2024
United Fire Group, Inc. Reports Fourth Quarter and Full Year 2023 Results
United Fire Group, Inc. (the “Company” or “UFG”) (Nasdaq: UFCS) today reported financial results for the three-month period ended December 31, 2023 (the “fourth quarter of 2023”) with a consolidated net income of $19.6 million ($0.77 per diluted share) and consolidated adjusted operating income of $0.65 per diluted share.
“I am pleased with our fourth quarter results as we achieved the highest level of quarterly profit in 2023,” said UFG President and CEO Kevin Leidwinger. “This incremental improvement in profitability combined with our continued growth and the progress we have made to deepen our expertise and drive operational efficiency positions UFG to deliver superior financial and operational performance.
“In the fourth quarter, net premiums written grew to $247 million led by our core commercial and assumed reinsurance business units. Core commercial production remained strong with new business and retention above the prior year while average renewal premium increases accelerated to 11.6% led by property average renewal premium increases of 23.9%. On a full-year basis, net premiums written grew 8.4% to $1.1 billion, the highest level since 2019.
“The fourth quarter combined ratio improved to 99.2%, the lowest in seven quarters. Light catastrophe activity resulted in a fourth quarter catastrophe loss ratio of 1.5%, well below historical averages. In the fourth quarter, prior period reserves increased $8.8 million, or 3.3% on the combined ratio due to a few late developing property claims and severity pressure in a few casualty lines.
“The full year combined ratio of 109.3% increased compared to fiscal year 2022 due to reserve strengthening, elevated surety losses, and increased reinsurance costs, while the 2022 expense ratio benefited from one-time items related to the restructuring of employee post-retirement benefits.
“Improving core commercial line profitability led to a fourth quarter underlying loss ratio of 60.0%, the lowest quarterly result of 2023. These results show early signs of progress in our strategic efforts to deliver improved and more consistent long-term profitability. These improvements have begun to offset elevated surety loss activity and other pressures experienced this year, bringing our full year underlying loss ratio to 62.2%.
“The fourth quarter expense ratio of 34.4% was also the lowest result of 2023, as we continued to sustainably reduce expenses. In addition to ongoing careful vacancy management, in the fourth quarter we completed a voluntary early retirement program that contributed to a 22% decline in enterprise workforce over the course of 2023 and will provide more impactful benefits to our expense ratio in 2024. Our reported 2023 expense ratio is above prior year on both a quarterly and full year basis largely due to one-time items that benefited 2022 results that are offsetting the impact of our actions to reduce expenses in 2023.
“UFG also benefited from capital market conditions in the fourth quarter. Sustainable increases in fixed maturity income and increased valuation on limited partnership investments resulted in fourth quarter net investment income of $19.1 million, the highest since exiting the life insurance business in 2018. Higher bond valuations reduced UFG’s unrealized loss position by over 40% in the fourth quarter compared to the third quarter of 2023, improving book value per share by over $2 per share.
“In the fourth quarter we continued to evolve the Company with strategic investments in leadership talent to increase the depth of our underwriting, actuarial and claims expertise. We also enhanced our organizational structure to improve specialization and achieve a higher level of efficiency and effectiveness with a more streamlined processes.
“More recently, we successfully placed our 2024 reinsurance programs on January 1, 2024. In addition, we announced a partnership with New England Asset Management to oversee our investment portfolio.
“As we enter the new year, I am proud of the progress we’re making at UFG and grateful to our employees for their outstanding dedication to our Company’s success. While our actions are not yet fully reflected in our financial results, we remain confident in the path forward and committed to achieving superior performance over time by delivering deep underwriting expertise with the personal relationships and responsive service that are so greatly valued by our agency partners.”
View the full press release here.