United Fire Group, Inc. Reports Third Quarter 2022 Results

Third Quarter Net Loss of $0.91 per Diluted Share and Non-GAAP Adjusted Operating Loss of $0.47 per Diluted Share

In the third quarter of 2022, United Fire Group, Inc. reported:

• Net premiums earned decreased 0.3% in comparison with the third quarter of 2021
• Net premiums written ⁽¹⁾ elevated 9.1% in comparison with the third quarter of 2021
• GAAP mixed ratio of 111.7% pushed by disaster loss ratio of 11.4% and unfavorable prior yr reserve improvement of 5.9%. Expense ratio was 35.1%.
• Net funding earnings of $11.6 million elevated 0.3% in comparison with the third quarter of 2021
• Year to this point Return on Equity of (0.9)%
• Book worth per widespread share of $27.82, down 20.6% in comparison with year-end 2021

CEDAR RAPIDS, Iowa , Nov. 02, 2022 (GLOBE NEWSWIRE) — United Fire Group, Inc. (Nasdaq: UFCS),

United Fire Group, Inc. (the “Company” or “UFG”) (Nasdaq: UFCS) right this moment reported monetary outcomes for the three-month interval ended September 30, 2022 (the “third quarter of 2022”) with a consolidated internet loss, together with internet funding losses and modifications within the truthful worth of fairness securities, of $23.0 million ($0.91 per diluted share) and consolidated adjusted working lack of $0.47 per diluted share for the third quarter of 2022. The third quarter mixed ratio of 111.7% was pushed by disaster losses of 11.4% and unfavorable prior yr reserve improvement of 5.9%. Hurricane Ian disaster loss represented 5.7% of the loss ratio. The unfavorable improvement within the third quarter of 2022 was primarily pushed by different legal responsibility and business fireplace & allied traces of business offset by favorable improvement in business automobile and staff’ compensation traces. In the third quarter of 2022, internet premiums earned had been successfully flat from the identical interval a yr in the past whereas internet premiums written elevated from the third quarter of 2021.

“I am honored to be here serving as the sixth leader in UFG’s 76-year history, and thankful for the support shown to me by my incredible UFG colleagues over the past several weeks,” mentioned UFG President and CEO Kevin Leidwinger.

“The third quarter presented our industry with a number of challenges, including elevated catastrophe losses, rising inflation and declining asset values,” mentioned Leidwinger. “Although these challenges negatively impacted our results in the third quarter, we remain confident in our path forward as we continue to execute on our strategic plan for superior financial performance.”

“Over the past two years, UFG has taken steps to improve profitability, diversify growth, enhance underwriting governance and reduce volatility. This is evident in the continued improvement in our net underlying loss ratio and increase in written premium compared to the same quarter last year. These corrective actions are largely concluded, and we’ve emerged well poised to grow our business responsibly and profitably. As we move forward, we will apply the same level of intensity to improving our expense ratio.”

_______________
(1) Net premiums written is a non-GAAP monetary measure of the quantity charged for insurance coverage contracts issued and acknowledged on an annualized foundation on the efficient date of the coverage. Management believes internet premiums written are a significant measure for evaluating insurance firm gross sales efficiency. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of internet premiums written to internet premiums earned.

Consolidated Financial Highlights:

_______________
(1) Net underlying loss ratio is outlined as the online loss ratio much less impacts of catastrophes and reserve improvement.
(2) Underlying mixed ratio is outlined because the GAAP mixed ratio much less impacts of catastrophes and reserve improvement.
(3) Adjusted working earnings (loss) is a non-GAAP monetary measure of internet earnings excluding internet funding beneficial properties and losses, after relevant taxes. Management evaluates this measure and ratios derived from this measure and the Company supplies this data to buyers as a result of we consider it higher represents the traditional, ongoing efficiency of our business. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted working earnings (loss) to internet earnings.
(4) Return on fairness is calculated by dividing annualized internet earnings by common year-to-date stockholders’ fairness.

Total Property & Casualty Underwriting Results

Net premiums earned had been down barely whereas internet premiums written elevated 9.1% within the third quarter of 2022 reflecting development in assumed reinsurance, different legal responsibility and surety, and slowing declines in different business traces. The general common change in renewal premiums was 9.5%, with 3.8% from publicity modifications and 5.7% from price will increase. Excluding the employees’ compensation line of business, the general common change in renewal premiums was 10.7%, with 4.0% from exposures modifications and 6.7% from price modifications.

The mixed ratio was 111.7% within the third quarter of 2022, up from 109.7% a yr in the past, with the rise pushed by unfavorable prior yr reserve improvement attributable to inflationary pressures and different components. On a year-to-date foundation, reserve improvement has favorably impacted our mixed ratio by 0.2% in comparison with a 3.6% profit final yr. Catastrophe loss ratio within the third quarter of 2022 of 11.4% consists of 5.7 proportion factors for Hurricane Ian and is 5.1 factors under the identical interval final yr. The underwriting expense ratio for the third quarter of 2022 was 35.1%, down from the identical interval final yr by 1.2 factors. On a year-to-date foundation our expense ratio of 34.6% is 2.4 factors larger than the identical interval final yr primarily pushed by the non-recurring profit in 2021 ensuing from the change in design of our worker post-retirement profit plans.

Investment Results

Net funding earnings was $11.6 million for the third quarter of 2022. The slight enhance in internet funding earnings from the third quarter of 2021 was primarily as a result of larger yields within the mounted earnings portfolio offset by the change within the truthful worth of our investments in restricted legal responsibility partnerships. The valuation of those investments varies from interval to interval as a result of present fairness market circumstances, particularly associated to monetary establishments. Fixed earnings securities common yields have risen from each the third quarter of 2021 and on a year-to-date foundation pushed by larger rates of interest.

(1) Fixed earnings securities yield excluding internet unrealized funding beneficial properties/losses and bills

Balance Sheet

Total consolidated belongings as of September 30, 2022 had been $2.8 billion, which included $1.8 billion of invested belongings. The Company’s e-book worth per share was $27.82, a lower of $7.23 per share, or 20.6 p.c, from December 31, 2021. This lower is primarily attributable to the $156.1 million lower within the after-tax internet unrealized worth of our mounted maturity securities, shareholder dividends of $11.8 million and internet losses of $5.1 million within the first 9 months of 2022.

Capital Management

During the third quarter of 2022, the Company declared and paid a $0.16 per share money dividend to shareholders of report as of September 2, 2022. We have paid a quarterly dividend each quarter since March 1968.

Earnings Call Access Information

An earnings name can be held at 9:00 a.m. Central Time on November 3, 2022 to permit securities analysts, shareholders and different events the chance to listen to administration focus on the Company’s third quarter of 2022 outcomes.

Teleconference: Dial-in data for the decision is toll-free 1-844-492-3723. The occasion can be archived and accessible for digital replay by way of November 10, 2022. The replay entry data is toll-free 1-877-344-7529; convention ID no. 9309581.

Webcast: An audio webcast of the teleconference might be accessed on the Company’s investor relations web page at
http://ir.ufginsurance.com/event or https://event.choruscall.com/mediaframe/webcast.html?webcastid=ReRsM4P6. The archived audio webcast can be accessible till November 10, 2022.

Transcript: A transcript of the teleconference can be accessible on the Company’s web site quickly after the completion of the teleconference.

About UFG

Founded in 1946 as United Fire & Casualty Company, UFG, by way of its insurance firm subsidiaries, is engaged within the business of writing property and casualty insurance.

Through our subsidiaries, we’re licensed as a property and casualty insurer in 50 states, plus the District of Columbia, and we’re represented by roughly 1,000 unbiased companies. A.M. Best Company assigns a score of “A” (Excellent) for members of the United Fire & Casualty Group.

For extra details about UFG, go to www.ufginsurance.com or contact:

Investor Relations or [email protected]. 

Disclosure of Forward-Looking Statements

This launch might include forward-looking statements about our operations, anticipated efficiency and different related issues. The Private Securities Litigation Reform Act of 1995 supplies a secure harbor below the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. The forward-looking statements should not historic details and contain dangers and uncertainties that would trigger precise outcomes to vary from these anticipated and/or projected. Such forward-looking statements are primarily based on present expectations, estimates, forecasts and projections in regards to the Company, the trade by which we function, and beliefs and assumptions made by administration. Words corresponding to “expect(s),” “anticipate(s),” “intend(s),” “plan(s),” “believe(s),” “continue(s),” “seek(s),” “estimate(s),” “goal(s),” “remain(s) optimistic,” “target(s),” “forecast(s),” “project(s),” “predict(s),” “should,” “could,” “may,” “will,” “might,” “hope,” “can” and different phrases and phrases of comparable which means or expression in reference to a dialogue of future operations, monetary efficiency or monetary situation, are meant to determine forward-looking statements. These statements should not ensures of future efficiency and contain dangers, uncertainties and assumptions which might be tough to foretell. Therefore, precise outcomes and outcomes might differ materially from what’s expressed in such forward-looking statements. Information regarding components that would trigger precise outcomes and outcomes to vary materially from these expressed within the forward-looking statements is contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-Okay for the yr ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022. The dangers recognized in our Annual Report on Form 10-Okay and in our different SEC filings are consultant of the dangers, uncertainties, and assumptions that would trigger precise outcomes and outcomes to vary materially from what’s expressed within the forward-looking statements. Readers are cautioned to not place undue reliance on these forward-looking statements, which communicate solely as of the date of this launch or as of the date they’re made. Except as required below the federal securities legal guidelines and the principles and rules of the SEC, we do not need any intention or obligation to replace publicly any forward-looking statements, whether or not because of new data, future occasions, or in any other case, besides as required by regulation. In addition, future dividend funds are throughout the discretion of our Board of Directors and can depend upon quite a few components, together with our monetary situation, our capital necessities and different components that our Board of Directors considers related.

Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures

The Company prepares its public monetary statements in conformity with accounting ideas typically accepted within the United States of America (“GAAP”). Management additionally makes use of sure non-GAAP measures to guage its operations and profitability. As additional defined under, administration believes that disclosure of sure non-GAAP monetary measures enhances investor understanding of our monetary efficiency. Non-GAAP monetary measures disclosed on this report embrace: adjusted working earnings and internet premiums written. The Company has offered the next definitions and reconciliations of the non-GAAP monetary measures:

Adjusted working earnings: Adjusted working earnings is calculated by excluding internet funding beneficial properties and losses, after relevant federal and state earnings taxes from internet earnings (loss). Management believes adjusted working earnings is a significant measure for evaluating insurance firm efficiency and a helpful complement to GAAP data as a result of it higher represents the traditional, ongoing efficiency of our business. Investors and fairness analysts who make investments and report on the insurance trade and the Company typically deal with this metric of their analyses.

Net premiums written: While not an alternative choice to any GAAP measure of efficiency, internet premiums written is ceaselessly utilized by trade analysts and different acknowledged reporting sources to facilitate comparisons of the efficiency of insurance firms. Net premiums written are the quantity charged for insurance coverage contracts issued and acknowledged on an annualized foundation on the efficient date of the coverage. Management believes internet premiums written are a significant measure for evaluating insurance firm gross sales efficiency and geographical enlargement efforts. Net premiums written for an insurance firm consists of direct premiums written and premiums assumed, much less premiums ceded. Net premiums earned is calculated on a professional rata foundation over the phrases of the respective insurance policies. Unearned premium reserves are established for the portion of premiums written relevant to the unexpired time period of insurance coverage in pressure. The distinction between internet premiums earned and internet premiums written is the change in unearned premiums and alter in pay as you go reinsurance premiums.

Supplemental Tables

NM = Not significant

(1) Commercial traces “Other liability” is business insurance protecting bodily damage and property harm arising from basic business operations, accidents on the insured’s premises and merchandise manufactured or bought.
(2) Commercial traces “Fire and allied lines” consists of fireplace, allied traces, business a number of peril and inland marine.
(3) Commercial traces “Surety” previously referred to as “Fidelity and surety”.
(4) Personal lines “Fire and allied lines” includes fire, allied lines, homeowners and inland marine.

NM = Not significant