2024

Released on: Aug 6, 2024, 15:01 PM

CEDAR RAPIDS, Iowa - (GLOBE NEWSWIRE) - United Fire Group, Inc. (Nasdaq: UFCS), August 6, 2024 - FOR IMMEDIATE RELEASE

Second Quarter Net Loss of $0.11 per Diluted Share and Adjusted Operating Loss of $0.07 per Diluted Share

Second quarter 2024 highlights:

• Net loss of $2.7 million includes a $3.2 million pre-tax charge for an estimated contingent liability related to rating errors.
• Net premiums written(1) increased 9.0% to $326.1 million compared to the second quarter of 2023.
• Net investment income increased 59.2% to $18.0 million compared to the second quarter of 2023.
• GAAP combined ratio of 105.6% improved 27.4 points compared to the second quarter of 2023; comprised of an underlying loss ratio(2) of 58.9%, catastrophe loss ratio of 11.2%, no prior year reserve development, and underwriting expense ratio of 35.5%.
• The underlying combined ratio(3) improved 4.8 points to 94.4% compared to the second quarter of 2023.
• Book value per common share decreased $0.36 to $28.68 as of June 30, 2024, compared to December 31, 2023.

United Fire Group, Inc. (the “Company” or “UFG”) (Nasdaq: UFCS) today reported financial results for the three-month period ended June 30, 2024 (the “second quarter of 2024”) with a consolidated net loss of $2.7 million ($0.11 loss per diluted share) and consolidated adjusted operating loss of $0.07 per diluted share.

“Our second quarter results reflect continued progress in our efforts to deliver improved performance through the strategic execution of our business plan,” said UFG President and CEO Kevin Leidwinger. “The quarter was marked by continued premium growth, lower underlying loss ratio, neutral prior period development and increased investment income.

“Net written premiums grew 9% to $326.1 million, led by ongoing growth in our core commercial and assumed reinsurance business units. Core commercial growth remained steady with average renewal premium increases of 12.3%, healthy retention and attractive new business opportunities reflecting our continued focus on profitability. Rate increases accelerated to 9.8% with all liability lines increasing in the second quarter and improving margins above loss cost trends.

“The second quarter GAAP combined ratio of 105.6% improved significantly over prior year, primarily due to lower prior period reserve development and decreases in catastrophe and underlying combined ratios.

“Prior period reserve development in the second quarter was neutral overall. Consistent with the first quarter, favorable emergence across several lines of business enabled us to further reinforce our position against the future inflationary uncertainty challenging our industry in certain liability lines. Loss emergence remains within our expectations, and we believe these proactive steps are a prudent measure to mitigate the impact of a potential further acceleration in severity trends.

“As you will recall, in the second quarter of 2023 we significantly strengthened loss reserves as a result of investments in our actuarial processes and increased depth of analysis that provided a more informed understanding of our reserve position. Those investments also led to greater visibility into our underlying loss trends, and we reacted quickly to recognize the increased levels of severity observed in our liability portfolio. For the last four quarters, we have been reflecting this elevated view of trend in our analyses and management decisions, which has fostered greater confidence in the strength of our reserve position. We remain committed to establishing a strong and stable reserve position, providing a solid foundation to grow our business.

“Second quarter catastrophe loss ratio of 11.2% improved 1.8 points over prior year and was below our five-year and 10-year historical averages as we continue our focus on effectively managing our property catastrophe risk profile.

“The second quarter underlying loss ratio of 58.9% improved 5.7 points from the prior year reflecting strong earned rate achievement and continued disciplined underwriting. In addition, results in the second quarter of 2023 were impacted by elevated surety loss activity.

“Our intense focus on expense management has reduced our overall cost structure compared to last year. Efficiencies in non-revenue generating functions have funded investments in talent and technology supporting our underwriting capabilities and shifted our cost structure toward the underwriting expense ratio. As a result, the underwriting expense ratio increased to 35.5% in the second quarter while we see reductions in the loss adjusting expense ratio that contribute to a lower net loss ratio. We will continue to diligently manage the underwriting expense ratio down over time.

“Overall, the second quarter underlying combined ratio of 94.4% improved 4.8 points over prior year as a result of the successful execution of our ongoing actions to improve core margins.

“Net investment income increased 59.2% from prior year to $18.0 million on improving fixed maturity income along with higher valuations on alternative assets. Fixed maturity investment income increased 19% from prior year to $16.0 million as we repositioned portions of our fixed income portfolio to take advantage of the current attractive reinvestment rates and further support future earnings.

“Recently, we identified rating errors within our core commercial business and recorded a pre-tax charge of $3.2 million in anticipation of voluntarily issuing refunds to certain affected policyholders. We are committed to resolving this matter as expediently as possible and have begun working with state regulators to ensure resolution.

“The improvements in underlying profitability were sufficient to generate positive adjusted operating income in the second quarter, excluding the impact of this rating adjustment. We remain committed to continuing to drive improvements in our performance through strategic execution of our business plan during the second half of the year.”

View the full press release here.