UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrantx                                       Filed by a Party other than the Registrant¨

Check the appropriate box:

Donegal Group Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS

WE WILL HOLD ON APRIL 18, 201316, 2015

To the Stockholders of

DONEGAL GROUP INC.:

We will hold our 20132015 annual meeting of stockholders (our “2015 Annual Meeting”) at 10:00 a.m., local time, on Thursday, April 18, 2013,16, 2015, at the Heritage Hotel Lancaster, 500 Centerville Road, Lancaster, Pennsylvania 17601. At our 2013 annual meeting of stockholders,2015 Annual Meeting, our stockholders will act on the following items of stockholder business:

TheOur advance notice by-laws we have had in effect for many yearsBy-laws require that our stockholders submit to us, before a specificnot later than 90 days prior to the first anniversary of the date on which we first mailed our proxy statement to stockholders for our prior year’s annual meeting of stockholders, detailed information regarding any nomination by a stockholder nomination of a candidate for election as a director or any proposal by a stockholder of any other item of stockholder business a stockholder wishes to propose for consideration by our stockholders to consider at our next forthcoming annual meetingsmeeting of stockholders. That date has expiredwas December 17, 2014 with respect to our 20132015 Annual Meeting and is December 16, 2015 with respect to our 2016 annual meeting of stockholders. No stockholder made a proposal with respect to our 2015 Annual Meeting.

Therefore, under applicable law and our by-laws:By-laws, at our 2015 Annual Meeting:

Our board of directors has established the close of business on March 1, 20132, 2015 as the record date for the determination of the holders of our Class A common stock and for the determination of the holders of our Class B common stock entitled to notice of, and to vote at, our 2013 annual meeting2015 Annual Meeting. Our certificate of stockholders.incorporation does not authorize cumulative voting in the election of our directors.

We include our 2012 annual report2014 Annual Report to stockholders with this notice of our 2015 Annual Meeting and our proxy statement relating to our 2013 annual meeting of stockholders with this notice of our 2013 annual meeting of stockholders.2015 Annual Meeting. We also enclose a proxy card for you to sign, date and return in the accompanying postage-prepaid envelope we also enclose.that you may use to vote by proxy at our 2015 Annual Meeting.

Please return your completed and duly signed proxy card, whether or not you expect to attend our 2013 annual meeting of stockholders2015 Annual Meeting in person, by mail, or vote by telephone or via the internetInternet as we describe on the accompanying proxy card.

By order of our board of directors,

By order of our board of directors,
Donald H. Nikolaus,
President and Chairman of the Board		Kevin G. Burke, Executive Vice President, Chief Operating Officer and Acting Chief Executive Officer

March 18, 201316, 2015

Marietta, Pennsylvania

Important Notice Regarding the Availability of theOur Proxy Materials for

Our 2015 Annual Meeting of Stockholders We Will Hold on April 18, 201316, 2015

We enclose a printed copy of theThis document includes our proxy statement for our 2013 annual meeting of stockholders2015 Annual Meeting and our 2012 annual report2014 Annual Report to stockholders with thisas well as our notice of annual meeting.our 2015 Annual Meeting. You may also view each of these documents on the internetInternet atwww.proxyvote.com. No information on theour website other than thethis proxy statement for our 2013 annual meeting of stockholders2015 Annual Meeting and our 2012 annual report2014 Annual Report to stockholders constitutes a part of our proxy solicitation materials for our 2013 annual meeting of stockholders2015 Annual Meeting or part of our 2012 annual report2014 Annual Report to our stockholders.

DONEGAL GROUP INC.

PROXY STATEMENT

Introduction

This proxy statement contains information relating to our 2013 annual meeting of stockholders.2015 Annual Meeting. We will hold our 2013 annual meeting of stockholders2015 Annual Meeting on Thursday, April 18, 2013,16, 2015, at 10:00 a.m., local time, at the Heritage Hotel Lancaster, 500 Centerville Road, Lancaster, Pennsylvania 17601.

On March 18, 2013,16, 2015, we mailed to our stockholders of record at the close of business on March 1, 20132, 2015 this proxy statement, an accompanying form of proxy card and return envelope as well as our 2012 annual report2014 Annual Report to stockholders. Thestockholders (our “2014 Annual Report”). Our mailing also included a postage-prepaid envelope for your convenience in returning your proxy card to us,our transfer agent, unless you prefer to vote in person, by telephone or via the internet.Internet. We ask stockholders to return their completed proxy cards to us whether or not they expect to attend our 2013 annual meeting of stockholders2015 Annual Meeting in person.

We will bear all ofpay the costs of preparing and mailing our proxy materials to our stockholders for our 2013 annual meeting of stockholders2015 Annual Meeting and making those materials available for our stockholders to view on the internet.Internet. We will, upon request, reimburse brokers, nominees, fiduciaries, custodians and other record holders for their reasonable expenses in forwarding our proxy solicitation materials for our 2013 annual meeting of stockholders2015 Annual Meeting to the beneficial owners of our Class A common stock and to the beneficial owners of our Class B common stock for whom such persons serve as record holders. We may also solicit proxies from some stockholders in person, by mail, e-mail, telephone or other means of communication through our directors, officers and regular employees whom we do not employ specifically for proxy solicitation purposes and none of whom will receive any additional compensation for performing such services.

Summary of Our 2014 Performance

For 2014, our total revenues increased 7.2%, and our net income and net income per diluted Class A share decreased 44.8% and 46.1%, respectively, compared to 2013. The following table depicts our total revenues, net income, net income per diluted Class A share and net income per Class B share for the years ended December 31, 2014, 2013 and 2012. For further information, we refer you to the financial statements included in our 2014 Annual Report, which we have mailed to you simultaneously with the mailing of this proxy statement.

We use the following defined terms relating to us, our subsidiaries and our affiliates in this proxy statement:

(i)

(i)(ii)

CONTENTS

(iii)

(ii)

(iii)(iv)

Unless we otherwise expressly indicate, all of the financial information we include or incorporate by reference in this proxy statement for our 2013 annual meeting of stockholders2015 Annual Meeting relates to our 20122014 fiscal year. Our 20122014 fiscal year began on January 1, 20122014 and ended on December 31, 2012.2014.

(iv)(v)

OUR 20132015 ANNUAL MEETING OF STOCKHOLDERS

In accordance with this proxy statement, our board of directors solicits proxies from our stockholders for use in connection with our 2013 annual meeting of stockholders2015 Annual Meeting and any adjournment or postponement of our 2013 annual meeting of stockholders.2015 Annual Meeting. We will hold our 2013 annual meeting of stockholders2015 Annual Meeting at 10:00 a.m., local time, on April 18, 201316, 2015 at the Heritage Hotel Lancaster, 500 Centerville Road, Lancaster, Pennsylvania 17601.

What is the agenda for our 2013 annual meeting of stockholders?2015 Annual Meeting?

At our 2013 annual meeting of stockholders,2015 Annual Meeting, our stockholders will consider and act upon the following fivefour items of stockholder business:

What is the effect of our advance notice by-laws?By-laws?

We have had advance notice by-laws in effect for many years as is the case with many other public companies. Our advance notice by-laws, which comply with all applicable laws,By-laws require that a stockholder provide us with a specified period of prior notice of that stockholder’s intention to nominate aany candidate for election as a Class CB director at our 2013 annual meeting of stockholders2015 Annual Meeting or to propose any other item of stockholder business for stockholder actionconsideration at our 20132015 Annual Meeting.

Our advance notice By-laws establish a date by which a stockholder must submit a stockholder proposal with respect to our next forthcoming annual meeting of stockholders.

Under our advance notice by-laws, as we summarize them each year That date in general is 90 days prior to the first anniversary of the mailing date of our proxy statementssolicitation for our prior year’s annual meetingsmeeting of stockholders, we annually establish astockholders. After that date, after which a stockholder may no longer propose aany candidate for election as a director at that year’sour next forthcoming annual meeting of stockholders and may no longer propose any other item of stockholder business for consideration and a vote by our stockholders at that year’sour next forthcoming annual meeting of stockholders. For our 2013 annual meeting of stockholders,2015 Annual Meeting, that date was December 19, 2012.17, 2014. For our 20142016 annual meeting of stockholders, that date is December 18, 2013.16, 2015. The purpose of our advance notice by-lawsBy-laws is to ensure that we can include in our annual proxy statements, for the information of all of our stockholders, all of the actions we or others propose to present for consideration by our stockholders at each of our annual meetings of stockholders.

No stockholder has nominated a candidate for election as a Class CB director at our 2013 annual meeting of stockholders2015 Annual Meeting or proposed the transaction of any other item of stockholder business at our 2013 annual meeting of stockholders on or before the date our advance notice by-laws specify.2015 Annual Meeting. Accordingly, no item of stockholder business other than the fivefour items of stockholder business we describe in our notice of our 2013 annual meeting of stockholders,2015 Annual Meeting, as well as in this proxy statement, may properly come before our 2013 annual meeting of stockholders2015 Annual Meeting or any adjournment or postponement of our 2013 annual meeting of stockholders.2015 Annual Meeting. As a result, we will not submit any other item of stockholder business, other than procedural matters related to the conduct of our 2013 annual meeting of stockholders,2015 Annual Meeting, to a vote of our stockholders at our 2013 annual meeting of stockholders.2015 Annual Meeting.

We are a Delaware corporation. Therefore, the Delaware General Corporation Law, or the DGCL, our amended and restated certificate of incorporation and our by-lawsBy-laws as currently in effect govern the conduct of business at our annual meetings of stockholders, our relationships with our stockholders and the relative rights, powers, duties and obligations of us and our stockholders, directors, nominees for director,directors, officers and employees.

What is athe quorum requirement for the conduct of business at our 2013 annual meeting of stockholders?2015 Annual Meeting?

Our by-lawsBy-laws provide that the presence, in person or by proxy, of not less than a majority of the aggregate voting power of our outstanding shares of Class A common stock and our outstanding shares of Class B common stock as of the record date for our 2013 annual meeting will constitute2015 Annual Meeting constitutes a quorum at our 2013 annual meeting of stockholders.2015 Annual Meeting. Because Donegal Mutual owns approximately 66%65% of the aggregate voting power of our Class A common stock and our Class B common stock outstanding on the record date and because Donegal Mutual will vote all of the shares of our Class A common stock and all of the shares of our Class B common stock itDonegal Mutual owns will be present in person at our 2013 annual meeting of stockholders,2015 Annual Meeting, the presence in person of the shares Donegal Mutual owns at our 2013 annual meeting of stockholders2015 Annual Meeting will ensureconstitute the presence of a quorum at our 2013 annual meeting of stockholders.2015 Annual Meeting. Because of the certainty of the presence of a quorum will be present at our 2013 annual meeting of stockholders,2015 Annual Meeting, our stockholders will have the legal power and authority to conduct the items of stockholder business at our 2013 annual meeting of stockholders2015 Annual Meeting that we describe in our notice of annual meeting of stockholdersour 2015 Annual Meeting and in this proxy statement with one exception. That exception is the right of the holders of our Class A common stock to vote as a separate class on the proposed amendment to increase the number of shares of our Class A common stock we have the authority to issue. A quorum for that Class A common stock separate vote is a majority of our outstanding shares of Class A common stock present in person or by proxy at our 2013 annual meeting of stockholders.statement.

What is the order of business at our 2013 annual meeting of stockholders?2015 Annual Meeting?

Our by-lawsBy-laws and applicable provisions of the DGCL govern the organization, and conduct of business at and the adjournment of our 2013 annual meeting of stockholders.2015 Annual Meeting. Our board of directors has designated Donald H. Nikolaus, our chairman of the board and chief executive officer,president, as the presiding officer of our 2013 annual meeting of stockholders. Mr. Nikolaus2015 Annual Meeting. The presiding officer will call our 2013 annual meeting of stockholders2015 Annual Meeting to order and will preside overconduct the transactionbusiness of our 2015 Annual Meeting, including voting upon the four items of stockholder business we describe in this proxy statement forupon which our 2013 annual meeting of stockholders.stockholders will vote at our 2015 Annual Meeting. No other matteritem of stockholder business may properly come before our 2013 annual meeting of stockholders. Mr. Nikolaus will determine, as the2015 Annual Meeting. The presiding officer of our 2013 annual meeting of stockholders,2015 Annual Meeting will determine, in his discretion, the order of the items of stockholder business our stockholderswe will conduct at our 2013 annual meeting of stockholders2015 Annual Meeting and the procedural manner in which we will conduct the business of our 2013 annual meeting of stockholders.2015 Annual Meeting.

We have historically conducted the voting on the proposalsitems of stockholder business we submit for a stockholder actionvote at our annual meetings of stockholders as the first item of business.business following the calling of our 2015 Annual Meeting to order and the determination of a quorum by the presiding officer of our Annual Meeting. We currently intend to follow a substantially similar procedure at our 2013 annual meeting of stockholders.2015 Annual Meeting. After our stockholders have voted on the fivefour items of stockholder business we describe in this proxy statement, and the judgesinspectors of election our board of directors has appointed have conductedtallied the voting on those fivefour items of stockholder business, Mr. NikolausKevin G. Burke, our executive vice president, chief operating officer and acting chief executive officer, and Jeffrey D. Miller, our executive vice president and chief financial officer, will then discuss our results of operations for 20122014 compared to 20112013 and our outlook for 2013.2015. After Mr. Nikolaus completes histhose remarks, the judgesinspectors of election will announce the results of the voting on the fivefour items of stockholder business. Then Mr. Nikolaus, our chairman of the board and president, and Mr. Burke, our executive vice president, chief operating officer and acting chief executive officer, will, in his capacity as the presiding officer of our 2013 annual meeting of stockholders, willtheir discretion, recognize stockholders who wish to ask pertinent questions or make comments as Mr.Messrs. Nikolaus in his discretion, deemsand Burke deem appropriate under then prevailing circumstances.

Who may attend,is entitled to notice of, and who may vote at, our 2013 annual meeting of stockholders?2015 Annual Meeting?

Our board of directors established the close of business on March 1, 20132, 2015 as the record date for the determination of the holders of our Class A common stock and the holders of our Class B common stock who are entitled to notice of, and to vote at, our 2013 annual meeting of stockholders.2015 Annual Meeting. We refer to those eligible stockholders as “stockholders of record” in this proxy statement. Stockholders of record, including persons whom a stockholder of record duly and validly appoints as the proxy of such stockholder of record’s proxy,record, may attend, and vote at, our 2013 annual meeting2015 Annual Meeting.

Each share of stockholders.our Class A common stock held of record for our 2015 Annual Meeting has the right to cast one-tenth of a vote per Class A share for each nominee for election as a Class B director at our 2015 Annual Meeting and each of the other items of stockholder business we submit to a vote of our stockholders at our 2015 Annual Meeting.

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Each share of our Class B common stock held of record for our 2015 Annual Meeting has the right to cast one vote per Class B share for each nominee for election as a Class B director at our 2015 Annual Meeting and each of the other items of stockholder business we submit to a vote of our stockholders at our 2015 Annual Meeting.

We reserve the right to request photographic identification, such as a currently valid driver’s license, before we permit a stockholder of record, or a proxy for a stockholder of record, to attend our 2013 annual meeting of

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stockholders.2015 Annual Meeting in person. Even if you currently plan to attend our 2013 annual meeting of stockholders2015 Annual Meeting and vote in person, we recommend that you vote by proxy using one of the methods we describe in this proxy statement under “How do you vote the DGI shares you own that are registered in your name?” By voting in one of those ways, we can then recognize your votes even if you later do not, or cannot for any reason, attend our 2013 annual meeting of stockholders2015 Annual Meeting and vote in person for any reason.person.

Our independent transfer agent, Computershare Trust Company, N.A. (“Computershare”), has prepared and certified a list of all holders of our Class A common stock and all holders of our Class B common stock outstanding as of the close of business on March 1, 2013,2, 2015, the record date for our 2013 annual meeting of stockholders.2015 Annual Meeting. If your name appears on that certified list of stockholders Computershare prepared for our use in connection with our 2013 annual meeting of stockholders,2015 Annual Meeting, you are a stockholder of record entitled to vote in person or by proxy at our 2013 annual meeting of stockholders.2015 Annual Meeting. For example, you are a stockholder of record if you received this proxy statement and the proxyrelated materials for our 2013 annual meeting of stockholders2015 Annual Meeting directly from us through our transfer agent and not indirectly from another person who is the record holder of the shares you own beneficially, such as a bank, a brokerage firm or other fiduciary.fiduciary or representative.

Our by-laws,By-laws, in accordance with Delaware law,the DGCL, provide a stockholder of record an opportunity, subject to that stockholder of record’s prior compliance with certain conditions we describe in this proxy statement, during the ten calendar days preceding the date of our 2013 annual meeting of stockholders,2015 Annual Meeting, to examine, at our principal executive offices in Marietta, Pennsylvania, an alphabetical list of the holders of record for our 2015 Annual Meeting of our Class A common stock and an alphabetical list of the holders of record for our 2015 Annual Meeting of our Class B common stock. We will grant a stockholder of record’s request to make such an examination if:

If a stockholder of record does not make such a written request to inspect our list of stockholders within the specified ten-day period we describe above or if we make a discretionary determination, in our discretion, that the stockholder of record’s request for inspection of our list of stockholders is not proper or not legally relevant to the items of stockholder business we will conduct at our 2013 annual meeting of stockholders,2015 Annual Meeting, we will not permit that stockholder of record to examine ourthe list of stockholders.the record holders of our Class A common stock and the record holders of our Class B common stock.

If you are the beneficial owner of shares of our Class A common stock or the beneficial owner of shares of our Class B common stock registered in the name of a bank, broker or other fiduciary or representative, also known as shares held in “street name,” we consider you the beneficial owner of the shares your bank, broker or other fiduciary or representative holds for you, and we consider your bank, your broker or your other fiduciary or representative the stockholder of record of your shares. Your bank, your broker or your other fiduciary or representative will send you separately, as the beneficial owner, information describing the procedure for votingyou to vote your shares. You should follow the instructions your bank, your broker or your other fiduciary or representative provides to you on how to vote your shares.

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Which of the items of stockholder business we will conduct at our 2015 Annual Meeting do we consider routine and which do we consider non-routine?

We will transact four items of stockholder business at our 2015 Annual Meeting. We consider these items routine or non-routine as we indicate in the table below:

Under applicable SEC rules, a broker or other non-beneficial record owner may not vote on non-routine matters without voting instructions from the beneficial owner.

What percentage of the aggregate voting power of our outstanding shares of Class A common stock and our outstanding shares of Class B common stock is necessary to approve the items of stockholder business on which our stockholders will consider and vote at our 2013 annual meeting of stockholders?2015 Annual Meeting?

Election of Our Class C Directors.B Directors

The threefour nominees our board of directors nominated for election as Class CB directors are the only nominees eligible for election as Class CB directors at our 2013 annual meeting of stockholders2015 Annual Meeting and any adjournment or postponement of our 2013 annual meeting2015 Annual Meeting. Our certificate of incorporation and our By-laws do not authorize cumulative voting in the election of our directors. As the DGCL permits and our By-laws provide, we utilize a plurality of the votes cast standard, and not a majority of the outstanding votes cast standard, in determining the election of directors by our stockholders. Our certificate of incorporation provides that our shares of Class A common stock and our shares of Class B common stock vote together as a single class in the election of our directors. At our 2013 annual meeting of stockholders,2015 Annual Meeting, our stockholders will elect as Class C

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B directors the threefour nominees for election as Class CB directors who receive the highest number of stockholder votes.votes at our 2015 Annual Meeting. The four persons elected as Class CB directors will serve for a term of three years and until their respective successors take office.

If you properly submit your proxy properly and markWithhold Authority, for the election of some or all of the nominees for election as Class B directors, the proxies we have named will not vote your shares with respect to the nominee or nominees for election as Class CB director as to whom you have withheld authority. We will count yourthe shares for which you have withheld authority to vote for the election of directors as present at our 2013 annual meeting of stockholders2015 Annual Meeting for the purposes of determining whether a quorum is present at our 2013 annual meeting2015 Annual Meeting. Because Donegal Mutual will vote all of stockholders.

Our certificate of incorporation and our by-laws do not authorize cumulative voting inits DGI shares for the election of our directors.

Amendment to Our Certificate of Incorporation to Authorize the Issuance of Additional Shares of Ourfour nominees for Class A Common Stock.    Approval ofB director we name in this proxy statement and the amendment to our certificate of incorporation to increase the number ofDonegal Mutual-owned shares of our Class A common stock we have the authority to issue as our board of directors determines from time to time from 30.0 million shares to 40.0 million shares requires:

Our certificate of incorporation provides that our shares of Class A common stock and our shares of Class B common stock vote together asdirectors for a single class on all matters submitted to a voteterm of our stockholders, except that, under the DGCL, our shares of Class A common stockthree years and our shares of Class B common stock each have the right to vote as a separate class on any matter that would uniquely adversely affect the rights of that class.until their successors take office.

Approval of our 2013Our 2015 Equity Incentive Plan for Employees.Employees

Approval of our 20132015 equity incentive plan for employees requires the affirmative vote of the holders of record of a majority of the voting power of our outstanding shares of Class A common stock and our outstanding shares of Class B common stock, voting together as a single class, present in person or by proxy and entitled to vote at our 2013 annual meeting2015 Annual Meeting. Because Donegal Mutual will vote all of stockholders.its DGI shares for approval of our 2015 equity incentive plan for employees and the Donegal Mutual-owned shares constitute a majority of the votes entitled to be cast at our 2015 Annual Meeting, our stockholders will approve our 2015 equity incentive plan for employees.

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Approval of our 2013Our 2015 Equity Incentive Plan for Directors.Directors

Approval of our 20132015 equity incentive plan for directors requires the affirmative vote of the holders of record of a majority of the voting power of our outstanding shares of Class A common stock and our outstanding shares of Class B common stock, voting together as a single class, present in person or by proxy and entitled to vote at our 2013 annual meeting2015 Annual Meeting. Because Donegal Mutual will vote all of stockholders.its DGI shares for approval of our 2015 equity incentive plan for directors and the Donegal Mutual-owned shares constitute a majority of the votes entitled to be cast at our 2015 Annual Meeting, our stockholders will approve our 2015 equity incentive plan for directors.

Ratification of the Appointment by Our Audit Committee’s AppointmentCommittee of KPMG LLP to Serve as Our Independent Registered Public Accounting Firm for 2015.    

Ratification of the appointment by our audit committee’s appointmentcommittee of KPMG LLP to serve as our independent registered public accounting firm for our fiscal year ending December 31, 20132015 requires the affirmative vote of the holders of a majority of the aggregate voting power of our outstanding shares of Class A common stock and our outstanding shares of Class B common stock, voting together as a single class, present in person or by proxy and entitled to vote at our 2013 annual meeting2015 Annual Meeting. Because Donegal Mutual will vote all of stockholders.its DGI shares for ratification of the appointment by our audit committee of KPMG LLP to serve as our independent registered public accounting firm for 2015 and the Donegal Mutual-owned shares constitute a majority of the votes entitled to be cast at our 2015 Annual Meeting, the ratification of the appointment by our audit committee of KPMG LLP will receive the requisite stockholder approval.

Quorum and Broker Non-Votes

WeIn connection with our 2015 Annual Meeting, we will considertreat abstentions and broker non-votes as outstanding shares entitled to vote at our 2013 annual meeting2015 Annual Meeting. The holders present in person or by proxy of stockholders and will count those shares in determining the number of votes necessary to constitute a quorum at our 2013 annual meeting of stockholders. Under any circumstances, a quorum will be present at our 2013 annual meeting of stockholders becausemajority of the presence at our 2013 annual meetingaggregate voting power of stockholders of the outstanding shares of our Class A common stock and the outstanding shares of our Class B common stock entitled to vote at our 2015 Annual Meeting will constitute a quorum at our 2015 Annual Meeting. Thus, a quorum will be present at our 2015 Annual Meeting because of the presence at our 2015 Annual Meeting of Donegal Mutual owns.and because Donegal Mutual holds, and will exercise, the majority voting power of all of the outstanding shares of our Class A common stock and the outstanding shares of our Class B common stock.

Broker non-votes are shares brokers or nominees hold of record in their name for whichand that such broker or nominee has not voted because the broker or nominee has not received voting instructions from the beneficial owner of or person otherwise entitled to vote, those shares

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and as to which shares the broker or nominee does not have discretionary voting power. Broker non-votes, if any, will not impactaffect the presence of a quorum at our 2013 annual meeting of stockholders2015 Annual Meeting, other than being treated as votes present, or affect the outcome of any matter we submit to a vote of our stockholders at our 2013 annual meeting of stockholders, except that broker non-votes will count as votes against the proposal to amend our certificate of incorporation.2015 Annual Meeting.

What voting rights do our stockholders have?

At March 1, 2013,2, 2015, we had outstanding:

Therefore,

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In summary:

At the close of business on March 1, 2013,2, 2015, Donegal Mutual owned of record and beneficially 7,755,953 shares, or 38.7%36.0%, of our outstanding Class A common stock, and 4,217,0394,247,039 shares, or 75.6%76.2%, of our outstanding Class B common stock. Donegal Mutual therefore has the right to cast approximately two-thirds of the total number of votes that all of our stockholders may cast at our 2013 annual meeting of stockholders2015 Annual Meeting on each matter we submit to a vote of our stockholders at our 2013 annual meeting of stockholders with the exception of the separate vote of the holders of our Class A common stock on the proposal to increase the number of shares of our Class A common stock we are authorized to issue. Because Donegal Mutual holds 38.7% of our outstanding shares of Class A common stock and the board of directors and management of Donegal Mutual and DGI own an additional 3.5% of our outstanding shares of Class A common stock, and each of them has advised us they will vote in favor of the approval of the amendment to our certificate of incorporation, the votes Donegal Mutual and the members of the boards of directors of Donegal Mutual and DGI and their executive officers cast in favor of the amendment will have a substantial influence on the approval of the amendment.2015 Annual Meeting.

Donegal Mutual has advised us that it will vote all of its shares of our Class A common stock and all of its shares of our Class B common stock at our 2015 Annual Meeting as follows:

Therefore,As a result, based on the votesinformation Donegal Mutual and the officers and directors offurnished to us as to how Donegal Mutual will cast its votes at our 2015 Annual Meeting and DGI willbecause those shares constitute a majority of the votes entitled to be cast at our 2013 annual meeting of stockholders,2015 Annual Meeting, we anticipate our stockholders will:will, at our 2015 Annual Meeting:

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How do you vote yourthe DGI shares you own that are registered in your name?

If the certified list of the holders of our Class A common stock and the holders of our Class B common stock as of the record date that our independent transfer agent prepared includes your name, you are a stockholder of record and you may attend our 2013 annual meeting of stockholders2015 Annual Meeting and vote in person or by proxy.proxy on the items of stockholder business we submit to a vote of our stockholders at our 2015 Annual Meeting. If you prefer, you may vote your proxy by telephone or via the Internet by following the instructions we include on the proxy card we sent to you along with this proxy statement and our 2014 Annual Report. The proxies our board of directors has appointed will vote your shares as you direct on any proxy card you return by mail, by telephone or over the internet. If you prefer, you may vote your proxy by telephone or via the internet by following the instructions we include on the proxy card we sent to you along with this proxy statement and our annual report to our stockholders for 2012.Internet. The deadline for stockholders of record to vote at our 2013 annual meeting of stockholders2015 Annual Meeting by telephone or via the internetInternet is 11:59 p.m., local time, on April 17, 2013.15, 2015. The deadline for our receipt of proxies submitted by mail or by express delivery services for voting at our 2015 Annual Meeting is 3:00 p.m., local time, on April 17, 2013.15, 2015.

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You may vote by proxy by using one of the following three methods:

Vote by telephone – use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week. Have your proxy card available when you call. When requested, enter the control numbers your proxy card lists and then follow the prompts. The telephone number is 1-800-690-6903.

Vote by mail – mark, sign and date the proxy card we have mailed to you and return it to our independent transfer agent in the postage-prepaid envelope we mailed to you along with thisour proxy statementsolicitation materials for our 2015 Annual Meeting and our annual report to stockholders for 2012.2014 Annual Report.

Vote via the internetInternet – use the internetInternet to vote your proxy 24 hours a day, 7 days a week. Have your proxy card available when you access the website. When requested, enter the control numbers your proxy card lists and then create and submit your ballot over the internet.Internet. The website address for voting via the internetInternet iswww.proxyvote.com.

If a broker, bank or other fiduciary or representative is the holder of record of your shares, see “How do you vote yourthe DGI shares heldyou own that are registered in street name?” below.

How do you vote yourthe DGI shares heldyou own that are registered in street name?

If you are not a stockholder of record, but you are a “beneficial owner” of our Class A common stock or our Class B common stock at the close of business on March 1, 2013,2, 2015, which means that theour list of our stockholders of record at the close of business on March 1, 2013 that2, 2015 prepared by our independent transfer agent prepared does not include your name but instead the name of the bank, broker or other fiduciary or representative who is the holder of record of your shares, you must either direct the holder of record of your shares to vote your shares on your behalf on the mattersitems of stockholder business upon which our stockholders will consider and vote upon at our 2013 annual meeting of stockholders2015 Annual Meeting or you must obtain a form of proxy from your holder of record that you may then vote as if you were the holder of record. Your broker does not have the discretion to vote your shares on non-routine matters which includesat our 2015 Annual Meeting. Those matters are the election of four Class B directors, the approval of our 2015 equity incentive plan for employees and the approval of our 2015 equity incentive plan for directors. Your broker, however, does have the discretion to vote your shares on routine matters at our 2015 Annual Meeting. The stockholder ratification of the appointment by our audit committee of KPMG LLP to serve as our independent registered public accounting firm for our fiscal year ending December 31, 2015 is a routine matter as to which your broker may exercise discretionary voting power.

If you are a “beneficial owner” of our Class C directors.A common stock or our Class B common stock and desire to attend our 2015 Annual Meeting or vote your beneficially owned shares at our 2015 Annual Meeting in person, you must obtain a proxy from your holder of record that you may vote as if you were the holder of record and not direct your holder of record how to vote. Your holder of record is generally your broker or bank who holds the shares in its name for you.

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How does our board of directors recommend our stockholders vote at our 2013 annual meeting of stockholders?2015 Annual Meeting?

Our board of directors unanimously recommends that each of our stockholders complete such stockholder’s proxy and vote as follows:

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Unless you mark your proxy card to the contrary, the proxies our board of directors has appointed will vote your shares represented by a duly completed proxy for the election of the threefour nominees for Class CB directors we name in this proxy statement, for the approval of the amendment to our certificate of incorporation to increase the number of shares of our Class A common stock we have the authority to issue from 30.0 million shares to 40.0 million shares, for the approval of our 20132015 equity incentive plan for employees, for the approval of our 20132015 equity incentive plan for directors and for the ratification of the appointment by our audit committee’s appointmentcommittee of KPMG LLP to serve as our independent registered public accounting firm for our fiscal year ending December 31, 2013.2015.

May you change your vote after you have voted by proxy but before the commencement of voting at our 2013 annual meeting of stockholders convenes?2015 Annual Meeting?

You may revoke your proxy at any time prior to the time when the proxies our board of directors appointed vote your shareshave completed their collection of ballots during our 2013 annual meeting of stockholders.2015 Annual Meeting. If you are a stockholder of record, you may revoke your proxy by timely:

However, if you attend our 2013 annual meeting of stockholders2015 Annual Meeting in person and do not submit a ballot at our 2015 Annual Meeting, our proxies will vote the proxy you most recently submitted to them in accordance with the instructions you provided on that most recent proxy.

If a bank, broker, nominee, other fiduciary or representative or other person is the holder of record of the shares you own, you will need to follow the instructions of the bank, broker, nominee, other fiduciary or representative or other holder of record as to how you may revoke your proxy.

If you have any questions about our 2013 annual meeting of stockholders2015 Annual Meeting or voting your shares, please call Jeffrey D. Miller, our seniorexecutive vice president and chief financial officer, at1-800-877-0600 or e-mail Mr. Miller atjeffmiller@donegalgroup.com.

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CERTAIN BENEFICIAL OWNERS OF OUR CLASS A COMMON STOCK OWNERSHIP

AND OUR CLASS B COMMON STOCK

The OwnershipBeneficial Owners of Our Principal Stockholders5% or More of DGICA or DGICB

The table below lists each person whom we believe beneficially owned 5% or more of the outstanding shares of our Class A common stock (Nasdaq symbol DGICA) or 5% or more of the outstanding shares of our Class B common stock (Nasdaq symbol DGICB), in each case, as of the close of business on March 1, 2013.2, 2015.

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The Ownership ofby Our Directors and Executive Officers of Our Stock

The following table shows the amount and the percentage of the outstanding shares of our Class A common stock and the amount and the percentage of the outstanding shares of our Class B common stock that each of our directors, and each of our nominees for director, each of our named executive officers and all of our executive officers, our nominees for director and our directors as a group owned beneficially at the close of business on March 1, 2013.2, 2015. The total shares shown for each person includes shares the person owned jointly, in whole or in part, with the person’s spouse, or owned individually by the person’s spouse and shares purchasable upon the exercise of stock options that were exercisable as of March 1, 20132, 2015 or that become exercisable within 60 days after March 2, 2015. The ownership of March 1, 2013. Ownershipeach director, nominee for director or executive officer is less than 1% unless otherwise indicated. The business address of each of our executive officers, directors and nominees for director is c/o Donegal Group Inc., 1195 River Road, P.O. Box 302, Marietta, Pennsylvania 17547.the table immediately below indicates otherwise.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, or the Exchange Act, requires that each of our executive officers,directors, each of our directorsexecutive officers and each holder ofany person who owns 10% or more of the outstanding shares of our Class A common stock or 10% or more of the outstanding shares of our Class B common stock, report such person’sfile with the SEC initial reports of their ownership of 10% or more of our Class A common stock and our Class B common stock to the SEC.as well as reports of subsequent changes in that ownership. Such persons

Based solely upon our review of the Section 16(a) filings our executive officers and directors made with the SEC during 2014 and written representations we receive annually from our directors and executive officers, we believe that during 2014 all of our directors and executive officers filed all required Section 16(a) reports on a timely basis.

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also mustUnder the caption “Certain Beneficial Owners of Our Class A Common Stock and Our Class B Common Stock” in this proxy statement, we disclose that Gregory M. Shepard, an individual who is not affiliated with the Company, owns more than 10% of the outstanding shares of our Class A common stock. As such, Section 16(a) of the Exchange Act requires that Mr. Shepard file statementsreports of changes in suchhis beneficial ownership with the SECof our Class A common stock as well as our Class B common stock within two business days of aafter any change in such person’shis beneficial ownership of our Class A common stock or our Class B common stock. Our executive officers and directors, our nominees for election as director, certain holders of 10% or more of our Class A common stock and certain holders of 10% or more

Mr. Shepard filed a change in beneficial ownership report with the SEC on December 29, 2014. Mr. Shepard’s December 29, 2014 report disclosed that:

Based upon Mr. Shepard’s December 29, 2014 change in beneficial ownership report, we have advised usdetermined, based on the advice of our outside counsel, that:

THE RELATIONSHIP OF DONEGAL MUTUAL AND DGI

Introduction

A group of local residents and business owners in Lancaster County, Pennsylvania formed Donegal Mutual in 1889 to provide property and casualty insurance. Now, 124126 years later, Donegal Mutual has succeeded and grown to havehad approximately $350.7$393.7 million in total assets and surplus of approximately $187.7$204.4 million at December 31, 2012.2014. In addition, Donegal Mutual owns 38.7%36.0% of the outstanding shares of our Class A common stock and 75.6%76.2% of the outstanding shares of our Class B common stock.

DGI, at December 31, 2012,2014, had total assets of approximately $1.3$1.5 billion and stockholders’ equity of approximately $400.0$416.1 million.

Donegal Mutual and DGI’s insurance subsidiaries conduct business together as the Donegal Insurance Group in 2221 Mid-Atlantic, Midwestern, New England and Southern states.

During 2012,2014, A.M. Best Company reported that the Donegal Insurance Group ranked as the 10198^stth largest property and casualty insurance group in the United States based on its 2011 net premiums written.written in 2013. A.M. Best Company has assigned the Donegal Insurance Group an A.M. Bestits rating of A (Excellent) forto the past 19 consecutive years.Donegal Insurance Group.

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The Development of DGI

In the mid-1980s, Donegal Mutual recognized the desirability, as a mutual insurance company, of developing additional sources of capital and surplus so it could remain competitive and have the surplus to expand its business and ensure its long-term viability. Donegal Mutual determined to implement a downstream holding company structure as one of its business strategies. Accordingly, in 1986, Donegal Mutual formed DGI as a downstream holding company. Initially, Donegal Mutual owned all of our outstanding common stock. After Donegal Mutual formed us, we in turn formed Atlantic States as our wholly owned property and casualty insurance company subsidiary.

In connection with the establishment of Atlantic States and our downstream insurance holding company system, Donegal Mutual and Atlantic States entered into a proportional reinsurance agreement, or pooling agreement, that became effective October 1, 1986. Under the pooling agreement, Donegal Mutual and Atlantic States pool substantially all of their respective premiums, losses and loss expenses to the reinsurance pool, and the reinsurance pool, acting through Donegal Mutual, then cedes a portion of the pooled business, currently 80%, to Atlantic States, and Donegal Mutual retains the remaining 20%. Donegal Mutual and Atlantic States share the underwriting results in proportion to their respective participation in the underwriting pool. Since we established Atlantic States in 1986, Donegal Mutual and our insurance subsidiaries have conducted business together as the Donegal Insurance Group, while retaining their separate legal and corporate existences. As the Donegal Insurance Group, Donegal Mutual and our insurance subsidiaries share a combined business plan to enhance market penetration and underwriting profitability objectives. As such, Donegal Mutual and our insurance subsidiaries share the same business philosophies, the same management, the same employees and the same facilities and offer the same types of insurance products.

We believe Donegal Mutual’s long-term ownership of a majority interest in the combined voting power of our Class A common stock and of our Class B common stock in us fosters our ability to to:

In addition, as the Donegal Insurance Group, Donegal Mutual and our insurance subsidiaries share a combined business plan to enhance market penetration and underwriting profitability objectives. The products Donegal Mutual and our insurance subsidiaries offer are generally complementary, which permits the Donegal Insurance Group to offer a broad range of products in a given market and to expand the Donegal Insurance Group’s ability to service an entire personal lines or commercial lines account. Distinctions within the products Donegal Mutual and our insurance subsidiaries offer generally relate to specific risk profiles within similar classes of business, such as preferred tier products versus standard tier products. Donegal Mutual and we do not allocate all of the standard risk gradients to one company. As a result, the underwriting profitabilityresults of the business the individual companies write directly will vary. However, since the underwriting pool homogenizes the risk characteristics of all business Donegal Mutual and Atlantic States write directly, Donegal Mutual and Atlantic States share the underwriting results in proportion to their respective participation in the underwriting pool.directly. We receive 80% of the results of the underwriting pool because Atlantic States has an 80% participation in the pool. The business Atlantic States derives from the underwriting pool represents a significant percentage of our total consolidated revenues. However, thatthe percentage of the total revenue we derive from the underwriting pool has gradually decreased over the past few years as we have acquired a number of other property and casualty insurance companies in other jurisdictions that do not participate in the underwriting pool.

From time to time, the board of directors of Donegal Mutual and our board of directors review our structure and relationships. The most recent such review occurred in November and December 2012. As a result of these

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reviews, both our board of directors and Donegal Mutual’s board of directors continue to believe, as of the date of this proxy statement, that the Donegal Mutual-DGI structure continues to be appropriate for the respective businesses and operations of DGI and of Donegal Mutual.

The Formation of DGI

In the mid-1980s, Donegal Mutual recognized the desirability, as a mutual insurance company, of developing additional sources of capital and surplus so it could remain competitive and have the surplus to expand its business and ensure its long-term viability. Donegal Mutual determined to implement a downstream holding company structure as one of its business strategies. Accordingly, in 1986, Donegal Mutual formed us as a downstream holding company. Initially, Donegal Mutual owned all of our outstanding common stock. We in turn formed Atlantic States as our wholly owned property and casualty insurance company subsidiary. We subsequently effected a public offering in September 1986 to provide the surplus necessary to support the business Atlantic States began to receive on October 1, 1986 as its share under a proportional reinsurance agreement, or the pooling agreement, between Donegal Mutual and Atlantic States that became effective on that date.

Under the pooling agreement, Donegal Mutual and Atlantic States pool substantially all of their respective premiums, losses and loss expenses. Donegal Mutual then cedes 80% of the pooled business to Atlantic States. Our insurance subsidiaries pay dividends to us annually. During the year ended December 31, 2012, our insurance subsidiaries paid a total of $7.0 million in dividends to us. These dividends are a major source of the funds we utilize to pay quarterly cash dividends to our stockholders. Donegal Mutual received $5.6 million in dividends from us during the year ended December 31, 2012.

As the capital of Atlantic States and our other insurance subsidiaries has increased, the underwriting capacity of our insurance subsidiaries, including Atlantic States, has proportionately increased. The size of the underwriting pool has increased substantially. Therefore, as we originally planned in the mid-1980s, Atlantic States has successfully raised the capital necessary to support the growth of its direct business as well as to accept increases in its allocation of business from the underwriting pool. Atlantic States’ allocationIn addition, the portion of the pooled business

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underwriting pool allocated to Atlantic States has increased from an initial allocation of 35% in 1986 to an 80% allocation since March 1, 2008. We do not anticipate any further change in the pooling agreement between Atlantic States and Donegal Mutual in the foreseeable future, including any change in the percentage participation of Atlantic States in the underwriting pool.

The board of directors of Donegal Mutual and our board of directors review annually our structure and relationships. The most recent such review occurred in February 2015. As a result of these reviews, both our board of directors and Donegal Mutual’s board of directors reaffirmed their belief, as of the date of this proxy statement, that the Donegal Mutual-DGI structure and the inter-company relationships we describe in this proxy statement continue to be appropriate for the respective businesses and operations of DGI and of Donegal Mutual. Our board of directors reaffirmed in February 2015 that Donegal Mutual’s majority voting control of us is in the best interests of our stockholders, Donegal Mutual’s employees who provide services to us and our subsidiaries, the policyholders of our insurance subsidiaries and the general public.

As our Form 10-K Report for the year ended December 31, 2014 reports, certain of our insurance subsidiaries pay dividends to us. During the year ended December 31, 2014, our insurance subsidiaries paid a total of $11.5 million in dividends to us. These dividends are a major source of the funds we utilize to pay quarterly cash dividends to our stockholders. We paid $13.6 million in dividends to our stockholders in 2014, of which Donegal Mutual received $6.0 million based on its holdings of our Class A common stock and our Class B common stock on the respective record dates for our payments of dividends during the year ended December 31, 2014.

Our Recapitalization in 2001

We recapitalized ineffective April 19, 2001. WeAt that time, we effected a one-for-three reverse stock split of our common stock and renamed it Class B common stock and issued two shares of our Class A common stock as a stock dividend for each post-reverse stock split share of our Class B common stock. Our Class A common stock has one-tenth of a vote per share and our Class B common stock has one vote per share. As a result of the reverse split and the stock dividend, each of our stockholders at April 19, 2001 continued to own the same number of shares of our common stock, with one-third of the shares being shares of our Class B common stock and two-thirds of the shares being shares of our Class A common stock. As a result, the relative voting power and equity interest of ourall of the stockholders of DGI at the time of our recapitalization remained constant. Donegal Mutual’s continued ownership of more than a majority of the aggregate voting power of our outstanding shares of our Class A common stock and our Class B common stock after the recapitalization better enables us to maintain our long-term relationship with Donegal Mutual, which our board of directors believes is a central part of our historical business strategy and success.

We effected our recapitalization because weour board of directors believed in 2001, and continuecontinues to believe as of the date of this proxy statement, that a capital structure that has more than one class of publicly traded securities offers us a number of benefits. The principal benefit to us from our recapitalizationtwo-class capital structure is our ability to issue our Class A common stock or securities convertible into or exchangeable for our Class A common stock for financing, acquisition and compensation purposes without materially adversely affecting the relative voting power of any of our stockholders, including Donegal Mutual. At the time of our recapitalization in 2001 and continuing to the current time, our board of directors recognized that our recapitalization was likely to favor longer-term investors, including Donegal Mutual, and could

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discourage attempts to acquire us, which our board of directors believedcontinues to bebelieve is remote in any event because of Donegal Mutual has ownedMutual’s continuing ownership of more than a majority of the voting power of our common stock since our formation in 1986.stock.

Every holder of our Class A common stock and every holder of our Class B common stock who has purchasedowns shares of our Class A common stock or our Class B common stock has purchased our Class A common stock or our Class B common stock with the prior knowledge and consistent disclosure by us that Donegal Mutual has, since our formation in 1986, held greater-than-majoritymajority voting control of us forus. For the reasons we discuss in this proxy statement, and that

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Donegal Mutual currently intends to retain that greater-than-majoritymajority voting control of us for the long-term future because itDonegal Mutual believes that greater-than-majorityits majority voting control of us is in our long-term best interests and the long-term best interests of Donegal Mutual.

The Continuing Relationship of Donegal Mutual and DGI

Our board of directors remainsis of the opinion that preservation of the relationship between Donegal Mutual and us and our status as an independenta public company majority-controlled by Donegal Mutual is in the best interests of all of the constituencies that we and Donegal Mutual serve, including including:

We believe our relationship with Donegal Mutual offers us and our insurance subsidiaries a number of competitive advantages, including the following:

Our board of directors reviewed our relationships with Donegal Mutual in the fourth quarter of 2012 and the first two months of 2013 and determined that the continuation of the existing relationships between Donegal Mutual and us are in our best interests and in the best interests of our stockholders. In the latter portion of the fourth quarter of 2012 and the first quarter of 2013, the board of directors of Donegal Mutual undertook its annual review of the transactions between Donegal Mutual and DGI and determined that continuing the current transactions between Donegal Mutual and DGI and the current corporate structure of Donegal Mutual and DGI is in the best interests of Donegal Mutual and in the best interests of its various constituencies.

We refer our stockholders to our Form 10-K Annual Report for theour fiscal year ended December  31, 20122014 for a further discussion of our business strategy.

Our Strategy to Maximize Stockholder Value

A fundamental goal of our board of directors and management is to maximize stockholder value over the long-term. We conduct our operations with this fundamental goal in mind. Our business strategies seek to maximize stockholder value by improving operating efficiencies as well as pursuing internal and external growth in order to

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enhance the long-term profitability of our businesses. Our board of directors and management regularly evaluate our business strategies and concentrate on improving our long-term, sustainable earnings. We focus on:

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The Coordinating Committee

Donegal Mutual and we have maintained a coordinating committee since our formation in 1986. The coordinating committee consists of two members of our board of directors, neither of whom is a member of Donegal Mutual’s board of directors, and two members of Donegal Mutual’s board of directors, neither of whom is a member of our board of directors. The purpose of the coordinating committee is to establish and maintain a process for an ongoing evaluation of the fairness of the terms of the transactions between Donegal Mutual on the one hand, and our insurance subsidiaries and us.us on the other hand.

Any change to an agreement between Donegal Mutual, on the one hand, and us andor any of our insurance subsidiaries on the other hand, or any new agreement between Donegal Mutual, on the one hand, and us andor any of our insurance subsidiaries, on the other hand, is also subject to the applicable provisions of the Pennsylvania Insurance Company Law of 1921, as amended, and the Pennsylvania Insurance Holding Company Act, as amended, or the PHCA. The coordinating committee utilizes the following processstandards in considering whether to approve a new agreement between Donegal Mutual and us or Donegal Mutual and one or more of our insurance subsidiaries or ato change in an existing agreement between Donegal Mutual and us or Donegal Mutual and one or more of our insurance subsidiaries:

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The coordinating committee also meets annually during the first two months of each year to review each existingcontinuing agreement and each on-going transaction between Donegal Mutual and us or one or more of our insurance subsidiaries, including a number ofthe various reinsurance agreements between Donegal Mutual and our insurance

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subsidiaries. The purpose of this annual review is to examine the results of these reinsurance agreements over the immediately preceding year and for the fivefour preceding years and to determine if the results of the existing agreements between Donegal Mutual and us and our insurance subsidiaries remain fair and equitable to us and our stockholders and fair and equitable to Donegal Mutual and its policyholders or if Donegal Mutual and we should mutually agree to certain adjustments. In the case of these reinsurance agreements, the adjustments typically relateconsist of adjustments to the reinsurance premiums, lossesthe level at which the reinsurance attaches and the reinstatement premiums.premiums and are designed to achieve relative parity between Donegal Mutual, on the one hand, and us or one or more of our insurance subsidiaries, on the other hand, over a period of several years. These agreements are ongoing in nature and will continue in effect throughout 20132015 in the ordinary course of our business and the business of our insurance subsidiaries and in the ordinary course of the business of Donegal Mutual.

Robert S. Bolinger and John J. Lyons serve asRichard D. Wampler, II are our members of the coordinating committee.committee as of the date of this proxy statement. Our board of directors appointed Mr. Wampler as a member of the coordinating committee in January 2015 to fill a vacancy created by the resignation of John J. Lyons in December 2014. See “Proposal 1 – Election of Class B Directors” for certain biographical information about Messrs. Bolinger and Lyons.Wampler. Dennis J. Bixenman and John E. Hiestand serve as Donegal Mutual’s members of the coordinating committee. Certain biographical information about Messrs. Bixenman and Hiestand is as follows:

Mr. Bixenman, age 66,68, has been a director of Donegal Mutual since 2008 and2008. Mr. Bixenman retired at the end of 2012 as a vice president and senior consultant atof Williams & Company Consulting, Inc., an environmental and business consulting firm with its headquarters in Sioux City, Iowa. Mr. Bixenman is a certified public accountant with extensive experience in auditing and preparing financial statements. Mr. Bixenman beneficially owns 30,75537,722 shares of our Class A common stock. He owns no shares of our Class B common stock. As director compensation in 2012,2014, Donegal Mutual paid Mr. Bixenman cash fees of $44,000$62,000 and granted him a restricted stock award of 400 shares of Class A common stock with a value at the time of issuance in January 2014 of $5,664.$6,360. Mr. Bixenman received $500 in cash fees as compensation from Donegal Mutual for each meeting attended as one of Donegal Mutual’s members on the coordinating committee during 2014.

Mr. Hiestand, age 75,77, has been a director of Donegal Mutual since 1983 and has been a self-employed provider of insurance administrative services for over 20 years. Mr. Hiestand served as a director of Central Savings and Loan Association in Columbia, Pennsylvania from 1982 to 1992. Mr. Hiestand beneficially owns 32,24739,247 shares of our Class A common stock. He owns 157 shares of our Class B common stock. As director compensation in 2012,2014, Donegal Mutual paid Mr. Hiestand cash fees of $42,250$60,050 and granted him a restricted stock award of 400 shares of Class A common stock with a value at the time of issuance in January 2014 of $5,664.$6,360. Mr. Hiestand received $500 in cash fees as compensation from Donegal Mutual for each meeting attended as one of Donegal Mutual’s members on the coordinating committee during 2014.

The Relationship of Donegal Mutual and DGIInter-Company Transactions

Donegal Mutual provides facilities, personnel and other services to us and our insurance subsidiaries.subsidiaries pursuant to a service agreement that has been in effect since 1986. Donegal Mutual allocates certain related expenses to Atlantic States in accordance with the relative participation of Donegal Mutual and Atlantic States in the pooling agreement.underwriting pool. Our insurance subsidiaries other than Atlantic States reimburse Donegal Mutual for those services for their respective personnel costs and bear their proportionate share of information services costs based on their written insurance premiums compared to the total written insurance premiums of the Donegal Insurance Group. Donegal Mutual’s charges for these services totaled $78.8$98.6 million in 20122014 compared to $64.7$94.0 million in 2011.2013.

We lease office equipment and automobiles to Donegal Mutual and Southern. Donegal Mutual and Southern made total lease payments to us of $953,000 in 2012 compared to $957,000 in 2011.

Donegal Mutual and Atlantic States participateAs we discuss in an underwriting pool. Both companies cede substantially allearlier portion of their respective premiums, losses and loss expenses and receive an allocated percentage of their combined underwriting results. The underwriting pool excludes certain intercompany reinsurance Donegal Mutual assumes from our insurance subsidiaries. Since March 1, 2008, Atlantic States has had an 80% share of the results of the pool and Donegal Mutual has had a 20% share of the results of the pool.

this proxy statement, Donegal Mutual and Atlantic States may amend or terminate the pooling agreement at the end of any calendar year by mutual agreement, subject to approval by the coordinating committee and approval by the respective boards of directors of Donegal Mutual and Atlantic States and by the coordinating committee.States. Our 2012 annual report to stockholders2014 Annual Report contains additional information describing the underwriting pool.

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In addition to the pooling agreement, our insurance subsidiaries, in the ordinary course of their businesses, have various ongoing reinsurance agreements with Donegal Mutual.Mutual that renew from year to year. The coordinating committee reviews these reinsurance agreements annually so as to achieve relative parity between Donegal Mutual and our insurance subsidiaries between the reinsurance premiums Donegal Mutual charges our insurance subsidiaries and the losses Donegal Mutual incurs under the reinsurance it provides to our insurance subsidiaries over a period of several years. We believe the reinsurance arrangements between Donegal Mutual and our insurance subsidiaries are no less favorable to our insurance subsidiaries than the terms and conditions of reinsurance available to our insurance subsidiaries from independent third parties. These reinsurance agreements include:

The coordinating committee annually reviews each of the agreements and transactions we describe in the preceding paragraph between Donegal Mutual and our insurance subsidiaries and the results thereof to each of Donegal Mutual and us for the most recent year and for the past five years. In February 2013,January 2015, the coordinating committee met and determined that the proposed terms of suchthese reinsurance agreements for 2015 were fair and equitable to us and our stockholders and fair and equitable to Donegal Mutual and its policyholders. Accordingly, the coordinating committee unanimously approved the continuation of the terms of such agreements and transactions, with non-material adjustments, through the next scheduled annual review during the first two months of 2014.2016.

We refer you to noteNote 3 of the notesNotes to our consolidated financial statementsOur Consolidated Financial Statements we include in our 2012 annual report to stockholders2014 Annual Report for further information about the reinsurance agreements between Donegal Mutual and our insurance subsidiaries. The intent of these catastrophe and excess of loss reinsurance agreements is to lessen the effects of a single large loss, or an accumulation of smaller losses arising from one event, to levels that are appropriate given each insurance subsidiary’sthe size, underwriting profile and surplus capacity.capacity of each of our insurance subsidiaries.

Union Community Bank

We own 48.2% and Donegal Mutual owns 51.8% of Donegal Financial Services Corporation, or DFSC. OnSince May 6, 2011, Union National Financial Corporation, or UNNF, a bank holding company headquartered in Lancaster, Pennsylvania, merged with and into DFSC with DFSC as the surviving corporation. On the same date, Union National Community Bank, a national banking association headquartered in Lancaster, Pennsylvania and a subsidiary of UNNF, merged with and into Province Bank FSB, a federal savings bank and a subsidiary of DFSC. Upon the merger, Province Bank FSB changed its name tohas owned Union Community Bank, FSB, or UCB. UCB and continued its status ashas been a federalstate-chartered savings bank.