UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, DC 20549 
  
FORM 8-K 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
Date of Report (Date of earliest event reported): April 22, 2005 

Donegal Group Inc. 
(Exact name of registrant as specified in its charter)

 	 	 	 	 	
Delaware 	 	0-15341 	 	23-2424711	
  	 	  	 	 	
(State or other
jurisdiction of
incorporation) 	 	(Commission file
number) 	 	(IRS employer
identification no.)	
 	 	 	
1195 River Road, Marietta, Pennsylvania 	 	17547	
  	 	 	
(Address of principal executive offices) 	 	(Zip code)	
Registrant’s telephone number, including area code: (717)426-1931 

 	 	 	
N/A		
 		
(Former name or former address, if changed since last report)		

 

 
Item 2.02 Results of Operations. 
     On April 22, 2005, the Registrant issued a press release regarding the Company’s financial results for its first quarter ended March 31, 2005. The press release is exhibit 99.1 to this Form 8-K. The information in this report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filing under the Securities Act of 1933. 
Item 9.01. Financial Statements and Exhibits 
 	 	 	
Exhibit No.	 	Description	
 	 	 	
99.1 	 	Press release issued by Donegal Group Inc. (the “Company”) dated April 22, 2005	
2 

SIGNATURES 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 
 	 	 	 	 	
 	DONEGAL GROUP INC.
 	 	
Date: April 22, 2005 	By:  	/s/ Ralph G. Spontak  	 	
 	 	Ralph G. Spontak, Senior Vice President 	 	
 	 	 	 	
3 

 	 	 	 	 	
EXHIBIT INDEX 
 	 	 	
Exhibit	 	 	
Number	 	Description	
 	 	 	
99.1 	 	Press release dated April 22, 2005 issued by the Company.	

EXHIBIT 99.1 
DONEGAL GROUP INC. ANNOUNCES FIRST QUARTER RESULTS 
Ralph G. Spontak
Senior Vice President and Chief Financial Officer
Phone (717) 426-1931
Fax (717) 426-7009 
For Immediate Release 
     MARIETTA, Pennsylvania, April 22, 2005 – Donegal Group Inc. (Nasdaq: DGICA and DGICB ) today reported net income for the quarter ended March 31, 2005 of $8,417,088, or $.46 per share on a diluted basis, compared to $6,286,636, or $.35 per share on a diluted basis, before extraordinary item, for the quarter ended March 31, 2004. Net income for the quarter ended March 31, 2004 was $11,732,306, or $.65 per share on a diluted basis, which included an extraordinary gain of $5,445,670, or $.30 per share on a diluted basis, related to an acquisition. 
     The Company’s first quarter results were characterized by solid premium growth and continued excellent underwriting results, with the Company posting a combined ratio of 90.6% for the first quarter of 2005 compared to a combined ratio of 92.7% for the comparable period in 2004. 
     All 2004 per share information has been restated to reflect a 4-for-3 stock split in the form of a 33 1/3% stock dividend issued on March 28, 2005 to stockholders of record as of March 1, 2005. 
     Revenues for the first quarter of 2005 were $78,079,058, an increase of 14.8% over a year earlier. Premiums earned for the first quarter were $71,762,523, a 14.5% increase over the first quarter of 2004. Investment income increased 16.6% to $4,407,468 for the first quarter of 2005 compared to $3,780,017 for the first quarter of 2004 as the Company continues to move some of its short-term funds into tax-exempt securities. Service fees 

 
for the first quarter of 2005 were $989,560, an increase of 18.7% over the first quarter of 2004 total of $833,897. 
     The Company’s loss ratio for the first quarter of 2005 improved to 57.9% compared to 64.4% for the first quarter of 2004, benefiting from continued pricing improvements and from a relative absence of severe weather in the first quarter of 2005. The Company’s expense ratio decreased to 32.2% for the first quarter of 2005 compared to 32.5% for the fourth quarter of 2004, but was up from 27.8% in the first quarter of 2004, which was favorably impacted by the purchase accounting for the acquisitions in that quarter. The Company’s workers’ compensation policy dividend ratio in the first quarter of 2005 remained unchanged from a year earlier at 0.5%. 
     “We are pleased that operating results were improved in both the personal lines and commercial lines sectors, with commercial lines benefiting from improved loss ratios in the workers’ compensation area” stated Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc. “The acquisitions completed in 2004 have continued to perform well and the identification of other solid acquisition candidates continues to be a high priority for the Company,” stated Nikolaus. 
     These strong results helped the Company increase its book value per common share 7.1% to $13.81 per share as of March 31, 2005 compared to $12.90 at December 31, 2004. 
     The Company announced yesterday that its Board of Directors approved a quarterly cash dividend payable May 16, 2005 of $.10 per share of Class A Common Stock and $.085 per share of Class B Common Stock, to stockholders of record as of May 2, 2005. These dividends represent an increase when compared to the prior year’s cash dividends adjusted for the 4-for-3 stock split. 
     The extraordinary gain in the first quarter of 2004 of $5,445,670 resulted from GAAP purchase accounting for unallocated negative goodwill from the Le Mars Insurance Company acquisition completed in early January, 2004. 
     The Company will hold a conference call on Friday April 22, 2005, beginning at 11:00 A. M. Eastern Time. You may participate in the conference call by calling 1-800-510-0219 (Passcode 79280048). An instant replay of the conference call will be available until May 2, 2005, by calling 1-888-286-8010 (Passcode 80139543). 
     Donegal Group Inc. is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in 

 
six Mid-Atlantic states (Connecticut, Delaware, Maryland, New Hampshire, New York and Pennsylvania), eight Southeastern states (Alabama, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and five Midwestern states (Iowa, Nebraska, Ohio, Oklahoma and South Dakota). 
     All statements contained in this press release that are not historic facts are based on current expectations. Such statements are forward-looking (as defined in the Private Securities Litigation Reform Act of 1995) in nature and necessarily involve a number of risks and uncertainties. Actual results could vary materially. The factors that could cause actual results to vary materially include, but are not limited to, the ability of the Company to maintain profitable operations, the adequacy of the Company’s reserves for losses and loss adjustment expenses, business and economic conditions in the areas in which the Company operates, competition from various insurance and non-insurance businesses, terrorism, legal and judicial developments, changes in regulatory requirements and other risks that are described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company disclaims any obligation to update such statements or to announce publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. 
(Tables Follow) 

 
 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended March 31	 	
 	 	 	 	 	 	 	
 	 	2005	 	 	2004*	 	
 	 	 	 	 	 	 	 	 	
Net premiums earned	 	$	71,762,523	 	 	$	62,699,881	 	
Investment income, net of investment expenses	 	 	4,407,468	 	 	 	3,780,017	 	
Realized investment gains	 	 	690,291	 	 	 	468,443	 	
Total revenues	 	 	78,079,058	 	 	 	68,001,661	 	
 	 	 	 	 	 	 	 	 	
Net income before extraordinary Item	 	$	8,417,088	 	 	$	6,286,636	 	
Net income after extraordinary item	 	$	8,417,088	 	 	$	11,732,306	 	
 	 	 	 	 	 	 	 	 	
Net income per common share before extraordinary item	 	 	 	 	 	 	 	 	
Basic	 	$	0.47	 	 	$	0.37	 	
Diluted	 	$	0.46	 	 	$	0.35	 	
 	 	 	 	 	 	 	 	 	
Net income per common share After extraordinary item	 	 	 	 	 	 	 	 	
Basic	 	$	0.47	 	 	$	0.68	 	
Diluted	 	$	0.46	 	 	$	0.65	 	
* Per share information restated for 4-for-3 stock split 

 
Consolidated Statements of Income
(unaudited; in thousands, except per share data) 
 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended March 31	 	
 	 	 	 	 	 	 	
 	 	2005	 	 	2004*	 	
 	 	 	 	 	 	 	 	 	
Net premiums earned	 	$	71,763	 	 	$	62,700	 	
Investment income, net of investment expenses	 	 	4,407	 	 	 	3,780	 	
Realized investment gains	 	 	690	 	 	 	468	 	
Lease income	 	 	229	 	 	 	220	 	
Service fees	 	 	990	 	 	 	834	 	
 	 	 	 	 	 	 	
Total revenues	 	 	78,079	 	 	 	68,002	 	

Losses and loss expenses	 	 	41,538	 	 	 	40,371	 	
Amortization of deferred policy acquisition costs	 	 	11,486	 	 	 	8,345	 	
Other underwriting expenses	 	 	11,654	 	 	 	9,058	 	
Other expenses	 	 	430	 	 	 	583	 	
Dividends	 	 	351	 	 	 	368	 	
Interest	 	 	499	 	 	 	338	 	
 	 	 	 	 	 	 	
Total expenses	 	 	65,958	 	 	 	59,063	 	

Income before income taxes and extraordinary item	 	 	12,121	 	 	 	8,939	 	
Income tax expense	 	 	3,704	 	 	 	2,652	 	
 	 	 	 	 	 	 	
Net income before extraordinary Item	 	 	8,417	 	 	 	6,287	 	
Extraordinary item	 	 	—	 	 	 	5,445	 	
 	 	 	 	 	 	 	
Net income after extraordinary Item	 	$	8,417	 	 	$	11,732	 	

Net income per common share before extraordinary item	 	 	 	 	 	 	 	 	
Basic	 	$	0.47	 	 	$	0.37	 	
 	 	 	 	 	 	 	
Diluted	 	$	0.46	 	 	$	0.35	 	

Net income per common share after extraordinary item	 	 	 	 	 	 	 	 	
Basic	 	$	0.47	 	 	$	0.68	 	
 	 	 	 	 	 	 	
Diluted	 	$	0.46	 	 	$	0.65	 	
 	 	 	 	 	 	 	
* Per share information restated for 4-for-3 stock split	 	 	 	 	 	 	 	 	
Supplementary Financial Analysts’ Data	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Weighted average number of shares outstanding	 	 	 	 	 	 	 	 	
Basic	 	 	17,946,915	 	 	 	17,186,431	 	
 	 	 	 	 	 	 	
Diluted	 	 	18,473,084	 	 	 	18,011,373	 	

Net written premiums	 	$	74,498	 	 	$	68,416	 	

Book value per common share	 	$	13.81	 	 	$	12.90	 	

 
Consolidated Balance Sheet
(unaudited; in thousands) 
 	 	 	 	 	 	 	 	 	
 	 	March 31, 2005	 	 	December 31, 2004	 	
 	 	 	 	 	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Investments:	 	 	 	 	 	 	 	 	
Fixed Maturities:	 	 	 	 	 	 	 	 	
Held to maturity, at amortized cost	 	$	190,629	 	 	$	182,574	 	
Available for sale, at fair value	 	 	245,889	 	 	 	226,757	 	
Equity securities, at fair value	 	 	34,634	 	 	 	33,505	 	
Investments in affiliates	 	 	8,748	 	 	 	8,865	 	
Short-term investments, at cost, which approximates fair value	 	 	24,169	 	 	 	47,368	 	
 	 	 	 	 	 	 	
Total investments	 	 	504,069	 	 	 	499,069	 	
 	 	 	 	 	 	 	 	 	
Cash	 	 	8,331	 	 	 	7,350	 	
Premiums in course of collection	 	 	45,975	 	 	 	44,267	 	
Reinsurance receivable	 	 	95,792	 	 	 	98,479	 	
Accrued investment income	 	 	4,794	 	 	 	4,961	 	
Deferred policy acquisition costs	 	 	22,530	 	 	 	22,258	 	
Prepaid reinsurance premiums	 	 	37,722	 	 	 	35,907	 	
Property and equipment, net	 	 	5,500	 	 	 	5,509	 	
Deferred income taxes	 	 	12,850	 	 	 	10,922	 	
Other assets	 	 	4,309	 	 	 	6,693	 	
 	 	 	 	 	 	 	
Total assets	 	$	741,872	 	 	$	735,415	 	

LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
Liabilities:	 	 	 	 	 	 	 	 	
Unpaid losses and loss settlement expenses	 	$	265,842	 	 	$	267,190	 	
Unearned premiums	 	 	179,009	 	 	 	174,458	 	
Accounts payable and accrued expenses	 	 	10,911	 	 	 	13,414	 	
Debt	 	 	30,929	 	 	 	30,929	 	
Due to affiliates	 	 	92	 	 	 	241	 	
Other liabilities	 	 	7,146	 	 	 	6,479	 	
 	 	 	 	 	 	 	
Total liabilities	 	 	493,929	 	 	 	492,711	 	
Shareholders’ equity:	 	 	 	 	 	 	 	 	
Preferred stock	 	 	—	 	 	 	—	 	
Class A common stock	 	 	139	 	 	 	104	 	
Class B common stock	 	 	42	 	 	 	32	 	
Additional paid-in capital	 	 	132,253	 	 	 	131,980	 	
Accumulated other comprehensive income	 	 	1,350	 	 	 	4,750	 	
Retained earnings	 	 	115,051	 	 	 	106,730	 	
Treasury stock, at cost	 	 	(892	)	 	 	(892	)	
 	 	 	 	 	 	 	
Total shareholders’ equity	 	 	247,943	 	 	 	242,704	 	
 	 	 	 	 	 	 	
Total liabilities and shareholders’ equity	 	$	741,872	 	 	$	735,415