United Fire Group, Inc. (Nasdaq: UFCS) -
Consolidated Financial Results -
Highlights(1):
Three Months Ended
June 30, 2019 |
|
|
Six Months Ended June
30, 2019 |
|
Net income (loss) per diluted share |
$ |
(0.17 |
) |
|
Net income per diluted share |
$ |
1.57 |
|
Adjusted operating income
(loss)(2) per diluted share |
$ |
(0.59 |
) |
|
Adjusted operating income(2)
per diluted share |
$ |
0.33 |
|
Net realized investment gains
per diluted share |
$ |
0.42 |
|
|
Net realized investment gains
per diluted share |
$ |
1.24 |
|
GAAP combined ratio |
111.7 |
% |
|
GAAP combined ratio |
103.9 |
% |
|
|
|
Book value per share |
$ |
38.36 |
|
|
|
|
Return on equity(3) |
8.7 |
% |
United Fire Group, Inc. (the "Company" or
"UFG") (Nasdaq: UFCS) today reported consolidated net loss,
including net realized investment gains and losses and changes in
the fair value of equity securities, of $4.2 million ($0.17 per
diluted share) for the three-month period ended June 30, 2019 (the
"second quarter of 2019"), compared to a consolidated net income of
$0.2 million ($0.01 per diluted share) for the same period in
2018(4). For the six-month period ended June 30, 2019
("year-to-date"), consolidated net income, including realized
investment gains and losses and changes in the fair value of equity
securities, was $40.3 million ($1.57 per diluted share), compared
to $45.9 million ($1.80 per diluted share) for the same period in
2018.
The Company reported consolidated adjusted operating loss of
$0.59 per diluted share for the second quarter, compared to a
consolidated adjusted operating loss of $0.03 per diluted share for
the same period in 2018. Year-to-date, consolidated adjusted
operating income was $0.33 per diluted share compared to
consolidated adjusted operating income of $0.96 per diluted share
for the same period in 2018.
"The second quarter of 2019 was impacted by an increase in
catastrophe losses and unfavorable prior year reserve development
partially offset by continued strong equity markets and an increase
in net premiums earned," stated Randy A. Ramlo, President and Chief
Executive Officer. "In the second quarter, we experienced the same
number of catastrophe events as in second quarter 2018, but the
events were more severe in 2019. The majority of the losses were
from convective storms in the Midwest and hail storms in Texas,
which is not uncommon for second quarter."_________________(1) Per
share amounts are after tax.(2) Adjusted operating income (loss) is
a non-GAAP financial measure of net income (loss) excluding net
realized investmentgains and losses, changes in the fair value of
equity securities 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 regular, 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.(3) Return on equity is
calculated by dividing annualized net income by average
year-to-date equity.(4) 2018 Consolidated Financial Results include
both continuing operations and discontinued life insurance
operations and the one-time gain on the sale of discontinued
operations.
"The unfavorable prior year reserve development was primarily
from reserve strengthening on commercial auto and commercial
liability claims in our Gulf Coast region," continued Ramlo. "The
increase in catastrophe losses and prior year unfavorable reserve
development were partially offset by an increase in the value of
our equity securities from continued strong equity markets and an
increase in net premiums earned due to our continued focus on
increasing rates in our commercial auto book of business."
"On a positive note, similar to the first quarter of 2019, we
continue to see improvement in our underlying operating
profitability, which we attribute to the initiatives we put in
place in 2018 in our commercial auto book of business. Removing the
impact of catastrophe losses and prior year reserve development,
this marks the second consecutive quarter of improvement in our
core loss ratio. Compared with the same periods last year, our core
loss ratio improved 3.5 points in the second quarter and 6.8 points
year-to-date in 2019. In addition, this is the third consecutive
quarter with reduced frequency of commercial auto claims. While it
may be too early to call these improvements a trend, they are
encouraging."
Consolidated net unrealized investment gains, net of tax,
totaled $39.5 million as of June 30, 2019, an increase of
$48.8 million from December 31, 2018. The increase in net
unrealized investment gains is primarily the result of lower
interest rates in the first half of 2019.
Total consolidated assets as of June 30, 2019 were $3.0
billion, which included $2.1 billion of invested assets. The
Company's book value per share was $38.36, which is an increase of
$2.96 per share, or 8.4 percent from December 31, 2018. This
increase is primarily attributed to net income of $40.3 million and
an increase in net unrealized investment gains on fixed maturity
securities of $48.8 million, net of tax, over the prior year
period, partially offset by shareholder dividends of $16.1 million
during the first half of 2019.
The annualized return on equity was 8.7 percent for the
six-month period ended June 30, 2019 compared to 6.9 percent for
the same period in 2018. The annualized equity return increase was
primarily driven by the change in the value of equity securities
for the first half of 2019 compared to the same period in 2018.
Property and Casualty Insurance Business
Net loss from the property and casualty insurance business,
including net realized investment gains and losses, totaled $4.2
million ($0.17 per diluted share) for the second quarter, compared
to net income of $0.2 million ($0.01 per diluted share) in the same
period in 2018. The decrease in net income was primarily due to an
increase in losses and loss settlement expenses from an increase in
catastrophe losses and unfavorable prior year reserve development,
partially offset by an increase in net premiums earned and net
realized investment gains.
Year-to-date, net income, including net realized investment
gains and losses, totaled $40.3 million ($1.57 per diluted share)
compared to $20.5 million ($0.80 per diluted share) in the same
period in 2018. The change in net income was primarily due to an
increase in the value of equity securities and an increase in net
premiums earned offset by an increase in losses and loss settlement
expenses from an increase in catastrophe losses and unfavorable
prior year reserve development.
Net premiums earned increased 7.6 percent to $276.5 million in
the second quarter, compared to $256.9 million in the same period
in 2018. Year-to-date net premiums earned increased 7.3 percent to
$538.8 million compared to $502.0 million in the same period in
2018. The increase in the three- and six-month periods ended June
30, 2019 was primarily due to rate increases, premium audits and
endorsements.
The average renewal pricing change for commercial lines
increased 6.6 percent in the second quarter of 2019 compared to 5.9
percent in the first quarter of 2019. The renewal pricing increases
continue to be driven by commercial auto rate increases. During the
second quarter of 2019, filed commercial auto rate increases
averaged in the low-double digits. Personal lines filed rate and
renewal pricing increases also remained in the mid-single
digits.
Reserve Development
We experienced unfavorable development in our net reserves for
prior accident years of $9.4 million in the three-month period
ended June 30, 2019, compared to favorable development of $10.3
million in the same period in 2018. The change in prior year
reserve development in the three-month period ended June 30, 2019
came primarily from reserve strengthening in on our commercial auto
and commercial liability line of business in our Gulf Coast region.
Year-to-date, unfavorable development in our net reserves for prior
accident years was $4.7 million, compared to $48.4 million
favorable development in the same period in 2018. The change in
prior year reserve development in the six-month period ended June
30, 2019 came primarily from reserve strengthening in our
commercial auto and commercial liability lines of business in our
Gulf Coast region. Development amounts can vary significantly from
quarter-to-quarter depending on a number of factors, including the
number of claims settled and the settlement terms. At June 30,
2019, our total reserves were within our actuarial estimates.
GAAP Combined Ratio
The GAAP combined ratio increased by 3.8 percentage points to
111.7 percent for the second quarter, compared to 107.9 percent in
the same period in 2018. Year-to-date, the GAAP combined ratio
increased 3.0 percentage points to 103.9 percent compared to 100.9
percent in 2018. The increases in the combined ratios in the
three-month and six-month periods ended June 30, 2019 as compared
to the same periods in 2018 are primarily driven by a combination
of increases in catastrophe losses and unfavorable prior year
reserve development, partially offset by decreases in the expense
ratios.
Pre-tax catastrophe losses in the second quarter of 2019 were
higher when compared to second quarter of 2018, with catastrophe
losses adding 8.0 percentage points to the combined ratio in 2019
as compared to 5.9 percentage points in 2018. Our 10-year
historical average for second quarter catastrophe losses is 10.9
percentage points added to the combined ratio. Year-to-date,
catastrophe losses totaled $25.6 million ($0.79 per diluted share)
compared to $18.5 million ($0.57 per diluted share) for the same
period in 2018.
The GAAP net loss ratio excluding catastrophe losses
deteriorated 3.9 percentage points and 3.7 percentage points,
respectively, in the three- and six-month periods ended June 30,
2019 when compared to the same periods in 2018. This deterioration
is primarily due to the previously mentioned unfavorable prior year
reserve development in 2019 compared to favorable development in
2018. Excluding the impact of prior year reserve development and
catastrophe losses, our core loss ratio improved 3.5 percentage
points and 6.8 percentage points, respectively, in the three- and
six-month periods ended June 30, 2019, when compared to the same
periods in 2018.
Expense Ratio
The expense ratio for the second quarter was 32.1 percentage
points, compared to 34.3 percentage points for the second quarter
in 2018. The decrease in the expense ratio during the second
quarter is primarily due to a decrease in employee benefit accruals
and expenses caused by post-retirement benefit plan amendments made
at the end of 2018 and capitalization of expenses for our
multi-year Oasis project to upgrade our technology platform to
enhance core underwriting decisions, selection of risks and
productivity. Year-to-date, the expense ratio was 32.6 percentage
points, compared to 34.4 percentage points in the same period in
2018.
Investment Income and Realized Investment Gains and
Losses
Net investment income was $14.1 million for the second quarter
of 2019, a decrease of 18.1 percent, as compared to net investment
income of $17.2 million for the same period in 2018. Year-to date,
net investment income was $30.6 million, flat compared to net
investment income of $30.7 million for the same period in 2018. The
change in net investment income for the quarter was due to lower
appreciation in the value of our investments in limited liability
partnerships in 2019 as compared to 2018. 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.
The Company recognized net realized investment gains of $13.6
million during the second quarter of 2019, compared to net realized
investment gains of $1.3 million for the same period in 2018.
Year-to-date, the Company recognized net realized investment gains
of $40.3 million compared to net realized losses of $6.6 million.
The increase in both the three- and six-month periods ended June
30, 2019 as compared to the same periods in 2018 were primarily due
to an increase in the value of equity securities of $12.5
million and $37.1 million, respectively, compared with an increase
of $0.3 million and decrease of $8.9 million, respectively, in the
same periods in 2018.
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 second quarter, we declared and paid a $0.33 per
share cash dividend to shareholders of record as of May 31, 2019.
We have paid a quarterly dividend every quarter since March 1968.
During the second quarter we repurchased 1,507 shares of our common
stock for a total purchase price of approximately $69 thousand.
Earnings Call Access Information
An earnings call will be held at 9:00 a.m. Central Time on
August 7, 2019 to allow securities analysts, shareholders and
other interested parties the opportunity to hear management discuss
the Company's second quarter 2019 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 August 21, 2019. The replay access
information is toll-free 1-877-344-7529; conference ID no.
10133214.
Webcast: An audio webcast of the teleconference can be accessed
at the Company's investor relations page
athttp://ir.ufginsurance.com/event or
http://services.choruscall.com/links/ufcs190807. The archived audio
webcast will be available until August 21, 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 UFG, visit www.ufginsurance.com or
contact:
Randy Patten, AVP and Controller, Corporate Finance,
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, 2018, filed with the
Securities and Exchange Commission ("SEC") on February 28,
2019. 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 June 30, |
|
Six Months Ended June 30, |
(In
Thousands, Except Per Share Data) |
2019 |
|
2018 |
Change % |
|
2019 |
|
2018 |
Change % |
Income Statement
Data |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(4,196 |
) |
|
$ |
157 |
|
NM |
|
$ |
40,325 |
|
|
$ |
45,916 |
|
(12.2 |
)% |
Less: gain on sale of discontinued operations, net of tax |
— |
|
|
— |
|
—% |
|
— |
|
|
27,307 |
|
(100.0 |
)% |
Less: after-tax net realized investment gains (losses) |
10,737 |
|
|
1,025 |
|
NM |
|
31,840 |
|
|
(6,023 |
) |
NM |
Adjusted operating income (loss) |
$ |
(14,933 |
) |
|
$ |
(868 |
) |
NM |
|
$ |
8,485 |
|
|
$ |
24,632 |
|
(65.6 |
)% |
Diluted Earnings Per
Share Data |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(0.17 |
) |
|
$ |
0.01 |
|
NM |
|
$ |
1.57 |
|
|
$ |
1.80 |
|
(12.8 |
)% |
Less: gain on sale of discontinued operations, net of tax |
— |
|
|
— |
|
—% |
|
— |
|
|
1.07 |
|
(100.0 |
)% |
Less: after-tax net realized investment gains (losses) |
0.42 |
|
|
0.04 |
|
NM |
|
1.24 |
|
|
(0.23 |
) |
NM |
Adjusted operating income (loss) |
$ |
(0.59 |
) |
|
$ |
(0.03 |
) |
NM |
|
$ |
0.33 |
|
|
$ |
0.96 |
|
(65.6 |
)% |
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 June 30, |
|
Six Months Ended June 30, |
(In
Thousands, Except Ratios) |
2019 |
|
2018 |
Change % |
|
2019 |
|
2018 |
Change % |
Premiums: |
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
276,486 |
|
|
$ |
256,853 |
|
7.6 |
% |
|
$ |
538,800 |
|
|
$ |
515,023 |
|
4.6 |
% |
Less: change in unearned premiums |
(29,267 |
) |
|
(40,820 |
) |
28.3 |
% |
|
(47,062 |
) |
|
(52,343 |
) |
10.1 |
% |
Less: change in prepaid reinsurance premiums |
606 |
|
|
899 |
|
(32.6 |
)% |
|
1,049 |
|
|
1,152 |
|
(8.9 |
)% |
Net premiums written |
$ |
305,147 |
|
|
$ |
296,774 |
|
2.8 |
% |
|
$ |
584,813 |
|
|
$ |
566,214 |
|
3.3 |
% |
Supplemental Tables
Consolidated Financial Highlights |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In
Thousands, Except Share and Per Share Data and Ratios) |
2019 |
|
2018 |
Change % |
|
2019 |
|
2018 |
Change % |
Revenue
Highlights |
|
|
|
|
|
|
|
|
|
Net premiums earned: |
|
|
|
|
|
|
|
|
|
P&C continuing operations |
$ |
276,486 |
|
|
$ |
256,853 |
|
7.6 |
% |
|
$ |
538,800 |
|
|
$ |
502,020 |
|
7.3 |
% |
Life discontinued operations |
— |
|
|
— |
|
— |
% |
|
— |
|
|
13,003 |
|
(100.0 |
)% |
Consolidated net premiums earned |
276,486 |
|
|
256,853 |
|
7.6 |
% |
|
538,800 |
|
|
515,023 |
|
4.6 |
% |
Net investment income: |
|
|
|
|
|
|
|
|
|
P&C continuing operations |
14,120 |
|
|
17,249 |
|
(18.1 |
)% |
|
30,632 |
|
|
30,741 |
|
(0.4 |
)% |
Life discontinued operations |
— |
|
|
— |
|
— |
% |
|
— |
|
|
12,663 |
|
(100.0 |
)% |
Consolidated net investment income |
14,120 |
|
|
17,249 |
|
(18.1 |
)% |
|
30,632 |
|
|
43,404 |
|
(29.4 |
)% |
Total revenues: |
|
|
|
|
|
|
|
|
|
P&C continuing operations |
304,197 |
|
|
275,399 |
|
10.5 |
% |
|
609,736 |
|
|
526,194 |
|
15.9 |
% |
Life discontinued operations |
— |
|
|
— |
|
— |
% |
|
— |
|
|
24,755 |
|
(100.0 |
)% |
Total revenues |
304,197 |
|
|
275,399 |
|
10.5 |
% |
|
609,736 |
|
|
550,949 |
|
10.7 |
% |
Income Statement
Data |
|
|
|
|
|
|
|
|
|
Net income (loss) |
(4,196 |
) |
|
157 |
|
NM |
|
40,325 |
|
|
45,916 |
|
(12.2 |
)% |
Gain on sale of discontinued operations, net of tax |
— |
|
|
— |
|
— |
% |
|
— |
|
|
27,307 |
|
(100.0 |
)% |
After-tax net realized investment gains (losses) |
10,737 |
|
|
1,025 |
|
NM |
|
31,840 |
|
|
(6,023 |
) |
NM |
Adjusted operating income (loss)(1) |
$ |
(14,933 |
) |
|
$ |
(868 |
) |
NM |
|
$ |
8,485 |
|
|
$ |
24,632 |
|
(65.6 |
)% |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share Data |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(0.17 |
) |
|
$ |
0.01 |
|
NM |
|
$ |
1.57 |
|
|
$ |
1.80 |
|
(12.8 |
)% |
Gain on sale of discontinued operations, net of tax |
— |
|
|
— |
|
— |
% |
|
— |
|
|
1.07 |
|
(100.0 |
)% |
After-tax net realized investment gains (losses) |
0.42 |
|
|
0.04 |
|
NM |
|
1.24 |
|
|
(0.23 |
) |
NM |
Adjusted operating income (loss) (1) |
$ |
(0.59 |
) |
|
$ |
(0.03 |
) |
NM |
|
$ |
0.33 |
|
|
$ |
0.96 |
|
(65.6 |
)% |
Catastrophe
Data |
|
|
|
|
|
|
|
|
|
Pre-tax catastrophe losses |
$ |
22,006 |
|
|
$ |
15,115 |
|
45.6 |
% |
|
$ |
25,636 |
|
|
$ |
18,476 |
|
38.8 |
% |
Effect on after-tax earnings per share |
0.69 |
|
|
0.47 |
|
46.8 |
% |
|
0.79 |
|
|
0.57 |
|
38.6 |
% |
Effect on combined ratio |
8.0 |
% |
|
5.9 |
% |
35.6 |
% |
|
4.8 |
% |
|
3.7 |
% |
29.7 |
% |
|
|
|
|
|
|
|
|
|
|
Favorable (unfavorable)
reserve development experienced on prior accident years |
$ |
(9,391 |
) |
|
$ |
10,330 |
|
(190.9 |
)% |
|
$ |
(4,742 |
) |
|
$ |
48,385 |
|
(109.8 |
)% |
|
|
|
|
|
|
|
|
|
|
Combined ratio |
111.7 |
% |
|
107.9 |
% |
3.5 |
% |
|
103.9 |
% |
|
100.9 |
% |
3.0 |
% |
Return on equity |
|
|
|
|
|
8.7 |
% |
|
6.9 |
% |
26.1 |
% |
Cash dividends declared per
share |
$ |
0.33 |
|
|
$ |
0.31 |
|
6.5 |
% |
|
$ |
0.64 |
|
|
$ |
0.59 |
|
8.5 |
% |
Diluted
weighted average shares outstanding |
25,210,354 |
|
|
25,611,773 |
|
(1.6 |
)% |
|
25,659,803 |
|
|
25,582,708 |
|
0.3 |
% |
NM = Not
meaningful(1) Adjusted operating income (loss) is a non-GAAP
financial measure of net income (loss). See Definitions of Non-GAAP
Information and Reconciliations to Comparable GAAP Measures for a
reconciliation of adjusted operating income (loss) to net income
(loss). |
|
Income Statement |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In
Thousands, Except Ratios) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
|
|
|
|
|
|
|
Net premiums earned |
$ |
276,486 |
|
|
$ |
256,853 |
|
|
$ |
538,800 |
|
|
$ |
502,020 |
|
Investment income, net of
investment expenses |
14,120 |
|
|
17,249 |
|
|
30,632 |
|
|
30,741 |
|
Net realized investment gains
(losses) |
|
|
|
|
|
|
|
Change in the fair value of equity securities |
12,499 |
|
|
305 |
|
|
37,133 |
|
|
(8,883 |
) |
All other net realized gains |
1,092 |
|
|
992 |
|
|
3,171 |
|
|
2,316 |
|
Net
realized investment gains (losses) |
13,591 |
|
|
1,297 |
|
|
40,304 |
|
|
(6,567 |
) |
Total
Revenues |
$ |
304,197 |
|
|
$ |
275,399 |
|
|
$ |
609,736 |
|
|
$ |
526,194 |
|
|
|
|
|
|
|
|
|
Benefits, Losses and
Expenses |
|
|
|
|
|
|
|
Losses and loss settlement
expenses |
$ |
220,009 |
|
|
$ |
189,146 |
|
|
$ |
384,249 |
|
|
$ |
333,874 |
|
Amortization of deferred
policy acquisition costs |
54,795 |
|
|
50,810 |
|
|
107,014 |
|
|
100,449 |
|
Other
underwriting expenses |
33,964 |
|
|
37,252 |
|
|
68,367 |
|
|
72,107 |
|
Total Benefits, Losses
and Expenses |
$ |
308,768 |
|
|
$ |
277,208 |
|
|
$ |
559,630 |
|
|
$ |
506,430 |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes from continuing
operations |
(4,571 |
) |
|
(1,809 |
) |
|
50,106 |
|
|
19,764 |
|
Federal
income tax expense (benefit) from continuing operations |
(375 |
) |
|
(1,966 |
) |
|
9,781 |
|
|
(757 |
) |
Net income (loss) from continuing operations |
$ |
(4,196 |
) |
|
$ |
157 |
|
|
$ |
40,325 |
|
|
$ |
20,521 |
|
Net loss from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
(1,912 |
) |
Gain on sale of discontinued operations, net of
tax |
— |
|
|
— |
|
|
— |
|
|
27,307 |
|
Net income (loss) |
$ |
(4,196 |
) |
|
$ |
157 |
|
|
$ |
40,325 |
|
|
$ |
45,916 |
|
|
|
|
|
|
|
|
|
GAAP combined ratio: |
|
|
|
|
|
|
|
Net loss ratio - excluding
catastrophes |
71.6 |
% |
|
67.7 |
% |
|
66.5 |
% |
|
62.8 |
% |
Catastrophes - effect on net loss ratio |
8.0 |
|
|
5.9 |
|
|
4.8 |
|
|
3.7 |
|
Net
loss ratio |
79.6 |
% |
|
73.6 |
% |
|
71.3 |
% |
|
66.5 |
% |
Expense
ratio |
32.1 |
|
|
34.3 |
|
|
32.6 |
|
|
34.4 |
|
Combined ratio |
111.7 |
% |
|
107.9 |
% |
|
103.9 |
% |
|
100.9 |
% |
|
|
Balance Sheet |
|
June 30, 2019 |
|
December 31, 2018 |
(In
Thousands) |
|
Invested assets |
$ |
2,087,961 |
|
|
$ |
2,074,123 |
|
Cash |
148,784 |
|
|
64,454 |
|
Total assets |
3,001,797 |
|
|
2,816,698 |
|
Losses and loss settlement
expenses |
1,341,666 |
|
|
1,312,483 |
|
Total liabilities |
2,033,494 |
|
|
1,928,323 |
|
Net unrealized investment
gains (losses), after-tax |
39,518 |
|
|
(9,323 |
) |
Total
stockholders’ equity |
968,303 |
|
|
888,375 |
|
|
|
Discontinued Operations(1) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In
Thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
|
|
|
|
|
|
|
Net premiums earned |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
13,003 |
|
Investment income, net of
investment expenses |
— |
|
|
— |
|
|
— |
|
|
12,663 |
|
Net realized investment
losses |
— |
|
|
— |
|
|
— |
|
|
(1,057 |
) |
Other
income |
— |
|
|
— |
|
|
— |
|
|
146 |
|
Total
Revenues |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
24,755 |
|
|
|
|
|
|
|
|
|
Benefits, Losses and
Expenses |
|
|
|
|
|
|
|
Losses and loss settlement
expenses |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
10,823 |
|
Increase in liability for
future policy benefits |
— |
|
|
— |
|
|
— |
|
|
5,023 |
|
Amortization of deferred
policy acquisition costs |
— |
|
|
— |
|
|
— |
|
|
1,895 |
|
Other underwriting
expenses |
— |
|
|
— |
|
|
— |
|
|
3,864 |
|
Interest on policyholders’ accounts |
— |
|
|
— |
|
|
— |
|
|
4,499 |
|
Total Benefits, Losses
and Expenses |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,104 |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(1,349 |
) |
Federal
income tax expense |
— |
|
|
— |
|
|
— |
|
|
563 |
|
Net loss |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(1,912 |
) |
(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 June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
(In
Thousands) |
|
|
|
Net Premiums
Written(1) |
|
|
|
|
|
|
|
Continuing
operations: |
|
|
|
|
|
|
|
Commercial lines: |
|
|
|
|
|
|
|
Other liability(2) |
$ |
88,169 |
|
|
$ |
88,846 |
|
|
$ |
171,483 |
|
|
$ |
167,457 |
|
Fire and allied lines(3) |
64,611 |
|
|
64,029 |
|
|
127,515 |
|
|
122,571 |
|
Automobile |
89,268 |
|
|
84,010 |
|
|
171,579 |
|
|
157,039 |
|
Workers’ compensation |
24,447 |
|
|
26,565 |
|
|
48,905 |
|
|
51,658 |
|
Fidelity and surety |
7,335 |
|
|
8,235 |
|
|
13,503 |
|
|
14,012 |
|
Miscellaneous |
453 |
|
|
470 |
|
|
918 |
|
|
920 |
|
Total commercial lines |
$ |
274,283 |
|
|
$ |
272,155 |
|
|
$ |
533,903 |
|
|
$ |
513,657 |
|
|
|
|
|
|
|
|
|
Personal lines: |
|
|
|
|
|
|
|
Fire and allied lines(4) |
$ |
10,839 |
|
|
$ |
11,025 |
|
|
$ |
19,760 |
|
|
$ |
20,008 |
|
Automobile |
8,051 |
|
|
7,903 |
|
|
15,717 |
|
|
15,183 |
|
Miscellaneous |
330 |
|
|
337 |
|
|
624 |
|
|
627 |
|
Total personal lines |
$ |
19,220 |
|
|
$ |
19,265 |
|
|
$ |
36,101 |
|
|
$ |
35,818 |
|
Reinsurance assumed |
11,644 |
|
|
5,354 |
|
|
14,809 |
|
|
3,734 |
|
Total
net premiums written from continuing operations |
305,147 |
|
|
296,774 |
|
|
584,813 |
|
|
553,209 |
|
Total
net premiums written from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
13,005 |
|
Total |
$ |
305,147 |
|
|
$ |
296,774 |
|
|
$ |
584,813 |
|
|
$ |
566,214 |
|
(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 June 30, |
2019 |
|
2018 |
|
|
|
Net Losses |
|
|
|
|
|
Net Losses |
|
|
|
|
|
and Loss |
|
|
|
|
|
and Loss |
|
|
|
Net |
|
Settlement |
|
Net |
|
Net |
|
Settlement |
|
Net |
(In Thousands, Except
Ratios) |
Premiums |
|
Expenses |
|
Loss |
|
Premiums |
|
Expenses |
|
Loss |
Unaudited |
Earned |
|
Incurred |
|
Ratio |
|
Earned |
|
Incurred |
|
Ratio |
Commercial lines |
|
|
|
|
|
|
|
|
|
|
|
Other liability |
$ |
79,452 |
|
|
$ |
57,582 |
|
|
72.5 |
% |
|
$ |
76,309 |
|
|
$ |
38,503 |
|
|
50.5 |
% |
Fire and allied lines |
60,615 |
|
|
55,851 |
|
|
92.1 |
|
|
57,996 |
|
|
51,101 |
|
|
88.1 |
|
Automobile |
78,472 |
|
|
69,766 |
|
|
88.9 |
|
|
69,709 |
|
|
66,090 |
|
|
94.8 |
|
Workers' compensation |
22,621 |
|
|
9,378 |
|
|
41.5 |
|
|
23,633 |
|
|
17,002 |
|
|
71.9 |
|
Fidelity and surety |
6,146 |
|
|
(650 |
) |
|
(10.6 |
) |
|
5,742 |
|
|
291 |
|
|
5.1 |
|
Miscellaneous |
436 |
|
|
99 |
|
|
22.7 |
|
|
428 |
|
|
193 |
|
|
45.1 |
|
Total commercial lines |
$ |
247,742 |
|
|
$ |
192,026 |
|
|
77.5 |
% |
|
$ |
233,817 |
|
|
$ |
173,180 |
|
|
74.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Personal lines |
|
|
|
|
|
|
|
|
|
|
|
Fire and allied lines |
$ |
10,302 |
|
|
$ |
14,386 |
|
|
139.6 |
% |
|
$ |
10,396 |
|
|
$ |
9,359 |
|
|
90.0 |
% |
Automobile |
7,698 |
|
|
6,809 |
|
|
88.5 |
|
|
7,227 |
|
|
6,213 |
|
|
86.0 |
|
Miscellaneous |
307 |
|
|
552 |
|
|
179.8 |
|
|
301 |
|
|
(167 |
) |
|
(55.5 |
) |
Total personal lines |
$ |
18,307 |
|
|
$ |
21,747 |
|
|
118.8 |
% |
|
$ |
17,924 |
|
|
$ |
15,405 |
|
|
85.9 |
% |
Reinsurance assumed |
$ |
10,437 |
|
|
$ |
6,236 |
|
|
59.7 |
% |
|
$ |
5,112 |
|
|
$ |
561 |
|
|
11.0 |
% |
Total |
$ |
276,486 |
|
|
$ |
220,009 |
|
|
79.6 |
% |
|
$ |
256,853 |
|
|
$ |
189,146 |
|
|
73.6 |
% |
|
|
Net Premiums Earned, Losses and Loss Settlement Expenses
and Loss Ratio by Line of Business |
Six Months Ended June 30, |
2019 |
|
2018 |
|
|
|
Net Losses |
|
|
|
|
|
Net Losses |
|
|
|
|
|
and Loss |
|
|
|
|
|
and Loss |
|
|
|
Net |
|
Settlement |
|
Net |
|
Net |
|
Settlement |
|
Net |
(In Thousands, Except
Ratios) |
Premiums |
|
Expenses |
|
Loss |
|
Premiums |
|
Expenses |
|
Loss |
Unaudited |
Earned |
|
Incurred |
|
Ratio |
|
Earned |
|
Incurred |
|
Ratio |
Commercial lines |
|
|
|
|
|
|
|
|
|
|
|
Other liability |
$ |
157,879 |
|
|
$ |
95,857 |
|
|
60.7 |
% |
|
$ |
151,902 |
|
|
$ |
63,806 |
|
|
42.0 |
% |
Fire and allied lines |
119,789 |
|
|
92,637 |
|
|
77.3 |
|
|
115,395 |
|
|
85,330 |
|
|
73.9 |
|
Automobile |
153,706 |
|
|
140,337 |
|
|
91.3 |
|
|
136,403 |
|
|
120,037 |
|
|
88.0 |
|
Workers' compensation |
44,496 |
|
|
15,323 |
|
|
34.4 |
|
|
46,974 |
|
|
29,062 |
|
|
61.9 |
|
Fidelity and surety |
12,521 |
|
|
(901 |
) |
|
(7.2 |
) |
|
11,215 |
|
|
949 |
|
|
8.5 |
|
Miscellaneous |
863 |
|
|
— |
|
|
— |
|
|
853 |
|
|
377 |
|
|
44.2 |
|
Total commercial lines |
$ |
489,254 |
|
|
$ |
343,253 |
|
|
70.2 |
% |
|
$ |
462,742 |
|
|
$ |
299,561 |
|
|
64.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Personal lines |
|
|
|
|
|
|
|
|
|
|
|
Fire and allied lines |
$ |
20,522 |
|
|
$ |
20,668 |
|
|
100.7 |
% |
|
$ |
20,834 |
|
|
$ |
16,760 |
|
|
80.4 |
% |
Automobile |
15,180 |
|
|
12,476 |
|
|
82.2 |
|
|
14,236 |
|
|
11,970 |
|
|
84.1 |
|
Miscellaneous |
608 |
|
|
484 |
|
|
79.6 |
|
|
596 |
|
|
(272 |
) |
|
(45.6 |
) |
Total personal lines |
$ |
36,310 |
|
|
$ |
33,628 |
|
|
92.6 |
% |
|
$ |
35,666 |
|
|
$ |
28,458 |
|
|
79.8 |
% |
Reinsurance assumed |
$ |
13,236 |
|
|
$ |
7,368 |
|
|
55.7 |
% |
|
$ |
3,612 |
|
|
$ |
5,855 |
|
|
162.1 |
% |
Total |
$ |
538,800 |
|
|
$ |
384,249 |
|
|
71.3 |
% |
|
$ |
502,020 |
|
|
$ |
333,874 |
|
|
66.5 |
% |
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