Exhibit 10.22

DONEGAL MUTUAL INSURANCE COMPANY
DONEGAL GROUP INC.

2023 ANNUAL EXECUTIVE INCENTIVE PLAN

Purpose

The 2023 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 2023 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).

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 2023 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 2023, 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

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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.

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, 2023 to be eligible to participate in this Plan. Participants must be employed by the Donegal Mutual Insurance Company on December 31, 2023 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, 2024.
 

 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 2023 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
W. Daniel DeLamater
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
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
Incentive Levels - Bonus % of Salary Paticipants Threshold Level 1 Level 2 Target Level 3 Level 4 Maximurr 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 W. Daniel Delamater 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 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., Matthew T. Hudnall, David W. Sponic 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 2023 are as follows:

     
         
Performance Objectives
Performance
Measure
  
Weighting
  
Threshold
Level 1
Level 2
Target
Level 3
Level 4
Maximum

Commercial Lines Premium Growth

  

15.0%
  

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%
Personal Lines Premium Growth

  
15.0%
  
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Adjusted Statutory Combined Ratio

  
50.0%
  
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%
Performance Objectives Performance Measure Weighting Threshold Level 1 Level 2 Target Level 3 Level 4 Maximun Commerckll Linc Premium Growth 15.0% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% Personal Lines Premium Growth 15.0% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Adjusted Statuto Combined Ratio 50.0% 100.0% 99.0% 98.0% 97.0% 96.0% 95.0% 94.0% Operating Returr on Equity 20.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 10.5%
 

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