Donegal Group Inc.

AI-generated fair value estimate for this company.

Method: Residual-income / justified price-to-book model: book value per share $17.33 (combined company stockholders' equity $640.4M at 12/31/2025); normalized ROE 11% (blend of 2025's 13.4%, 2024's 9.9%, and depressed 2022-23 hard-market years); cost of equity 9% (CAPM: 4.0% risk-free + 0.75 beta x 5.5% equity risk premium, plus ~1pt small-cap premium); terminal growth 3.5%; justified P/B = (ROE-g)/(Ke-g) = 1.364x applied to BVPS.

Reasoning: Donegal Group is a P&C insurer whose value is driven by book value compounding at excess returns over cost of equity rather than standalone free cash flow, so a residual-income/justified-P/B framework was used instead of a DCF, consistent with the stock's observed trading range near book value.