AM Best Affirms Credit Ratings of Donegal Insurance Group Members and Donegal Group Inc.

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of the members of Donegal Insurance Group (Donegal Group) (Marietta, PA). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of Donegal Group Inc. (Delaware). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the member companies.)

The ratings reflect Donegal Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The stable outlooks are based on AM Best’s expectation that Donegal Group will maintain a very strong overall balance sheet strength assessment, supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), at the 99.6% VaR confidence level and continued organic surplus growth. Operating results are expected to remain consistent with the adequate assessment while continuing to refine the portfolio of risks.

Donegal Group’s balance sheet strength assessment reflects risk-adjusted capitalization at the strongest level, as measured by BCAR, as well as a high quality well-diversified investment portfolio with solid liquidity and stable loss reserve trends. The balance sheet is protected further from the impact of severe weather losses by a comprehensive reinsurance program with high quality reinsurance partners. In 2025, the group’s double-digit surplus growth was driven by its strong earnings and improved risk profile. These strengths are offset partially by the group’s elevated premium leverage albeit trending lower in recent years.

Donegal Group’s improved operating results in 2025 benefited from several factors including refinements in risk selection and pricing segmentation, as well as use of enhanced analytical tools and utilization of third-party data analytics. Operating results in 2025 further benefited from below average weather-related losses due to relatively benign catastrophe events in the group’s operating regions. Through the first quarter of 2026, underwriting results trailed the group’s unusually favorable results achieved for the prior year-to-date quarter. Underwriting income was dampened by higher-than-average weather-related losses and increased frequency and severity of fire losses. While the first quarter was below plan, sustained profitability for year-end 2026 is expected driven by controlled growth derived from refined state strategies through agency partners and optimized regional underwriting risk portfolios.

The neutral business profile assessment reflects Donegal Group’s well-diversified product offerings and broad geographic footprint, writing business in 21 Mid-Atlantic, Midwestern, Southern and Southwestern states. Products of the member companies generally are complementary, which allows the group to expand its ability to service an entire commercial or personal lines account in a given market. Donegal Group holds a solid niche position with a regional focus and continues to maintain a respected presence in its operating territories.

AM Best views Donegal Group’s ERM framework and risk management practices as appropriate for the group’s risk profile with established risk appetite and tolerance statements. Controls and mitigation strategies are in place to manage and monitor key risks actively. The ERM process includes a comprehensive reinsurance program tailored to manage catastrophe and systemic risks effectively, ensuring adequate protection is maintained.

The FSR of A (Excellent) and the Long Term ICRs of “a” (Excellent) have been affirmed, with stable outlooks for the following members of Donegal Insurance Group:

• Atlantic States Insurance Company
• Donegal Mutual Insurance Company
• Michigan Insurance Company
• Mountain States Commercial Insurance Company
• Mountain States Indemnity Company
• Peninsula Indemnity Company
• Southern Insurance Company of Virginia
• Southern Mutual Insurance Company
• The Peninsula Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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