atlantic States and the establishment of our downstream insurance holding company system, Donegal Mutual and Atlantic States entered into a proportional reinsurance agreement, or

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The member companies of the Donegal Insurance Group, which include our insurance subsidiaries, share a combined business plan to enhance market penetration and underwriting profitability objectives.

Donegal Mutual’s majority interest in the combined voting power of our Class A common stock and of our Class B common stock fosters our ability to implement our business philosophies, enjoy management continuity, maintain superior employee

relations and provide a stable environment within which we can grow our businesses.

We believe Donegal

Mutual’s majority interest in the combined voting power of our Class A common stock and of our Class B common stock fosters our ability to implement our business philosophies, enjoy management continuity, maintain superior employee relations and

provide a stable environment within which we can grow our businesses.

The products the member companies of the Donegal Insurance Group offer are generally complementary, which permits the Donegal Insurance Group to offer a broad range of products in a given market and to expand the

Donegal Insurance Group’s ability to service an entire personal lines or commercial lines account.

Distinctions within the products the member companies of the Donegal Insurance Group offer generally relate to specific risk profiles within

similar classes of business, such as preferred tier products versus standard tier products.

Distinctions within the products the member companies of the Donegal Insurance Group offer generally relate to specific risk profiles within similar

classes of business, such as preferred tier products versus standard tier products.

The member companies of the Donegal Insurance Group do not allocate all of the standard risk gradients to one company.

As a result, the underwriting

profitability of the business the individual companies write directly will vary.

However, the underwriting pool homogenizes the risk characteristics of all business that Donegal Mutual and Atlantic States write directly and all business that

Donegal Mutual assumes from its affiliates and places into the underwriting pool.

As a result, the underwriting profitability

of the business the individual companies write directly will vary.

However, the underwriting pool homogenizes the risk characteristics of all business that Donegal Mutual and Atlantic States write directly and all business that Donegal Mutual

assumes from its affiliates and places into the underwriting pool.

The business Atlantic States derives from the underwriting pool represents a significant percentage of our total consolidated revenues.

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increased substantially.

Therefore, as we originally planned in the mid-1980s, Atlantic States has successfully raised the capital necessary to support the growth of its direct business as well as to accept increases in its allocation of

business from the underwriting pool.

from the underwriting pool.

The portion of the underwriting pool allocated to Atlantic States has increased from an initial allocation of 35% in 1986 to an 80% allocation since March 1, 2008.

We do not anticipate any further change in

the pooling agreement between Atlantic States and Donegal Mutual, including any change in the percentage participation of Atlantic States in the underwriting pool.

In addition to Atlantic States, our insurance subsidiaries are Southern Insurance Company of Virginia, or Southern, The Peninsula Insurance Company and its wholly owned subsidiary, Peninsula Indemnity Company, or

collectively, Peninsula, and Michigan Insurance Company, or MICO.

We do not anticipate any further change in the pooling

agreement between Atlantic States and Donegal Mutual, including any change in the percentage participation of Atlantic States in the underwriting pool.

In addition to Atlantic States, our insurance subsidiaries are Michigan Insurance Company, or MICO, The Peninsula Insurance Company and its wholly owned subsidiary, Peninsula Indemnity Company, or collectively,

Peninsula, and Southern Insurance Company of Virginia, or Southern.

Donegal Mutual has a 100% quota-share reinsurance agreement with Southern Mutual Insurance Company, or Southern Mutual, and Donegal Mutual places its assumed business from Southern

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The following chart depicts our organizational structure, including all of our property and casualty insurance subsidiaries and affiliates:

(1) Because of the different relative voting power of our Class A common stock and our Class B common stock, our public stockholders hold approximately 29% of the combined voting power of our Class A common stock and our Class B

common stock and Donegal Mutual holds approximately 71% of the combined voting power of our Class A common stock and our Class B common stock.

Because of the different relative voting power of our Class A common stock and our Class B common stock, our public stockholders hold approximately 29% of the combined voting power of our Class A common stock and our Class B common

stock and Donegal Mutual holds approximately 71% of the combined voting power of our Class A common stock and our Class B common stock.

Relationship with Donegal Mutual

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Allocated expenses from Donegal Mutual for services it provided to Atlantic States and our other insurance subsidiaries totaled $219.0 million, $199.2 million and $186.6 million for 2023, 2022 and 2021, respectively.

To enhance process

efficiencies, Donegal Mutual paid certain expenses directly in 2022 and 2021 that our insurance subsidiaries paid directly in 2020, resulting in higher allocations of expenses from Donegal Mutual to our insurance subsidiaries and lower direct

expense payments by our insurance subsidiaries in 2022 and 2021 compared to 2020.

Donegal Mutual is the employer of record for all personnel who provide services for our insurance subsidiaries.

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There were 861 full-time employees and 11 part-time employees.

Many of Donegal Mutual's employees work remotely from their homes or follow a hybrid schedule that includes working several days

in their assigned office to allow for enhanced collaboration and interaction with other employees.

Many of Donegal Mutual’s employees work remotely from their homes or follow a hybrid schedule that includes working several days in

their assigned office to allow for enhanced collaboration and interaction with other employees.

Donegal Mutual targets employee compensation that is competitive and consistent with an employee’s position, knowledge, experience and skill level.

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Our insurance subsidiaries have a catastrophe reinsurance agreement with Donegal Mutual, pursuant to which Donegal Mutual provides coverage for losses related to any catastrophic occurrence over a set retention of $3.0

$3.0 million ($2.0 million for 2022, 2021 and 2020) for each participating insurance subsidiary, with a combined retention of $6.0 million ($5.0 million for 2022, 2021 and 2020) for a catastrophe involving a combination of participating

insurance subsidiaries, up to the amount Donegal Mutual and our insurance subsidiaries retain under catastrophe reinsurance agreements with unaffiliated reinsurers.

The purpose of the catastrophe reinsurance agreement is to lessen the effects of

an accumulation of losses arising from one event to levels that are appropriate given each subsidiary’s size, underwriting profile and surplus.

million ($2.0 million for 2022 and 2021) for each participating insurance subsidiary, with a combined retention of $6.0 million ($5.0 million for 2022 and 2021) for a catastrophe involving a combination of participating insurance subsidiaries, up

to the amount Donegal Mutual and our insurance subsidiaries retain under catastrophe reinsurance agreements with unaffiliated reinsurers.

The purpose of the catastrophe reinsurance agreement is to lessen the effects of an accumulation of losses

arising from one event to levels that are appropriate given each subsidiary’s size, underwriting profile and surplus.

Donegal Mutual had a quota-share reinsurance agreement with MICO for policies effective through December 31, 2021.

The purpose of the quota-share reinsurance agreement with MICO was to transfer to Donegal Mutual 25%

of the premiums and losses related to MICO’s business.

The purpose of the quota-share reinsurance agreement with MICO was to transfer to Donegal Mutual 25% of

the premiums and losses related to MICO’s business.

Donegal Mutual placed its assumed business from MICO into the underwriting pool.

Donegal Mutual and MICO terminated this reinsurance agreement on a run-off basis effective January 1, 2022.

a result, MICO retains 100% of its net premiums and losses beginning with policies effective as of that date.

result, MICO retains 100% of its net premiums and losses beginning with policies effective as of that date.

Donegal Mutual had a quota-share reinsurance agreement with Peninsula for policies effective through December 31, 2021.

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We and Donegal Mutual have maintained a coordinating committee since our formation in 1986.

The coordinating committee consists of two members of our board of directors, neither of whom is a member of Donegal

Mutual’s board of directors, and two members of Donegal Mutual’s board of directors, neither of whom is a member of our board of directors.

The purpose of the coordinating committee is to establish and maintain a process for an ongoing evaluation

of the transactions between Donegal Mutual, our insurance subsidiaries and us.

The coordinating committee consists of two members of our board of directors, neither of whom is a member of Donegal Mutual’s

board of directors, and two members of Donegal Mutual’s board of directors, neither of whom is a member of our board of directors.

The purpose of the coordinating committee is to establish and maintain a process for an ongoing evaluation of the

transactions between Donegal Mutual, our insurance subsidiaries and us.

The coordinating committee considers the fairness of each intercompany transaction to Donegal Mutual and its policyholders and to us and our stockholders.

A new agreement or any change to a previously approved agreement must receive coordinating committee approval.

The approval process for a new agreement between Donegal Mutual and us or one of our insurance

subsidiaries or a change in such an agreement is as follows:

The approval process for a new agreement between Donegal Mutual and us or one of our insurance subsidiaries

or a change in such an agreement is as follows:

both of our members on the coordinating committee must determine that the new agreement or the change in an existing agreement is fair and equitable to us and in the best interests of our stockholders;

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remain fair and equitable to us and our stockholders and fair and equitable to Donegal Mutual and its policyholders or if Donegal Mutual and we should mutually agree to certain adjustments to the terms of the agreements.

In the case of

reinsurance agreements, the annual adjustments typically relate to the reinsurance premiums and loss retention amounts.

In the case of reinsurance

agreements, the annual adjustments typically relate to the reinsurance premiums and loss retention amounts.

These agreements are ongoing in nature and will continue in effect throughout 2024 in the ordinary course of our business.

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Donegal Mutual’s members on the coordinating committee as of such date are Michael W.

Brubaker and Cyril J.

We refer to our proxy statement for our annual meeting of stockholders to be held on April 20, 2023 for further information about the members of the coordinating committee.

Brubaker and Michael K.

Callahan, who replaced Cyril J.

Greenya in January 2024.

We refer to our proxy statement for our annual meeting of stockholders to be held on April 18, 2024 for further information about the members of the coordinating

We believe our relationships with Donegal Mutual offer us and our insurance subsidiaries a number of competitive advantages, including the following:

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The annual net premiums earned of our insurance subsidiaries have increased from $301.5 million in 2006 to $882.1 million in 2023, a compound annual growth rate of 6.5%.

The combined ratio of our insurance subsidiaries and that of the United States property and casualty insurance industry as computed using United States generally accepted accounting principles, or GAAP, and

statutory accounting principles, or SAP, for the years 2018 through 2022 are shown in the following table:

accounting principles, or SAP, for the years 2019 through 2023 are shown in the following table:

Our GAAP combined ratio

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We and Donegal Mutual believe we can continue to expand our insurance operations over time through organic growth and acquisitions of, or affiliations with, other insurance companies.

We and Donegal Mutual have

enhanced the performance of companies we have acquired, while leveraging the acquired companies’ core strengths and local market knowledge to expand their operations.

Our insurance subsidiaries and Donegal Mutual also seek to increase their

premium base by making quality independent agency appointments, enhancing their competitive position within each agency, introducing new and enhanced insurance products and developing and maintaining automated systems to improve service,

communications and efficiency.

Our insurance subsidiaries and

Donegal Mutual seek to increase their premium base by making quality independent agency appointments, enhancing their competitive position within each agency, introducing new and enhanced insurance products and developing and maintaining automated

systems to improve service, communications and efficiency.

A detailed review of our business strategies follows:

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Our insurance subsidiaries seek to achieve consistent underwriting profitability.

Underwriting profitability is a fundamental component of our long-term financial strength because it allows our insurance

subsidiaries to generate profits without relying exclusively on their investment income for profitability.

Underwriting profitability is a fundamental component of our long-term financial strength because it allows our insurance subsidiaries

to generate profits without relying exclusively on their investment income for profitability.

Our insurance subsidiaries seek to enhance their underwriting results by:

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Our insurance subsidiaries maintain discipline in their pricing by effecting rate increases to sustain or improve their underwriting results without unduly affecting their customer retention.

In addition to

appropriate pricing, our insurance subsidiaries seek to ensure that their premium rates are adequate relative to the amount of risk they insure.

Our insurance subsidiaries review loss trends on a regular basis to identify changes in the frequency

and severity of their claims and to assess the adequacy of their rates and underwriting standards.

Our insurance subsidiaries also carefully monitor and audit the information they use to price their policies for the purpose of enabling them to

receive an adequate level of premiums for the risk they assume.

For example, our insurance subsidiaries audit the payroll data of their workers’ compensation customers to verify that the assumptions used to price a particular policy were

By implementing appropriate rate increases and understanding the risks our insurance subsidiaries agree to insure, our insurance subsidiaries seek to achieve consistent underwriting profitability.

In addition to appropriate

pricing, our insurance subsidiaries seek to ensure that their premium rates are adequate relative to the risk exposures they insure.

Our insurance subsidiaries review loss trends on a regular basis to identify changes in the frequency and severity

of their claims and to assess the adequacy of their rates and underwriting standards.

Our insurance subsidiaries also carefully monitor and audit the information they use to price their policies for the purpose of enabling them to receive an

adequate level of premiums for the risk they assume.

For example, our insurance subsidiaries audit the payroll data of their workers’ compensation customers to verify that the assumptions used to price a particular policy were accurate.

implementing appropriate rate increases and understanding the risks our insurance subsidiaries agree to insure, our insurance subsidiaries seek to achieve consistent underwriting profitability.

Our insurance subsidiaries monitor the performance of the product lines they underwrite and the geographies in which they offer their insurance products.

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they cannot reasonably expect to generate targeted profitability over time.

For example, our insurance subsidiaries ceased writing new commercial lines policies and began non-renewing all existing commercial lines accounts in the states of Georgia

and Alabama during 2023.

Our insurance subsidiaries took this action after determining that they could not reasonably expect to generate targeted profitability within a reasonable period of time for commercial lines of business in those states.

Our insurance subsidiaries have no material exposures to asbestos or environmental liabilities.

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operating synergies and better expense control.

Our insurance subsidiaries utilize technology to automate much of their underwriting, claims and billing processes and to facilitate agency and policyholder communications on an efficient, timely

and cost-effective basis.

Our insurance subsidiaries have increased their annual premium per employee, a measure of efficiency that our insurance subsidiaries use to evaluate their operations, from approximately $470,000 in 1999 to approximately

$1.1 million in 2022.

Our insurance subsidiaries utilize technology to automate much of their underwriting, claims and billing processes and to facilitate agency and policyholder communications on an efficient, timely and

cost-effective basis.

Return on invested assets is an important element of the financial results of our insurance subsidiaries.

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The fixed-maturity portfolios of our insurance subsidiaries consist of both taxable and tax-exempt securities.

Our insurance subsidiaries maintain a portion of their

portfolios in short-term securities to provide liquidity for the payment of claims and operation of their respective businesses.

Our insurance subsidiaries maintain a small percentage (2.7% at December 31, 2022) of their portfolios in equity

securities that have a history of paying cash dividends or that our insurance subsidiaries expect will appreciate in value over time.

Our insurance subsidiaries maintain a portion of their portfolios

in short-term securities to provide liquidity for the payment of claims and operation of their respective businesses.

Our insurance subsidiaries maintain a small percentage (2.0% at December 31, 2023) of their portfolios in equity securities that

have a history of paying cash dividends or that our insurance subsidiaries expect will appreciate in value over time.

Strategically modernizing our operations and processes to transform our business.

In 2018, Donegal Mutual initiated a multi-year systems modernization project to replace its remaining legacy systems, streamline business processes and workflows and enhance data analytics and modeling capabilities.

In February 2020, Donegal Mutual implemented the first release of new systems related to the project, and our insurance subsidiaries began to issue workers’ compensation policies from the new systems in the second quarter of 2020.

February 2020, Donegal Mutual implemented the first release of new systems related to the project, and our insurance subsidiaries began to issue workers’ compensation policies from the new systems in the second quarter of 2020.

In August 2021,

Donegal Mutual implemented the second release of new systems related to the project, including a new agency portal and the rating, underwriting and policy issuance capabilities necessary to support the launch of new personal lines products, and

our insurance subsidiaries began to issue new personal lines products from the new systems in the fourth quarter of 2021.

Over the next several years, Donegal Mutual expects to implement new systems for the remaining lines of business the Donegal

Insurance Group offers currently.

The next release of new systems related to the project will include three commercial lines of business with enhanced straight-through-processing capabilities.

This release is scheduled for implementation

beginning in the first half of 2023.

insurance subsidiaries began to issue new personal lines products from the new systems in the fourth quarter of 2021.

In 2023, Donegal Mutual implemented two additional major releases of new systems, which included three commercial lines of

business with enhanced straight-through-processing capabilities as well as dwelling fire and conversion of legacy homeowners renewal policies in two initial states.

Over the next two years, Donegal Mutual expects to implement new systems for the

remaining lines of business the Donegal Insurance Group issues currently and for the conversion of remaining legacy renewal policies of the Donegal Insurance Group.

We have an enterprise analytics department that is focused on integrating data and analytics into strategy and decision-making at all levels of our organization.

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functions of rate-making, predictive analytics, data management and business intelligence.

These responsibilities include the development and expansion of risk-based pricing segmentation, analytical innovation, predictive modeling solutions,

formal data strategies, performance monitoring and enhanced reporting mechanisms.

These responsibilities include the development and expansion of risk-based pricing segmentation, analytical innovation, predictive modeling solutions, formal

data strategies, performance monitoring and enhanced reporting mechanisms.

We developed and began executing a pricing and analytics roadmap that will continue to deliver data-driven insights to our underwriters.

This roadmap includes

ongoing development and enhancement of quality tools that allow us to operationalize pricing and underwriting predictive models, integrate internal and external data for better-informed pricing and underwriting decisions and enhance the

automation and precision of our rate indication methodology.

Our enterprise analytics team is continuing to develop new tools and solutions that are enhancing our product portfolio management capabilities, competitive intelligence, pricing

sophistication and utilization of data to monitor and manage our operations.

This roadmap includes ongoing

development and enhancement of quality tools that allow us to operationalize pricing and underwriting predictive models, integrate internal and external data for better-informed pricing and underwriting decisions and enhance the automation and

precision of our rate indication methodology.

Our enterprise analytics team is continuing to develop new tools and solutions that are enhancing our product portfolio management capabilities, competitive intelligence, pricing sophistication and

utilization of data to monitor and manage our operations.

The team also generates reporting and analyses that enable us to draw business insights from data that drive actions to improve performance.

We are expanding our focus on process excellence, including the formalization of a structure to readily identify opportunities for operational efficiencies and to build a multi-year roadmap for addressing those

opportunities.

We are also expanding our data management personnel and capabilities to continually ensure the data upon which we rely for our business decisions and financial reporting is complete, accurate and secure.

We have assigned an

innovation task force the responsibility to research emerging technologies and identify potential technology solutions that might assist us in further modernizing our operations.

We are focused on process excellence and have prepared a multi-year roadmap for addressing those opportunities.

We are also expanding our data management personnel and capabilities to continually ensure the data upon

which we rely for our business decisions and financial reporting is complete, accurate and secure.

We have assigned an innovation task force the responsibility to research emerging technologies and identify potential technology solutions that might

assist us in achieving our business strategies.

Capitalizing on opportunities to grow profitably.

Continued expansion of our insurance subsidiaries within their existing markets will be a key source of their continued premium growth, and maintaining an effective network of independent agencies is integral to

this expansion.

Our insurance subsidiaries seek to be among the top three insurers within each of the independent agencies for the lines of business our insurance subsidiaries write by providing a consistent, competitive and stable market for

their products.

We believe that the consistency of the product offerings of our insurance subsidiaries enables our insurance subsidiaries to compete effectively for independent agents with other insurers whose product offerings may fluctuate

based on industry conditions.

Our insurance subsidiaries offer a competitive compensation program to their independent agents that rewards them for producing profitable growth and maintaining profitable books of business with our insurance

subsidiaries.

industry conditions.

Our insurance subsidiaries execute a combined annual business plan with Donegal Mutual and its insurance subsidiaries.

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directing efforts and resources toward geographic regions, market segments, product lines and classes of business that will give us the best opportunities to achieve sustained growth and profitability.

As part of the planning process, we perform

a detailed analysis of internal and external data with respect to each state within our operating regions.

As part of the planning process, we perform a

detailed analysis of internal and external data with respect to each state within our operating regions.

We assess state-specific marketing dynamics and opportunities, including an evaluation of the historical experience of our insurance

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We then assign a strategic posture for each state and develop action plans to execute state-specific strategies for growth or reduction of premiums, agency distribution and enhanced profit generation over the next several years.

part of our property exposure management, we implemented tools that have allowed us to assign a strategic posture at a county level within each state.

Our insurance subsidiaries utilize these tools to further manage and refine their concentrations

of property risk exposure and to enhance their geographic risk diversification.

We expect this strategy will reduce over time the overall impact of losses from severe weather events to the results of our insurance subsidiaries.

In recent years, the consolidation of independent agencies has accelerated, resulting in the acquisition of independent agencies from which our insurance subsidiaries and Donegal Mutual currently receive business by

national cluster groups and aggregators.

We have a national accounts team that is responsible for the management and expansion of our relationships with these national agency groups.

The national accounts team serves as a centralized point of

contact for these groups and works directly with our regional sales and marketing teams to support and develop relationships with independent agents affiliated with national agency groups.

We believe our relationships with existing and emerging

national agency groups will continue to expand and that these groups represent a significant opportunity for profitable future growth.

We have expanded our national accounts team that is responsible for the management and expansion of our relationships with these national agency groups.

The national accounts team serves as a centralized

point of contact for these groups and works directly with our regional sales and marketing teams to support and develop relationships with independent agents affiliated with national agency groups.

We believe our relationships with existing and

emerging national agency groups will continue to expand and that these groups represent a significant opportunity for profitable future growth.

Delivering a superior experience to our agents and policyholders.

Donegal Mutual and our insurance subsidiaries strive to maintain technology comparable to that of their larger competitors.

“Ease of doing business” is an increasingly important component of an insurer’s value to an

“Ease of doing business” is a critically important component of an insurer’s value to an

independent agency.

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independent agents of our insurance subsidiaries.

In addition, we are employing new agency relationship management solutions to expand the abilities of our insurance subsidiaries to manage their agency relationships and enhance their agency

communications and interactions.

In addition, we continue to explore and implement new agency relationship management solutions to expand the abilities of our insurance subsidiaries to manage their agency relationships and enhance

their agency communications and interactions.

Our insurance subsidiaries also provide their independent agents with ongoing support to enable them to better attract and service customers, including:

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marketing support;

availability of a personal lines service center that provides comprehensive service for our policyholders;

availability of a personal lines service center that provides comprehensive service for our personal lines policyholders;

availability of a commercial lines small business unit to monitor straight-through processing results and enhance turnaround time for responses to agents for less complicated commercial risks;

availability of a commercial lines service center, which is an optional service enhancement for agencies who prefer that we interact directly with their customers for mid-term policy coverage changes and other service requests;

accessibility to and regular interactions with marketing and underwriting personnel and senior management of our insurance subsidiaries.

We plan to introduce a new commercial lines service center in late 2023, which will represent an optional service enhancement for agencies who prefer that we interact directly with their customers for mid-term policy

coverage changes and other service requests.

Our insurance subsidiaries appoint independent agencies with a strong underwriting and growth track record.

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We have been an effective consolidator of smaller “main street” property and casualty insurance companies.

While we are currently placing less emphasis on pursuing acquisitions due to several ongoing major

While we are currently placing less emphasis on pursuing acquisitions due to several ongoing major initiatives

to enhance our technology infrastructure as well as our analytical and processing capabilities, we expect to continue to acquire other insurance companies to expand our business in a given region over time.

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fair and reasonable transaction terms.

We believe that our relationship with Donegal Mutual assists us in pursuing affiliations with, and subsequent acquisitions of, mutual insurance companies because, through Donegal Mutual, we understand the concerns

and issues that mutual insurance companies face.

In particular, Donegal Mutual has had success affiliating with underperforming mutual insurance companies that were operating at a competitive disadvantage due to lack of economies of scale

compared to other industry participants, and we have either acquired them following their conversion to a stock company or benefited from their underwriting results as a result of Donegal Mutual’s entry into a 100% quota-share reinsurance

agreement with them and placement of that assumed business into the pooling agreement.

We evaluate a number of areas for operational synergies when considering acquisitions, including product underwriting, expenses, the cost of reinsurance and

issues that mutual insurance companies face.

In particular, Donegal Mutual has had success affiliating with underperforming mutual insurance companies that were operating at a competitive disadvantage due to lack of economies of scale compared to

other industry participants, and we have either acquired them following their conversion to a stock company or benefited from their underwriting results as a result of Donegal Mutual’s entry into a 100% quota-share reinsurance agreement with them

and placement of that assumed business into the pooling agreement.

We evaluate a number of areas for operational synergies when considering acquisitions, including product underwriting, expenses, the cost of reinsurance and technology.

We believe that our ability to make direct acquisitions of stock insurance companies and to make indirect acquisitions of mutual insurance companies through Donegal Mutual provides us with flexibility that is a

competitive advantage in making acquisitions.

We also believe our historic record demonstrates our ability to acquire control of an underperforming insurance company utilizing a number of different acquisition structures and affiliation

strategies, re-underwrite its book of business, reduce its cost structure and return it to sustained profitability.

We also believe our historic record demonstrates our ability to acquire control of an underperforming insurance company utilizing a number of different acquisition structures and affiliation strategies,

re-underwrite its book of business, reduce its cost structure and return it to sustained profitability.

While Donegal Mutual and we generally engage in preliminary discussions with potential direct or indirect acquisition candidates from time to time, neither Donegal Mutual nor we make any public disclosure regarding a

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State of Domicile

Year Control Acquired

Method of Acquisition/Affiliation

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Donegal Mutual completed the merger of Mountain States with and into Donegal Mutual effective May 25, 2017.

Donegal Mutual was the surviving company in the merger, and Mountain States insurance subsidiaries became insurance

subsidiaries of Donegal Mutual upon completion of the merger.

Donegal Mutual was the surviving company in the merger, and Mountain States insurance subsidiaries became insurance subsidiaries

of Donegal Mutual upon completion of the merger.

Donegal Mutual also entered into a 100% quota-share reinsurance agreement with the Mountain States insurance subsidiaries on the merger date.

Beginning with policies effective

in 2021, Donegal Mutual places the business of the Mountain States Insurance Group into the underwriting pool.

Beginning with policies effective in 2021,

Donegal Mutual places the business of the Mountain States Insurance Group into the underwriting pool.

The property and casualty insurance industry is highly competitive on the basis of both price and service.

Numerous companies compete for business in the geographic areas where our insurance subsidiaries operate.

Many of these other insurance companies are substantially larger and have greater financial resources than those of our insurance subsidiaries.

In addition, because our insurance subsidiaries and Donegal Mutual market their respective insurance

products exclusively through independent insurance agencies, most of which represent more than one insurance company, our insurance subsidiaries face competition within agencies, as well as competition to retain qualified independent agents.

Insurance companies that are substantially larger than our insurance subsidiaries are likely to benefit from certain cost synergies, and insurance companies that market their products directly to end consumers are likely to incur lower relative

acquisition costs compared to those of our insurance subsidiaries.

of these other insurance companies are substantially larger and have greater financial resources than those of our insurance subsidiaries.

In addition, because our insurance subsidiaries and Donegal Mutual market their respective insurance products

exclusively through independent insurance agencies, most of which represent more than one insurance company, our insurance subsidiaries face competition within agencies, as well as competition to retain qualified independent agents.

companies that are substantially larger than our insurance subsidiaries are likely to benefit from certain cost synergies, and insurance companies that market their products directly to end consumers are likely to incur lower relative acquisition

costs compared to those of our insurance subsidiaries.

Products and Underwriting

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The personal lines our insurance subsidiaries write consist primarily of private passenger automobile and homeowners insurance.

We describe these lines of insurance in

greater detail below:

We describe these lines of insurance in greater

detail below:

Commercial automobile — policies that provide protection against liability for bodily injury and property damage arising from automobile accidents and protection against loss from damage to automobiles owned by the insured.

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Homeowners — policies that provide coverage for damage to residences and their contents from a broad range of perils, including fire, lightning, windstorm and theft.

These policies also cover liability of the insured arising from

injury to other persons or their property while on the insured’s property and under other specified conditions.

These policies also cover liability of the insured arising from injury

to other persons or their property while on the insured’s property and under other specified conditions.

In recent years, we have taken actions to shift our business mix to a higher proportion of commercial business, where we believe we will continue to have opportunities to achieve profitable, sustainable long-term

We are executing state-specific strategies that include accelerating growth in states where we see opportunities for profitable growth and reducing exposures in states we have targeted for profit improvement.

While we expect to place

greater emphasis on commercial growth for the foreseeable future, we desire to maintain a profitable book of personal business to provide enhanced stability across our product portfolio and increase our brand value to our independent agents.

commenced a phased rollout of new personal lines products in the fourth quarter of 2021.

These products feature various coverage enhancements, modernized rating methodology, enhanced pricing segmentation, application of predictive analytical

models and utilization of third-party data to augment pricing and risk selection.

We implemented a new personal lines agency portal and the rating, underwriting and policy issuance capabilities necessary to support the launch in the ten states

where Donegal Mutual and our insurance subsidiaries offer personal lines.

The portal and systems are now live in nine of the ten states in which our insurance subsidiaries offer personal lines, and we plan to complete the rollout of the new

personal lines products in the remaining state in the first half of 2023.

Due to ongoing inflationary pressures on loss costs, we will carefully manage personal lines premium growth in 2023, and our insurance subsidiaries plan to continue

implementing premium rate increases throughout the year.

Due to our decision to exit the commercial lines markets in Georgia and Alabama that reduced commercial lines premiums and the significant personal lines rate increases we implemented to restore profitability while maintaining strong policy

retention rates that increased personal lines premiums, our 2023 business mix did not reflect this strategic shift that we expect will resume as we concentrate on profitable commercial growth opportunities in the future.

We are executing

state-specific strategies that include accelerating growth in states where we see opportunities for profitable growth and reducing exposures in states we have targeted for profit improvement.

While we expect to place greater emphasis on commercial

growth for the foreseeable future, we desire to maintain a profitable book of personal business to provide enhanced stability across our product portfolio and increase our brand value to our independent agents.

Donegal Mutual and our insurance

subsidiaries offer personal lines products in ten states through a modern, user-friendly online agency portal.

These products feature comprehensive coverage options, modernized rating methodology, enhanced pricing segmentation, application of

predictive analytical models and utilization of third-party data to augment pricing and risk selection.

Due to ongoing inflationary pressures on loss costs, we carefully managed personal lines exposure growth in 2023, while implementing premium

rate increases throughout the year.

In 2024, we plan to continue implementing premium rate increases and managing exposures to restore the profitability of our personal lines segment.

The following table sets forth the net premiums written of our insurance subsidiaries by line of insurance for the periods indicated:

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Total business

The commercial lines and personal lines underwriting departments of our insurance subsidiaries evaluate and select those risks that they believe will enable our insurance subsidiaries to achieve an underwriting

Within each of the underwriting departments, our insurance subsidiaries have dedicated product development and management teams responsible for the development of quality products at competitive prices to promote growth and profitability

as well as the enhancement of our current products to meet targeted customer needs.

the enhancement of our current products to meet targeted customer needs.

In order to achieve underwriting profitability on a consistent basis, our insurance subsidiaries:

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adhere to disciplined underwriting guidelines;

seek to price risks appropriately based on exposure, risk characteristics, utilization of predictive models and application of underwriting judgment and

seek to price risks appropriately based on exposure, risk characteristics, utilization of predictive models and application of underwriting judgment;

utilize various types of risk management and loss control services.

Our insurance subsidiaries also review their existing portfolio of insured accounts to determine whether certain risks or classes of business continue to meet their underwriting guidelines and margin expectations.

a given account or class of business no longer meets those underwriting guidelines or margin expectations, our insurance subsidiaries will take appropriate action regarding that account or class of business, including raising premium rates or

given account or class of business no longer meets those underwriting guidelines or margin expectations, our insurance subsidiaries will take appropriate action regarding that account or class of business, including raising premium rates or

non-renewing policies to the extent applicable laws and regulations permit.

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At December 31,

2022, the Donegal Insurance Group actively wrote business in 24 states (Alabama, Colorado, Delaware, Georgia, Illinois, Indiana, Iowa, Maine, Maryland, Michigan, Nebraska, New Hampshire, New Mexico, North

Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and Wisconsin).

Beginning with policies effective in 2021, Donegal Mutual includes the business it writes directly and assumes from the

Mountain States insurance subsidiaries in four Southwestern states (Colorado, New Mexico, Texas and Utah) in the pooling agreement between Donegal Mutual and Atlantic States.

This business had no impact on our results of operations prior to 2021.

We believe the relationships of our insurance subsidiaries with their independent agents are valuable in identifying, obtaining and retaining profitable business.

Our insurance subsidiaries maintain a stringent agency selection procedure that

emphasizes appointing agencies with proven marketing strategies for the development of profitable business, and our insurance subsidiaries only appoint agencies with a strong underwriting history and potential growth capabilities.

Our insurance

subsidiaries also regularly evaluate the independent agencies that represent them based on their profitability and performance in relation to the objectives of our insurance subsidiaries.

Our insurance subsidiaries seek to be among the top three

insurers within each of their agencies for the lines of business our insurance subsidiaries write.

2023, the Donegal Insurance Group actively wrote business in 23 states (Arizona, Colorado, Delaware, Georgia, Illinois, Indiana, Iowa, Maine, Maryland, Michigan, Nebraska, New Hampshire, New Mexico, North

Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, and Wisconsin).

Donegal Mutual includes the business it writes directly and assumes from the Mountain States insurance subsidiaries in five Southwestern

states (Arizona, Colorado, New Mexico, Texas and Utah) in the pooling agreement between Donegal Mutual and Atlantic States.

We believe the relationships of our insurance subsidiaries with their independent agents are valuable in identifying,

obtaining and retaining profitable business.

Our insurance subsidiaries maintain a stringent agency selection procedure that emphasizes appointing agencies with proven marketing strategies for the development of profitable business, and our

insurance subsidiaries only appoint agencies with a strong underwriting history and potential growth capabilities.

Our insurance subsidiaries also regularly evaluate the independent agencies that represent them based on their profitability and

performance in relation to the objectives of our insurance subsidiaries.

Our insurance subsidiaries seek to be among the top three insurers within each of their agencies for the lines of business our insurance subsidiaries write.

The following table sets forth the percentage of direct premiums our insurance subsidiaries write, including 80% of the direct premiums Donegal Mutual and Atlantic States include in the underwriting pool, in each of

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further enhancing the ability of our insurance subsidiaries to conduct business with their independent agents and to develop and implement new products.

Our insurance subsidiaries have a competitive compensation program for their independent

agents that includes base commissions, growth incentive plans and a profit-sharing plan, consistent with applicable state laws and regulations, under which the independent agents may earn additional commissions based upon the volume of premiums

produced and the profitability of the business our insurance subsidiaries receive from that agency.

We have an agency stock purchase plan that allows our independent agents to purchase our Class A common stock at a discount to market prices to

further align the interests of our independent agents with the interests of our stockholders.

Our insurance subsidiaries have a competitive compensation program for their independent agents

that includes base commissions, growth incentive plans and a profit-sharing plan, consistent with applicable state laws and regulations, under which the independent agents may earn additional commissions based upon the volume of premiums produced

and the profitability of the business our insurance subsidiaries receive from that agency.

We have an agency stock purchase plan that allows our independent agents to purchase our Class A common stock at a discount to market prices to further align

the interests of our independent agents with the interests of our stockholders.

Our insurance subsidiaries encourage their independent agents to focus on “account selling,” or serving all of a particular insured’s property and casualty insurance needs, which our insurance subsidiaries believe

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systems we describe in more detail under “Business - Business Strategy - Strategically modernizing our operations and processes to transform our business.”

The modernized proficiency of these integrated technology systems facilitates high service levels for the agents and policyholders of our insurance subsidiaries, increased efficiencies in processing the business of

our insurance subsidiaries and lower operating costs.

insurance subsidiaries and lower operating costs.

Key components of these technology systems include agency interface systems, automated policy management systems, a claims processing system and a billing administration system.

interface systems provide our insurance subsidiaries with a comprehensive single source to facilitate data sharing both to and from agents’ systems and also provides agents with an integrated means of processing new business.

The automated policy

management systems provide agents with the ability to generate underwritten quotes and automatically issue policies that meet the underwriting guidelines of our insurance subsidiaries with limited or no intervention by their personnel.

processing system allows our insurance subsidiaries to process claims efficiently and in an automated environment.

The billing administration system allows our insurance subsidiaries to process premium billing and collection efficiently and in an

automated environment.

The agency interface

systems provide our insurance subsidiaries with a comprehensive single source to facilitate data sharing both to and from agents’ systems and also provides agents with an integrated means of processing new business.

The automated policy management

systems provide agents with the ability to generate underwritten quotes and automatically issue policies that meet the underwriting guidelines of our insurance subsidiaries with limited or no intervention by their personnel.

The claims processing

system allows our insurance subsidiaries to process claims efficiently and in an automated environment.

The billing administration system allows our insurance subsidiaries to process premium billing and collection efficiently and in an automated

We believe Donegal Mutual’s agency-facing technology systems compare well against those of many national property and casualty insurance carriers in terms of feature capabilities and service levels.

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Our senior claims management oversees the claims processing units of each of our insurance subsidiaries to assure consistency in the claims settlement process.

The field office

staff of our insurance subsidiaries receives support from home office technical, litigation, material damage, subrogation and medical audit personnel.

The field office staff

of our insurance subsidiaries receives support from home office technical, litigation, material damage, subrogation and medical audit personnel.

The claims departments of our insurance subsidiaries rigorously manage claims to assure that they settle legitimate claims quickly and fairly and that they identify questionable claims for defense.

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various means of claims reporting on a 24-hours a day, seven-days a week basis, including toll-free numbers and electronic reporting through our website and mobile application.

Our insurance subsidiaries strive to respond to notifications of

claims promptly, generally within the day reported.

Our insurance subsidiaries strive to respond to notifications of claims

promptly, generally within the day reported.

Our insurance subsidiaries believe that, by responding promptly to claims, they provide quality customer service and minimize the ultimate cost of the claims.

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independent adjusters as needed to handle claims in areas in which the volume of claims is not sufficient to justify the hiring of internal claims adjusters by our insurance subsidiaries.

Our insurance subsidiaries also employ independent

adjusters and private investigators, structural experts and outside legal counsel to supplement their internal staff and to assist in the investigation of claims.

Our insurance subsidiaries have a special investigative unit primarily staffed by

former law enforcement officers that attempts to identify and prevent fraud and abuse and to investigate questionable claims.

Our insurance subsidiaries also employ independent adjusters

and private investigators, structural experts and outside legal counsel to supplement their internal staff and to assist in the investigation of claims.

Our insurance subsidiaries have a special investigative unit primarily staffed by former law

enforcement officers that attempts to identify and prevent fraud and abuse and to investigate questionable claims.

The management of the claims departments of our insurance subsidiaries develops and implements policies and procedures for the establishment of adequate claim reserves.

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Liabilities for Losses and Loss Expenses

Liabilities for losses and loss expenses are estimates at a given point in time of the amounts an insurer expects to pay with respect to incurred policyholder claims based on facts and circumstances the insurer

knows at that point in time.

at that point in time.

For example, legislative, judicial and regulatory actions may expand coverage definitions, retroactively mandate coverage or otherwise require our insurance subsidiaries to pay losses for damages that their policies

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their estimates of liabilities for losses and loss expenses on assumptions as to future loss trends, expected claims severity, judicial theories of liability and other factors.

However, during the loss adjustment period, our insurance

subsidiaries may learn additional facts regarding individual claims, and, consequently, it often becomes necessary for our insurance subsidiaries to refine and adjust their estimates for these liabilities.

We reflect any adjustments to the

liabilities for losses and loss expenses of our insurance subsidiaries in our consolidated results of operations in the period in which our insurance subsidiaries make adjustments to their estimates.

However, during the loss adjustment period, our insurance subsidiaries

may learn additional facts regarding individual claims, and, consequently, it often becomes necessary for our insurance subsidiaries to refine and adjust their estimates for these liabilities.

We reflect any adjustments to the liabilities for

losses and loss expenses of our insurance subsidiaries in our consolidated results of operations in the period in which our insurance subsidiaries make adjustments to their estimates.

Our insurance subsidiaries maintain liabilities for the payment of losses and loss expenses with respect to both reported and unreported claims.

Our insurance subsidiaries establish these liabilities for the

purpose of covering the ultimate costs of settling all losses, including investigation and litigation costs.

Our insurance subsidiaries base the amount of their liability for reported losses primarily upon a case-by-case evaluation of the type of

risk involved, knowledge of the circumstances surrounding each claim and the insurance policy provisions relating to the type of loss the policyholder incurred.

Our insurance subsidiaries determine the amount of their liability for unreported

claims and loss expenses on the basis of historical information by line of insurance.

Our insurance subsidiaries establish these liabilities for the purpose of

covering the ultimate costs of settling all losses, including investigation and litigation costs.

Our insurance subsidiaries base the amount of their liability for reported losses primarily upon a case-by-case evaluation of the type of risk

involved, knowledge of the circumstances surrounding each claim and the insurance policy provisions relating to the type of loss the policyholder incurred.

Our insurance subsidiaries determine the amount of their liability for unreported claims and

loss expenses on the basis of historical information by line of insurance.

Our insurance subsidiaries account for inflation in the reserving function through analysis of costs and trends and reviews of historical reserving results.

insurance subsidiaries monitor their liabilities closely and recompute them periodically using new information on reported claims and a variety of statistical techniques.

Our insurance subsidiaries do not discount their liabilities for losses and

loss expenses.

Our insurance

subsidiaries monitor their liabilities closely and recompute them periodically using new information on reported claims and a variety of statistical techniques.

Our insurance subsidiaries do not discount their liabilities for losses and loss

Reserve estimates can change over time because of unexpected changes in assumptions related to our insurance subsidiaries’ external environment and, to a lesser extent, assumptions related to our insurance

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of factors, including supply chain disruption, higher new and used automobile values, increases in the cost of replacement automobile parts and rising labor rates.

These trend changes give rise to greater uncertainty as to the pattern of future

loss settlements.

Related uncertainties regarding future trends include social inflation, availability and cost of replacement automobile parts and building materials, availability of skilled labor, the rate of plaintiff attorney involvement in

claims and the cost of medical technologies and procedures.

Assumptions related to our insurance subsidiaries’ external environment include the absence of significant changes in tort law and the legal environment that increase liability exposure,

consistency in judicial interpretations of insurance coverage and policy provisions and the rate of loss cost inflation.

Internal assumptions include consistency in the recording of premium and loss statistics, consistency in the recording of

claims, payment and case reserving methodology, accurate measurement of the impact of rate changes and changes in policy provisions, consistency in the quality and characteristics of business written within a given line of business and

consistency in reinsurance coverage and collectability of reinsured losses, among other items.

To the extent our insurance subsidiaries determine that underlying factors impacting their assumptions have changed, our insurance subsidiaries make

adjustments in their reserves that they consider appropriate for such changes.

Accordingly, our insurance subsidiaries’ ultimate liability for unpaid losses and loss expenses will likely differ from the amount recorded at December 31, 2022.

every 1% change in our insurance subsidiaries’ loss and loss expense reserves, net of reinsurance recoverable, the effect on our pre-tax results of operations would be approximately $6.7 million.

The establishment of appropriate liabilities is an inherently uncertain process and we can provide no assurance that our insurance subsidiaries’ ultimate liability will not exceed our insurance subsidiaries’ loss

and loss expense reserves and have an adverse effect on our results of operations and financial condition.

While these trend changes have begun to normalize, they caused significant

disruption to historical loss patterns and give rise to greater uncertainty as to the pattern of future loss settlements.

Related uncertainties regarding future trends include social inflation, availability and cost of replacement automobile parts

and building materials, availability of skilled labor, the rate of plaintiff attorney involvement in claims and the cost of medical technologies and procedures.

Assumptions related to our insurance subsidiaries’ external environment include the

absence of significant changes in tort law and the legal environment that increase liability exposure, consistency in judicial interpretations of insurance coverage and policy provisions and the rate of loss cost inflation.

Internal assumptions

include consistency in the recording of premium and loss statistics, consistency in the recording of claims, payment and case reserving methodology, accurate measurement of the impact of rate changes and changes in policy provisions, consistency in

the quality and characteristics of business written within a given line of business and consistency in reinsurance coverage and collectability of reinsured losses, among other items.

To the extent our insurance subsidiaries determine that

underlying factors impacting their assumptions have changed, our insurance subsidiaries make adjustments in their reserves that they consider appropriate for such changes.

Accordingly, our insurance subsidiaries’ ultimate liability for unpaid

losses and loss expenses will likely differ from the amount recorded at December 31, 2023.

For every 1% change in our insurance subsidiaries’ loss and loss expense reserves, net of reinsurance recoverable, the effect on our pre-tax results of

operations would be approximately $6.9 million.

loss expense reserves and have an adverse effect on our results of operations and financial condition.

Furthermore, we cannot predict the timing, frequency and extent of adjustments to our insurance subsidiaries’ estimated future liabilities,

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their actual liabilities for losses and loss expenses.

Changes in our insurance subsidiaries’ estimates of their liability for losses and loss expenses generally reflect actual payments and their evaluation of information received subsequent to

the prior reporting period.

Changes in our insurance subsidiaries’ estimates of their liability for losses and loss expenses generally reflect actual payments and their evaluation of information received subsequent to the

prior reporting period.

Our insurance subsidiaries recognized a decrease in their liability for losses and loss expenses of prior years of $16.7 million, $44.8 million and $31.2 million in 2023, 2022 and 2021, respectively.

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The majority of the 2023 development related to decreases in the liability for losses and loss expenses of prior years for Atlantic States and MICO.

The 2021 development represented 5.6% of the December 31, 2020 net carried

reserves and resulted primarily from lower-than-expected loss emergence in the personal automobile, workers’ compensation and commercial automobile lines of business for accident years prior to 2021.

The majority of the 2021 development related

to decreases in the liability for losses and loss expenses of prior years for Atlantic States and MICO.

The 2020 development represented 2.6% of the December 31, 2019 net carried reserves and resulted primarily from lower-than-expected severity

in the workers’ compensation and personal automobile lines of business, partially offset by higher-than-expected severity in the commercial automobile and commercial multi-peril lines of business, for accident years prior to 2020.

The majority of

the 2020 development related to decreases in the liability for losses and loss expenses of prior years for Atlantic States and MICO.

The 2022 development represented 7.2% of the December 31, 2021 net carried reserves

and resulted primarily from lower-than-expected loss emergence in the personal automobile and commercial automobile lines of business for accident years prior to 2022.

The majority of the 2022 development related to decreases in the liability for

losses and loss expenses of prior years for Atlantic States and MICO.

The 2021 development represented 5.6% of the December 31, 2020 net carried reserves and resulted primarily from lower-than-expected loss emergence in the personal automobile,

workers’ compensation and commercial automobile lines of business for accident years prior to 2021.

The majority of the 2021 development related to decreases in the liability for losses and loss expenses of prior years for Atlantic States and MICO.

Excluding the impact of severe weather events and the COVID-19 pandemic, our insurance subsidiaries have noted stable amounts in the number of claims incurred and the number of claims outstanding at period ends

relative to their premium base in recent years across most of their lines of business.

However, the amount of the average claim outstanding has increased gradually over the past several years due to various factors such as rising inflation and

increased litigation trends.

We have also experienced a general slowing of settlement rates in litigated claims and lengthening of repair completion times for property and automobile claims.

Our insurance subsidiaries could have to make further

adjustments to their estimates in the future.

However, on the basis of our insurance subsidiaries’ internal procedures, which analyze, among other things, their prior assumptions, their experience with similar cases and historical trends such as

reserving patterns, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions and public attitudes, we believe that our insurance subsidiaries have made adequate provision for their liability

for losses and loss expenses.

However, the amount of the average claim outstanding has increased gradually over the past several years due to various factors such as increased property and

automobile repair and replacement costs, rising medical loss costs and increased litigation trends.

We have also experienced a general slowing of settlement rates in litigated claims and lengthening of repair completion times for property and

automobile claims.

Our insurance subsidiaries could have to make further adjustments to their estimates in the future.

However, on the basis of our insurance subsidiaries’ internal procedures, which analyze, among other things, their prior

assumptions, their experience with similar cases and historical trends such as reserving patterns, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions and public attitudes, we believe that

our insurance subsidiaries have made adequate provision for their liability for losses and loss expenses.

Atlantic States’ participation in the underwriting pool with Donegal Mutual exposes Atlantic States to adverse loss development on the business that Donegal Mutual contributes to the underwriting pool.

pooled business represents the predominant percentage of the net underwriting activity of both companies, and Donegal Mutual and Atlantic States share proportionately any adverse risk development relating to the pooled business.

The business in

the underwriting pool is homogeneous, and each company has a pro-rata share of the entire underwriting pool.

However, pooled

business represents the predominant percentage of the net underwriting activity of both companies, and Donegal Mutual and Atlantic States share proportionately any adverse risk development relating to the pooled business.

The business in the

underwriting pool is homogeneous, and each company has a pro-rata share of the entire underwriting pool.

Since the predominant percentage of the business of Atlantic States and Donegal Mutual is pooled and the results shared by each company

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Less reinsurance recoverable

Cumulative effect of adoption of updated accounting guidance for credit losses at January 1

Net liability for unpaid losses and loss expenses at beginning of year

Provision for net losses and loss expenses for claims incurred in the

Change in provision for estimated net losses and loss expenses for claims

incurred in prior years

Provision for net losses and loss expenses for claims incurred in the current year

Change in provision for estimated net losses and loss expenses for claims incurred in prior years

Total incurred

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The following table sets forth the development of the liability for net unpaid losses and loss expenses of our insurance subsidiaries from 2013 to 2023.

Loss data in the table includes business Atlantic States

received from the underwriting pool.

Loss data in the table includes business Atlantic States received

from the underwriting pool.

“Net liability at end of year for unpaid losses and loss expenses” sets forth the estimated liability for net unpaid losses and loss expenses recorded at the balance sheet date for each of the indicated years.

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payments are made and more information becomes known about the severity of the remaining unpaid claims.

For example, the 2012 liability has developed a deficiency after ten years because we expect the re-estimated net losses and loss expenses to

be $24.7 million more than the estimated liability we initially established in 2012 of $250.9 million.

For example, the 2013 liability has developed a deficiency after ten years because we expect the re-estimated net losses and loss expenses to be

$23.7 million more than the estimated liability we initially established in 2013 of $265.6 million.

The “Cumulative deficiency (excess)” shows the cumulative deficiency or excess at December 31, 2023 of the liability estimate shown on the top line of the corresponding column.

A deficiency in liability means that

the liability established in prior years was less than the amount of actual payments and currently re-estimated remaining unpaid liability.

A deficiency in liability means that the

liability established in prior years was less than the amount of actual payments and currently re-estimated remaining unpaid liability.

An excess in liability means that the liability established in prior years exceeded the amount of actual

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(in thousands)

Net liability at end of

year for unpaid

losses and loss

Net liability re-

estimated as of:

Net liability at end of year for unpaid losses and loss expenses

Net liability re-estimated as of:

One year later

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Ten years later

Cumulative amount

of liability paid

Cumulative deficiency (excess)

Cumulative amount of liability paid through:

One year later

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(in thousands)

Gross liability at end

Net liability at end of

Gross re-estimated

Net re-estimated

Gross cumulative

Gross liability at end of year

Reinsurance recoverable

Net liability at end of year

Gross re-estimated liability

Re-estimated recoverable

Net re-estimated liability

Gross cumulative deficiency (excess)

Third-Party Reinsurance

Our insurance subsidiaries and Donegal Mutual purchase certain third-party reinsurance on a combined basis.

Our insurance subsidiaries use several different reinsurers, all of which, consistent with the requirements

of our insurance subsidiaries and Donegal Mutual, have an A.M.

Best rating of A- (Excellent) or better or, with respect to foreign reinsurers, have a financial condition that, in the opinion of our management, is equivalent to a company with at

least an A- (Excellent) rating from A.M.

Our insurance subsidiaries use several different reinsurers, all of which, consistent with the requirements of

our insurance subsidiaries and Donegal Mutual, have an A.M.

Best rating of A- (Excellent) or better or, with respect to foreign reinsurers, have a financial condition that, in the opinion of our management, is equivalent to a company with at least

an A- (Excellent) rating from A.M.

The external reinsurance our insurance subsidiaries and Donegal Mutual purchased for 2023 included:

excess of loss reinsurance, under which Donegal Mutual and our insurance subsidiaries recovered losses over a set retention of $2.0 million ($3.0 million retention for all losses except for workers' compensation for 2023);

excess of loss reinsurance, under which Donegal Mutual and our insurance subsidiaries recovered losses over a set retention of $3.0 million for all losses except workers’ compensation, for which the set retention was $2.0 million (set

retention of $4.0 million for all property losses and $3.0 million retention for all casualty and workers’ compensation losses for 2024);

catastrophe reinsurance, under which Donegal Mutual and our insurance subsidiaries recovered 100% of an accumulation of many losses resulting from a single event, including natural disasters, over a set retention of $25.0 million up to

aggregate losses of $185.0 million per occurrence (over a set retention of $25.0 million up to aggregate losses of $175.0 million per occurrence for 2023).

aggregate losses of $175.0 million per occurrence (no change for 2024).

For property insurance, our insurance subsidiaries had excess of loss reinsurance that provided for coverage of $37.0 million per loss over a set retention of $3.0 million ($36.0

million per loss over a set retention of $4.0 million for 2024).

For liability insurance, our insurance subsidiaries had excess of loss reinsurance that provided for coverage of $73.0 million per

occurrence over a set retention of $2.0 million ($72.0 million per occurrence over a set retention of $3.0 million for 2023).

For workers’ compensation insurance, our insurance subsidiaries had excess of loss reinsurance that provided for

coverage of $18.0 million on any one life over a set retention of $2.0 million (no change for 2023).

For liability insurance, our insurance subsidiaries had excess of loss reinsurance that provided for coverage of $72.0 million per occurrence

over a set retention of $3.0 million (no change for 2024).

For workers’ compensation insurance, our insurance subsidiaries had excess of loss reinsurance that provided for coverage of $18.0 million on any one life over a set retention of $2.0

million ($17.0 million on any one life over a set retention of $3.0 million for 2024).

Our insurance subsidiaries and Donegal Mutual also purchased facultative reinsurance to cover certain exposures, including property exposures that exceeded the limits provided by their respective treaty reinsurance.

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agency securities (2)

Allowance for expected credit losses

Ratings assigned by Moody’s Investors Services, Inc.

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Held to maturity:

Treasury securities and obligations of

government corporations and

Treasury securities and obligations of U.S.

government corporations and agencies

Obligations of states and political subdivisions

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Available for sale:

Treasury securities and obligations of

government corporations and

Obligations of states and political

Treasury securities and obligations of U.S.

government corporations and agencies

Obligations of states and political subdivisions

Corporate securities

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Mortgage-backed securities

Allowance for expected credit losses

Based on stated maturity dates with no prepayment assumptions.

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As shown above, our insurance subsidiaries held investments in mortgage-backed securities having a carrying value of $278.3 million at December 31, 2023.

The mortgage-backed securities consist primarily of

investments in governmental agency balloon pools with stated maturities between one and 35 years.

The stated maturities of these investments limit the exposure of our insurance subsidiaries to extension risk in the event that interest rates rise

and prepayments decline.

Our insurance subsidiaries perform an analysis of the underlying loans when evaluating a mortgage-backed security for purchase, and they select those securities that they believe will provide a return that properly

reflects the prepayment risk associated with the underlying loans.

The mortgage-backed securities consist primarily of investments

in governmental agency balloon pools with stated maturities between one and 34 years.

The stated maturities of these investments limit the exposure of our insurance subsidiaries to extension risk in the event that interest rates rise and

prepayments decline.

prepayment risk associated with the underlying loans.

The following table sets forth the investment results of our insurance subsidiaries for the years ended December 31, 2023, 2022 and 2021:

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Best rating of Donegal Mutual and our insurance subsidiaries is an important factor in their marketing of their products to their agents and customers.

Best’s ratings are industry ratings

based on a comparative analysis of the financial condition and operating performance of insurance companies.

Best’s classifications are A++ and A+ (Superior), A and A- (Excellent), B++ and B+ (Good), B and B- (Fair), C++ and C+ (Marginal), C

and C- (Weak), D (Poor), E (Under Regulatory Supervision), F (Liquidation) and S (Suspended).

Best bases its ratings upon factors relevant to the payment of claims of policyholders and are not directed toward the protection of investors in

insurance companies.

Best’s ratings are industry ratings based

on a comparative analysis of the financial condition and operating performance of insurance companies.

Best’s classifications are A++ and A+ (Superior), A and A- (Excellent), B++ and B+ (Good), B and B- (Fair), C++ and C+ (Marginal), C and C-

(Weak), D (Poor), E (Under Regulatory Supervision), F (Liquidation) and S (Suspended).

Best bases its ratings upon factors relevant to the payment of claims of policyholders and are not directed toward the protection of investors in insurance

According to A.M.

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Best’s opinion, have an excellent ability to meet their ongoing insurance obligations.

The supervision and regulation of insurance companies consists primarily of the laws and regulations of the various states in which the insurance companies transact business, with the primary regulatory authority

being the insurance regulatory authorities in the state of domicile of the insurance company.

the insurance regulatory authorities in the state of domicile of the insurance company.

Such supervision and regulation relate to numerous aspects of an insurance company’s business and financial condition.

The primary purpose of such

supervision and regulation is the protection of policyholders.

The authority of the state insurance departments includes the establishment of standards of solvency that insurers must meet and maintain, the licensing of insurers and insurance

agents to do business, the nature of, and limitations on, investments, premium rates for property and casualty insurance, the provisions that insurers must make for current losses and future liabilities, the deposit of securities for the benefit

of policyholders, the approval of policy forms, notice requirements for the cancellation of policies and the approval of certain changes in control.

State insurance departments also conduct periodic examinations of the affairs of insurance

companies and require the filing of annual and other reports relating to the financial condition of insurance companies.

In addition to state-imposed insurance laws and regulations, the National Association of Insurance Commissioners, or the NAIC, maintains a risk-based capital system, or RBC, for assessing the adequacy of the

statutory capital and surplus of insurance companies that augments the states’ current fixed dollar minimum capital requirements for insurance companies.

At December 31, 2022, our insurance subsidiaries and Donegal Mutual each exceeded the

minimum levels of statutory capital the RBC rules require by a substantial margin.

The primary purpose of such supervision

and regulation is the protection of policyholders.

The authority of the state insurance departments includes the establishment of standards of solvency that insurers must meet and maintain, the licensing of insurers and insurance agents to do

business, the nature of, and limitations on, investments, premium rates for property and casualty insurance, the provisions that insurers must make for current losses and future liabilities, the deposit of securities for the benefit of

policyholders, the approval of policy forms, notice requirements for the cancellation of policies and the approval of certain changes in control.

State insurance departments also conduct periodic examinations of the affairs of insurance companies

and require the filing of annual and other reports relating to the financial condition of insurance companies.

capital and surplus of insurance companies that augments the states’ current fixed dollar minimum capital requirements for insurance companies.

At December 31, 2023, our insurance subsidiaries and Donegal Mutual each exceeded the minimum levels of

statutory capital the RBC rules require by a substantial margin.

Generally, every state has guaranty fund laws under which insurers licensed to do business in that state can be assessed on the basis of premiums written by the insurer in that state in order to fund policyholder

liabilities of insolvent insurance companies.

Under these laws in general, an insurer is subject to assessment, depending upon its market share of a given line of business, to assist in the payment of policyholder claims against insolvent

Under these laws in general, an insurer is subject to assessment, depending upon its market share of a given line of business, to assist in the payment of policyholder claims against insolvent insurers.

Our insurance subsidiaries and Donegal Mutual have made accruals for their portion of assessments related to such insolvencies based upon the most current information furnished by the guaranty associations.

We are part of an insurance holding company system of which Donegal Mutual is the ultimate controlling person.

All of the states in which our insurance companies and Donegal Mutual maintain a domicile have

legislation that regulates insurance holding company systems.

Each insurance company in the insurance holding company system must register with the insurance supervisory agency of its state of domicile and furnish information concerning the

operations of companies within the insurance holding company system that may materially affect the operations, management or financial condition of the insurers within the system.

Pursuant to these laws, the respective insurance departments in

which our subsidiaries and Donegal Mutual maintain a domicile may examine our insurance subsidiaries or Donegal Mutual at any time, require disclosure of material transactions by the holding company with another member of the insurance holding

company system and require prior notice or prior approval of certain transactions, such as “extraordinary dividends” from the insurance subsidiaries to the holding company.

We have insurance subsidiaries domiciled in Michigan, Pennsylvania and

All of the states in which our insurance companies and Donegal Mutual maintain a domicile have legislation

that regulates insurance holding company systems.

Each insurance company in the insurance holding company system must register with the insurance supervisory agency of its state of domicile and furnish information concerning the operations of

companies within the insurance holding company system that may materially affect the operations, management or financial condition of the insurers within the system.

Pursuant to these laws, the respective insurance departments in which our

subsidiaries and Donegal Mutual maintain a domicile may examine our insurance subsidiaries or Donegal Mutual at any time, require disclosure of material transactions by the holding company with another member of the insurance holding company system

and require prior notice or prior approval of certain transactions, such as “extraordinary dividends” from the insurance subsidiaries to the holding company.

We have insurance subsidiaries domiciled in Michigan, Pennsylvania and Virginia.

The Pennsylvania Insurance Holding Companies Act, which generally applies to Donegal Mutual, us and our insurance subsidiaries, requires that all transactions within an insurance holding company system to which an

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subsidiaries are domiciled, the acquisition of 10% or more of the outstanding capital stock of an insurer or its holding company or the intent to acquire such an interest creates a rebuttable presumption of a change in control.

Pursuant to an

order issued in April 2003, the Department approved Donegal Mutual’s ownership of up to 70% of our outstanding Class A common stock and Donegal Mutual’s ownership of up to 100% of our outstanding Class B common stock.

Our insurance subsidiaries have the legal obligation under state insurance laws to participate in involuntary insurance programs for automobile insurance, as well as other property and casualty insurance lines, in

the states in which they conduct business.

Pursuant to an order

issued in April 2003, the Department approved Donegal Mutual’s ownership of up to 70% of our outstanding Class A common stock and Donegal Mutual’s ownership of up to 100% of our outstanding Class B common stock.

states in which they conduct business.

These programs include joint underwriting associations, assigned risk plans, fair access to insurance requirements plans, reinsurance facilities, windstorm plans and tornado plans.

establishing these programs requires all companies that write lines covered by these programs to provide coverage, either directly or through reinsurance, for insureds who are unable to obtain insurance in the voluntary market.

The legislation

creating these programs usually allocates a pro rata portion of risks attributable to such insureds to each company on the basis of the direct premiums it has written in that state or the number of automobiles it insures in that state.

state law requires participation in these programs as a condition to obtaining a certificate of authority.

Our loss ratio on insurance we write under these involuntary programs has traditionally been significantly greater than our loss ratio on

insurance we voluntarily write in those states.

Legislation establishing

these programs requires all companies that write lines covered by these programs to provide coverage, either directly or through reinsurance, for insureds who are unable to obtain insurance in the voluntary market.

The legislation creating these

programs usually allocates a pro rata portion of risks attributable to such insureds to each company on the basis of the direct premiums it has written in that state or the number of automobiles it insures in that state.

Generally, state law

requires participation in these programs as a condition to obtaining a certificate of authority.

Our loss ratio on insurance we write under these involuntary programs has traditionally been significantly greater than our loss ratio on insurance we

voluntarily write in those states.

Regulatory requirements, including RBC requirements, may impact our insurance subsidiaries’ ability to pay dividends.

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regulatory requirements, including RBC requirements, was not significant in relation to our insurance subsidiaries’ statutory capital and surplus at December 31, 2023.

Generally, the maximum amount that one of our insurance subsidiaries may pay

to us as ordinary dividends during any year after notice to, but without prior approval of, the insurance commissioner of its domiciliary state is limited to a stated percentage of that subsidiary’s statutory capital and surplus at December 31 of

the preceding fiscal year or the net income of that subsidiary for its preceding fiscal year.

Our insurance subsidiaries did not pay any dividends to us in 2022.

Our insurance subsidiaries paid dividends to us of $5.0 million and $14.0 million in

2021 and 2020, respectively.

At December 31, 2022, the amount of ordinary dividends our insurance subsidiaries could pay to us during 2023, without the prior approval of their respective domiciliary insurance commissioners, is shown in the

following table.

Generally, the maximum amount that one of our insurance subsidiaries may pay to

us as ordinary dividends during any year after notice to, but without prior approval of, the insurance commissioner of its domiciliary state is limited to a stated percentage of that subsidiary’s statutory capital and surplus at December 31 of the

preceding fiscal year or the net income of that subsidiary for its preceding fiscal year.

Our insurance subsidiaries paid dividends to us of $13.0 million and $5.0 million in 2023 and 2021, respectively.

Our insurance subsidiaries did not pay any

dividends to us in 2022.

At December 31, 2023, the amount of ordinary dividends our insurance subsidiaries could pay to us during 2024, without the prior approval of their respective domiciliary insurance commissioners, is shown in the following

Name of Insurance Subsidiary

Ordinary Dividend Amount

Atlantic States

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Donegal Mutual organized as a mutual fire insurance company in Pennsylvania in 1889.

At December 31, 2022, Donegal Mutual had admitted assets of $726.4 million and

policyholders’ surplus of $346.9 million.

At December 31, 2022, Donegal Mutual had total liabilities of $379.5 million, including reserves for net losses and loss expenses of $186.5 million and unearned premiums of $70.0 million.

Donegal Mutual’s

investment portfolio of $466.2 million at December 31, 2022 consisted primarily of investment-grade bonds of $224.9 million and its investment in our Class A common stock and our Class B common stock.

At December 31, 2022, Donegal Mutual owned

11,578,470 shares, or approximately 43%, of our Class A common stock, which Donegal Mutual carried on its books at $152.7 million, and 4,708,571 shares, or approximately 84%, of our Class B common stock, which Donegal Mutual carried on its books

at $62.1 million.

We present Donegal Mutual’s financial information in accordance with SAP as the NAIC Accounting Practices and Procedures Manual requires.

Donegal Mutual does not, nor is it required to, prepare financial statements in accordance

At December 31, 2023, Donegal Mutual had admitted assets of $712.8 million and policyholders’ surplus of $364.2 million.

31, 2023, Donegal Mutual had total liabilities of $348.6 million, including reserves for net losses and loss expenses of $161.5 million and unearned premiums of $71.5 million.

Donegal Mutual’s investment portfolio of $448.9 million at December 31,

2023 consisted primarily of investment-grade bonds of $212.1 million and its investment in our Class A common stock and our Class B common stock.

At December 31, 2023, Donegal Mutual owned 12,095,090 shares, or approximately 44%, of our Class A

common stock, which Donegal Mutual carried on its books at $151.7 million, and 4,708,570 shares, or approximately 84%, of our Class B common stock, which Donegal Mutual carried on its books at $59.0 million.

We present Donegal Mutual’s financial

information in accordance with SAP as the NAIC Accounting Practices and Procedures Manual requires.

Donegal Mutual does not, nor is it required to, prepare financial statements in accordance with GAAP.

Information about Our Executive Officers

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President and Chief Executive Officer of Donegal Mutual since 2018;

Executive Vice President and Chief Operating Officer of Donegal Mutual from 2014

Executive Vice President and Chief Operating Officer of Donegal Mutual from 2014 to

Senior Vice President of Human Resources of Donegal Mutual and us from 2005 to 2014;

other positions from 2000 to 2005.

Daniel DeLamater

Executive Vice President and Chief Operating Officer of Donegal Mutual and us since 2024;

Senior Vice President of us from 2022 to 2024;

Senior Vice President and Head of Field Operations & National Accounts of Donegal Mutual from

2022 to 2024;

Senior Vice President of National Accounts for Donegal Mutual from 2020 to 2022;

President of Southern Mutual Insurance Company since 2016;

other positions at Southern Mutual Insurance Company from 2000 to 2016.

Executive Vice President and Chief Financial Officer of Donegal Mutual and us since 2014;

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Director of Willis Towers Watson from 2018 to 2019;

Director of Pricing Innovation of USAA from 2014 to 2018;

of Pricing Innovation of USAA from 2014 to 2018;

other positions at USAA from 2001 to 2014.

Daniel DeLamater

Senior Vice President of us since 2022;

Senior Vice President and Head of Field Operations & National Accounts of Donegal Mutual since 2022;

Senior Vice President of National Accounts for Donegal Mutual from 2020 to 2022;

of Southern Mutual Insurance Company since 2016;

other positions at Southern Mutual Insurance Company from 2000 to 2016.

Senior Vice President of Field Operations & National Accounts of Donegal Mutual and Senior Vice President of us since 2024;

Senior Regional Vice President of Donegal Mutual from 2022 to 2024 and Regional

Vice President of Donegal Mutual from 2020 to 2022;

other positions with Donegal Mutual from 2006 to 2020.

Senior Vice President of Claims of Donegal Mutual and Senior Vice President of us since 2019;

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Senior Vice President of Internal Audit of Donegal Mutual and Senior Vice President of us from 2013 to 2019;

Vice President

of Internal Audit of Donegal Mutual and Vice President of us from 2009 to 2013.

Vice President of

Internal Audit of Donegal Mutual and Vice President of us from 2009 to 2013.

Senior Vice President of Commercial Lines of Donegal Mutual and Senior Vice President of us since 2022;

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This Form 10-K Report and the documents we incorporate by reference in this Form 10-K Report contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

forward-looking statements include certain discussions relating to underwriting, premium and investment income volumes, business strategies, reserves, profitability and business relationships and our other business activities during 2022 and

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “objective,” “project,” “predict,” “potential,” “goal”

and similar expressions.

These forward-looking statements reflect our current views about future events and our current assumptions, and are subject to known and unknown risks and uncertainties that may cause our results, performance or

achievements to differ materially from those we anticipate or imply by our forward-looking statements.

We cannot control or predict many of the factors that could determine our future financial condition or results of operations.

Such factors may

include those we describe under “Risk Factors.” The forward-looking statements contained in this Form 10-K Report reflect our views and assumptions only as of the date of this Form 10-K Report.

Except as required by law, we do not intend to

update, and we assume no responsibility for updating, any forward-looking statements we have made.

forward-looking statements include certain discussions relating to underwriting, premium and investment income volumes, business strategies, reserves, profitability, Donegal Mutual’s ongoing information systems implementation, business

relationships and our other business activities during 2023 and beyond.

“estimate,” “objective,” “project,” “predict,” “potential,” “goal” and similar expressions.

These forward-looking statements reflect our current views about future events and our current assumptions, and are subject to known and unknown risks and

uncertainties that may cause our results, performance or achievements to differ materially from those we anticipate or imply by our forward-looking statements.

We cannot control or predict many of the factors that could determine our future

financial condition or results of operations.

Such factors may include those we describe under “Risk Factors.” The forward-looking statements contained in this Form 10-K Report reflect our views and assumptions only as of the date of this Form 10-K

Except as required by law, we do not intend to update, and we assume no responsibility for updating, any forward-looking statements we have made.

We qualify all of our forward-looking statements by these cautionary statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business