2023
United Fire Group, Inc. Reports Second Quarter 2023 Results
Released on: Aug 7, 2023, 15:01 PM
Company Release - 8/7/2023 4:01 PM ET
Second Quarter Net Loss of $2.23 per Diluted Share and Adjusted Operating Loss of $2.27 per Diluted Share; Net Premiums Written Increased 14.6% Over Prior Year Quarter
Second quarter 2023 highlights:
- Net loss of $56.4 million driven by prior period loss reserve strengthening and elevated catastrophe losses.
- Net premiums written(1) of $299.1 million increased 14.6% compared to the second quarter of 2022, representing five consecutive quarters of growth. Core commercial lines growth remained strong, up 10.1% supported by increasing levels of rate, retention and new business.
- GAAP combined ratio of 132.9%, including an underlying loss ratio(2) of 64.6%, catastrophe loss ratio of 13.0%, and prior period reserve strengthening of 20.8%. Expense ratio was 34.5%.
- Underlying combined ratio of 99.1%.
- Net investment income of $11.3 million increased 23.4% compared to the second quarter of 2022.
- Book value per common share decreased 8.8% to $26.77 as of June 30, 2023, compared to December 31, 2022.
CEDAR RAPIDS, Iowa , Aug. 07, 2023 (GLOBE NEWSWIRE) -- United Fire Group, Inc. (the “Company” or “UFG”) (Nasdaq: UFCS) today reported financial results for the three- month period ended June 30, 2023 (the “second quarter of 2023”) with a consolidated net loss of $56.4 million ($2.23 per diluted share) and consolidated adjusted operating loss of $2.27 per diluted share.
“Our second quarter results were impacted by reserve strengthening and seasonally elevated catastrophe losses,” said UFG President and CEO Kevin Leidwinger. “The reserve strengthening is a result of enhanced actuarial processes within our Company that have increased the depth of analysis and improved alignment with our unique product exposures. These enhancements in our actuarial processes foster greater confidence in our ability to estimate ultimate losses and provide more actionable feedback that aligns with the increasing levels of specialization being developed in the underwriting and claims organizations. While the adjustments coming out of these enhancements negatively impacted results in the short term, they position us to more effectively manage our portfolio going forward.
“In addition, the industry dealt with a historic level of catastrophe losses in the second quarter of 2023, with UFG experiencing catastrophe losses from 18 separate weather events that resulted in losses slightly above the five- and 10- year historic averages. We will continue to take action to improve the risk profile of our property business to reposition the portfolio and reduce volatility. During the second quarter of 2023, our property average premium increase was 19%, with rate increases of 12% and exposure increases of 7%.
“Our second quarter underlying loss ratio included approximately 3 points of impact from a small number of claims and associated reinsurance reinstatement premium in our surety business. This business has delivered strong profitability historically, but can experience occasional periods of volatility. We remain confident this business will deliver favorable returns over the long term.
“Despite these near-term impacts, there were many positive results in the second quarter of 2023 that demonstrate our progress in delivering consistent profitable growth. UFG produced double-digit growth in net premiums written in the second quarter, marking the fifth consecutive quarter of growth in net premiums written, and the second consecutive quarter of growth in our core commercial business. In addition to increases in new business and retention, average renewal premiums increased, with rate achievement up across all lines of business from the first quarter of 2023, and at the highest level in six quarters.
“Our actions to sustainably reduce costs led the second quarter of 2023 expense ratio to decrease 0.7 points from the prior year quarter while we continue to make strategic investments in the talent and technology capabilities necessary for success.
“UFG also recently announced the formation of distinct business units within our underwriting organization, establishing specialized operating models for small business and middle market. This action is a key step in UFG’s evolution from a generalist to a specialist company with the deeper levels of expertise necessary to be successful.
“Looking ahead, we remain confident that we are executing the actions necessary for UFG to deliver superior financial and operational performance over time.”
View the full press release here.
“Our second quarter results were impacted by reserve strengthening and seasonally elevated catastrophe losses,” said UFG President and CEO Kevin Leidwinger. “The reserve strengthening is a result of enhanced actuarial processes within our Company that have increased the depth of analysis and improved alignment with our unique product exposures. These enhancements in our actuarial processes foster greater confidence in our ability to estimate ultimate losses and provide more actionable feedback that aligns with the increasing levels of specialization being developed in the underwriting and claims organizations. While the adjustments coming out of these enhancements negatively impacted results in the short term, they position us to more effectively manage our portfolio going forward.
“In addition, the industry dealt with a historic level of catastrophe losses in the second quarter of 2023, with UFG experiencing catastrophe losses from 18 separate weather events that resulted in losses slightly above the five- and 10- year historic averages. We will continue to take action to improve the risk profile of our property business to reposition the portfolio and reduce volatility. During the second quarter of 2023, our property average premium increase was 19%, with rate increases of 12% and exposure increases of 7%.
“Our second quarter underlying loss ratio included approximately 3 points of impact from a small number of claims and associated reinsurance reinstatement premium in our surety business. This business has delivered strong profitability historically, but can experience occasional periods of volatility. We remain confident this business will deliver favorable returns over the long term.
“Despite these near-term impacts, there were many positive results in the second quarter of 2023 that demonstrate our progress in delivering consistent profitable growth. UFG produced double-digit growth in net premiums written in the second quarter, marking the fifth consecutive quarter of growth in net premiums written, and the second consecutive quarter of growth in our core commercial business. In addition to increases in new business and retention, average renewal premiums increased, with rate achievement up across all lines of business from the first quarter of 2023, and at the highest level in six quarters.
“Our actions to sustainably reduce costs led the second quarter of 2023 expense ratio to decrease 0.7 points from the prior year quarter while we continue to make strategic investments in the talent and technology capabilities necessary for success.
“UFG also recently announced the formation of distinct business units within our underwriting organization, establishing specialized operating models for small business and middle market. This action is a key step in UFG’s evolution from a generalist to a specialist company with the deeper levels of expertise necessary to be successful.
“Looking ahead, we remain confident that we are executing the actions necessary for UFG to deliver superior financial and operational performance over time.”
View the full press release here.
