Document:

EX-10.25

 EXHIBIT 10.25 

DONEGAL MUTUAL INSURANCE COMPANY 

DONEGAL GROUP INC. 
 2021
ANNUAL EXECUTIVE INCENTIVE PLAN 
 Purpose 
 The
2021 Annual Executive Incentive Plan (the “Plan”) provides for the payment of performance-based bonuses to Plan participants based upon the Donegal Insurance Group’s achievement of performance objectives for individual performance
measures according to the weighting assigned to each performance measure. 
 The performance objectives correlate to incentive levels that represent
percentages of a participant’s 2021 base salary (as defined in this Plan). The potential bonuses available for Plan participants with respect to the performance measures will be based on the incentive levels, performance objectives and
weighting percentages as outlined in Appendix 1. 
 Scope 

The performance measures and objectives, unless otherwise specified, relate to the statutory financial results of the Donegal Insurance Group, which includes
the following legal entities for the purposes of this Plan: 
 Donegal Mutual Insurance Company 

Atlantic States Insurance Company 
 Michigan Insurance Company

 Mountain States Commercial Insurance Company 
 Mountain
States Indemnity Company 
 Peninsula Indemnity Company 

Peninsula Insurance Company 
 Southern Insurance Company of
Virginia 
 Southern Mutual Insurance Company 
 Performance
Measures 
 Commercial Lines Premium Growth – annual growth in commercial lines direct premiums written compared to the previous calendar year
total. 
 Personal Lines Premium Growth – annual growth in personal lines direct premiums written compared to the previous calendar year total. 

Adjusted Statutory Combined Ratio – reported statutory combined ratio excluding any catastrophe adjustment, all executive incentive plan bonus accruals
and a stock option expense adjustment (see definitions below). 

  
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 Operating Return on Equity – Donegal Group Inc.’s consolidated GAAP net income divided by average
GAAP stockholders’ equity excluding accumulated other comprehensive income or loss (average of current year-end and prior year-end values). 

Bonus Formula 
 Each participant in this Plan shall be
eligible to receive a bonus that represents the sum of the performance bonuses such participant earns for each respective performance measure. Each performance bonus shall be calculated by multiplying the participant’s 2021 base salary, as
defined in this Plan, by the bonus percentage that correlates to the incentive level achieved and multiplying that result by the weighting percentage assigned to the respective performance measure. The calculation methodology is illustrated below:

  

	 	•	 	 Base Salary x Incentive Level Bonus % x Weighting % = Performance Bonus 

 

	 	•	 	 Sum of Performance Bonuses = Total Bonus Earned 

Key Definitions 
 Base Salary – total wages as
reported on a participant’s W-2 for 2021, excluding any taxable fringe benefits, short or long-term disability pay, gains from exercise of stock options and prior-year bonus. 

Statutory Combined Ratio – sum of the net loss and loss expense ratio (net losses and loss expenses incurred divided by net premiums earned), the expense
ratio (underwriting expenses less installment fee income divided by net premiums written) and the dividend ratio (policyholder dividends incurred divided by net premiums earned). 

Catastrophe Adjustment – an adjustment will be provided to the statutory combined ratio for the purpose of this Plan to limit the net effect of up to two
catastrophe events. For purposes of this provision, a catastrophe event is defined as an event for which the Property Claims Services unit of Insurance Services Office issues a catastrophe serial number and for which the net effect to the Donegal
Insurance Group exceeds $5 million when aggregating losses incurred, loss expenses incurred and reinstatement premiums. The statutory combined ratio for the purposes of this Plan will be charged with: 

 

	 	•	 	 The first $5 million of the net effect of a catastrophe 

 

	 	•	 	 One-half of the amount between $5 million and $10 million

  

	 	•	 	 None of the net effect above $10 million 

In the event that more than two catastrophe events, as defined above, occur within the calendar year, the statutory combined ratio for the purposes of this
Plan will be charged with all of the net effect of the third and subsequent catastrophe events. 

  
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 Stock Option Expense Adjustment – an adjustment will be provided to statutory combined ratio for the
purpose of this Plan to remove the effect of stock option compensation expense included in the statutory financial statements. 
 Additional Provisions

  

	1.	 Participants must be employed by Donegal Mutual Insurance Company on or before October 1, 2021 to be
eligible to participate in this Plan. Participants must be employed by the Donegal Mutual Insurance Company on December 31, 2021 in order to receive a bonus payment under this Plan. 

 

	2.	 No bonus is payable under this Plan unless the employees and managers of Donegal Mutual Insurance Company
qualify for bonuses under their respective incentive plans. 

  

	3.	 Any bonuses earned under this Plan shall be paid prior to March 15, 2022. 

 

	4.	 Approved participants in this Plan are listed in Appendix 1. Any changes to the participants in this Plan and
the incentive levels for such participants must be approved by the Joint Compensation Committee of the Boards of Directors of Donegal Mutual Insurance Company and Donegal Group Inc. (“the Joint Compensation Committee”).

  

	5.	 This Plan provides for a discretionary pool calculated in similar fashion to the bonuses for Plan participants
using a “base salary” equivalent of $1,000,000. The discretionary pool may be allocated among participants in this Plan or other officers, managers or employees in the sole discretion of the Joint Compensation Committee. The President
shall provide a recommendation to the Joint Compensation Committee with respect to high performers who should be considered for allocations from the discretionary pool. 

 

	6.	 Payment of bonuses under this Plan may be capped by the Joint Compensation Committee in their sole discretion.

  
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 Appendix 1 

The participants and incentive levels for the 2021 Annual Executive Incentive Plan are as follows: 

 

																													
	 	  	Incentive Levels - Bonus% of Salary	 
	 Participants
	  	 Threshold
	 	  	 Level 1
	 	  	 Level 2
	 	  	 Target
	 	  	 Level 3
	 	  	 Level 4
	 	  	 Maximum
	 
	 Kevin G. Burke
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Jeffrey D. Miller
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Kristi S. Altshuler
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 William A. Folmar
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Jeffery T. Hay
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Christina M. Hoffman
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Richard G. Kelley
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Robert R. Long, Jr.
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Sanjay Pandey
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 V. Anthony Viozzi
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Daniel J. Wagner
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Discretionary Pool
	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 

 Note: Francis J. Haefner, Jr., Jeffrey A. Jacobsen, and Regional Senior Officers are not included as participants in this
Plan due to their participation in individual incentive plans that are tailored to performance objectives within their specific areas of responsibility. 

  
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 Performance measures, performance objectives and weighting percentages for 2021 are as follows: 

 

																																	
	 	  	 	 	 	Performance Objectives	 
	 Performance
Measure
	  	 Weighting
	 	 	 Threshold
	 	 	 Level 1
	 	 	 Level 2
	 	 	 Target
	 	 	 Level 3
	 	 	 Level 4
	 	 	 Maximum
	 
	 Commercial Lines Premium Growth
	  	 	25.0	% 	 	 	3.0	% 	 	 	4.0	% 	 	 	5.0	% 	 	 	6.0	% 	 	 	7.0	% 	 	 	8.0	% 	 	 	9.0	% 
	 Personal Lines Premium Growth
	  	 	15.0	% 	 	 	-3.0	% 	 	 	-2.0	% 	 	 	-1.0	% 	 	 	0.0	% 	 	 	1.0	% 	 	 	2.0	% 	 	 	3.0	% 
	 Adjusted Statutory Combined Ratio
	  	 	40.0	% 	 	 	100.0	% 	 	 	99.0	% 	 	 	98.0	% 	 	 	97.0	% 	 	 	96.0	% 	 	 	95.0	% 	 	 	94.0	% 
	 Operating Return on Equity
	  	 	20.0	% 	 	 	7.5	% 	 	 	8.0	% 	 	 	8.5	% 	 	 	9.0	% 	 	 	9.5	% 	 	 	10.0	% 	 	 	10.5	% 

  
 5EX-10.31

 EXHIBIT 10.31 

DISCRETIONARY LOAN AGREEMENT 

THIS DISCRETIONARY LOAN AGREEMENT (this “Agreement”) is made as of August 1, 2020, by and between DONEGAL GROUP INC. a Delaware
corporation (the “Borrower”) and M&T BANK, a New York banking corporation (the “Bank”); Witnesseth: 
 R E C I T A L
S 
 WHEREAS, the Borrower may from time to time request the Bank to make loans to the Borrower for the purpose of supporting the
Borrower’s short term capital needs; and 
 WHEREAS, subject to and upon the terms, conditions and provisions of this Agreement, the
Bank may make loans to the Borrower. 
 NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Bank and the Borrower agree as follows: 

1.    Loans. Subject to, and upon the provisions of, this Agreement, and relying upon the representations and warranties
herein set forth, the Bank may, in its sole and absolute discretion, from time to time upon the request of the Borrower make loans (each a “Loan” and collectively, the “Loans”) to the Borrower in an aggregate principal amount at
any time outstanding not to exceed the Credit Amount (hereinafter defined). No Loans shall be made if after giving effect thereto the sum of the aggregate principal amount of all outstanding Loans exceed the Credit Amount. In no event shall the Bank
be obligated to make a Loan hereunder. The fact that there may be no Loans outstanding at any particular time shall not affect the continuing validity of this Agreement. As used herein, the term “Credit Amount” means the amount of Twenty
Million Dollars ($20,000,000.00). 
 2.    Note. The Borrower’s obligation to pay the Loans with interest shall be
evidenced by that certain LIBOR Demand Note dated as of August 1, 2020 (which LIBOR Demand Note, as the same may from time to time be extended, replaced, substituted for, amended, restated or otherwise modified, is herein called the
“Note”) dated the date hereof in the Credit Amount and executed and delivered by the Borrower on the date hereof. The Bank will maintain on its books a loan account (the “Loan Account”) with respect to advances, repayments and
prepayments of Loan, the accrual and payment of interest on Loan and all other amounts and charges owing to the Bank in connection with Loan. Except for manifest error, the Loan Account shall be conclusive as to all amounts owing by the Borrower to
the Bank in connection with and on account of Loan. 
 3.    Prepayments of Loans. Within the limitations set forth herein
and subject to the provisions of this Agreement, the Borrower may prepay any Loan at any time in whole or in part from time to time without premium or penalty, and any such prepayment need not be accompanied by payment of interest on the amount
prepaid except, that any prepayment of the Loans which constitutes a final payment of all Loans shall be accompanied by payment of all interest thereon accrued through the date of prepayment. 

 4.    Obligations, Financing Documents. As used in this Agreement, the
term “Obligations” means collectively and includes all present and future indebtedness, liabilities and obligations of any kind and nature whatsoever of the Borrower to the Bank both now existing and hereafter arising under, as a result
of, on account of, or in connection with, (a) the Note, (b) this Agreement and any and all amendments thereto, restatements thereof, supplements thereto and modifications thereof made at any time and from time to time hereafter, or
(c) the other Financing Documents (hereinafter defined), including, without limitation, future advances, principal, interest, fees, late charges, enforcement costs (hereinafter defined) and other costs and expenses whether direct, contingent,
joint, several, matured or unmatured. The term “Financing Documents” as used herein means collectively and includes the Note, this Agreement and any other instrument, document or agreement both now and hereafter executed, delivered or
furnished by the Borrower or any other person evidencing, guaranteeing, securing or in connection with the Loans, this Agreement or all or any part of the Obligations. 

5.    Rights and Remedies. If the Borrower should not immediately pay any amounts due under the Note upon the Bank’s
demand, or if proceedings in receivership, bankruptcy, or for reorganization of the Borrower, or for the readjustment of any of the Borrower’s debts, under the United States Bankruptcy Code (as amended) or any part thereof, or under any other
applicable laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced against or by the Borrower the unpaid aggregate principal amount of the Loans, together with accrued and unpaid interest thereon, and
all other Obligations then outstanding shall be automatically and immediately due and payable by the Borrower to the Bank without notice, presentment, demand, protest or other action of any kind, all of which are expressly waived by the Borrower.
Additionally, if the Borrower should not immediately pay any amounts due under the Note upon the Bank’s demand, the Bank shall be entitled to exercise in any jurisdiction in which enforcement thereof is sought, the rights and remedies available
to the Bank under the other provisions of this Agreement and the other Financing Documents, the rights and remedies of an unsecured creditor under the Uniform Commercial Code as enacted in the Commonwealth of Pennsylvania and all other rights and
remedies available to the Bank under applicable law, all such rights and remedies being cumulative and enforceable alternatively, successively or concurrently. 

6.    Enforcement Costs. The Borrower agrees to pay to the Bank on demand (a) all enforcement costs paid, incurred or
advanced by or on behalf of the Bank and (b) interest on such enforcement costs from the date paid, incurred or advanced until paid in full at a per annum rate of interest equal at all times to the Applicable Rate in effect from time to time,
plus two percent (2%) per annum. As used herein, the term “enforcement costs” shall mean and include, collectively, all expenses, charges, recordation or other taxes, costs and fees (including reasonable attorneys’ fees and expenses)
of any nature whatsoever advanced, paid or incurred by or on behalf of the Bank in connection with (a) the collection or enforcement of this Agreement or any of the other Financing Documents, and (b) the exercise by the Bank of any rights
or remedies available to it under the provisions of this Agreement, or any of the other Financing Documents. All enforcement costs, with interest as above provided, shall be a part of the Obligations hereunder. 

7.    Remedies Cumulative, etc. Each right, power and remedy of the Bank as provided for in this Agreement or in the other
Financing Documents or now or hereafter existing under applicable laws or otherwise shall be cumulative and concurrent and shall be in addition to every other right, 

  
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power or remedy provided for in this Agreement or in the other Financing Documents or now or hereafter existing under applicable laws or otherwise, and the exercise or beginning of the exercise
by the Bank of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by the Bank of any or all such other rights, powers or remedies. No failure or delay by the Bank to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement or of the other Financing Documents, or to exercise any right, power or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition,
covenant or agreement or of any such breach, or preclude the Bank from exercising any such right, power or remedy at any later time or times. By accepting payment after the due date of any amount payable under this Agreement or under any of the
other Financing Documents, the Bank shall not be deemed to waive the right either to require prompt payment when due of all other amounts payable under this Agreement or under any of the other Financing Documents. The payment by the Borrower or any
other person and the acceptance by the Bank of any amount due and payable under the provisions of this Agreement or the other Financing Documents shall not in any way or manner be construed as a waiver or preclude the Bank from exercising any right
of power or remedy consequent upon such occurrence. 
 8.    Course of Dealing, etc. No course of dealing between the Bank
and the Borrower shall be effective to amend, modify or change any provision of this Agreement or the other Financing Documents. The Bank shall have the right at all times to enforce the provisions of this Agreement and the other Financing Documents
in strict accordance with the provisions hereof and thereof, notwithstanding any conduct or custom on the part of the Bank in refraining from so doing at any time or times. The failure of the Bank at any time or times to enforce its rights under
such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or the other Financing Documents or as having in any way or manner
modified or waived the same. This Agreement and the other Financing Documents to which the Borrower is a party may not be amended, modified, or changed in any respect except by an agreement in writing signed by the Bank and the Borrower. The Bank
may, at any time and from time to time, execute and deliver to the Borrower a written instrument waiving, on such terms and conditions as the Bank may specify in such written instrument, any of the requirements of this Agreement or of the other
Financing Documents, provided, that any such waiver shall be for such period and subject to such conditions as shall be specified in any such instrument. In the case of any such waiver, the Borrower and the Bank shall be restored to their former
positions prior to such occurrence and shall have the same rights as they had hereunder. No such waiver shall extend to any subsequent or other occurrence, or impair any right consequent thereto and shall be effective only in the specific instance
and for the specific purpose for which given. 
 9.    Notices. All notices, requests and demands to or upon the parties
to this Agreement shall be deemed to have been given or made when delivered by hand, or when deposited in the mail, postage prepaid by registered or certified mail, return receipt requested, or, in the case of notice by telegraph, telex or facsimile
transmission, when properly transmitted, addressed as set forth on Exhibit A attached hereto or to such other address as may be hereafter designated in writing by one party to the other. Except in cases where it is expressly herein provided
that such notice, request or demand is not effective until received by the party to whom it is addressed. 

  
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 10.    Miscellaneous. This Agreement constitutes the complete and
exclusive expression of the terms of the agreement between the parties, and supersedes all prior or contemporaneous communications between the parties relating to the subject matter of this Agreement. This Agreement and the rights and obligations of
the parties hereunder shall be construed and interpreted in accordance with the laws of the Commonwealth of Pennsylvania, both in interpretation and performance. The Borrower irrevocably (a) consents and submits to the jurisdiction and venue of
any state or federal court sitting in the Commonwealth of Pennsylvania over any suit, action or proceeding arising out of or relating to this Agreement or any of the other Financing Documents, (b) waives, to the fullest extent permitted by law,
any objection that the Borrower may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum, and (c) consents to the service of process in any such suit, action or proceeding in any such court by the mailing of copies of such process to the Borrower by certified or registered mail at the Borrower’s
address set forth herein for the purpose of giving notice. Time is of the essence in connection with all obligations of the Borrower hereunder and under any of the other Financing Documents. This Agreement and all other Financing Documents shall be
binding upon and inure to the benefit of the Borrower and the Bank and their respective personal representatives, successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Bank. The invalidity, illegality or unenforceability of any provision of this Agreement shall not affect the validity, legality or enforceability of any of the other provisions of this Agreement which shall remain
effective. The Bank may, without notice to or consent of the Borrower, sell, assign or transfer to any person or persons, all or any part of the Obligations or all or any part of the Financing Documents.    THE BORROWER AND
THE BANK HEREBY VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOANS, THIS AGREEMENT OR ANY OF THE OTHER
FINANCING DOCUMENTS. 

  
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 SIGNATURE PAGE FOR DISCRETIONARY LOAN AGREEMENT 

IN WITNESS WHEREOF, each of the parties hereto have executed and delivered this Agreement as of the day and year first written above. 

 

									
	 WITNESS/ATTEST:
	  		  	DONEGAL GROUP INC.	  	
					
	 /s/ Kevin G. Burke
	  		  	By:	  	 /s/ Jeffrey D. Miller
	  	
	Kevin G. Burke	  		  		  	Jeffrey D. Miller, EVP & Chief Financial Officer
	        (Name)	  		  		  	        (Name)
                                        
(Title)	  	
			
		  		  	MANUFACTURERS AND TRADERS TRUST COMPANY
					
	 /s/ Abby Smith
	  		  	By:	  	 /s/ Steven E. Stewart
	  	
	Abby Smith	  		  		  	Steven E. Stewart, Vice-President
	        (Name)	  		  		  	        (Name)
                        (Title)	  	

 State of Pennsylvania, County of Lancaster 

On this, the 17th day of July, 2020, before me, Sheri O. Smith, the undersigned officer, personally
appeared Jeffrey D. Miller, who acknowledged himself to be the EVP & Chief Financial Officer of Donegal Group Inc., a corporation, and that he as such EVP & Chief Financial Officer, being authorized to do so, executed the foregoing
instrument for the purpose therein contained by signing the name of the corporation by himself as EVP & Chief Financial Officer. In witness whereof, I hereunto set my hand and official seals. 

/s/ Sheri O. Smith              Notary Public [NOTARIAL SEAL] 

  
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 EXHIBIT A 
  

			
	Borrower:	  	 Donegal Group Inc.
 1195 River Road

Marietta, Pennsylvania 17547

Attention: Jeffrey D. Miller, CFO
 Fax No.:
(717) 426-7009

		
	Bank:	  	 M&T Bank
 109 West Market Street

York, Pennsylvania 17401

Attention: Kellie M. Matthews, Group Vice President

Fax No.: (717) 852-2047

  
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