United Fire Group, Inc. Reports Fourth Quarter and Year End 2018 Results

Company Release - 2/20/2019 7:00 AM ET

CEDAR RAPIDS, Iowa, Feb. 20, 2019 (GLOBE NEWSWIRE) -- United Fire Group, Inc. (Nasdaq: UFCS)

Consolidated Financial Results - Highlights(1):

Quarter Ended December 31, 2018  Year Ended December 31, 2018 
Net income (loss) per diluted share(2)$(1.17) Net income per diluted share(2)$1.08 
Adjusted operating income (loss)(3) per diluted share(2)$(0.30) Adjusted operating income(3) per diluted share(2)$0.67 
Gain on sale of discontinued operations per diluted share(2)$  Gain on sale of discontinued operations per diluted share(2)$1.07 
Net realized investment gains (losses) per share(2)$(0.87) Net realized investment gains (losses) per share(2)$(0.66)
GAAP combined ratio108.5% GAAP combined ratio104.0%
   Book value per share$35.40 
   Return on equity(4)3.0%

United Fire Group, Inc. (the “Company” or "UFG") (Nasdaq: UFCS) today reported consolidated net loss, including net realized investment gains and losses, of $29.3 million ($1.17 per diluted share) for the three-month period ended December 31, 2018 (the "fourth quarter"), compared to consolidated net income of $46.0 million ($1.81 per diluted share) for the same period in 2017. For the year ended December 31, 2018 (the "full year"), consolidated net income, including investment gains and losses, was $27.7 million ($1.08 per diluted share) compared to $51.0 million ($1.99 per diluted share) for the same period in 2017.

The Company reported a consolidated adjusted operating loss of $0.30 per diluted share for fourth quarter 2018 compared to consolidated adjusted operating income of $1.78 per diluted share for the same period in 2017. For the year ended December 31, 2018, the Company reported consolidated adjusted operating income of $0.67 per diluted share compared to consolidated adjusted operating income of $1.79 per diluted share for 2017.

"The fourth quarter of 2018 was a challenging quarter," stated Randy A. Ramlo, President and Chief Executive Officer. "During 2018, we made steady progress improving the profitability of our commercial auto line of business. However, during the fourth quarter we experienced an increase in severity of losses in both our commercial auto and general liability lines of business from auto related claims, due to several factors including a trend toward higher jury awards. In response to this setback to profitability we are taking several initiatives in pricing adequacy, underwriting and claims."

Consolidated net unrealized investment losses, net of tax, totaled $9.3 million as of December 31, 2018, a decrease of $224.2 million, compared to December 31, 2017. The decrease in net unrealized investment gains is primarily the result of the cumulative change in accounting principles on recognizing the change in the value of equity securities in the income statement. The change in accounting principles required unrealized gains on equity securities of $191.2 million, after-tax, as of January 1, 2018, to be reclassified to retained earnings from accumulated other comprehensive income, both within shareholders equity. The remaining decrease is due to a decrease in the value of the fixed maturity portfolio due to rising interest rates in 2018.

Total consolidated assets as of December 31, 2018 were $2.8 billion, which included $2.1 billion of invested assets. The Company's book value was $35.40 per share, which is a decrease of $3.66 per share or 9.4 percent from December 31, 2017. The decrease is primarily attributed to shareholder dividends of $105.4 million, a decrease in net unrealized investment gains of $32.9 million, net of tax, and share repurchases of $5.4 million, all partially offset by net income of $27.7 million and the change in benefits and the valuation of our post retirement benefit obligations of $25.4 million.

__________________
(1) Consolidated financial results include results from both continuing operations and life insurance business discontinued operations, unless otherwise noted.
(2) Per share amounts are after tax.
(3) Adjusted operating income is a non-GAAP financial measure of net income excluding net realized investment
gains and losses, changes in the fair value of equity securities, the one-time gain on the sale of discontinued operations and related federal income taxes. Management evaluates this measure and ratios derived from this measure and the Company provides this information to investors because we believe it better represents the normal, ongoing performance of our business. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted operating income to net income.
(4) Return on equity is calculated by dividing annualized net income by average year-to-date equity.

Property and Casualty Insurance

Net loss for the property and casualty insurance business including net realized investment gains and losses, totaled $29.3 million ($1.17 per diluted share) for the fourth quarter, compared to net income of $45.3 million ($1.78 per diluted share) for the fourth quarter of 2017. For the full year, net income totaled $2.3 million ($0.09 per diluted share), compared to net income of $44.9 million ($1.75 per diluted share) for the full year 2017.

The decrease in net income in the fourth quarter 2018 compared to the same period in 2017 is due to the decrease in the fair value of equity securities, an increase in loss and loss settlement expenses incurred, primarily due to an increase in the severity of losses in commercial auto and general liability lines of business, and an increase in catastrophe losses.

The decrease in net income in the full year 2018 compared to the same period in 2017 is due to the decrease in the fair value of equity securities and an increase in other underwriting expenses partially offset by an increase in net premiums earned.

Net premiums earned increased 4.1 percent to $270.7 million for the fourth quarter, compared to $260.1 million in the fourth quarter 2017. For the full year, net premiums earned increased 4.0 percent to $1,037.5 million, compared to $997.5 million in 2017, primarily due to continued organic growth from new business writings and geographical expansion and rate increases. The growth in premiums in commercial auto is due to rate increases, while the number of insured units has decreased.

The average renewal pricing increases for commercial lines remained in the mid-single digits during the fourth quarter 2018 with pricing varying depending on the region and size of the account. The renewal pricing increases continue to be driven by commercial auto pricing. Filed commercial auto rate increases during the fourth quarter 2018 averaged in the low-double digits. Personal lines filed rate and renewal pricing increases also remained in the mid-single digits.

Pre-tax catastrophe losses totaled $15.9 million ($0.50 per share after tax) and $46.7 million ($1.44 per share after tax) for the three- and twelve-month periods ended December 31, 2018, respectively, compared to $5.3 million ($0.13 per share after tax) and $74.0 million ($1.88 per share after tax) for the same periods in 2017.

"Catastrophe losses for the fourth quarter of 2018 added 5.9 percentage points to the combined ratio, which is above our 10-year historical catastrophe load of 4.3 percentage points for the fourth quarter. The fourth quarter of 2018 included $9.2 million of losses from the California wildfires," stated Ramlo. "For the full year of 2018, catastrophe losses added 4.5 percentage points to the combined ratio which is below our 10-year historical catastrophe load of 6.4 percentage points. We believe this is due to effective management of our geographic concentration despite an increase in catastrophic events in 2018."

Reserve development

The property and casualty insurance business experienced $6.5 million and $54.2 million of favorable reserve development in our net reserves for prior accident years during the three- and twelve-month periods ended December 31, 2018, respectively, compared to $16.3 million and $54.3 million of favorable reserve development in the same periods of 2017. The decrease in favorable development in the fourth quarter of 2018 as compared to the fourth quarter of 2017 was primarily driven by reserve increases in commercial liability and commercial fire, offset by workers compensation and reinsurance assumed lines of business. For the twelve-months ended December 31, 2018, favorable reserve development was comparable to the same period in 2017. Development amounts can vary significantly from quarter to quarter and year to year depending on a number of factors, including the number of claims settled and the settlement terms. At December 31, 2018, our total reserves were within our actuarial estimates.

GAAP combined ratio

The GAAP combined ratio increased 14.7 percentage points to 108.5 percent for the fourth quarter 2018, compared to 93.8 percent for the fourth quarter of 2017, primarily driven by an increase in the loss ratio due to an increase in severity in commercial auto and general liability line of business along with an increase in catastrophe losses in commercial fire and allied lines of business. For the year ended December 31, 2018, the combined ratio was flat at 104.0 percent as compared to the same period of 2017.

Expense Levels

The expense ratio for the fourth quarter 2018 was 33.1 percentage points, a slight decrease compared to 33.3 percentage points for the fourth quarter of 2017. For the full year, the expense ratio was 33.5 percentage points, compared to 31.2 percentage points for 2017.

The increase in the expense ratio during for the full year of 2018 as compared to 2017 is primarily due to our continued investment in our multi-year Oasis project to upgrade our technology platform to enhance core underwriting decisions, selection of risks and productivity. As we stated the last few quarters, the expectation is this project will add 1.0 to 2.0 percentage points annually to the expense ratio for the duration of the project.

Investment Income and Realized Investment Gains and Losses

The Company recognized net realized investment losses from continuing operations of $27.6 million and $20.2 million, respectively, for the fourth quarter and full year 2018 compared to net realized investment gains of $0.7 million and $4.1 million, respectively, for the fourth quarter and full year 2017. The change in net realized investment gains and losses for the fourth quarter and full year compared to the same periods in 2017 was primarily due to a decrease of $27.6 million and $22.3 million, respectively, in the fair value of our equity securities investments.

Net investment income was $9.0 million for the fourth quarter 2018 and $52.9 million for the full year 2018 with a decrease of 29.0 percent for the quarter and an increase of 3.3 percent for the full year, compared to net investment income of $12.6 million and $51.2 million, respectively, for the fourth quarter and full year 2017. The change in net investment income for the quarter was due to a decrease in the value of our investments in limited liability partnerships resulting from the decrease in the equity markets in the fourth quarter, partially offset by an increase in invested assets. The change in net investment income for the full year was driven by an increase in invested assets and not due to a change in our investment philosophy. The valuation of these investments in limited liability partnerships varies from period to period due to current equity market conditions, specifically related to financial institutions.

Life Insurance Business

On September 18, 2017, the Company signed a definitive agreement to sell its subsidiary, United Life Insurance Company, to Kuvare US Holdings, Inc. and on March 30, 2018, the sale transaction was completed. As a result, the life insurance business is presented as discontinued operations in all periods presented in this press release.

Capital Management

During the fourth quarter, we declared and paid a $0.31 per share cash dividend to stockholders of record as of December 1, 2018. We have paid a quarterly dividend every quarter since March 1968.

During the fourth quarter, we did not repurchase any shares of our common stock. In the year ended December 31, 2018, we purchased 120,372 shares of our common stock for $5.4 million, at an average cost of $44.90 per share. As of December 31, 2018, we were authorized by our Board of Directors to purchase an additional 2,116,200 shares of common stock under our share repurchase program, which expires in August 2020.

Earnings Call Access Information

An earnings call will be held at 9:00 a.m. Central Time on February 20, 2019 to allow securities analysts, shareholders and other interested parties the opportunity to hear management discuss the Company's fourth quarter and year ended December 31, 2018 results.

Teleconference: Dial-in information for the call is toll-free 1-844-492-3723. The event will be archived and available for digital replay through March 6, 2019. The replay access information is toll-free 1-877-344-7529; conference ID no. 10127979.

Webcast: An audio webcast of the teleconference can be accessed at the Company's investor relations page at
http://ir.unitedfiregroup.com/event or https://services.choruscall.com/links/ufcs190220. The archived audio webcast will be available until March 6, 2019.

Transcript: A transcript of the teleconference will be available on the Company's website soon after the completion of the teleconference.

About UFG

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

Through our subsidiaries, we are licensed as a property and casualty insurer in 46 states, plus the District of Columbia, and we are represented by approximately 1,100 independent agencies. A.M. Best Company assigns a rating of "A" (Excellent) for members of the United Fire & Casualty Group.

For more information about United Fire Group, Inc. visit www.ufginsurance.com or contact:

Randy Patten, AVP of Finance and Investor Relations, 319-286-2537 or IR@unitedfiregroup.com.

Disclosure of Forward-Looking Statements

This release may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. The forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results to differ from those expected and/or projected. Such forward-looking statements are based on current expectations, estimates, forecasts and projections about our company, the industry in which we operate, and beliefs and assumptions made by management. Words such as "expect(s)," "anticipate(s)," "intends(s)," "plan(s)," "believe(s)" "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "remain optimistic," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will," "might," "hope," "can" and other words and terms of similar meaning or expression in connection with a discussion of future operations, financial performance or financial condition, are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Information concerning factors that could cause actual outcomes and results to differ materially from those expressed in the forward-looking statements is contained in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission ("SEC") on February 28, 2018.The risks identified in our Form 10-K are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release or as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

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

The Company prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Management also uses certain non-GAAP measures to evaluate its operations and profitability. As further explained below, management believes that disclosure of certain non-GAAP financial measures enhances investor understanding of our financial performance. Non-GAAP financial measures disclosed in this report include: adjusted operating income and net premiums written. The Company has provided the following definitions and reconciliations of the non-GAAP financial measures:

Adjusted operating income: Adjusted operating income is calculated by excluding net realized investment gains and losses and the one-time gain from the sale of discontinued operations after applicable federal and state income taxes from net income. Management believes adjusted operating income is a meaningful measure for evaluating insurance company performance and a useful supplement to GAAP information because it better represents the normal ongoing performance of our business. Investors and equity analysts who invest and report on the insurance industry and the Company generally focus on this metric in their analyses.

Net Income Reconciliation
 Three Months Ended December 31, Twelve Months Ended December 31,
(In Thousands, Except Per Share Data)2018 2017Change % 2018 2017Change %
Income Statement Data         
Net income (loss)$(29,336) $45,993 (163.8)% $27,650  $51,023 (45.8)%
Less: gain on sale of discontinued operations, net of tax    % 27,307   NM 
Less: after-tax net realized investment gains (losses)(21,790) 693 NM  (16,776) 5,241 NM 
Adjusted operating income (loss)$(7,546) $45,300 (116.7)% $17,119  $45,782 (62.6)%
Diluted Earnings Per Share Data         
Net income (loss)$(1.17) $1.81 (164.6)% $1.08  $1.99 (45.7)%
Less: gain on sale of discontinued operations, net of tax    % 1.07    %
Less: after-tax net realized investment gains (losses)(0.87) 0.03 NM  (0.66) 0.20 NM 
Adjusted operating income (loss)$(0.30) $1.78 (116.9)% $0.67  $1.79 (62.6)%
NM=Not meaningful                   
                    

Net premiums written: While not a substitute for any GAAP measure of performance, net premiums written is frequently used by industry analysts and other recognized reporting sources to facilitate comparisons of the performance of insurance companies. Net premiums written are the amount charged for insurance policy contracts issued and recognized on an annualized basis at the effective date of the policy. Management believes net premiums written are a meaningful measure for evaluating insurance company sales performance and geographical expansion efforts. Net premiums written for an insurance company consists of direct premiums written and reinsurance assumed, less reinsurance ceded. Net premiums earned is calculated on a pro rata basis over the terms of the respective policies. Unearned premium reserves are established for the portion of premiums written applicable to the unexpired term of insurance policy in force. The difference between net premiums earned and net premiums written is the change in unearned premiums and change in prepaid reinsurance premiums.

Net Premiums Earned Reconciliation
 Three Months Ended December 31, Twelve Months Ended December 31,
(In Thousands)2018 2017Change % 2018 2017Change %
Premiums:         
Net premiums earned$270,684  $275,437 (1.7)% $1,050,454  $1,058,860 (0.8)%
Less: change in unearned premiums15,932  25,050 (36.4)% (27,527) (21,585)(27.5)%
Less: change in prepaid reinsurance premiums1,207  (72)NM  3,312  (33)NM 
Net premiums written$253,545  $250,459 1.2% $1,074,669  $1,080,478 (0.5)%
                    


Supplemental Tables

Consolidated Financial Highlights
 Three Months Ended December 31, Years Ended December 31,
(In Thousands Except Shares and Per Share Data and Ratios)2018 2017Change % 2018 2017Change %
Revenue Highlights         
Net premiums earned:         
P&C continuing operations$270,684  $260,068 4.1% $1,037,451  $997,492 4.0%
Life discontinued operations  15,369 (100.0)% 13,003  61,368 (78.8)%
Consolidated net premiums earned270,684  275,437 (1.7)% 1,050,454  1,058,860 (0.8)%
Net investment income:         
P&C continuing operations8,961  12,629 (29.0)% 52,894  51,190 3.3%
Life discontinued operations  12,490 (100.0)% 12,663  49,720 (74.5)%
Consolidated net investment income8,961  25,119 (64.3)% 65,557  100,910 (35.0)%
Total revenues:         
P&C continuing operations252,062  273,355 (7.8)% 1,070,166  1,052,737 1.7%
Life discontinued operations  28,386 (100)% 24,755  115,713 (78.6)%
Total revenues252,062  301,741 (16.5)% 1,094,921  1,168,450 (6.3)%
Income Statement Data         
Net income (loss)$(29,336) $45,993 (163.8)% $27,650  $51,023 (45.8)%
Gain on sale of discontinued operations, net of tax    % 27,307   NM 
After-tax net realized investment gains (losses)(21,790) 693 NM  (16,776) 5,241 NM 
Adjusted operating income (loss)(1)$(7,546) $45,300 (116.7)% $17,119  $45,782 (62.6)%
Diluted Earnings Per Share Data         
Net income (loss)$(1.17) $1.81 (164.6)% $1.08  $1.99 (45.7)%
Gain on sale of discontinued operations, net of tax    % 1.07   NM 
After-tax net realized investment gains (losses)(0.87) 0.03 NM  (0.66) 0.20 NM 
Adjusted operating income (loss)(1)$(0.30) $1.78 (116.9)% $0.67  $1.79 (62.6)%
Catastrophe Data         
Pre-tax catastrophe losses$15,948  $5,273 202.4% $46,693  $74,039 (36.9)%
Effect on after-tax earnings per share0.50  0.13 284.6% 1.44  1.88 (23.4)%
Effect on combined ratio5.9% 2.0%195.0% 4.5% 7.4%(39.2)%
          
Favorable reserve development experienced on prior accident years6,494  16,265 (60.1)% 54,167  54,253 (0.2)%
          
GAAP combined ratio108.5% 93.8%15.7% 104.0% 104.0%%
Return on equity     3.0% 5.3%(43.4)%
Cash dividends declared per share$0.31  $0.28 10.7% $4.21  $1.09 286.2%
Diluted weighted average shares outstanding25,077,593  25,413,148 (1.3)% 25,622,812  25,640,604 (0.1)%
NM=Not meaningful               
(1) Adjusted operating income is a non-GAAP financial measure of net income. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted operating income to net income.
 


Income Statement
 Three Months Ended December 31, Years Ended December 31,
(In Thousands)2018 2017 2018 2017
Revenues       
Net premiums earned$270,684  $260,068  $1,037,451  $997,492 
Investment income, net of investment expenses8,961  12,629  52,894  51,190 
Net realized investment gains (losses)       
Change in the fair value of equity securities(27,492) 100  (21,994) 332 
All other net realized gains (losses)(91) 558  1,815  3,723 
Net realized investment gains (losses)(27,583) 658  (20,179) 4,055 
Total Revenues$252,062  $273,355  $1,070,166  $1,052,737 
        
Benefits, Losses and Expenses       
Losses and loss settlement expenses$204,070  $157,357  $731,611  $725,713 
Amortization of deferred policy acquisition costs54,025  52,901  206,232  207,746 
Other underwriting expenses35,479  33,728  141,473  103,628 
Total Benefits, Losses and Expenses$293,574  $243,986  $1,079,316  $1,037,087 
        
Income (loss) before income taxes from continuing operations(41,512) 29,369  (9,150) 15,650 
Federal income tax benefit(12,176) (15,890) (11,405) (29,220)
Net income (loss) from continuing operations$(29,336) $45,259  $2,255  $44,870 
Net income (loss) from discontinued operations  734  (1,912) 6,153 
Gain on sale of discontinued operations, net of tax    27,307   
Net income (loss)$(29,336) $45,993  $27,650  $51,023 
        
GAAP combined ratio:       
Net loss ratio - excluding catastrophes69.5% 58.5% 66.0% 65.4%
Catastrophes - effect on net loss ratio5.9  2.0  4.5  7.4 
Net loss ratio75.4% 60.5% 70.5% 72.8%
Expense ratio33.1  33.3  33.5  31.2 
Combined ratio108.5% 93.8% 104.0% 104.0%
            


Balance Sheet
 December 31, 2018 December 31, 2017
(In Thousands) 
    
Invested assets - continuing operations$2,074,123  $1,888,933 
Cash - continuing operations64,454  95,562 
Total assets:   
Continuing operations2,816,698  2,597,297 
Assets held for sale  1,586,134 
Total assets2,816,698  4,183,431 
Loss and loss settlement expenses   
Continuing operations$1,312,483  $1,224,183 
Total liabilities:   
Continuing operations1,928,323  1,862,923 
Liabilities held for sale  1,347,135 
Total liabilities1,928,323  3,210,058 
Net unrealized investment gains (losses), after-tax$(9,323) $214,865 
Total stockholders’ equity888,375  973,373 
      


Discontinued Operations(1)
 Three Months Ended December 31, Years Ended December 31,
(In Thousands)2018 2017 2018 2017
Revenues       
Net premiums earned$ $15,369  $13,003  $61,368 
Investment income, net of investment expenses 12,490  12,663  49,720 
Net realized investment gains (losses) 408  (1,057) 4,008 
Other income 119  146  617 
Total Revenues$ $28,386  $24,755  $115,713 
        
Benefits, Losses and Expenses       
Losses and loss settlement expenses$ $9,772  $10,823  $40,451 
Increase in liability for future policy benefits 8,291  5,023  27,632 
Amortization of deferred policy acquisition costs (343) 1,895  5,181 
Other underwriting expenses 3,829  3,864  13,281 
Interest on policyholders’ accounts 4,543  4,499  18,525 
Total Benefits, Losses and Expenses$ $26,092  $26,104  $105,070 
        
Income (loss) before income taxes$ $2,294  $(1,349) $10,643 
Federal income tax expense 1,560  563  4,490 
Net income (loss)$ $734  $(1,912) $6,153 
(1) On September 18, 2017, the Company signed a definitive agreement to sell its subsidiary, United Life Insurance Company, to Kuvare US Holdings, Inc. The sale closed on March 30, 2018. The life insurance business is presented as discontinued operations in all periods presented in this table.
 


Net Premiums Written by Line of Business
 Three Months Ended December 31, Years Ended December 31,
 2018 2017 2018 2017
(In Thousands)   
Net Premiums Written(1)       
Continuing operations:       
Commercial lines:       
Other liability(2)$73,403  $68,421  $315,977  $311,226 
Fire and allied lines(3)56,802  55,192  237,410  230,934 
Automobile73,895  63,441  301,055  266,055 
Workers’ compensation20,247  20,095  92,711  101,037 
Fidelity and surety6,460  5,925  26,684  25,813 
Miscellaneous410  407  1,728  1,766 
Total commercial lines$231,217  $213,481  $975,565  $936,831 
        
Personal lines:       
Fire and allied lines(4)$10,111  $10,054  $41,242  $42,138 
Automobile7,616  6,865  30,488  28,265 
Miscellaneous291  278  1,222  1,193 
Total personal lines$18,018  $17,197  $72,952  $71,596 
Reinsurance assumed4,310  4,408  13,147  10,686 
Total net premiums written from continuing operations$253,545  $235,086  $1,061,664  $1,019,113 
Total net premiums written from discontinued operations  15,373  13,005  61,365 
Total$253,545  $250,459  $1,074,669  $1,080,478 
(1) Net premiums written is a non-GAAP financial measure of net premiums earned. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of net premiums written to net premiums earned. 
(2) Commercial lines “Other liability” is business insurance covering bodily injury and property damage arising from general business operations, accidents on the insured’s premises and products manufactured or sold.
(3) Commercial lines “Fire and allied lines” includes fire, allied lines, commercial multiple peril and inland marine.
(4) Personal lines “Fire and allied lines” includes fire, allied lines, homeowners and inland marine.
 


Net Premiums Earned, Losses and Loss Settlement Expenses and Loss Ratio by Line of Business
Three Months Ended December 31,2018 2017
(In Thousands)
Unaudited
Net Premiums Earned Net Losses and Loss Settlement Expenses Incurred Net Loss Ratio Net Premiums Earned Net Losses and Loss Settlement Expenses Incurred Net Loss Ratio
Commercial lines           
Other liability81,086  66,305  81.8% $78,230  $33,112  42.3%
Fire and allied lines60,161  39,253  65.2  59,205  28,660  48.4 
Automobile75,098  82,319  109.6  66,777  63,970  95.8 
Workers' compensation24,102  10,763  44.7  26,074  15,168  58.2 
Fidelity and surety7,293  (450) (6.2) 6,940  1,898  27.3 
Miscellaneous439  101  23.0  455  40  8.8 
Total commercial lines$248,179  $198,291  79.9% $237,681  $142,848  60.1%
            
Personal lines           
Fire and allied lines10,331  4,776  46.2% $10,705  $4,667  43.6%
Automobile7,561  6,315  83.5  7,015  6,719  95.8 
Miscellaneous307  34  11.1  299  150  50.2 
Total personal lines$18,199  $11,125  61.1% $18,019  $11,536  64.0%
Reinsurance assumed4,306  (5,346) (124.2)% $4,368  $2,973  68.1%
Total$270,684  $204,070  75.4% $260,068  $157,357  60.5%
                      


Net Premiums Earned, Losses and Loss Settlement Expenses and Loss Ratio by Line of Business
Years Ended December 31,2018 2017
(In Thousands)
Unaudited 
Net Premiums Earned Net Losses and Loss Settlement Expenses 
Incurred
 Net Loss Ratio Net Premiums Earned Net Losses and Loss Settlement Expenses Incurred Net Loss Ratio
Commercial lines           
Other liability$311,931  $183,692  58.9% $306,480  $121,054  39.5%
Fire and allied lines234,612  165,097  70.4  227,711  178,768  78.5 
Automobile284,274  271,248  95.4  250,465  266,272  106.3 
Workers' compensation95,203  57,601  60.5  104,166  71,053  68.2 
Fidelity and surety24,437  1,878  7.7  24,981  2,206  8.8 
Miscellaneous1,728  449  26.0  1,829  312  17.1 
Total commercial lines$952,185  $679,965  71.4% $915,632  $639,665  69.9%
            
Personal lines           
Fire and allied lines$41,581  $32,959  79.3% $43,005  $34,503  80.2%
Automobile29,247  25,016  85.5  27,046  28,997  107.2 
Miscellaneous1,210  (213) (17.6) 1,159  268  23.1 
Total personal lines$72,038  $57,762  80.2% $71,210  $63,768  89.5%
Reinsurance assumed$13,228  $(6,116) (46.2)% $10,650  $22,280  209.2%
Total$1,037,451  $731,611  70.5% $997,492  $725,713  72.8%

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Source: United Fire Group, Inc
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