<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2005

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number 001-11462

                          DELPHI FINANCIAL GROUP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
            Delaware                          (302) 478-5142                          13-3427277
-------------------------------      -------------------------------      --------------------------------
<S>                                  <C>                                  <C>
 (State or other jurisdiction of     (Registrant's telephone number,      (I.R.S. Employer Identification
 incorporation or organization)           including area code)                          Number)
</TABLE>

<TABLE>
<S>                                                                             <C>
1105 North Market Street, Suite 1230, P.O. Box 8985, Wilmington, Delaware         19899
-------------------------------------------------------------------------       ----------
            (Address of principal executive offices)                            (Zip Code)
</TABLE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to filing requirements
for the past 90 days:

                                 Yes [X] No [ ]

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

                                 Yes [X] No [ ]

      As of July 31, 2005, the Registrant had 28,317,798 shares of Class A
     Common Stock and 3,904,481 shares of Class B Common Stock outstanding.

<PAGE>

                          DELPHI FINANCIAL GROUP, INC.
                                    FORM 10-Q
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                              AND OTHER INFORMATION

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
PART I.  FINANCIAL INFORMATION (UNAUDITED)

         Consolidated Statements of Income for the Three and Six
             Months Ended June 30, 2005 and 2004................................    3

         Consolidated Balance Sheets at June 30, 2005 and
             December 31, 2004..................................................    4

         Consolidated Statements of Shareholders' Equity for the
             Six Months Ended June 30, 2005 and 2004............................    5

         Consolidated Statements of Cash Flows for the
             Six Months Ended June 30, 2005 and 2004............................    6

         Notes to Consolidated Financial Statements.............................    7

         Management's Discussion and Analysis of Financial
             Condition and Results of Operations................................   11

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings.............................................   21

         Item 4.  Submission of Matters to a Vote of Security Holders...........   21

         Item 6.  Exhibits......................................................   21

         Signatures.............................................................   22
</TABLE>

                                      -2-
<PAGE>

                          PART I. FINANCIAL INFORMATION

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  Three Months Ended      Six Months Ended
                                                                        June 30,              June 30,
                                                                  -------------------   -------------------
                                                                    2005       2004       2005       2004
                                                                  --------   --------   --------   --------
<S>                                                               <C>        <C>        <C>        <C>
Revenue:
   Premium and fee income ...................................     $249,851   $207,049   $489,451   $407,759
   Net investment income ....................................       55,192     48,705    108,629    101,248
   Net realized investment gains ............................        3,320      1,941      5,137      7,162
                                                                  --------   --------   --------   --------
                                                                   308,363    257,695    603,217    516,169
                                                                  --------   --------   --------   --------
Benefits and expenses:
   Benefits, claims and interest credited to policyholders...      185,690    153,570    364,263    303,672
   Commissions ..............................................       15,142     14,568     30,144     27,991
   Amortization of cost of business acquired ................       16,974     14,749     32,589     29,400
   Other operating expenses .................................       38,637     31,536     75,614     63,237
                                                                  --------   --------   --------   --------
                                                                   256,443    214,423    502,610    424,300
                                                                  --------   --------   --------   --------

      Operating income ......................................       51,920     43,272    100,607     91,869

Interest expense:
   Corporate debt ...........................................        4,261      3,475      7,931      6,911
   Junior subordinated deferrable interest debentures .......        1,199      1,106      2,370      2,211
                                                                  --------   --------   --------   --------
                                                                     5,460      4,581     10,301      9,122
                                                                  --------   --------   --------   --------

      Income before income tax expense ......................       46,460     38,691     90,306     82,747

Income tax expense ..........................................       14,483     11,558     28,222     24,993
                                                                  --------   --------   --------   --------

      Net income ............................................     $ 31,977   $ 27,133   $ 62,084   $ 57,754
                                                                  ========   ========   ========   ========

Basic results per share of common stock:
   Net income ...............................................     $   0.99   $   0.85   $   1.92   $   1.82

Diluted results per share of common stock:
   Net income ...............................................     $   0.96   $   0.82   $   1.87   $   1.76

Dividends paid per share of common stock ....................     $   0.09   $   0.08   $   0.18   $   0.16
</TABLE>

                See notes to consolidated financial statements.

                                      -3-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                     June 30,        December 31,
                                                                                       2005             2004
                                                                                    -----------    ---------------
<S>                                                                                 <C>            <C>
Assets:
   Investments:
      Fixed maturity securities, available for sale .............................   $ 3,104,115    $     3,049,013
      Short-term investments ....................................................       141,638             95,761
      Other investments .........................................................       521,447            396,302
                                                                                    -----------    ---------------
                                                                                      3,767,200          3,541,076
   Cash .........................................................................        33,029             24,324
   Cost of business acquired ....................................................       222,059            212,549
   Reinsurance receivables ......................................................       416,149            428,707
   Goodwill .....................................................................        93,929             93,929
   Securities lending collateral ................................................       251,238            236,900
   Other assets .................................................................       225,660            203,777
   Assets held in separate account ..............................................        91,451             88,205
                                                                                    -----------    ---------------
      Total assets ..............................................................   $ 5,100,715    $     4,829,467
                                                                                    ===========    ===============

Liabilities and Shareholders' Equity:
   Future policy benefits:
      Life ......................................................................   $   268,358    $       261,289
      Disability and accident ...................................................       522,629            488,909
   Unpaid claims and claim expenses:
      Life ......................................................................        50,062             49,441
      Disability and accident ...................................................       231,768            218,316
      Casualty ..................................................................       684,404            645,948
   Policyholder account balances ................................................     1,037,072          1,024,577
   Corporate debt ...............................................................       184,750            157,750
   Junior subordinated deferrable interest debentures underlying
      company-obligated mandatorily redeemable capital
      securities issued by unconsolidated subsidiaries ..........................        59,762             59,762
   Securities lending payable ...................................................       251,238            236,900
   Other liabilities and policyholder funds .....................................       713,090            658,522
   Liabilities related to separate account ......................................        91,451             88,205
                                                                                    -----------    ---------------
      Total liabilities .........................................................     4,094,584          3,889,619
                                                                                    -----------    ---------------

   Shareholders' equity:
      Preferred Stock, $.01 par; 50,000,000 shares authorized ...................             -                  -
      Class A Common Stock, $.01 par; 150,000,000 shares authorized;
         30,759,806 and 30,418,291 shares issued and outstanding, respectively...           308                304
      Class B Common Stock, $.01 par; 20,000,000 shares authorized;
         3,904,481 shares issued and outstanding ................................            39                 39
      Additional paid-in capital ................................................       420,942            406,908
      Accumulated other comprehensive income ....................................        53,266             57,371
      Retained earnings .........................................................       590,890            534,540
      Treasury stock, at cost; 2,573,211 shares of Class A Common Stock .........       (59,314)           (59,314)
                                                                                    -----------    ---------------
         Total shareholders' equity .............................................     1,006,131            939,848
                                                                                    -----------    ---------------
             Total liabilities and shareholders' equity .........................   $ 5,100,715    $     4,829,467
                                                                                    ===========    ===============
</TABLE>

                 See notes to consolidated financial statements.

                                      -4-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            Accumulated
                                        Class A    Class B   Additional        Other
                                        Common     Common     Paid-in      Comprehensive   Retained   Treasury
                                         Stock      Stock     Capital         Income       Earnings     Stock        Total
                                       ---------  ---------  ----------    -------------  ----------  ---------   -----------
<S>                                    <C>        <C>        <C>           <C>            <C>         <C>         <C>
Balance, January 1, 2004.............  $     295  $      42  $  383,573    $      52,428  $  421,080  $ (58,978)  $   798,440
                                                                                                                  -----------

Net income...........................          -          -           -                -      57,754          -        57,754
Other comprehensive income:
   Decrease in net unrealized
     appreciation on investments.....          -          -           -          (33,123)          -          -       (33,123)
   Decrease in net loss on
      cash flow hedge................          -          -           -              392           -          -           392
                                                                                                                  -----------
Comprehensive income.................                                                                                  25,023

Issuance of stock, exercise of stock
   options and share conversions.....          4          -      15,237                -           -          -        15,241
Stock-based compensation.............          -          -       1,337                -           -          -         1,337
Cash dividends.......................          -          -           -                -      (5,016)         -        (5,016)
                                       ---------  ---------  ----------    -------------  ----------  ---------   -----------

Balance, June 30, 2004...............  $     299  $      42  $  400,147    $      19,697  $  473,818  $ (58,978)  $   835,025
                                       =========  =========  ==========    =============  ==========  =========   ===========

Balance, January 1, 2005.............  $     304  $      39  $  406,908    $      57,371  $  534,540  $ (59,314)  $   939,848
                                                                                                                  -----------

Net income...........................          -          -           -                -      62,084          -        62,084
Other comprehensive income:
   Decrease in net unrealized
     appreciation on investments.....          -          -           -           (4,497)          -          -        (4,497)
   Decrease in net loss on
      cash flow hedge................          -          -           -              392           -          -           392
                                                                                                                  -----------
Comprehensive income.................                                                                                  57,979

Issuance of stock, exercise of stock
   options and share conversions.....          4          -      12,410                -           -          -        12,414
Stock-based compensation.............          -          -       1,624                -           -          -         1,624
Cash dividends.......................          -          -           -                -      (5,734)         -        (5,734)
                                       ---------  ---------  ----------    -------------  ----------  ---------   -----------

Balance, June 30, 2005...............  $     308  $      39  $  420,942    $      53,266  $  590,890  $ (59,314)  $ 1,006,131
                                       =========  =========  ==========    =============  ==========  =========   ===========
</TABLE>

                 See notes to consolidated financial statements.

                                      -5-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        Six Months Ended
                                                                                             June 30,
                                                                                   ---------------------------
                                                                                      2005             2004
                                                                                   -----------     -----------
<S>                                                                                <C>             <C>
Operating activities:
   Net income ..................................................................   $    62,084     $    57,754
   Adjustments to reconcile net income to net cash provided
        by operating activities:
      Change in policy liabilities and policyholder accounts ...................       105,025          82,345
      Net change in reinsurance receivables and payables .......................         8,593             424
      Amortization, principally the cost of business acquired and investments...        30,522          19,689
      Deferred costs of business acquired ......................................       (44,481)        (42,861)
      Net realized gains on investments ........................................        (5,137)         (7,162)
      Net change in trading account securities .................................       (22,631)          4,049
      Net change in federal income tax liability ...............................        13,171          14,447
      Other ....................................................................       (12,265)        (16,200)
                                                                                   -----------     -----------
        Net cash provided by operating activities ..............................       134,881         112,485
                                                                                   -----------     -----------

Investing activities:
   Purchases of investments and loans made .....................................    (1,018,057)     (1,079,209)
   Sales of investments and receipts from repayment of loans ...................       793,179         846,283
   Maturities of investments ...................................................       115,663          83,530
   Net change in short-term investments ........................................       (45,873)         11,039
   Change in deposit in separate account .......................................        (4,325)         (2,432)
                                                                                   -----------     -----------
        Net cash used by investing activities ..................................      (159,413)       (140,789)
                                                                                   -----------     -----------

Financing activities:
   Deposits to policyholder accounts ...........................................        52,148          73,316
   Withdrawals from policyholder accounts ......................................       (49,151)        (43,304)
   Borrowings under revolving credit facility ..................................        32,000          27,000
   Principal payments under revolving credit facility ..........................        (5,000)         (5,000)
   Change in liability for Federal Home Loan Bank advances .....................             -         (20,000)
   Other financing activities ..................................................         3,240           6,491
                                                                                   -----------     -----------
        Net cash provided by financing activities ..............................        33,237          38,503
                                                                                   -----------     -----------

Increase in cash ...............................................................         8,705          10,199
Cash at beginning of period ....................................................        24,324          18,733
                                                                                   -----------     -----------
      Cash at end of period ....................................................   $    33,029     $    28,932
                                                                                   ===========     ===========
</TABLE>

                See notes to consolidated financial statements.

                                      -6-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Delphi Financial Group, Inc. (the "Company," which
term includes the Company and its consolidated subsidiaries unless the context
indicates otherwise) included herein were prepared in conformity with accounting
principles generally accepted in the United States ("GAAP") for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. The information
furnished includes all adjustments and accruals of a normal recurring nature
which are, in the opinion of management, necessary for a fair presentation of
results for the interim periods. Operating results for the six months ended June
30, 2005 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2005. For further information refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 2004.
Capitalized terms used herein without definition have the meanings ascribed to
them in the Company's annual report on Form 10-K for the year ended December 31,
2004.

Stock Options

Prior to 2003, the Company accounted for its granted stock options according to
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to Employees" and related interpretations. All options granted prior to 2003 had
an intrinsic value of zero on the date of grant under APB No. 25, and,
therefore, no stock-based employee compensation expense is recognized in the
Company's financial statements for these options. Effective January 1, 2003, the
Company adopted the fair value recognition provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." Under the prospective transition method provisions of SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure," the
recognition provisions of SFAS No. 123 are applied to all option awards granted,
modified or settled after January 1, 2003. The amount of the expense related to
stock-based compensation included in the determination of the Company's net
income for 2005 and 2004 is lower than if these provisions had been applied to
all awards granted since the original January 1, 1995 effective date of SFAS No.
123. The following table illustrates the effect on net income and earnings per
share as if the Company had begun to apply the fair value recognition provisions
of SFAS No. 123 as of its original effective date:

<TABLE>
<CAPTION>
                                                                     Three Months Ended          Six Months Ended
                                                                         June 30,                    June 30,
                                                                   -----------------------    ------------------------
                                                                     2005        2004            2005          2004
                                                                   ----------   ----------    ----------    ----------
                                                                      (dollars in thousands, except per share data)
<S>                                                                <C>          <C>           <C>           <C>
Net income, as reported ........................................   $   31,977   $   27,133    $   62,084    $   57,754
Add: Stock-based employee compensation expense included
 in reported net income, net of related tax effects ............          641          566         1,296         1,076
Deduct: Stock-based employee compensation expense
  determined under the fair value based method for all awards,
  net of related tax effects ...................................         (712)        (752)       (1,452)       (1,457)
                                                                   ----------   ----------    ----------    ----------
Pro forma net income ...........................................   $   31,906   $   26,947    $   61,928    $   57,373
                                                                   ==========   ==========    ==========    ==========

Earnings per share:
  Basic, as reported ...........................................   $     0.99   $     0.85    $     1.92    $     1.82
  Basic, pro forma .............................................         0.98         0.84          1.91          1.80

  Diluted, as reported .........................................   $     0.96   $     0.82    $     1.87    $     1.76
  Diluted, pro forma ...........................................         0.95         0.81          1.85          1.74
</TABLE>

                                      -7-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE A - SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Recently Issued Accounting Standards

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123
(Revised) ("123R"), "Share-Based Payment," a revision of SFAS No. 123, which
requires all share-based payments to employees, including grants of employee
stock options, to be recognized as expense in the income statement based on
their fair values and prohibits pro forma disclosure as an alternative. SFAS No.
123R was scheduled to become effective no later than the first interim or annual
period beginning after June 15, 2005 with early adoption also permitted.
However, in April 2005, the United States Securities and Exchange Commission
delayed the effective date for registrants that are not small business issuers
to adopt SFAS No. 123R no later than the beginning of the first fiscal year
beginning after June 15, 2005. Upon its adoption of SFAS No. 123R, the Company
will be required to select a transition method between two permitted
alternatives, a "modified prospective" method or a "modified retrospective"
method. Under the "modified prospective" method, compensation cost is recognized
for all new awards granted after the date of adoption and any previously granted
awards that are not fully vested. Under the "modified retrospective" method,
compensation cost is recognized based on the requirements of the modified
prospective method described above, but this method also permits the restatement
of financial statements, either for all prior periods presented or prior interim
periods in the year of adoption, based on the amounts previously recognized
under SFAS No. 123 for purposes of pro forma disclosures.

Since SFAS No. 123R must be applied not only to new awards but to previously
granted awards that are not fully vested on the effective date, and the Company
has already adopted SFAS No. 123 using the prospective transition method,
compensation cost for some previously granted awards that were not recognized
under SFAS No. 123 will be recognized under the revised statement. However, had
the Company adopted SFAS No. 123R in prior periods, the impact of that standard
would have approximated the impact of SFAS No. 123 as described in the
disclosure of pro forma net income and earnings per share above in the "Stock
Options" paragraph of this Note A. In addition, SFAS No. 123R requires the
benefits of tax deductions in excess of recognized compensation cost to be
reported as a financing cash flow, rather than as an operating cash flow as
required under current accounting literature. The Company's benefits of tax
deductions in excess of recognized compensation cost were not material in the
first six months of 2005. The Company has not yet determined which method of
adoption it will use or what the effects of SFAS No. 123R will be on the future
earnings and financial position of the Company.

NOTE B - INVESTMENTS

At June 30, 2005, the Company had fixed maturity securities available for sale
with a carrying value and a fair value of $3,104.1 million and an amortized cost
of $3,000.1 million. At December 31, 2004, the Company had fixed maturity
securities available for sale with a carrying value and a fair value of $3,049.0
million and an amortized cost of $2,938.5 million.

The summarized aggregate unaudited net income for the various unaffiliated
entities in which the balances with independent investment managers have been
invested was $703.7 million and $632.7 million for the first six months of 2005
and 2004, respectively, and $354.0 million and $179.8 million for the second
quarters of 2005 and 2004, respectively.

                                      -8-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE C - CORPORATE DEBT

In May 2005, the Company entered into a new $200 million revolving credit
facility with Bank of America, N.A. as administrative agent, and a group of
major banking institutions (the "Credit Agreement"), which replaced the existing
$100 million revolving credit facility scheduled to expire in December 2006. The
Company had outstanding borrowings of $41.0 million under the Credit Agreement
at June 30, 2005 and $14.0 million of outstanding borrowings under the previous
revolving credit facility at December 31, 2004. Interest on borrowings under the
Credit Agreement is payable, at the Company's election, either at a floating
rate based on LIBOR plus a specified margin which varies depending on the level
of the specified ratings of the Company's senior unsecured debt, as in effect
from time to time, or at Bank of America's prime rate. Certain commitment and
utilization fees are also payable under the Credit Agreement. The Credit
Agreement contains certain financial and various other affirmative and negative
covenants considered ordinary for this type of credit agreement. They include,
among others, the maintenance of a specified debt to capital ratio, minimum
consolidated net worth of the Company, minimum risk-based capital requirements
for the Company's insurance subsidiaries, Reliance Standard Life Insurance
Company and Safety National Casualty Corporation, and certain limitations on
investments and subsidiary indebtedness. The maturity date of the Credit
Agreement is May 26, 2010. As of June 30, 2005, the Company was in compliance in
all material respects with the financial and various other affirmative and
negative covenants in the Credit Agreement.

NOTE D - SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                          Three Months Ended         Six Months Ended
                                              June 30,                  June 30,
                                        ----------------------    ----------------------
                                           2005        2004         2005         2004
                                        ---------    ---------    ---------    ---------
                                                     (dollars in thousands)
<S>                                     <C>          <C>          <C>          <C>
Revenues:
   Group employee benefit products...   $ 275,852    $ 228,295    $ 537,985    $ 453,330
   Asset accumulation products ......      20,755       19,562       43,445       40,122
   Other(1) .........................       8,436        7,897       16,650       15,555
                                        ---------    ---------    ---------    ---------
                                          305,043      255,754      598,080      509,007

   Net realized investment gains ....       3,320        1,941        5,137        7,162
                                        ---------    ---------    ---------    ---------
                                        $ 308,363    $ 257,695    $ 603,217    $ 516,169
                                        =========    =========    =========    =========

Operating income:
   Group employee benefit products...   $  47,108    $  39,396    $  89,756    $  78,883
   Asset accumulation products ......       4,424        3,766       10,757        8,903
   Other(1) .........................      (2,932)      (1,831)      (5,043)      (3,079)
                                        ---------    ---------    ---------    ---------
                                           48,600       41,331       95,470       84,707

   Net realized investment gains ....       3,320        1,941        5,137        7,162
                                        ---------    ---------    ---------    ---------
                                        $  51,920    $  43,272    $ 100,607    $  91,869
                                        =========    =========    =========    =========
</TABLE>

(1) Consists of operations that do not meet the quantitative thresholds for
    determining reportable segments and includes integrated disability and
    absence management services and certain corporate activities.

NOTE E - COMPREHENSIVE INCOME (LOSS)

Total comprehensive income is comprised of net income and other comprehensive
income, which includes the change in unrealized gains and losses on securities
available for sale and the change in the loss on the cash flow hedge described
in the Company's annual report on Form 10-K for the year ended December 31,
2004. Total comprehensive income (loss) was $58.0 million and $25.0 million for
the first six months of 2005 and 2004, respectively, and $60.7 million and
$(21.5) million for the second quarters of 2005 and 2004, respectively.

                                      -9-
<PAGE>

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE F - COMPUTATION OF RESULTS PER SHARE

The following table sets forth the calculation of basic and diluted results per
share:

<TABLE>
<CAPTION>
                                                                      Three Months Ended         Six Months Ended
                                                                           June 30,                 June 30,
                                                                     ---------------------     -------------------
                                                                       2005         2004          2005        2004
                                                                     ---------     -------     -------     -------
                                                                     (dollars in thousands, except per share data)
<S>                                                                  <C>           <C>         <C>         <C>
Numerator:
   Net income .....................................................  $  31,977     $27,133     $62,084     $57,754
                                                                     =========     =======     =======     =======

Denominator:
   Weighted average common shares outstanding .....................     32,426      31,931      32,368      31,811
   Effect of dilutive securities ..................................        876         999         914       1,007
                                                                     ---------     -------     -------     -------
   Weighted average common shares outstanding, assuming dilution...     33,302      32,930      33,282      32,818
                                                                     =========     =======     =======     =======

Basic results per share of common stock:
   Net income .....................................................  $    0.99     $  0.85     $  1.92     $  1.82

Diluted results per share of common stock:
   Net income .....................................................  $    0.96     $  0.82     $  1.87     $  1.76
</TABLE>

NOTE G - CONTINGENCIES

In the course of its business, the Company is a party to litigation and other
proceedings, primarily involving its insurance operations. In some cases, these
proceedings entail claims against the Company for punitive damages and similar
types of relief. The ultimate disposition of such pending litigation and
proceedings is not expected to have a material adverse effect on the Company's
financial position. In addition, incident to its discontinued products, the
Company has been and is currently a party to various arbitrations arising out of
accident and health reinsurance arrangements in which it and other companies
formerly were participating reinsurers. A hearing in one of such arbitrations
commenced in the second quarter of 2005 and has concluded. The Company
anticipates that a decision in such arbitration will be rendered in the second
half of 2005. The Company believes that it has substantial defenses upon which
to contest the claims made in these arbitrations, although it is not possible to
predict their ultimate outcome. In the opinion of management, such arbitrations,
when ultimately resolved, will not, individually or collectively, have an
adverse effect on the Company's financial position.

                                      -10-
<PAGE>

                          DELPHI FINANCIAL GROUP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Company, through its subsidiaries, underwrites a diverse portfolio of group
employee benefit products, primarily disability, group life and excess workers'
compensation insurance. Revenues from this group of products are primarily
comprised of earned premiums and investment income. The profitability of group
employee benefit products is affected by, among other things, differences
between actual and projected claims experience, the retention of existing
customers, product mix and the Company's ability to attract new customers,
change premium rates and contract terms and control administrative expenses. The
Company transfers its exposure to some group employee benefit risks through
reinsurance ceded arrangements with other insurance and reinsurance companies.
Accordingly, the profitability of the Company's group employee benefit products
is affected by the amount, cost and terms of reinsurance it obtains. The
profitability of certain group employee benefit products is also affected by the
difference between the yield achieved on invested assets and the discount rate
used to calculate the related reserves. The Company is continuing to experience
favorable market conditions for its excess workers' compensation products due to
high primary workers' compensation rates. For its other group employee benefit
products, the Company is maintaining its underwriting discipline under
competitive market conditions, and is continuing to increase the size of its
sales force in order to enhance its focus on the small case niche (insured
groups of 10 to 500 individuals), including employers which are first-time
providers of these employee benefits, which it believes to offer opportunities
for superior profitability.

The Company also operates an asset accumulation business that focuses primarily
on offering fixed annuities to individuals. Deposits from the Company's asset
accumulation business consist of new annuity sales, which are recorded as
liabilities rather than as premiums. Revenues from the Company's asset
accumulation business are primarily comprised of investment income earned on the
funds under management. The profitability of asset accumulation products is
primarily dependent on the spread achieved between the return on investments and
the interest credited to annuity holders. The Company is disciplined in setting
the crediting rates offered on its asset accumulation products in order to
achieve its targeted interest rate spreads on these products, and is willing to
accept lower levels of sales on these products when market conditions make these
targeted spreads more difficult to achieve.

The following discussion and analysis of the results of operations and financial
condition of the Company should be read in conjunction with the Consolidated
Financial Statements and related notes included in this document, as well as the
Company's annual report on Form 10-K for the year ended December 31, 2004.
Capitalized terms used herein without definition have the meanings ascribed to
them in the Company's annual report on Form 10-K for the year ended December 31,
2004. The preparation of financial statements in conformity with GAAP requires
management, in some instances, to make judgments about the application of these
principles. The amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period could differ materially from the amounts reported if different
conditions existed or different judgments were utilized. A discussion of how
management applies certain critical accounting policies is presented in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" of the Company's annual report on Form 10-K for the year ended
December 31, 2004 under the caption "Critical Accounting Policies" and should be
read in conjunction with the following discussion and analysis of results of
operations and financial condition of the Company. In addition, a discussion of
uncertainties and contingencies which can affect actual results and could cause
actual results to ultimately differ materially from those described below can be
found below under the caption "Forward-Looking Statements And Cautionary
Statements Regarding Certain Factors That May Affect Future Results."

RESULTS OF OPERATIONS

Six Months Ended June 30, 2005 Compared to
Six Months Ended June 30, 2004

Summary of Results. Net income was $62.1 million, or $1.87 per diluted share,
for the first half of 2005 as compared to $57.8 million, or $1.76 per diluted
share, for the first half of 2004. Net income in the first half of 2005 and 2004
included realized investment gains (net of the related income tax expense) of
$3.3 million, or $0.10 per diluted share, and $4.7 million, or $0.14 per diluted
share, respectively. The increase in net income in the first half of 2005 is
attributable to growth in income from group employee benefit products, increased
product spreads on the Company's asset accumulation products and an increase in
net investment income, partially offset by an increase in interest expense.
Premiums from the Company's core group employee benefit products increased 20%
in the first half of 2005 and the combined ratio (loss ratio plus expense ratio)
decreased to 94.3% in the first half of 2005 from 94.9% in the first half of
2004. Net investment income in the first half of 2005, which increased 7% from
the first half of 2004, reflects an 11% increase in average invested assets. The
increase in interest expense

                                      -11-
<PAGE>

was primarily due to the increases in the weighted average borrowings
and the weighted average borrowing rate due to increases in the levels of the
short-term interest indices referenced under the Company's revolving credit
facility during the first half of 2005 as compared to the first half of 2004.
The increase in interest expense was also attributable to the write-off of $0.5
million of capitalized debt issuance costs related to the Company's previous
$100 million revolving credit facility, which was terminated in conjunction
with the Company's entering into a new $200 million revolving credit facility
in May 2005.

Premium and Fee Income. Premium and fee income for the first half of 2005 was
$489.5 million as compared to $407.8 million for the first half of 2004, an
increase of 20%. Premiums from core group employee benefit products increased
20% to $455.7 million for the first half of 2005 from $379.0 million for the
first half of 2004. This increase reflects normal growth in employment and
salary levels for the Company's existing customer base, price increases, new
business production and an increase in premium income related to an indemnity
reinsurance arrangement which the Company entered into in the fourth quarter of
2004. Under this arrangement, the Company assumes certain group disability
insurance policies on an ongoing basis and is responsible for underwriting,
pricing and claims management with respect to the reinsured business. The
increase also reflects a decrease in premiums ceded by the Company to reinsurers
for these core group employee benefit products. Within core group employee
benefit products, premiums from excess workers' compensation insurance for
self-insured employers increased 16% to $104.5 million for the first half of
2005 from $90.3 million for the first half of 2004. This increase was primarily
due to the demand for this product as a result of high primary workers'
compensation rates. Safety National Casualty Corporation ("SNCC") has continued
to obtain significant improvements in contract terms, in particular higher
self-insured retention levels, while maintaining rates in connection with its
renewals of insurance coverage during the first half of 2005. On average,
self-insured retention levels increased 9% in the first half of 2005 compared to
the first half of 2004. Excess workers' compensation new business production,
which represents the amount of new annualized premium sold, increased 67% to
$16.6 million for the first half of 2005 from $9.9 million for the first half of
2004 and the retention of existing customers for the first half of 2005 remained
strong. Premiums for the Company's other core group employee benefit products
increased 22% to $351.1 million for the first half of 2005 from $288.8 million
for the first half of 2004, reflecting new business production and a decrease in
premiums ceded by the Company to reinsurers for these products. See "Liquidity
and Capital Resources - Reinsurance." New business production for the Company's
other core group employee benefit products increased 12% to $92.2 million for
the first half of 2005 from $82.6 million for the first half of 2004. New
business production includes only directly written business, and does not
include business reinsured under the Company's indemnity reinsurance agreement
discussed above. The level of production achieved in the first half of 2005
reflects the Company's focus on the small case niche (insured groups of 10 to
500 individuals) which resulted in a 12% increase in production measured by the
number of cases sold as compared to the first half of 2004. The Company
continues to maintain its underwriting discipline under competitive market
conditions for these products and to implement price increases for certain
existing disability and group life customers.

Deposits from the Company's asset accumulation products were $48.9 million for
the first half of 2005 as compared to $69.8 million for the first half of 2004.
These deposits consist of new annuity sales, which are recorded as liabilities
rather than as premiums. The Company continues to maintain its discipline in
setting the crediting rates offered on its asset accumulation products. The
decrease in deposits was attributable to the increase in short-term interest
rates, which has caused other short-term investment products such as commercial
deposits to be an attractive alternative to fixed annuity products, and to
increased market performance of equity-indexed annuities during the first half
of 2005, which reduced demand for fixed annuity products.

Net Investment Income. Net investment income for the first half of 2005 was
$108.6 million as compared to $101.2 million for the first half of 2004, an
increase of 7%. The level of net investment income in the 2005 period reflects
an increase in average invested assets in such period, partially offset by a
decrease in the tax equivalent weighted average annualized yield. The tax
equivalent weighted average annualized yield on invested assets was 6.2% on
average invested assets of $3,594.5 million for the first half of 2005 and 6.5%
on average invested assets of $3,230.2 million for the first half of 2004.

Net Realized Investment Gains. Net realized investment gains were $5.1 million
for the first half of 2005 as compared to $7.2 million for the first half of
2004. The Company's investment strategy results in periodic sales of securities
and, therefore, the recognition of realized investment gains and losses. During
the first half of 2005 and 2004, the Company recognized $6.3 million and $9.7
million, respectively, of net gains on the sales of securities. The Company
monitors its investments on an ongoing basis. When the market value of a
security declines below its cost, and management judges the decline to be other
than temporary, the security is written down to fair value, and the decline is
reported as a realized investment loss. In the first half of 2005 and 2004, the
Company recognized $1.2 million and $2.5 million, respectively, of losses due to
the other than temporary declines in the market values of certain fixed maturity
securities.

The Company may recognize additional losses of this type in the future. The
Company anticipates that if certain other existing declines in security values
are determined to be other than temporary, it may recognize additional
investment losses in the range of $2 million to $5 million, on an after-tax
basis, with respect to the relevant securities. However, the extent of any such
losses will depend on future market developments and changes in security values,
and such losses may be outside this range. The Company continuously monitors the
affected securities pursuant to its procedures for evaluation for the other than
temporary

                                      -12-
<PAGE>

impairment in valuation. See "Forward-Looking Statements and Cautionary
Statements Regarding Certain Factors That May Affect Future Results" for a
description of these procedures, which take into account a number of factors. It
is not possible to predict the extent of any future changes in value, positive
or negative, or the results of the future application of these procedures, with
respect to these securities. There can be no assurance that the Company will
realize investment gains in the future in an amount sufficient to offset any
such losses.

Benefits and Expenses. Policyholder benefits and expenses were $502.6 million
for the first half of 2005 as compared to $424.3 million for the first half of
2004, an increase of 18%. This increase primarily reflects the increase in
premiums from the Company's group employee benefit products discussed above. The
combined ratio (loss ratio plus expense ratio) for the Company's group employee
benefits segment decreased to 94.3% for the first half of 2005 from 94.9% for
the first half of 2004. The weighted average annualized crediting rate on the
Company's asset accumulation products, which reflects the effects of the first
year bonus crediting rate on certain newly issued products, was 4.6% and 4.8%
for the first half of 2005 and 2004, respectively.

Interest Expense. Interest expense was $10.3 million for the first half
of 2005 as compared to $9.1 million for the first half of 2004, an increase of
$1.2 million. This increase primarily resulted from the increases in the
weighted average borrowings and the weighted average borrowing rate due to
increases in the levels of the short-term interest indices referenced under the
Company's revolving credit facility during the first half of 2005 as compared
to the first half of 2004. The increase was also attributable to the write-off
of $0.5 million of capitalized debt issuance costs related to the Company's
previous $100 million revolving credit facility which was scheduled to expire
in December 2006, but was terminated in May 2005 when the Company entered into
a new $200 million revolving credit facility.

Income Tax Expense. Income tax expense was $28.2 million for the first half of
2005 as compared to $25.0 million for the first half of 2004. The increase in
income tax expense is primarily related to the increase in pre-tax income. The
Company's effective tax rate was 31.3% for the first half of 2005 and 30.2% for
the first half of 2004. The lower tax rate in the 2004 period reflects a higher
level of tax-exempt investment income.

Three Months Ended June 30, 2005 Compared to
Three Months Ended June 30, 2004

Summary of Results. Net income was $32.0 million, or $0.96 per diluted
share, for the second quarter of 2005 as compared to $27.1 million, or $0.82
per diluted share, for the second quarter of 2004. Net income in the second
quarters of 2005 and 2004 included realized investment gains (net of the
related income tax expense) of $2.2 million, or $0.06 per diluted share, and
$1.3 million, or $0.03 per diluted share, respectively. The increase in net
income in the second quarter of 2005 is primarily attributable to growth in
income from group employee benefit products and an increase in net investment
income, partially offset by an increase in interest expense. Premiums from the
Company's core group employee benefit products increased 21% in the second
quarter of 2005 and the combined ratio (loss ratio plus expense ratio) remained
in the same range as in the second quarter of 2004. The 13% increase in net
investment income in the second quarter of 2005 from the second quarter of 2004
reflects a 12% increase in average invested assets. The increase in interest
expense was primarily attributable to the write-off of $0.5 million of
capitalized debt issuance costs related to the Company's previous $100 million
revolving credit facility, which was terminated in conjunction with the
Company's entering into a new $200 million revolving credit facility in May
2005. The increase in interest expense is also due to the increases in the
weighted average borrowings and the weighted average borrowing rate due to
increases in the levels of the short-term interest indices referenced under the
Company's revolving credit facility during the second quarter of 2005 as
compared to the second quarter of 2004.

Premium and Fee Income. Premium and fee income for the second quarter of 2005
was $249.9 million as compared to $207.0 million for the second quarter of 2004,
an increase of 21%. Premiums from core group employee benefit products increased
21% to $230.0 million for the second quarter of 2005 from $190.0 million for the
second quarter of 2004. This increase reflects normal growth in employment and
salary levels for the Company's existing customer base, price increases, new
business production and an increase in premium income related to an indemnity
reinsurance arrangement which the Company entered into in the fourth quarter of
2004. Under this arrangement, the Company assumes certain group disability
insurance policies on an ongoing basis and is responsible for underwriting,
pricing and claims management with respect to the reinsured business. The
increase also reflects a decrease in premiums ceded by the Company to reinsurers
for these core group employee benefit products. Within core group employee
benefit products, premiums from excess workers' compensation insurance for
self-insured employers increased 16% to $52.9 million for the second quarter of
2005 from $45.4 million for the second quarter of 2004. This increase was
primarily due to the demand for this product as a result of high primary
workers' compensation rates. SNCC has continued to obtain significant
improvements in contract terms, in particular higher self-insured retention
levels, while maintaining rates in connection with its renewals of insurance
coverage during the second quarter of 2005. Excess workers' compensation new
business production, which represents the amount of new annualized premium sold,
increased 162%

                                      -13-
<PAGE>

to $4.6 million for the second quarter of 2005 from $1.8 million for the second
quarter of 2004. Premiums from the Company's other core group employee benefit
products increased 23% to $177.1 million for the second quarter of 2005 from
$144.5 million for the second quarter of 2004, reflecting new business
production and a decrease in premiums ceded by the Company to reinsurers for
these products. See "Liquidity and Capital Resources - Reinsurance." New
business production for the Company's other core group employee benefit products
increased 17% to $46.3 million for the second quarter of 2005 from $39.4 million
for the second quarter of 2004. New business production includes only directly
written business, and does not include business reinsured under the Company's
indemnity reinsurance agreement discussed above. The level of production
achieved in the second quarter of 2005 reflects the Company's focus on the small
case niche (insured groups of 10 to 500 individuals) which resulted in a 18%
increase in production measured by the number of cases sold as compared to the
second quarter of 2004. The Company continues to maintain its underwriting
discipline under competitive market conditions for these products and to
implement price increases for certain existing disability and group life
customers.

Deposits from the Company's asset accumulation products were $27.5 million for
the second quarter of 2005 as compared to $40.6 million for the second quarter
of 2004. These deposits are new annuity sales, which are recorded as liabilities
rather than as premiums. The Company continues to maintain its discipline in
setting the crediting rates offered on its asset accumulation products. The
decrease in deposits was attributable to the increase in short-term interest
rates, which has caused other short-term investment products such as commercial
deposits to be an attractive alternative to fixed annuity products, and to
increased market performance of equity-indexed annuities during the first half
of 2005, which reduced demand for fixed annuity products.

Net Investment Income. Net investment income in the second quarter of 2005 was
$55.2 million as compared to $48.7 million in the second quarter of 2004, an
increase of 13%. The level of net investment income in the 2005 period reflects
an increase in average invested assets in such period and an increase in the tax
equivalent weighted average annualized yield. The tax equivalent weighted
average annualized yield on invested assets was 6.2% on average invested assets
of $3,676.8 million for the second quarter of 2005 and 6.1% on average invested
assets of $3,297.2 million in the second quarter of 2004.

Net Realized Investment Gains. Net realized investment gains were $3.3 million
for the second quarter of 2005 as compared to $1.9 million for the second
quarter of 2004. The Company's investment strategy results in periodic sales of
securities and, therefore, the recognition of realized investment gains and
losses. During the second quarters of 2005 and 2004, the Company recognized $4.0
million and $2.0 million, respectively, of net gains on sales of securities. The
Company monitors its investments on an ongoing basis. When the market value of a
security declines below its cost, and management judges the decline to be other
than temporary, the security is written down to fair value, and the decline is
reported as a realized investment loss. In the second quarters of 2005 and 2004,
the Company recognized $0.7 million and $0.1 million, respectively, of losses
due to the other than temporary declines in the market values of certain fixed
maturity securities.

The Company may recognize additional losses of this type in the future. The
Company anticipates that if certain other existing declines in security values
are determined to be other than temporary, it may recognize additional
investment losses in the range of $2 million to $5 million, on an after-tax
basis, with respect to the relevant securities. However, the extent of any such
losses will depend on future market developments and changes in security values,
and such losses may be outside this range. The Company continuously monitors the
affected securities pursuant to its procedures for evaluation for the other than
temporary impairment in valuation. See "Forward-Looking Statements and
Cautionary Statements Regarding Certain Factors That May Affect Future Results"
for a description of these procedures, which take into account a number of
factors. It is not possible to predict the extent of any future changes in
value, positive or negative, or the results of the future application of these
procedures, with respect to these securities. There can be no assurance that the
Company will realize investment gains in the future in an amount sufficient to
offset any such losses.

Benefits and Expenses. Policyholder benefits and expenses were $256.4 million
for the second quarter of 2005 as compared to $214.4 million for the second
quarter of 2004, an increase of 20%. This increase primarily reflects the
increase in premiums from the Company's group employee benefit products
discussed above. The combined ratio (loss ratio plus expense ratio) for the
Company's group employee benefits segment was 94.2% for the second quarter of
2005 and 94.4% for the second quarter of 2004.

Interest Expense. Interest expense was $5.5 million for the second
quarter of 2005 as compared to $4.6 million for the second quarter of 2004, an
increase of $0.9 million. This increase was primarily attributable to the
write-off of $0.5 million of capitalized debt issuance costs related to the
Company's previous $100 million revolving credit facility which was scheduled
to expire in December 2006, but was terminated in May 2005 when the Company
entered into a new $200 million revolving credit facility. The increase was
also due to the increases in the weighted average borrowings and the weighted
average borrowing rate due to increases in the levels of the short-term
interest indices referenced under the Company's revolving credit facility
during the second quarter 2005 as compared to the second quarter of 2004.

Income Tax Expense. Income tax expense was $14.5 million for the second quarter
of 2005 as compared to $11.6 million for

                                      -14-
<PAGE>

the second quarter of 2004. The increase in income tax expense is primarily
related to the increase in pre-tax income. The Company's effective tax rate was
31.2% for the second quarter of 2005 and 29.9% for the second quarter of 2004.
The lower tax rate in the 2004 period reflects a higher level of tax-exempt
investment income.

LIQUIDITY AND CAPITAL RESOURCES

General. The Company had approximately $108.0 million of financial resources
available at the holding company level at June 30, 2005, which was primarily
comprised of investments in the common stock of its investment subsidiaries,
balances with independent investment managers and short-term investments. The
assets of the investment subsidiaries are primarily invested in balances with
independent investment managers. Other sources of liquidity at the holding
company level include dividends paid from subsidiaries, primarily generated from
operating cash flows and investments. The Company's insurance subsidiaries are
permitted, without prior regulatory approval, to make dividends payments
totaling $61.4 million during 2005, of which $0.8 million has been paid to the
holding company during the first half of 2005. In general, dividends from the
company's non-insurance subsidiaries are not subject to regulatory or other
restrictions.

In May 2005, the Company entered into a new $200 million revolving credit
facility with Bank of America, N.A. as administrative agent, and a group of
major banking institutions which replaced the existing $100 million revolving
credit facility scheduled to expire in December 2006. This new facility, which
expires in May 2010, contains certain financial and various other affirmative
and negative covenants considered ordinary for this type of credit agreement.
They include, among others, the maintenance of a specified debt to capital
ratio, minimum consolidated net worth of the Company, minimum risk-based capital
requirements for the Company's subsidiaries, Reliance Standard Life Insurance
Company ("RSLIC") and SNCC, and certain limitations on investments and
subsidiary indebtedness. The Company had $159.0 million of borrowings available
to it under this revolving credit facility as of June 30, 2005. See Note C to
the Consolidated Financial Statements. A shelf registration statement is also in
effect under which securities yielding proceeds of up to $106.2 million may be
issued by the Company.

The Company's current liquidity needs, in addition to funding its operating
expenses, include principal and interest payments on outstanding borrowings
under its revolving credit facility, interest payments on the 2033 Senior Notes,
and distributions on the Capital Securities and the 2003 Capital Securities. The
2033 Senior Notes mature in their entirety in May 2033 and are not subject to
any sinking fund requirements but are redeemable by the Company at par at any
time on or after May 15, 2008. The junior subordinated deferrable interest
debentures underlying the Capital Securities are not redeemable prior to March
25, 2007. The junior subordinated deferrable interest debentures underlying the
2003 Capital Securities are redeemable, in whole or in part, beginning May 15,
2008.

On August 4, 2005, the Company's Board of Directors declared a cash dividend of
$0.09 per share, which will be paid on the Company's Class A Common Stock and
Class B Common Stock on September 1, 2005.

The Company and its subsidiaries expect available sources of liquidity to exceed
their current and long-term cash requirements.

Investments. The Company's overall investment strategy emphasizes safety and
liquidity, while seeking the best available return, by focusing on, among other
things, managing the Company's interest-sensitive assets and liabilities and
seeking to minimize the Company's exposure to fluctuations in interest rates.
The Company's investment portfolio, which totaled $3.8 billion at June 30, 2005,
consists primarily of investments in fixed maturity securities and short-term
investments. The weighted average credit rating of the Company's fixed maturity
portfolio as rated by Standard & Poor's Corporation was "AA" at June 30, 2005.
While the investment grade rating of the Company's fixed maturity portfolio
addresses credit risk, it does not address other risks, such as prepayment and
extension risks. The Company also invests in balances with independent
investment managers, consisting primarily of investments in limited partnerships
which invest in various financial instruments. These investments are reflected
in the Company's financial statements under the equity method; accordingly,
positive or negative changes in the values of the partnerships' investments are
included in net investment income. For this purpose, the Company estimates the
values of its balances with independent investment managers based on values
provided by the managers, as adjusted based on available information concerning
the underlying investment portfolios. As of March 31, 2004, there was an
adjustment for a reduction in value of $6.7 million; there were no adjustments
in such values as of June 30, 2004, December 31, 2004 and June 30, 2005. The
Company believes that its estimates reasonably reflect the values of its
balances with independent investment managers; however, there can be no
assurance that such values will ultimately be realized upon liquidation of such
balances. See "Forward-Looking Statements and Cautionary Statements Regarding
Certain Factors That May Affect Future Results" for a discussion of various
risks relating to the Company's investment portfolio.

Reinsurance. The Company cedes portions of the risks relating to its group
employee benefit products under indemnity reinsurance agreements with various
unaffiliated reinsurers. The Company pays reinsurance premiums which are
generally based upon specified percentages of the Company's premiums on the
business reinsured. These agreements expire at various intervals as to new
risks, and replacement agreements are negotiated on terms believed appropriate
in light of current market conditions. During 2003, the Company replaced certain
of its existing reinsurance arrangements for its excess workers' compensation
and long-term disability products. Under the replacement arrangements for excess
workers' compensation

                                      -15-
<PAGE>

products, the Company reinsures excess workers' compensation risks between $5.0
million (compared to $3.0 million previously) and $50.0 million, and a majority
in proportionate amount of the risks between $50.0 million and $100.0 million,
per policy per occurrence. For long-term disability products (effective October
1, 2003 for new policies and, for existing policies, the earlier of the next
policy anniversary date or October 1, 2004) the Company reinsures risks in
excess of $7,500 (compared to $2,500 previously) in benefits per individual per
month. These changes have reduced the reinsurance premiums paid by the Company
for these products. See "Forward-Looking Statements And Cautionary Statements
Regarding Certain Factors That May Affect Future Results."

MARKET RISK

There have been no material changes in the Company's exposure to market risk or
its management of such risk since December 31, 2004.

CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was performed
under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer ("CEO") and Vice President and
Treasurer (the individual who acts in the capacity of chief financial officer),
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures (as defined in the rules and regulations of the
Securities and Exchange Commission). Based on that evaluation, the Company's
management, including the CEO and Vice President and Treasurer, concluded that
the Company's disclosure controls and procedures were effective. There were no
changes in the Company's internal control over financial reporting during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Company's internal control over
financial reporting.

FORWARD-LOOKING STATEMENTS AND CAUTIONARY STATEMENTS REGARDING CERTAIN FACTORS
THAT MAY AFFECT FUTURE RESULTS

In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward-looking statements in the
above "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and elsewhere in this Form 10-Q and in any other statement made
by, or on behalf of, the Company, whether in future filings with the Securities
and Exchange Commission or otherwise. Forward-looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results, prospects, outlooks or other developments. Some
forward-looking statements may be identified by the use of terms such as
"expects," "believes," "anticipates," "intends," "judgment" or other similar
expressions. Forward-looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business, economic,
competitive and other uncertainties and contingencies, many of which are beyond
the Company's control and many of which, with respect to future business
decisions, are subject to change. Examples of such uncertainties and
contingencies include, among other important factors, those affecting the
insurance industry generally, such as the economic and interest rate
environment, federal and state legislative and regulatory developments,
including but not limited to changes in financial services, employee benefit and
tax laws and regulations, market pricing and competitive trends relating to
insurance products and services, acts of terrorism or war, and the availability
and cost of reinsurance, and those relating specifically to the Company's
business, such as the level of its insurance premiums and fee income, the claims
experience, persistency and other factors affecting the profitability of its
insurance products, the performance of its investment portfolio and changes in
the Company's investment strategy, acquisitions of companies or blocks of
business, and ratings by major rating organizations of the Company and its
insurance subsidiaries. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, the Company. Certain
of these uncertainties and contingencies are described in more detail in the
remainder of this section. The Company disclaims any obligation to update
forward-looking information.

      RESERVES ESTABLISHED FOR FUTURE POLICY BENEFITS AND CLAIMS MAY PROVE
INADEQUATE.

The Company establishes reserves for future policy benefits and unpaid claims
and claim expenses relating to its insurance products. These reserves are
calculated using various generally recognized actuarial methodologies and are
based upon assumptions that management believes are appropriate and which vary
by type of product. Annually, external actuarial experts also review the
Company's methodologies, assumptions and the resulting reserves. The estimation
process is complex and involves information obtained from company-specific and
industry-wide data, as well as general economic information. The most
significant assumptions made in the estimation process for future policy
benefits relate to mortality, morbidity, claim termination and discount rates.
The reserves for unpaid claims and claim expenses are determined on an
individual basis for reported claims and estimates of incurred but not reported
losses are developed on the basis of past experience. The most significant
assumptions made in the estimation process for unpaid claims and claim expenses
are the trend in loss costs, the

                                      -16-
<PAGE>

expected frequency and severity of claims, changes in the timing of the
reporting of losses from the loss date to the notification date, and expected
costs to settle unpaid claims. The assumptions vary based on the year the claim
is incurred. Disability reserves for unpaid claims and claim expenses are
discounted using interest rate assumptions based upon projected portfolio yield
rates for the assets supporting the liabilities. The assets selected to support
these liabilities produce cash flows that are intended to match the timing and
amount of anticipated claim and claim expense payments. Primary and excess
workers' compensation claim reserves are discounted using interest rate
assumptions based on the risk-free rate of return for U.S. Government securities
with a duration comparable to the expected duration and payment pattern of the
claims at the time the claims are settled. The rates used to discount reserves
are determined annually. The methods and assumptions used to establish reserves
for future policy benefits and unpaid claims and claim expenses are continually
reviewed and updated based on current circumstances, and any resulting
adjustments are reflected in earnings currently.

The Company's projected ultimate insurance liabilities and associated reserves
are estimates, which are subject to variability. This variability arises because
the factors and events affecting the Company's ultimate liability have not all
taken place, and thus cannot be evaluated with certainty. Moreover, under the
actuarial methodologies discussed above, these estimates are subject to
reevaluation based on developing trends with respect to the Company's loss
experience. Such trends may emerge over longer periods of time, and changes in
such trends cannot necessarily be identified or predicted at any given time by
reference to current claims experience, whether favorable or unfavorable. If the
Company's actual loss experience from its current or discontinued products is
different from the Company's assumptions or estimates, the Company's reserves
could be inadequate. In such event, the Company's results of operations,
liquidity or financial condition could be materially adversely affected.

      THE MARKET VALUES OF THE COMPANY'S INVESTMENTS FLUCTUATE.

The market values of the Company's investments vary depending on economic and
market conditions, including interest rates, and such values can decline as a
result of changes in such conditions. Increasing interest rates or a widening in
the spread between interest rates available on U.S. Treasury securities and
corporate debt, for example, will typically have an adverse impact on the market
values of the fixed maturity securities in the Company's investment portfolio.
If interest rates decline, the Company generally achieves a lower overall rate
of return on investments of cash generated from the Company's operations. In
addition, in the event that investments are called or mature in a declining
interest rate environment, the Company may be unable to reinvest the proceeds in
securities with comparable interest rates. The Company may also in the future be
required or determine to sell certain investments at a price and a time when the
market value of such investments is less than the book value of such
investments.

Declines in the fair value of investments that are considered in the judgment of
management to be other than temporary are reported as realized investment
losses. The Company evaluates, among other things, the financial position and
prospects of the issuer, conditions in the issuer's industry and geographic
area, liquidity of the investment, changes in the amount or timing of expected
future cash flows from the investment, and recent downgrades of the issuer by a
rating agency to determine if and when a decline in the fair value of an
investment below amortized cost is other than temporary. The length of time and
extent to which the fair value of the investment is lower than its amortized
cost and the Company's ability and intent to retain the investment to allow for
any anticipated recovery in the investment's fair value are also considered. The
Company has experienced and may in the future experience losses from other than
temporary declines in security values. Such losses are recorded as realized
investment losses in the income statement. See "Results of Operations."

      THE COMPANY'S INVESTMENT STRATEGY EXPOSES THE COMPANY TO DEFAULT AND OTHER
RISKS.

The management of the Company's investment portfolio is an important component
of the Company's profitability since a substantial portion of the Company's
operating income is generated from the difference between the yield achieved on
invested assets and, in the case of asset accumulation products, the interest
credited on policyholder funds and, in the case of the Company's other products
for which reserves are discounted, the discount rate used to calculate the
related reserves.

The Company is subject to the risk, among others, that the issuers of the fixed
maturity securities the Company owns will default on principal and interest
payments. A major economic downturn or any of the various other factors that
affect issuers' ability to pay could result in issuer defaults. Because the
Company's investments consist primarily of fixed maturity securities and
short-term investments, such defaults could materially adversely affect the
Company's results of operations, liquidity or financial condition. The Company
continually monitors its investment portfolio and attempts to ensure that the
risks associated with concentrations of investments in either a particular
sector of the market or a single entity are limited.

At June 30, 2005, mortgage-backed securities comprised 22% of the Company's
total invested assets. Mortgage-backed securities subject the Company to a
degree of interest rate risk, including prepayment and extension risk, which is
generally a function of the sensitivity of each security's underlying collateral
to prepayments under varying interest rate environments and

                                      -17-
<PAGE>

the repayment priority of the securities in the particular securitization
structure. The Company seeks to limit the extent of this risk by emphasizing the
more predictable payment classes and securities with stable collateral.

The Company, through its insurance subsidiaries, maintains a program in which
investments are financed using advances from various Federal Home Loan Banks.
The Company has utilized this program to manage the duration of its liabilities
and to earn spread income, which is the difference between the financing cost
and the earnings from the investments purchased with those funds. At June 30,
2005, the Company had outstanding advances of $85.0 million, which were obtained
at a fixed rate, and have a weighted average term to maturity of 9.8 years. A
total of $30.0 million of these advances will mature at various times during the
second half of 2005. In addition, the Company has from time to time utilized
reverse repurchase agreements, futures and option contracts and interest rate
and credit default swaps in connection with the Company's investment strategy.
These transactions may require the Company to maintain securities or cash on
deposit with the applicable counterparty as collateral. As the market value of
the collateral or contracts changes, the Company may be required to deposit
additional collateral or be entitled to have a portion of the collateral
returned to it. The Company also maintains a securities lending program under
which certain securities from its portfolio are loaned to other institutions for
short periods of time. The Company maintains full ownership rights to the
securities loaned and continues to earn interest and dividends on them. The
collateral received for securities loaned is recorded at the fair value of the
collateral, which is generally in an amount in excess of the market value of the
securities loaned. The Company's institutional lending agent monitors the market
value of the securities loaned and obtains additional collateral as necessary.

The types and amounts of investments made by the Company's insurance
subsidiaries are subject to the insurance laws and regulations of their
respective states of domicile. Each of these states has comprehensive investment
regulations. In addition, the Company's revolving credit facility also contains
limitations, with which the Company is currently in compliance in all material
aspects, on the composition of the Company's investment portfolio.

      THE COMPANY'S FINANCIAL POSITION EXPOSES THE COMPANY TO INTEREST RATE
RISKS.

Because the Company's primary assets and liabilities are financial in nature,
the Company's consolidated financial position and earnings are subject to risks
resulting from changes in interest rates. The Company manages this risk by
active portfolio management focusing on minimizing its exposure to fluctuations
in interest rates by matching its invested assets and related liabilities and by
periodically adjusting the crediting rates on its annuity products. In addition,
the profitability of the Company's products for which reserves are discounted is
affected by the difference between the yield achieved on invested assets and the
discount rate used to calculate such reserves. The Company manages this risk by
adjusting the prices charged for these products.

      THE COMPANY'S ABILITY TO REDUCE ITS EXPOSURE TO RISKS DEPENDS ON THE
AVAILABILITY AND COST OF REINSURANCE.

The Company transfers its exposure to some risks through reinsurance
arrangements with other insurance and reinsurance companies. Under the Company's
reinsurance arrangements, another insurer assumes a specified portion of the
Company's losses and loss adjustment expenses in exchange for a specified
portion of policy premiums. The availability, amount, cost and terms of
reinsurance may vary significantly based on market conditions. Any decrease in
the amount of the Company's reinsurance will increase the Company's risk of loss
and any increase in the cost of such reinsurance will, absent a decrease in the
reinsurance amount, reduce the Company's premium income. In either case, the
Company's operating results could be adversely affected unless it is able to
accordingly adjust the prices or other terms of its insurance policies or
successfully implement other operational initiatives, as to which no assurance
can be given. Also, the Company is subject to credit risk with respect to
reinsurance. The Company obtains reinsurance primarily through indemnity
reinsurance transactions in which the Company is still liable for the
transferred risks if the reinsurers fail to meet their financial obligations.
Such failures could materially affect the Company's results of operations,
liquidity or financial condition.

Some reinsurers experienced significant losses related to the terrorist events
of September 11, 2001. As a result of this and other market factors, higher
prices and less favorable terms and conditions continue to be offered in the
reinsurance market. These market conditions are reflected in the terms of the
replacement reinsurance arrangements entered into during 2003 for the Company's
excess workers' compensation and long-term disability products. See "Liquidity
and Capital Resources - Reinsurance." In the future, the Company's reinsurers
may continue to seek price increases, although the extent of any such increases
cannot be predicted. Also, there has been significantly reduced availability of
reinsurance covering risks such as terrorist and catastrophic events.
Accordingly, substantially all of the Company's coverages of this nature were
discontinued in 2002, which would result in the Company retaining a higher
portion of losses from such events if they occur. The Company has not been able
to replace such coverages on acceptable terms due to present market conditions,
and there can be no assurance that the Company will be able to do so in the
future. Under the Terrorism Act, the federal government will pay 90% of the
Company's covered losses relating to acts of international terrorism from
property and casualty products directly written by

                                      -18-
<PAGE>

SNCC above the Company's annual deductible; however, the Terrorism Act is
scheduled to terminate on December 31, 2005. The occurrence of a significant
catastrophic event could have a material adverse effect on the Company's results
of operations, liquidity or financial condition.

      THE INSURANCE BUSINESS IS A HEAVILY REGULATED INDUSTRY.

The Company's insurance subsidiaries, like other insurance companies, are highly
regulated by state insurance authorities in the states in which they are
domiciled and the states in which they conduct business. Such regulations, among
other things, limit the amount of dividends and other payments that can be made
by such subsidiaries without prior regulatory approval and impose restrictions
on the amount and type of investments such subsidiaries may have. These
regulations also affect many other aspects of the Company's insurance
subsidiaries' businesses, including, for example, risk-based capital
requirements, various reserve requirements, the terms, conditions and manner of
sale and marketing of insurance products, claims-handling practices and the form
and content of required financial statements. These regulations are intended to
protect policyholders rather than investors. The ability of the Company's
insurance subsidiaries to continue to conduct their businesses is dependent upon
the maintenance of their licenses in these various states.

In April 2004, the New York Attorney General ("NYAG") initiated an investigation
into certain insurance broker compensation arrangements and other aspects of
dealings between insurance brokers and insurance companies, and, in connection
therewith, filed a civil complaint in October 2004 against a major insurance
brokerage firm based on certain of such firm's compensation arrangements with
insurers and alleged misconduct in connection with the placement of insurance
business. Other state regulators subsequently announced the commencement of
similar investigations and reviews. The Company has received administrative
subpoenas or similar requests for information from the Illinois Division of
Insurance, the Missouri Department of Insurance, the NYAG's office and the North
Carolina Department of Insurance in connection with their investigations. The
Company anticipates that additional regulatory inquiries may be received by its
insurance subsidiaries as the various investigations continue. The Company will
fully cooperate with inquiries it has received to date, as well as any future
inquiries of this type.

As previously disclosed, based on an internal review relating to the Company's
insurance subsidiaries, the Company has identified certain potential issues
concerning past insurance solicitation practices involving SNCC and Marsh &
McLennan. The instances that the Company has been able to specifically identify
in this regard are limited in number and involved modest amounts of premium. The
Company has reported on these issues to the NYAG's office and to the Missouri
Department of Insurance, and will fully cooperate with these and any other
regulatory agencies relating to these issues. It is not possible to predict the
future impact of this matter on the Company or of the various investigations, or
any regulatory changes or litigation resulting from such investigations, on the
insurance industry or on the Company and its insurance subsidiaries.

From time to time, increased scrutiny has been placed upon the insurance
regulatory framework, and a number of state legislatures have considered or
enacted legislative measures that alter, and in many cases increase, state
authority to regulate insurance companies. In addition to legislative
initiatives of this type, the National Association of Insurance Commissioners
and insurance regulators are continuously involved in a process of reexamining
existing laws and regulations and their application to insurance companies.
Furthermore, while the federal government currently does not directly regulate
the insurance business, federal legislation and administrative policies (and
court interpretations thereof) in a number of areas, such as employee benefits
regulation, age, sex and disability-based discrimination, financial services
regulation and federal taxation, can significantly affect the insurance
business. It is not possible to predict the future impact of changing regulation
on the operations of the Company and those of its insurance subsidiaries.

The Company's insurance subsidiaries can also be required, under solvency or
guaranty laws of most states in which they do business, to pay assessments to
fund policyholder losses or liabilities of insurance companies that become
insolvent.

      THE FINANCIAL SERVICES INDUSTRY IS HIGHLY COMPETITIVE.

The Company competes with numerous other insurance and financial services
companies. Many of these organizations have substantially greater assets, higher
ratings from rating agencies, larger and more diversified portfolios of
insurance products and larger agency sales operations than the Company.
Competition in asset accumulation product markets is also encountered from the
expanding number of banks, securities brokerage firms and other financial
intermediaries marketing alternative savings products, such as mutual funds,
traditional bank investments and retirement funding alternatives.

                                      -19-
<PAGE>

      THE COMPANY MAY BE ADVERSELY IMPACTED BY A DECLINE IN THE RATINGS OF ITS
INSURANCE SUBSIDIARIES OR ITS OWN CREDIT RATINGS.

Ratings with respect to claims-paying ability and financial strength have become
an increasingly important factor impacting the competitive position of insurance
companies. The financial strength ratings of RSLIC as of August 1, 2005 as
assigned by A.M. Best, Fitch, Moody's and Standard & Poor's were A- (Excellent),
A (Strong), A3 (Good) and A (Strong), respectively. The financial strength
ratings of SNCC as of August 1, 2005 as assigned by A.M. Best, Fitch and
Standard & Poor's were A (Excellent), A (Strong) and A (Strong), respectively.
Each of the rating agencies reviews its ratings of companies periodically and
there can be no assurance that current ratings will be maintained or improved in
the future. Claims-paying and financial strength ratings are based upon factors
relevant to policyowners and are not directed toward protection of investors.
Downgrades in the ratings of the Company's insurance subsidiaries could
adversely affect sales of their products and could have a material adverse
effect on the results of the Company's operations. In addition, downgrades in
the Company's credit ratings could materially adversely affect its ability to
access the capital markets. The Company's senior unsecured debt ratings as of
August 1, 2005 from A.M. Best, Fitch, Moody's and Standard & Poor's were bbb-,
BBB, Baa3 and BBB, respectively.

                                      -20-
<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

            Incorporated by reference to Note G to the Consolidated Financial
            Statements included elsewhere herein.

Item 4. Submission of Matters to a Vote of Security Holders

            The Company held its Annual Meeting of Stockholders on May 24, 2005.
            The directors elected at the meeting will serve for a term ending on
            the date of the 2006 Annual Meeting of Stockholders. The directors
            elected at the meeting were Donald A. Sherman, Robert Rosenkranz,
            Kevin R. Brine, Lawrence E. Daurelle, Edward A. Fox, Harold F. Ilg,
            James N. Meehan, Philip R. O'Connor, and Robert M. Smith, Jr. One
            director is voted upon by the Class A stockholders, voting
            separately as a class. At the 2005 Annual Meeting that director was
            Mr. Sherman.

            The voting results for all matters at the meeting were as follows:

            1) Election of Directors

<TABLE>
<CAPTION>
                                                                                       VOTES
                                                                             --------------------------
                                                                                               Withhold
                                                                                 For          Authority
                                                                             ----------       ---------
<S>                                                                          <C>              <C>
Class A Director:
     Donald A. Sherman.................................................      21,639,793       4,571,681
Directors:
     Robert Rosenkranz.................................................      50,166,472       3,910,755
     Kevin R. Brine....................................................      51,857,289       2,219,938
     Lawrence E. Daurelle..............................................      50,218,244       3,858,983
     Edward A. Fox.....................................................      50,742,564       3,334,663
     Harold F. Ilg.....................................................      50,209,044       3,868,183
     James N. Meehan...................................................      49,007,405       5,069,822
     Philip R. O'Connor................................................      50,719,922       3,357,305
     Robert M. Smith, Jr...............................................      50,218,200       3,859,027
</TABLE>

            2) All Other Matters - The proposal to amend the Company's Restated
               Certificate of Incorporation to increase the number of authorized
               shares of the Company's Class A Common Stock from 40,000,000
               shares to 150,000,000 shares available thereunder received
               38,818,970 votes for approval and 15,246,991 votes against
               approval, with 11,266 votes abstaining. The proposal to amend the
               Company's Restated Certificate of Incorporation to increase the
               number of authorized shares of the Company's Preferred Stock from
               10,000,000 shares to 50,000,000 shares available thereunder
               received 34,449,490 votes for approval and 16,568,974 votes
               against approval, with 7,127 votes abstaining and 3,051,636
               broker non-votes.

Item 6. Exhibits

        3.1   Certificate of Amendment of Restated Certificate of
              Incorporation

       11.1   Computation of Results per Share of Common Stock (incorporated
              by reference to Note F to the Consolidated Financial
              Statements included elsewhere herein)

       31.1   Certification by the Chairman of the Board, President and
              Chief Executive Officer of Periodic Report Pursuant to Rule
              13a-14(a) or 15d-14(a)

       31.2   Certification by the Vice President and Treasurer of Periodic
              Report Pursuant to Rule 13a-14(a) or 15d-14(a)

       32.1   Certification of Periodic Report Pursuant to 18 U.S.C. Section
              1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002

                                      -21-
<PAGE>

                                   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 thereunto duly authorized.

                                    DELPHI FINANCIAL GROUP, INC. (Registrant)

                                    /s/  ROBERT ROSENKRANZ
                                    --------------------------------------------
                                    Robert Rosenkranz
                                    Chairman of the Board, President and Chief
                                    Executive Officer
                                    (Principal Executive Officer)

                                    /s/  THOMAS W. BURGHART
                                    --------------------------------------------
                                    Thomas W. Burghart
                                    Vice President and Treasurer
                                    (Principal Accounting and Financial Officer)

Date: August 8, 2005

                                      -22-