Item 9A. Controls and Procedures
Item 9A.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) at December 31, 2024 covered by this Form 10-K Report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, at December 31, 2024, our disclosure
controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information we are required to disclose in the reports that we file or submit under the Exchange Act and our disclosure controls and
procedures are also effective to ensure that information we disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the
participation of our Chief Executive Officer and our Chief Financial Officer, our management has conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on our evaluation under the COSO Framework, our
management has concluded that our internal control over financial reporting was effective at December 31, 2024.
The effectiveness of our internal control over financial reporting at December 31, 2024 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report, which is included in this
Form 10-K Report.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth quarter of 2024 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Other Information.
Trading Arrangements of Directors and Executive Officers
During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in item 408(a) of Regulation S-K.
Item 9C.
Disclosure Regarding Foreign Jurisdiction that Prevent Inspections.
Not applicable.
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Index
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Donegal Group Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Donegal Group Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and December 31,
2023, the related consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement
schedules III (collectively, the consolidated financial statements), and our report dated March 10, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Philadelphia, Pennsylvania
March 10, 2025
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Index
PART III
Item 10.
Directors, Executive Officers and Corporate Governance.
Other than the information we provide below and the information regarding executive officers included in Part I of this Form 10-K Report, we incorporate the response to this Item 10 by reference to our proxy statement
we will file with the SEC on or about March 17, 2025 relating to our annual meeting of stockholders that we will hold on April 17, 2025, or our Proxy Statement.
We incorporate the full text of our Code of Business Conduct and Ethics by reference to Exhibit 14 to this Form 10-K Report.
Item 11.
Executive Compensation.
We incorporate the response to this Item 11 by reference to our Proxy Statement. Neither the Report of our Compensation Committee nor the Report of our Audit Committee included in our Proxy Statement shall constitute
or be deemed to constitute a filing with the SEC under the Securities Act or the Exchange Act or be deemed to have been incorporated by reference into any filing we make under the Securities Act or the Exchange Act, except to the extent we
specifically incorporate the Report of Our Compensation Committee or the Report of Our Audit Committee by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
We incorporate the response to this Item 12 by reference to our Proxy Statement.
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
We incorporate the response to this Item 13 by reference to our Proxy Statement.
Item 14.
Principal Accounting Fees and Services.
We incorporate the response to this Item 14 by reference to our Proxy Statement.
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Index
PART IV
Item 15.
Exhibits, Financial Statement Schedules.
(a)
Financial statements, financial statement schedule and exhibits filed:
(i)
Consolidated Financial Statements
Page
Reports of Independent Registered Public Accounting Firm
105
Donegal Group Inc. and Subsidiaries:
Consolidated Balance Sheets at December 31, 2024 and 2023
63
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for each of the years in the three-year period ended December 31, 2024,
2023 and 2022
64
Consolidated Statements of Stockholders’ Equity for each of the years in the three-year period ended December 31, 2024, 2023 and 2022
65
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2024, 2023 and 2022
66
Notes to Consolidated Financial Statements
67
Report and Consent of Independent Registered Public Accounting Firm
(Filed as Exhibit 23.1)
(b)
Financial Statement Schedule
Schedule III — Supplementary Insurance Information
113
Report of Independent Registered Public Accounting Firm
Filed herewith
We have omitted all other schedules since they are not required, not applicable or the information is included in the financial statements or notes to the financial statements.
(c)
Exhibits
Exhibit No.
Description of Exhibits
Reference
3.1
Certificate of Incorporation of Donegal Group Inc., as amended.
(g)
3.2
Second Amended and Restated By-laws of Donegal Group Inc.
(n)
3.3
State of Delaware Certificate of Change of Registered Agent and/or Registered Office
(o)
4.1
Description of Donegal Group Inc’s Securities Registered pursuant to Section 12 of the Exchange Act.
(k)
Management Contracts and Compensatory Plans or Arrangements
10.1
Employment Agreement dated as of October 1, 2020 among Donegal Mutual Insurance Company, Donegal Group Inc. and Kevin G. Burke.
(j)
10.2
Employment Agreement dated as of October 1, 2020 among Donegal Mutual Insurance Company, Donegal Group Inc. and Jeffrey D. Miller.
(j)
10.3
Form of Employment Agreement dated as of October 1, 2020 among Donegal Mutual Insurance Company, Donegal Group Inc. and Our Executive Officers
Other Than Kevin G. Burke and Jeffrey D. Miller.
(p)
10.4
Donegal Mutual Insurance Company 401(k) Plan.
(a)
10.5
Amendment No. 1 effective January 1, 2000 to Donegal Mutual Insurance Company 401(k) Plan.
(a)
10.6
Amendment No. 2 effective January 6, 2000 to Donegal Mutual Insurance Company 401(k) Plan.
(b)
10.7
Amendment No. 3 effective July 23, 2001 to Donegal Mutual Insurance Company 401(k) Plan.
(b)
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Index
10.8
Amendment No. 4 effective January 1, 2002 to Donegal Mutual Insurance Company 401(k) Plan.
(b)
10.9
Amendment No. 5 effective December 31, 2001 to Donegal Mutual Insurance Company 401(k) Plan.
(b)
10.10
Amendment No. 6 effective July 1, 2002 to Donegal Mutual Insurance Company 401(k) Plan.
(c)
10.11
Donegal Group Inc. 2019 Equity Incentive Plan for Employees.
(h)
10.12
Donegal Group Inc. 2019 Equity Incentive Plan for Directors.
(h)
10.13
Donegal Group Inc. 2020 Long-Term Executive Incentive Plan.
(i)
10.14
Donegal Group Inc. 2021 Employee Stock Purchase Plan.
(m)
10.15
Donegal Group Inc. Cash Incentive Bonus Plan for 2022.
(l)
10.16
Donegal Group Inc. Cash Incentive Bonus Plan for 2023.
(p)
10.17
Donegal Group Inc. Cash Incentive Bonus Plan for 2024.
(r)
10.18
Donegal Group Inc. 2023 Long-Term Executive Incentive Plan.
(p)
10.19
Donegal Group Inc. 2024 Equity Incentive Plan for Employees.
(s)
10.20
Donegal Group Inc. 2024 Equity Incentive Plan for Directors.
(s)
10.21
Donegal Group Inc. Cash
Incentive Bonus Plan for 2025.
Filed herewith
Other Material Contracts
10.22
Amended and Restated Proportional Reinsurance Agreement dated March 1, 2010 between Donegal Mutual Insurance Company and Atlantic States
Insurance Company.
(e)
10.23
Amended and Restated Tax Sharing Agreement dated December 1, 2010 among Donegal Group Inc., Atlantic States Insurance Company, Southern
Insurance Company of Virginia, Le Mars Insurance Company, The Peninsula Insurance Company, Peninsula Indemnity Company and Michigan Insurance Company.
(f)
10.24
Amended and Restated Services Allocation Agreement dated September 1, 2021 among Donegal Mutual Insurance Company, Donegal Group Inc., Atlantic
States Insurance Company, Southern Insurance Company of Virginia, The Peninsula Insurance Company, Peninsula Indemnity Company and Michigan Insurance Company.
(l)
10.25
Quota-share Reinsurance Agreement dated December 1, 2010 between Donegal Mutual Insurance Company and Michigan Insurance Company.
(f)
10.26
Discretionary Loan Agreement between Donegal Group Inc. and M&T Bank dated August 1, 2020.
(k)
10.27
Amendment to Discretionary Loan Agreement between Donegal Group Inc. and M&T Bank dated September 24, 2021 - terms effective as of June 30,
2023 benchmark transition event.
(q)
10.28
Donegal Group Inc. 2024 Agency Stock Purchase Plan.
(t)
14
Code of Business Conduct and Ethics.
(d)
19
Insider Trading Policy.
Filed herewith
21
Subsidiaries of Registrant.
Filed herewith
23.1
Report and Consent of
Independent Registered Public Accounting Firm.
Filed herewith
31.1
Rule 13a-14(a)/15(d)-14(a)
Certification of Chief Executive Officer.
Filed herewith
31.2
Rule 13a-14(a)/15(d)-14(a)
Certification of Chief Financial Officer.
Filed herewith
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Index
32.1
Section 1350
Certification of Chief Executive Officer.
Filed herewith
32.2
Section 1350
Certification of Chief Financial Officer.
Filed herewith
97.1
Donegal Group Inc. Incentive Compensation Recoupment Policy.
(r)
Exhibit 101.INS
XBRL Instance Document
Filed herewith
Exhibit 101.SCH
XBRL Taxonomy Extension Schema Document
Filed herewith
Exhibit 101.PRE
XBRL Taxonomy Presentation Linkbase Document
Filed herewith
Exhibit 101.CAL
XBRL Taxonomy Calculation Linkbase Document
Filed herewith
Exhibit 101.LAB
XBRL Taxonomy Label Linkbase Document
Filed herewith
Exhibit 101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
Filed herewith
(a)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 1999.
https://www.sec.gov/Archives/edgar/data/800457/000095011500000431/0000950115-00-000431.txt
(b)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2001.
Amendment 2 - https://www.sec.gov/Archives/edgar/data/800457/000095015402000112/dgi-ex10i_53044.txt
Amendment 3 - https://www.sec.gov/Archives/edgar/data/800457/000095015402000112/dgi-ex10j_53044.txt
Amendment 4 - https://www.sec.gov/Archives/edgar/data/800457/000095015402000112/dgi-ex10k_53044.txt
Amendment 5 - https://www.sec.gov/Archives/edgar/data/800457/000095015402000112/dgi-ex10l_53044.txt
(c)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2002.
Amendment 6 - https://www.sec.gov/Archives/edgar/data/800457/000113542803000197/ex-10l.txt
(d)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2003.
https://www.sec.gov/Archives/edgar/data/800457/000089322004000561/w95544exv14.txt
(e)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2009.
https://www.sec.gov/Archives/edgar/data/800457/000095012310023520/w77589exv10wjj.htm
(f)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2010.
https://www.sec.gov/Archives/edgar/data/800457/000095012311025153/w81976exv10wnn.htm
https://www.sec.gov/Archives/edgar/data/800457/000095012311025153/w81976exv10wpp.htm
(g)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-Q Report for the quarter ended June 30, 2019.
https://www.sec.gov/Archives/edgar/data/800457/000119312519216557/d718901dex31.htm
(h)
We incorporate such exhibit by reference to the copy of such plan in Registrant’s definitive proxy statement for its Annual Meeting of Stockholders held on
April 18, 2019 filed on March 18, 2019.
https://www.sec.gov/Archives/edgar/data/800457/000119312519078249/d630272ddef14a.htm
(i)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2019.
https://www.sec.gov/Archives/edgar/data/800457/000119312520065229/d828895dex1024.htm
(j)
We incorporate such exhibit by reference to the like-described exhibit in Registrant's Form 8-K Report dated October 1, 2020.
https://www.sec.gov/Archives/edgar/data/800457/000119312520260880/d939405dex101.htm
https://www.sec.gov/Archives/edgar/data/800457/000119312520260880/d939405dex102.htm
(k)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2020.
https://www.sec.gov/Archives/edgar/data/800457/000119312521071327/d76653dex41.htm
https://www.sec.gov/Archives/edgar/data/800457/000119312521071327/d76653dex1031.htm
(l)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2021.
https://www.sec.gov/Archives/edgar/data/800457/000114036122008115/brhc10034696_ex10-26.htm
https://www.sec.gov/Archives/edgar/data/800457/000114036122008115/brhc10034696_ex10-23.htm
(m)
We incorporate such exhibit by reference to the copy of such plan in Registrant’s definitive proxy statement for its Annual Meeting of Stockholders held on
April 15, 2021 filed on March 15, 2021.
https://www.sec.gov/Archives/edgar/data/800457/000119312521080891/d89671ddef14a.htm
(n)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 8-K Report dated July 22, 2022.
https://www.sec.gov/Archives/edgar/data/800457/000114036122026675/brhc10039889_ex3-2.htm
(o)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 8-K Report dated August 10, 2022.
https://www.sec.gov/Archives/edgar/data/800457/000114036122029014/brhc10040619_ex3-1.htm
(p)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2022.
https://www.sec.gov/Archives/edgar/data/800457/000114036123010291/brhc10049169_ex10-5.htm
https://www.sec.gov/Archives/edgar/data/800457/000114036123010291/brhc10049169_ex10-22.htm
https://www.sec.gov/Archives/edgar/data/800457/000114036123010291/brhc10049169_ex10-23.htm
(q)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-Q Report for the quarter ended June 30, 2023.
https://www.sec.gov/Archives/edgar/data/800457/000114036123038058/brhc20056480_ex10-1.htm
(r)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s Form 10-K Report for the year ended December 31, 2023.
https://www.sec.gov/Archives/edgar/data/800457/000114036124011762/ef20015339_ex10-22.htm
https://www.sec.gov/Archives/edgar/data/800457/000114036124011762/ef20015339_ex97-1.htm
(s)
We incorporate such exhibit by reference to the copy of such plan in Registrant’s definitive proxy statement for its Annual Meeting of Stockholders held on
April 18, 2024 filed on March 15, 2024.
https://www.sec.gov/ix?doc=/Archives/edgar/data/800457/000114036124013410/ny20016701x1_def14a.htm
(t)
We incorporate such exhibit by reference to the like-described exhibit in Registrant’s For S-3 Registration Statement filed on August 30, 2024.
https://www.sec.gov/Archives/edgar/data/800457/000114036124039644/ny20035108x1_s3.htm
Item 16.
Form 10-K Summary.
None.
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Index
DONEGAL GROUP INC. AND SUBSIDIARIES
SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION
Years Ended December 31, 2024, 2023 and 2022
($ in thousands)
Segment
Net
Premiums
Earned
Net
Investment
Income
Net Losses
and Loss
Expenses
Amortization
of Deferred
Policy
Acquisition
Costs
Other
Underwriting
Expenses
Net
Premiums
Written
Year Ended December 31, 2024
Commercial lines
$
539,683
$
—
$
334,363
$
92,368
$
89,455
$
547,920
Personal lines
396,968
—
269,755
67,943
65,799
394,361
Investments
—
44,918
—
—
—
—
$
936,651
$
44,918
$
604,118
$
160,311
$
155,254
$
942,281
Year Ended December 31, 2023
Commercial lines
$
533,029
$
—
$
345,401
$
94,842
$
93,325
$
528,429
Personal lines
349,042
—
263,777
59,372
58,423
367,268
Investments
—
40,853
—
—
—
—
$
882,071
$
40,853
$
609,178
$
154,214
$
151,748
$
895,697
Year Ended December 31, 2022
Commercial lines
$
521,227
$
—
$
342,456
$
91,965
$
89,056
$
530,846
Personal lines
301,263
—
221,623
50,465
48,868
312,684
Investments
—
34,016
—
—
—
—
$
822,490
$
34,016
$
564,079
$
142,430
$
137,924
$
843,530
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Index
DONEGAL GROUP INC. AND SUBSIDIARIES
SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION, CONTINUED
($ in thousands)
At December 31,
Segment
Deferred
Policy
Acquisition
Costs
Liability
For Losses
and Loss
Expenses
Unearned
Premiums
Other Policy
Claims and
Benefits
Payable
2024
Commercial lines
$
44,160
$
887,820
$
368,756
$
—
Personal lines
29,187
233,165
243,720
—
Investments
—
—
—
—
$
73,347
$
1,120,985
$
612,476
$
—
2023
Commercial lines
$
42,775
$
869,393
$
341,664
$
—
Personal lines
32,268
256,764
257,747
—
Investments
—
—
—
—
$
75,043
$
1,126,157
$
599,411
$
—
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Index
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DONEGAL GROUP INC.
By:
/s/ Kevin G. Burke
Kevin G. Burke, President and Chief Executive Officer
Date: March 10, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Kevin G. Burke
President, Chief Executive Officer and a Director
March 10, 2025
Kevin G. Burke
(principal executive officer)
/s/ Jeffrey D. Miller
Executive Vice President and Chief Financial Officer
March 10, 2025
Jeffrey D. Miller
(principal financial and accounting officer)
/s/ Scott A. Berlucchi
Director
March 10, 2025
Scott A. Berlucchi
/s/ Dennis J. Bixenman
Director
March 10, 2025
Dennis J. Bixenman
/s/ Jack L. Hess
Director
March 10, 2025
Jack L. Hess
/s/ Barry C. Huber
Director
March 10, 2025
Barry C. Huber
/s/ David C. King
Director
March 10, 2025
David C. King
/s/ Kevin M. Kraft, Sr.
Director
March 10, 2025
Kevin M. Kraft, Sr.
/s/ Jon M. Mahan
Director
March 10, 2025
Jon M. Mahan
/s/ S. Trezevant Moore, Jr.
Director
March 10, 2025
S. Trezevant Moore, Jr.
/s/ Britta H. Schatz
Director
March 10, 2025
Britta H. Schatz
/s/ Annette B. Szady
Director
March 10, 2025
Annette B. Szady
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