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

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).

                               Yes       No   X
                                   -----    -----

      As of October 31, 2005, the Registrant had 28,667,962 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 Nine
              Months Ended September 30, 2005 and 2004...................     3

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

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

           Consolidated Statements of Cash Flows for the
              Nine Months Ended September 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 6.  Exhibits.............................................    21

           Signatures....................................................    21
</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    Nine Months Ended
                                                                   September 30,         September 30,
                                                                -------------------   -------------------
                                                                  2005       2004       2005       2004
                                                                --------   --------   --------   --------
<S>                                                             <C>        <C>        <C>        <C>
Revenue:
   Premium and fee income ...................................   $257,317   $210,292   $746,768   $618,051
   Net investment income ....................................     55,250     48,220    163,879    149,468
   Net realized investment gains ............................      3,397      1,433      8,534      8,595
                                                                --------   --------   --------   --------
                                                                 315,964    259,945    919,181    776,114
                                                                --------   --------   --------   --------
Benefits and expenses:
   Benefits, claims and interest credited to policyholders ..    204,677    152,312    568,940    455,984
   Commissions ..............................................     16,843     15,607     46,987     43,598
   Amortization of cost of business acquired ................     18,347     16,721     50,936     46,121
   Other operating expenses .................................     40,267     31,199    115,881     94,436
                                                                --------   --------   --------   --------
                                                                 280,134    215,839    782,744    640,139
                                                                --------   --------   --------   --------
      Operating income ......................................     35,830     44,106    136,437    135,975

Interest expense:
   Corporate debt ...........................................      3,781      3,548     11,712     10,459
   Junior subordinated deferrable interest debentures .......      1,229      1,124      3,599      3,335
                                                                --------   --------   --------   --------
                                                                   5,010      4,672     15,311     13,794
                                                                --------   --------   --------   --------
      Income before income tax expense ......................     30,820     39,434    121,126    122,181

Income tax expense ..........................................      8,788      7,255     37,010     32,248
                                                                --------   --------   --------   --------
      Net income ............................................   $ 22,032   $ 32,179   $ 84,116   $ 89,933
                                                                ========   ========   ========   ========
Basic results per share of common stock:
   Net income ...............................................   $   0.67   $   1.00   $   2.58   $   2.82

Diluted results per share of common stock:
   Net income ...............................................   $   0.65   $   0.98   $   2.52   $   2.74

Dividends paid per share of common stock ....................   $   0.09   $   0.08   $   0.27   $   0.24
</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>
                                                               September 30,   December 31,
                                                                    2005          2004
                                                               -------------   -----------
<S>                                                            <C>             <C>
Assets:
   Investments:
      Fixed maturity securities, available for sale ........    $3,144,090      $3,049,013
      Short-term investments ...............................       140,338          95,761
      Other investments ....................................       537,504         396,302
                                                                ----------      ----------
                                                                 3,821,932       3,541,076
   Cash ....................................................        25,956          24,324
   Cost of business acquired ...............................       242,249         212,549
   Reinsurance receivables .................................       413,416         428,707
   Goodwill ................................................        93,929          93,929
   Securities lending collateral ...........................       246,137         236,900
   Other assets ............................................       245,777         203,777
   Assets held in separate account .........................        96,168          88,205
                                                                ----------      ----------
      Total assets .........................................    $5,185,564      $4,829,467
                                                                ==========      ==========

Liabilities and Shareholders' Equity:
   Future policy benefits:
      Life .................................................    $  271,706      $  261,289
      Disability and accident ..............................       528,803         488,909
   Unpaid claims and claim expenses:
      Life .................................................        55,882          49,441
      Disability and accident ..............................       239,308         218,316
      Casualty .............................................       727,899         645,948
   Policyholder account balances ...........................     1,040,309       1,024,577
   Corporate debt ..........................................       178,750         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 ..............................       246,137         236,900
   Other liabilities and policyholder funds ................       724,470         658,522
   Liabilities related to separate account .................        96,168          88,205
                                                                ----------      ----------
      Total liabilities ....................................     4,169,194       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; 31,240,273 and 30,418,291 shares
         issued and outstanding, respectively ..............           312             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 ...........................       436,137         406,908
      Accumulated other comprehensive income ...............        29,198          57,371
      Retained earnings ....................................       609,998         534,540
      Treasury stock, at cost; 2,573,211 shares of Class
         A Common Stock ....................................       (59,314)        (59,314)
                                                                ----------      ----------
         Total shareholders' equity ........................     1,016,370         939,848
                                                                ----------      ----------
            Total liabilities and shareholders' equity .....    $5,185,564      $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 ............................       --       --            --            --        89,933         --       89,933
Other comprehensive income:
   Increase in net unrealized
      appreciation on investments .....       --       --            --           236            --         --          236
   Decrease in net loss on cash
      flow hedge ......................       --       --            --           589            --         --          589
                                                                                                                 ----------
Comprehensive income ..................                                                                              90,758

Issuance of stock, exercise of stock
   options and share conversions ......        8       (3)       18,532            --            --         --       18,537
Stock-based compensation ..............       --       --         1,916            --            --         --        1,916
Acquisition of treasury stock .........       --       --            --            --            --       (336)        (336)
Cash dividends ........................       --       --            --            --        (7,543)        --       (7,543)
                                            ----      ---      --------      --------      --------   --------   ----------
Balance, September 30, 2004 ...........     $303      $39      $404,021      $ 53,253      $503,470   $(59,314)  $  901,772
                                            ====      ===      ========      ========      ========   ========   ==========

Balance, January 1, 2005 ..............     $304      $39      $406,908      $ 57,371      $534,540   $(59,314)  $  939,848
                                                                                                                 ----------
Net income ............................       --       --            --            --        84,116         --       84,116
Other comprehensive income:
   Decrease in net unrealized
      appreciation on investments .....       --       --            --       (28,762)           --         --      (28,762)
   Decrease in net loss on cash
      flow hedge ......................       --       --            --           589            --         --          589
                                                                                                                 ----------
Comprehensive income ..................                                                                              55,943

Issuance of stock, exercise of stock
   options and share conversions ......        8       --        26,928            --            --         --       26,936
Stock-based compensation ..............       --       --         2,301            --            --         --        2,301
Cash dividends ........................       --       --            --            --        (8,658)        --       (8,658)
                                            ----      ---      --------      --------      --------   --------   ----------
Balance, September 30, 2005 ...........     $312      $39      $436,137      $ 29,198      $609,998   $(59,314)  $1,016,370
                                            ====      ===      ========      ========      ========   ========   ==========
</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>
                                                                      Nine Months Ended
                                                                        September 30,
                                                                  -------------------------
                                                                      2005          2004
                                                                  -----------   -----------
<S>                                                               <C>           <C>
Operating activities:
   Net income .................................................   $    84,116   $    89,933
   Adjustments to reconcile net income to net cash provided
      by operating activities:
      Change in policy liabilities and policyholder accounts ..       196,872       145,556
      Net change in reinsurance receivables and payables ......        10,608        (1,422)
      Amortization, principally the cost of business acquired
         and investments ......................................        46,571        33,087
      Deferred costs of business acquired .....................       (69,739)      (66,814)
      Net realized gains on investments .......................        (8,534)       (8,595)
      Net change in federal income tax liability ..............         8,614        17,635
      Other ...................................................       (59,614)      (43,007)
                                                                  -----------   -----------
         Net cash provided by operating activities ............       208,894       166,373
                                                                  -----------   -----------

Investing activities:
   Purchases of investments and loans made ....................    (1,460,493)   (1,524,817)
   Sales of investments and receipts from repayment of loans ..     1,142,110     1,109,869
   Maturities of investments ..................................       134,023       167,555
   Net change in short-term investments .......................       (44,566)       21,632
   Change in deposit in separate account ......................        (3,033)       (2,440)
                                                                  -----------   -----------
         Net cash used by investing activities ................      (231,959)     (228,201)
                                                                  -----------   -----------

Financing activities:
   Deposits to policyholder accounts ..........................        80,229       114,830
   Withdrawals from policyholder accounts .....................       (76,031)      (66,332)
   Borrowings under revolving credit facility .................        32,000        32,000
   Principal payments under revolving credit facility .........       (11,000)       (5,000)
   Change in liability for Federal Home Loan Bank advances ....       (15,000)      (15,000)
   Other financing activities .................................        14,499         6,936
                                                                  -----------   -----------
         Net cash provided by financing activities ............        24,697        67,434
                                                                  -----------   -----------

Increase in cash ..............................................         1,632         5,606
Cash at beginning of period ...................................        24,324        18,733
                                                                  -----------   -----------
      Cash at end of period ...................................   $    25,956   $    24,339
                                                                  ===========   ===========
</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 nine months ended
September 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   Nine Months Ended
                                                                           September 30,       September 30,
                                                                        ------------------   -----------------
                                                                           2005      2004      2005      2004
                                                                         -------   -------   -------   -------
                                                                             (dollars in thousands, except
                                                                                    per share data)
<S>                                                                     <C>        <C>       <C>       <C>
Net income, as reported .............................................    $22,032   $32,179   $84,116   $89,933
Add: Stock-based employee compensation expense included
   in reported net income, net of related tax effects ...............        707       581     2,003     1,657
Deduct: Stock-based employee compensation expense
   determined under the fair value based method for all awards,
   net of related tax effects ....................................          (764)     (764)   (2,215)   (2,221)
                                                                         -------   -------   -------   -------
Pro forma net income ................................................    $21,975   $31,996   $83,904   $89,369
                                                                         =======   =======   =======   =======
Earnings per share:
   Basic, as reported ...............................................    $  0.67   $  1.00   $  2.58   $  2.82
   Basic, proforma ..................................................       0.67      1.00      2.58      2.80

   Diluted, as reported .............................................    $  0.65   $  0.98   $  2.52   $  2.74
   Diluted, pro forma ...............................................       0.65      0.96      2.50      2.70
</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 as of January
1, 2006, 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 SFAS No. 123R. 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 nine 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 September 30, 2005, the Company had fixed maturity securities available for
sale with a carrying value and a fair value of $3,144.1 million and an amortized
cost of $3,089.6 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 (loss) for the various
unaffiliated entities in which the balances with independent investment managers
have been invested was $1,341.8 million and $632.4 million for the first nine
months of 2005 and 2004, respectively, and $638.1 million and $(0.3) million for
the third 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 $35.0 million under the Credit Agreement
at September 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 September 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    Nine Months Ended
                                              September 30,         September 30,
                                           -------------------   -------------------
                                             2005       2004       2005       2004
                                           --------   --------   --------   --------
                                                     (dollars in thousands)
<S>                                        <C>        <C>        <C>        <C>
Revenues:
   Group employee benefit products .....   $282,336   $230,856   $820,321   $684,186
   Asset accumulation products .........     21,634     20,170     65,079     60,292
   Other (1) ...........................      8,597      7,486     25,247     23,041
                                           --------   --------   --------   --------
                                            312,567    258,512    910,647    767,519
   Net realized investment gains .......      3,397      1,433      8,534      8,595
                                           --------   --------   --------   --------
                                           $315,964   $259,945   $919,181   $776,114
                                           ========   ========   ========   ========
Operating income:
   Group employee benefit products(2) ..   $ 30,792   $ 39,768   $120,548   $118,651
   Asset accumulation products .........      5,817      5,047     16,574     13,950
   Other (1) ...........................     (4,176)    (2,142)    (9,219)    (5,221)
                                           --------   --------   --------   --------
                                             32,433     42,673    127,903    127,380
   Net realized investment gains .......      3,397      1,433      8,534      8,595
                                           --------   --------   --------   --------
                                           $ 35,830   $ 44,106   $136,437   $135,975
                                           ========   ========   ========   ========
</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.

(2)  Operating income for the three and nine month periods ended September 30,
     2005 included losses, net of reinstatement premiums, of $18.8 million in
     the Company's non-core property catastrophe reinsurance business.

NOTE E - COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) 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 $55.9 million and $90.8
million for the first nine months of 2005 and 2004, respectively, and $(2.0)
million and $65.7 million for the third 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   Nine Months Ended
                                                                          September 30,       September 30,
                                                                       ------------------   -----------------
                                                                          2005      2004      2005      2004
                                                                        -------   -------   -------   -------
                                                                            (dollars in thousands, except
                                                                                   per share data)
<S>                                                                    <C>        <C>       <C>       <C>
Numerator:
   Net income ......................................................    $22,032   $32,179   $84,116   $89,933
                                                                        -------   -------   -------   -------
Denominator:
   Weighted average common shares outstanding ......................     32,900    32,028    32,545    31,883
      Effect of dilutive securities ................................        809       971       880       995
                                                                        -------   -------   -------   -------
   Weighted average common shares outstanding, assuming dilution ...     33,709    32,999    33,425    32,878
                                                                        =======   =======   =======   =======
Basic results per share of common stock:
   Net income ......................................................    $  0.67   $  1.00   $  2.58   $  2.82

Diluted results per share of common stock:
   Net income ......................................................    $  0.65   $  0.98   $  2.52   $  2.74
</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 favorable determination in one of such
arbitrations was rendered during the third quarter of 2005. The Company believes
that it has substantial defenses upon which to contest the claims made in the
remaining arbitration, although it is not possible to predict its ultimate
outcome. In the opinion of management, such arbitration, when ultimately
resolved, will not 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. In the fourth quarter of 2005, the Company decided
to exit its non-core property catastrophe reinsurance business and will not
renew or write any new reinsurance treaties in this line of business. See
"Liquidity and Capital Resources - Reinsurance."

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

Nine Months Ended September 30, 2005 Compared to
Nine Months Ended September 30, 2004

Summary of Results. Net income was $84.1 million, or $2.52 per diluted share,
for the first nine months of 2005 as compared to $89.9 million, or $2.74 per
diluted share, for the first nine months of 2004. Net income for the first nine
months of 2005 and 2004 included realized investment gains (net of the related
income tax expense) of $5.5 million, or $0.17 per diluted share, and $5.6
million, or $0.17 per diluted share, respectively. Net income for the first nine
months of 2005 reflected growth in income from the Company's core group employee
benefit products, increased product spreads on the Company's asset accumulation
products and an increase in net investment income, as well as losses in the
Company's non-core property catastrophe reinsurance business and an increase in
interest expense. Premiums from the Company's core group employee benefit
products increased


                                      -11-

<PAGE>

20% in the first nine months of 2005. Net investment income for the first nine
months of 2005, which increased 10% from the first nine months of 2004, reflects
an 11% increase in average invested assets. During the 2005 period, the Company
recognized losses (net of an income tax benefit and reinstatement premiums) of
$12.2 million, or $0.36 per diluted share, in its non-core property catastrophe
reinsurance business, substantially all of which were attributable to Hurricane
Katrina and which cover the Company's maximum exposure to this event. The
increase in interest expense 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 nine months of 2005 as compared to
the first nine months 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. Net income for the 2004 period
included a reduction of income tax expense of $4.6 million resulting from the
favorable resolution of audits by the Internal Revenue Service ("IRS") of the
1998 through 2002 tax years.

Premium and Fee Income. Premium and fee income for the first nine months of 2005
was $746.8 million as compared to $618.1 million for the first nine months of
2004, an increase of 21%. Premiums from core group employee benefit products
increased 20% to $692.2 million for the first nine months of 2005 from $578.4
million for the first nine months 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 15% to $160.4 million for the first nine
months of 2005 from $140.0 million for the first nine months 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 nine months
of 2005. On average, self-insured retention levels increased 8% in the first
nine months of 2005 compared to the first nine months of 2004. Excess workers'
compensation new business production, which represents the amount of new
annualized premium sold, increased 61% to $34.3 million for the first nine
months of 2005 from $21.3 million for the first nine months of 2004 and the
retention of existing customers for the first nine months of 2005 remained
strong. Premiums for the Company's other core group employee benefit products
increased 21% to $531.8 million for the first nine months of 2005 from $438.4
million for the first nine months 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 19% to $134.3 million for the first nine months of 2005 from $112.6
million for the first nine months 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 nine months of 2005 reflects the Company's
focus on the small case niche (insured groups of 10 to 500 individuals) which
resulted in a 15% increase in production measured by the number of cases sold as
compared to the first nine months 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 $74.4 million for
the first nine months of 2005 as compared to $110.7 million for the first nine
months 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 certificates of deposits to be an attractive alternative to fixed
annuity products, and to increased market performance of equity-indexed
annuities during the first nine months of 2005, which reduced demand for fixed
annuity products.

Net Investment Income. Net investment income for the first nine months of 2005
was $163.9 million as compared to $149.5 million for the first nine months of
2004, an increase of 10%. The level of net investment income in the 2005 period
reflects an 11% increase in average invested assets to $3,608.7 million for the
first nine months of 2005 from $3,259.5 million for the first nine months of
2004. The tax equivalent weighted average annualized yield on invested assets
was 6.3% for the first nine months of 2005 and 2004.

Net Realized Investment Gains. Net realized investment gains were $8.5 million
for the first nine months of 2005 as compared to $8.6 million for the first nine
months 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 nine months of 2005 and 2004, the Company recognized
$12.7 million and $11.7 million, respectively, of net gains on the sales of
securities. The Company monitors its


                                      -12-

<PAGE>

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 nine months of 2005 and 2004, the Company
recognized $4.2 million and $3.1 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 $782.7 million
for the first nine months of 2005 as compared to $640.1 million for the first
nine months of 2004, an increase of 22%. This increase primarily reflects the
increase in premiums from the Company's group employee benefit products
discussed above. Policyholder benefits for the first nine months of 2005 also
included pre-tax losses of $20.7 million in the Company's non-core property
catastrophe reinsurance business, substantially all of which were attributable
to Hurricane Katrina. The combined ratio (loss ratio plus expense ratio) for the
Company's group employee benefits segment was 96.5% (2.6% of which was
attributable to losses from Hurricane Katrina) for the first nine months of 2005
and 94.5% for the first nine months 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 4.7% for the first nine months of 2005 and 2004, respectively.

Interest Expense. Interest expense was $15.3 million for the first nine months
of 2005 as compared to $13.8 million for the first nine months of 2004, an
increase of $1.5 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 nine months of 2005 as
compared to the first nine months 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 $37.0 million for the first nine
months of 2005 as compared to $32.2 million for the first nine months of 2004.
The Company's effective tax rate was 30.6% for the first nine months of 2005 and
26.4% for the first nine months of 2004. The lower effective tax rate in the
2004 period primarily reflected a $4.6 million reduction in federal income tax
expense resulting from the favorable resolution of IRS audits of the 1998
through 2002 tax years. The accrual reduction represented the release of
previous accruals for potential audit adjustments which were subsequently
settled or eliminated.

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

Summary of Results. Net income was $22.0 million, or $0.65 per diluted share,
for the third quarter of 2005 as compared to $32.2 million, or $0.98 per diluted
share, for the third quarter of 2004. Net income for the third 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 $0.9 million, or $0.03
per diluted share, respectively. Net income for the third quarter of 2005 also
included losses (net of an income tax benefit and reinstatement premiums) of
$12.2 million, or $0.36 per diluted share, in the Company's non-core property
catastrophe reinsurance business, substantially all of which were attributable
to Hurricane Katrina and which cover the Company's maximum exposure to this
event. Net income for the third quarter of 2005 also reflected growth in income
from group employee benefit products and an increase in net investment income.
Premiums from the Company's core group employee benefit products increased 19%
in the third quarter of 2005. The 15% increase in net investment income in the
third quarter of 2005 from the third quarter of 2004 reflects an 11% increase in
average invested assets. Net income for the 2004 period also included a
reduction to income tax expense of $4.6 million during the third quarter of 2004
resulting from the favorable resolution of IRS audits of the 1998 through 2002
tax years.

Premium and Fee Income. Premium and fee income for the third quarter of 2005 was
$257.3 million as compared to $210.3 million for the third quarter of 2004, an
increase of 22%. Premiums from core group employee benefit products increased
19%


                                      -13-

<PAGE>

to $236.5 million for the third quarter of 2005 from $199.4 million for the
third 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 12% to $55.9 million for the third quarter of
2005 from $49.7 million for the third 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 third quarter of 2005. Excess workers' compensation new
business production, which represents the amount of new annualized premium sold,
increased 56% to $17.7 million for the third quarter of 2005 from $11.4 million
for the third quarter of 2004. Premiums from the Company's other core group
employee benefit products increased 21% to $180.7 million for the third quarter
of 2005 from $149.6 million for the third 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 41% to $42.2 million for the third quarter
of 2005 from $30.0 million for the third 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 third quarter of 2005 reflects
the Company's focus on the small case niche (insured groups of 10 to 500
individuals) which resulted in a 23% increase in production measured by the
number of cases sold as compared to the third 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 $25.4 million for
the third quarter of 2005 as compared to $40.8 million for the third 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
certificates of deposits to be an attractive alternative to fixed annuity
products, and to increased market performance of equity-indexed annuities during
the first nine months of 2005, which reduced demand for fixed annuity products.

Net Investment Income. Net investment income in the third quarter of 2005 was
$55.3 million as compared to $48.2 million in the third quarter of 2004, an
increase of 15%. The level of net investment income in the 2005 period reflects
an 11% 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 6.1% on average invested assets
of $3,765.9 million for the third quarter of 2005 and 5.9% on average invested
assets of $3,389.9 million in the third quarter of 2004.

Net Realized Investment Gains. Net realized investment gains were $3.4 million
for the third quarter of 2005 as compared to $1.4 million for the third 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 third quarters of 2005 and 2004, the Company recognized $6.4
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 third quarters of 2005 and 2004,
the Company recognized $3.0 million and $0.6 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 $280.1 million
for the third quarter of 2005 as compared to $215.8 million for the third
quarter of 2004, an increase of 30%. This increase primarily reflects the
increase in premiums from


                                      -14-

<PAGE>

the Company's group employee benefit products discussed above. Policyholder
benefits in the third quarter of 2005 also included pre-tax losses of $20.7
million in the Company's non-core property catastrophe reinsurance business,
substantially all of which were attributable to Hurricane Katrina. The combined
ratio (loss ratio plus expense ratio) for the Company's group employee benefits
segment was 100.7% (7.6% of which was attributable to losses from Hurricane
Katrina) for the third quarter of 2005 and 93.8% for the third quarter of 2004.

Income Tax Expense. Income tax expense was $8.8 million for the third quarter of
2005 as compared to $7.3 million for the third quarter of 2004. The Company's
effective tax rate was 28.5% for the third quarter of 2005 and 18.4% for the
third quarter of 2004. The lower effective tax rate in the 2004 period reflected
a $4.6 million reduction in federal income tax expense resulting from the
favorable resolution of IRS audits of the 1998 through 2002 tax years. The
accrual reduction represented the release of previous accruals for potential
audit adjustments which were subsequently settled or eliminated.

LIQUIDITY AND CAPITAL RESOURCES

General. The Company had approximately $95.8 million of financial resources
available at the holding company level at September 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 $1.6 million has been paid
to the holding company during the first nine months 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 $165.0 million of borrowings available
to it under this revolving credit facility as of September 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 November 3, 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 December 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 September 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
September 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


                                      -15-

<PAGE>

adjustment for a reduction in value of $6.7 million; there were no adjustments
in such values as of June 30, 2004, September 30, 2004, December 31, 2004 and
September 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 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."

In the fourth quarter of 2005, the Company decided to exit its non-core property
catastrophe reinsurance business and will not renew or write any new reinsurance
treaties in this line of business. Approximately 80% of the existing treaties,
measured by premium volume, will expire as of December 31, 2005; the remainder
of the treaties will expire on various dates during the first half of 2006.
Accordingly, the Company will continue to have a degree of exposure to loss
events in this business through this period.

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," "outlook" 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


                                      -16-

<PAGE>

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 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. In the future, the Company may also
be required or may 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."


                                      -17-

<PAGE>

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 September 30, 2005, mortgage-backed securities comprised 21% 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 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 September
30, 2005, the Company had outstanding advances of $70.0 million, which were
obtained at a fixed rate, and have a weighted average term to maturity of 11.6
years. A total of $15.0 million of these advances will mature at various times
during the fourth quarter 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


                                      -18-

<PAGE>

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 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.


                                      -19-

<PAGE>

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.

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 November 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 November 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
November 1, 2005 as assigned by 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 6. Exhibits

     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

                                   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: November 8, 2005


                                      -21-