Since my previous coverage of Donegal Group ( DGICA ), the firm returned -1.20% vs. the S&P return of 11%. I rated the company a strong buy given that it continues to trade at lower multiples relativeFull-time Equity Analyst and part-time retail investor with a bias for high quality stocks trading at discounted prices. over the past 5 years I've been retail investing and learning more about how the stock market works, following the work of Ben Graham and Joel Greenblatt. Equity Markets are fascinating as th ...

Group 1 - The core viewpoint is that Donegal Group (DGICA) has underperformed, returning -1.20% compared to the S&P's 11% return [1] - The company continues to trade at lower multiples relative to its peers, which may present a buying opportunity [1] Group 2 - The analyst has a background in equity analysis and retail investing, focusing on high-quality stocks at discounted prices [1] - The article emphasizes the importance of analytical insights into global market performance [1]

Financial Performance - Net income for Q3 2025 was $20.1 million, or $0.55 per share, compared to $16.8 million, or $0.51 per share, in Q3 2024[131]. - Net income for the first nine months of 2025 was $62.2 million, or $1.72 per share, compared to $26.9 million, or $0.81 per share, in 2024[140]. - Net cash flows from operating activities were $60.2 million for the first nine months of 2025, up from $39.2 million in 2024[143]. Premiums and Underwriting - Net premiums written for the three months ended September 30, 2025, were $219,615,000, compared to $232,208,000 for the same period in 2024, indicating a decrease of about 5.4%[116]. - Net premiums earned for Q3 2025 were $229.8 million, a decrease of $8.2 million, or 3.4%, compared to Q3 2024[123]. - Net premiums written for Q3 2025 were $219.6 million, a decrease of $12.6 million, or 5.4%, from Q3 2024, with commercial lines increasing by 3.4% and personal lines decreasing by 15.9%[124]. - Net premiums earned for the first nine months of 2025 were $694.3 million, a decrease of $5.7 million, or 0.8%, compared to the same period in 2024[132]. - Net premiums written for the first nine months of 2025 were $700.5 million, a decrease of $30.3 million, or 4.1%, from the same period in 2024[133]. Loss Ratios and Reserves - The loss ratio for Q3 2025 was 62.1%, up from 61.5% in Q3 2024, with a core loss ratio of 51.1% compared to 50.1%[127]. - The loss ratio for the insurance subsidiaries was 61.3% for the first nine months of 2025, down from 66.1% in the same period of 2024[136]. - The core loss ratio, excluding weather-related losses, was 51.8% for the first nine months of 2025, compared to 54.5% for the same period in 2024[136]. - The establishment of loss reserves is inherently uncertain, and the ultimate liability may exceed current estimates, impacting financial results[108]. - For every 1% change in loss and loss expense reserves, the pre-tax impact on results of operations would be approximately $7.2 million[107]. Claims and Expenses - The average claim amount has gradually increased due to rising property and automobile repair costs, with significant impacts from inflation and litigation trends[109]. - The company’s insurance subsidiaries have experienced an increase in claims severity and longer settlement periods for bodily injury claims in recent years[107]. - The combined ratio for Q3 2025 was 95.9%, a decrease from 96.4% in Q3 2024, primarily due to a lower expense ratio[129]. - The expense ratio decreased to 33.4% for the first nine months of 2025 from 34.0% in 2024, reflecting expense management initiatives[137]. - The combined ratio improved to 95.1% for the first nine months of 2025, down from 100.6% in 2024, primarily due to a decrease in the loss ratio[138]. Investment Income - Net investment income for Q3 2025 was $13.9 million, an increase of $3.1 million, or 28.8%, compared to Q3 2024[125]. - Net investment income for the first nine months of 2025 was $38.5 million, an increase of $5.6 million, or 17.0%, compared to the same period in 2024[134]. - Net investment gains for the first nine months of 2025 were $2.3 million, down from $4.7 million in the same period of 2024[135]. Liabilities and Reserves - Total liabilities for losses and loss expenses as of September 30, 2025, amounted to $1,114,302,000, a slight decrease from $1,120,985,000 on December 31, 2024[111]. - The total commercial lines liabilities increased to $578,479,000 as of September 30, 2025, compared to $558,175,000 at the end of 2024, reflecting a growth of approximately 3.8%[111]. - The liabilities for reported losses are evaluated on a case-by-case basis, while unreported claims are based on historical data by line of insurance[106]. Weather and Other Losses - Weather-related losses were $48.7 million, contributing 7.0 percentage points to the loss ratio for the first nine months of 2025, down from $60.0 million and 8.6 percentage points in 2024[136]. - Large fire losses were $29.8 million for the first nine months of 2025, compared to $36.2 million in 2024[136]. Dividends and Borrowings - The insurance subsidiaries paid $10.0 million in dividends to the company during the first nine months of 2025[147]. - The company had no outstanding borrowings under its line of credit as of September 30, 2025, with the ability to borrow up to $20.0 million[144].

Core Viewpoint - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues, particularly when ad-blockers are enabled [1] Group 1 - The article suggests that users may face restrictions if they have ad-blockers enabled, indicating a need for adjustments in browser settings to ensure smooth access [1]

Financial Performance - Donegal Group Inc. reported a net income of $20.1 million for Q3 2025, a 19.9% increase from $16.8 million in Q3 2024 [1][3] - Total revenues decreased by 2.3% to $245.9 million in Q3 2025 compared to $251.7 million in Q3 2024 [1][3] - Net premiums earned fell by 3.4% to $229.8 million in Q3 2025, while for the first nine months, it decreased by 0.8% to $694.3 million [1][3][7] Investment Income - Investment income increased by 28.8% to $13.9 million in Q3 2025, compared to $10.8 million in Q3 2024 [1][15] - Net investment gains for Q3 2025 were $1.3 million, down from $1.9 million in Q3 2024, primarily due to unrealized gains in equity securities [1][18] Underwriting Performance - The combined ratio improved to 95.9% in Q3 2025 from 96.4% in Q3 2024, indicating better underwriting profitability [1][8] - The core loss ratio for commercial lines increased to 54.0% in Q3 2025 from 48.5% in Q3 2024, attributed to higher casualty loss severity [10] - Personal lines core loss ratio decreased to 46.6% in Q3 2025 from 52.5% in Q3 2024, benefiting from premium rate increases [10] Premiums and Business Segments - Commercial lines net premiums earned increased by 2.9% to $140.3 million in Q3 2025, while personal lines decreased by 11.8% to $89.5 million [7][8] - The company experienced a 5.4% decrease in net premiums written in Q3 2025, driven by a 15.9% decline in personal lines [8][9] Book Value and Equity - Book value per share rose to $17.14 at September 30, 2025, compared to $15.22 at the end of 2024, reflecting net income and unrealized gains [1][19] - The annualized return on average equity was 13.0% for Q3 2025, slightly down from 13.4% in Q3 2024 [1][3] Strategic Initiatives - The company is focused on enhancing its underwriting approach and has completed a major systems transformation project to improve service capabilities [4][5] - Management expressed confidence in the company's strategic execution and disciplined underwriting to sustain financial performance [2][6]

Core Insights - The article emphasizes the effectiveness of the Zacks Rank system in identifying winning stocks through earnings estimates and revisions [1] - Value investing is highlighted as a popular and successful strategy across various market conditions, focusing on undervalued stocks using fundamental analysis [2] Company Analysis: Donegal Group (DGICA) - DGICA holds a Zacks Rank of 1 (Strong Buy) and an A for Value, indicating strong investment potential [4] - The stock has a P/E ratio of 9.36, significantly lower than the industry average of 27.19, suggesting it may be undervalued [4] - DGICA's Forward P/E has fluctuated between 9.13 and 18.88 over the past year, with a median of 14.42 [4] - The P/B ratio for DGICA is 1.16, compared to the industry average of 1.53, indicating a favorable valuation [5] - The P/S ratio stands at 0.7, well below the industry average of 1.22, reinforcing the perception of undervaluation [6] - DGICA's P/CF ratio is 6.98, significantly lower than the industry average of 12.67, suggesting strong cash flow relative to its market value [7] Company Analysis: Universal Insurance Holdings (UVE) - UVE is rated 2 (Buy) with a Value score of A, indicating solid investment potential [8] - The P/B ratio for UVE is 1.58, slightly above the industry average of 1.53, but still within a reasonable range [8] - UVE's P/B ratio has varied between 1.19 and 1.89 over the past year, with a median of 1.54 [8] Conclusion - Both Donegal Group and Universal Insurance Holdings are identified as potentially undervalued stocks, supported by strong earnings outlooks and favorable valuation metrics [9]

Core Points - Donegal Group Inc. plans to release its third quarter results for the period ended September 30, 2025, on October 30, 2025, before the market opens [1] - A supplemental investor presentation will be available on the company's website at the same time as the earnings press release [1] - A pre-recorded audio webcast featuring management commentary will be available on October 30, 2025, at approximately 8:30 am ET [2] Company Overview - Donegal Group Inc. is an insurance holding company with subsidiaries offering property and casualty insurance in 21 states across the Mid-Atlantic, Midwest, South, and Southwest regions [3] - The Donegal Insurance Group, which includes Donegal Mutual Insurance Company, has an A.M. Best rating of A (Excellent) [3] - The company's Class A and Class B common stocks trade on the NASDAQ under the symbols DGICA and DGICB, respectively [4] Strategic Focus - The company is focused on achieving sustained excellent financial performance, modernizing operations, capitalizing on profitable growth opportunities, and providing superior experiences to agents, customers, and employees [4]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks in various market conditions, utilizing established valuation metrics to assess potential investments [2][3]. Company Summary - Donegal Group (DGICA) is currently rated with a Zacks Rank of 1 (Strong Buy) and has received an "A" grade for Value, indicating it is among the best value stocks available [3]. - DGICA has a Price-to-Book (P/B) ratio of 1.16, which is attractive compared to the industry average of 1.57. Over the past year, DGICA's P/B ratio has fluctuated between 0.93 and 1.28, with a median of 1.08 [4]. - The company has a Price-to-Sales (P/S) ratio of 0.71, significantly lower than the industry average of 1.27, making it a favorable metric for value investors [5]. - DGICA's Price-to-Cash Flow (P/CF) ratio stands at 6.98, compared to the industry's average of 13.05. The P/CF ratio has varied from a low of 6.05 to a high of 37.36 over the past year, with a median of 8.11 [6]. - These valuation metrics suggest that Donegal Group is likely undervalued at present, supported by a strong earnings outlook, making it an attractive value stock [7].

Group 1 - Nabeel Bukhari is a law graduate specializing in company and corporate law, with self-taught expertise in financial analysis, providing a unique perspective on business dynamics [1] - His work has been published by respected platforms such as InvestorPlace and GuruFocus, and featured in well-known publications like Forbes, Yahoo Finance, and MSN [1] - Bukhari's integration of legal knowledge with financial insights makes him a valuable asset in the financial realm [1]

Company Overview - Donegal Group (DGICA) holds a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating strong potential for value investors [3][8] - First American Financial (FAF) has a Zacks Rank of 2 (Buy) and a Value score of A, making it another attractive option in the Insurance - Property and Casualty sector [7][8] Valuation Metrics for Donegal Group (DGICA) - DGICA has a P/E ratio of 9.43, significantly lower than the industry average P/E of 27.82, suggesting it may be undervalued [3][8] - The company's P/B ratio is 1.17, compared to the industry's average P/B of 1.55, indicating a favorable valuation [4][8] - DGICA's P/S ratio stands at 0.71, well below the industry average P/S of 1.3, reinforcing its undervalued status [5][8] - The P/CF ratio for DGICA is 7.04, compared to the industry's average P/CF of 12.82, highlighting its attractive cash flow valuation [6][8] Valuation Metrics for First American Financial (FAF) - FAF has a P/B ratio of 1.33, which is lower than the industry's price-to-book ratio of 1.55, suggesting it is also undervalued [7][8]