United Fire Group, Inc. (Nasdaq: UFCS),
Consolidated Financial Results -
Highlights(1):
| Three Months Ended
June 30, 2020 |
|
|
Six Months Ended June
30, 2020 |
|
|
Net income per diluted share |
$ |
0.24 |
|
|
Net income (loss) per diluted share |
$ |
(2.66 |
) |
| Adjusted operating income
(loss)(2) per diluted share |
$ |
(0.26 |
) |
|
Adjusted operating income
(loss)(2) per diluted share |
$ |
(0.21 |
) |
| Net realized investment gains
per diluted share |
$ |
0.50 |
|
|
Net realized investment gains
(losses) per diluted share |
$ |
(2.45 |
) |
| GAAP combined ratio |
111.4 |
% |
|
GAAP combined ratio |
108.2 |
% |
| |
|
|
Book value per share |
$ |
34.38 |
|
| |
|
|
Return on equity(3) |
(15.0 |
)% |
United Fire Group, Inc. (the "Company" or
"UFG") (Nasdaq: UFCS) today reported consolidated net income,
including net realized investment gains and losses and changes in
the fair value of equity securities, of $6.0 million ($0.24 per
diluted share) for the three-month period ended June 30, 2020 (the
"second quarter of 2020"), compared to consolidated net loss of
$4.2 million ($0.17 per diluted share) for the same period in 2019.
For the six-month period ended June 30, 2020 ("year-to-date"),
consolidated net loss, including realized investment gains and
losses and changes in the fair value of equity securities, was
$66.6 million ($2.66 per diluted share), compared to net income of
$40.3 million ($1.57 per diluted share) for the same period in
2019.
The Company reported consolidated adjusted operating loss of
$0.26 per diluted share for the second quarter of 2020, compared to
consolidated adjusted operating loss of $0.59 per diluted share for
the same period in 2019. Year-to-date, consolidated adjusted
operating loss was $0.21 per diluted share compared to consolidated
adjusted operating income of $0.33 per diluted share for the same
period in 2019.
"Our second quarter results were impacted by historically high
quarterly catastrophe losses, offset by improving core insurance
profitability," stated Randy A. Ramlo, President and Chief
Executive Officer. "Catastrophe losses in the second quarter of
2020 were from 20 catastrophic events, primarily from severe
convective storms in the Midwest and Southern United States as we
previously announced on July 29, 2020."
______________(1) Per share amounts are after tax.(2) 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 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. (3)
Return on equity is calculated by dividing annualized net income by
average year-to-date stockholders' equity.
"I'm pleased to report that we continue to make progress with
improving the profitability in our commercial auto book. During the
second quarter, we saw a double digit improvement in our commercial
auto loss ratio, with a decrease of 10.2 points when compared with
the second quarter of 2019. Year-to-date, our commercial auto loss
ratio has improved 10.0 points compared to the same period in 2019.
We also continued to see a decline in the frequency of commercial
auto claims and a reduction in commercial auto exposure units in
the second quarter of 2020. The improvement in our commercial auto
book is a key contributor to the 5.8 point improvement in our core
loss ratio in the second quarter of 2020 compared with the second
quarter of 2019."
"With respect to the COVID-19 pandemic, we continue to expect
the impact of the COVID-19 pandemic to be manageable. There was
some impact to net premiums earned from the COVID-19 pandemic but
it was less significant than the impact from our focus on improving
the profitability of our commercial auto book in the first half of
2020. We anticipate some additional pressure on premiums in the
second half of the year as we expect some decrease in new business
submissions and net endorsement premiums as some businesses have
reduced payrolls, sales and other exposure units. As a reminder,
nearly all of the policies we have issued contain contract language
that specifically excludes business interruption coverage for
losses due to viruses such as the COVID-19 pandemic. However, we
cannot determine how any changes in legislation, regulations and
interpretations by the courts will impact the Company in the
future."
Financial Highlights
Net income, including net realized investment gains and losses,
totaled $6.0 million ($0.24 per diluted share) for the second
quarter of 2020, compared to net loss of $4.2 million ($0.17 per
diluted share) in the same period in 2019. The increase in net
income was primarily due to an increase in net realized investment
gains, a decrease in losses and loss settlement expenses and other
income all partially offset by decreases in earned premiums and
investment income. Year to date, consolidated net loss, including
realized investment gains and losses and changes in the fair value
of equity securities, was $66.6 million ($2.66 per diluted share),
compared to net income of $40.3 million ($1.57 per diluted share)
for the same period in 2019. The decrease in net income was
primarily due to a decrease in the fair value of equity securities,
a decrease in net investment income and increases in losses and
loss settlement expenses.
Net premiums earned decreased 4.7 percent to $263.6 million in
the second quarter of 2020, compared to $276.5 million in the same
period in 2019. Year-to-date net premiums earned decreased 1.2
percent to $532.5 million compared to $538.8 million in the same
period in 2019. The decrease in both the three- and six-month
periods ended June 30, 2020 was primarily due to our focus on
improving profitability through non-renewal of under-performing
accounts in our commercial auto line of business. There was some
impact to net premiums earned from the COVID-19 pandemic but it was
less significant than the impact from our commercial auto
profitability initiatives in the three- and six-month periods ended
June 30, 2020.
The average renewal pricing change for commercial lines
increased 6.6 percent in the second quarter of 2020 compared to a
7.6 percent increase in the first quarter of 2020. The renewal
pricing increases were driven by commercial auto and commercial
property rate increases. During the second quarter of 2020, the
commercial auto effective rate change increased by 12.4 percent
compared to a 11.6 percent increase in the first quarter of 2020.
Also, during the second quarter of 2020, the commercial property
effective rate change increased to 7.3 percent compared to a 5.9
percent increase in the first quarter of 2020. Personal lines
renewal pricing increases remained in the mid-single
digits.
Net investment income was $12.7 million for the second
quarter of 2020 as compared to net investment income of
$14.1 million for the same period in 2019. The decrease
in net investment income in the second quarter of 2020 is primarily
due to a decrease in invested assets as compared to the same period
in 2019. Year-to date, net investment income was $15.1 million,
compared to net investment income of $30.6 million for the same
period in 2019. The decrease in net investment income was due to a
combination of a decrease in the fair value of our investments in
limited liability partnerships and a decrease in invested assets as
compared to the same period in 2019. The valuation of these
investments in limited liability partnerships varies from period to
period due to the current equity market conditions, specifically
related to financial institutions.
The Company recognized net realized investment gains of $15.8
million during the second quarter of 2020, compared to net realized
investment gains of $13.6 million for the same period in 2019. The
change in the three-month period ended June 30, 2020, as compared
to the same period in 2019, was primarily due to the increase in
the fair value of equity securities. Year-to-date, the Company
recognized net realized investment losses of $77.6 million compared
to net realized gains of $40.3 million. The decrease in the
six-month period ended June 30, 2020 as compared to the same period
in 2019 was primarily due to a decrease in the value of equity
securities of $60.8 million, compared with an increase of $37.1
million, respectively.
The 6.8 percent decrease in losses and loss settlement expenses
during the second quarter of 2020 as compared to the same period of
2019 was due to an improvement in the performance of our core book
of business, specifically our commercial auto and liability lines
of business partially offset by an increase in catastrophe losses.
Year-to-date, the 1.9 percent increase in losses and loss
settlement expenses as compared to the same period in 2019 was
primarily due to an increase in severity of non-catastrophe losses
and an increase in catastrophe losses.
Other income of $5.7 million before tax recognized during the
second quarter of 2020 was the result of a personal lines renewal
rights agreement we entered into with Nationwide Mutual Insurance
Company in May 2020.
Consolidated net unrealized investment gains, net of tax,
totaled $79.3 million as of June 30, 2020, an increase of
$32.0 million from December 31, 2019. The increase in net
unrealized investment gains is primarily the result of a decrease
in interest rates in the first half of 2020.
Total consolidated assets as of June 30, 2020 were $3.0
billion, which included $2.0 billion of invested assets. The
Company's book value per share was $34.38, which is a decrease of
$2.02 per share, or 5.5 percent from December 31, 2019. This
decrease is primarily attributed to a net loss of $66.6 million,
shareholder dividends of $16.5 million and share repurchases of
$2.7 million, partially offset by an increase in net unrealized
investment gains on fixed maturity securities of $32.0 million, net
of tax, during the first six months of 2020.
The annualized return on equity was (15.0) percent year-to-date
compared to 8.7 percent for the same period in 2019. The change in
the annualized return on equity was primarily driven by a net loss
of $66.6 million in the first six months of 2020 compared to the
same period in 2019.
Reserve Development
We experienced favorable development in our net reserves for
prior accident years of $10.0 million in the second quarter of
2020, compared to unfavorable development of $9.4 million in the
same period in 2019. Year-to-date, favorable development in our net
reserves for prior accident years was $23.8 million, compared to
$4.7 million unfavorable development in the same period in 2019.
The favorable prior year reserve development in the three- and
six-month periods ended June 30, 2020 came primarily from our
commercial fire and allied and workers' compensation lines of
business. 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,
2020, our total reserves were within our actuarial estimates.
GAAP Combined Ratio
The GAAP combined ratio decreased by 0.3 percentage points to
111.4 percent for the second quarter of 2020, compared to 111.7
percent in the same period in 2019. The decrease in the combined
ratio was primarily driven by a decrease in the loss ratio offset
by an increase in the expense ratio. For the six-month period ended
June 30, 2020, the GAAP combined ratio increased 4.3 percentage
points to 108.2 percent compared to 103.9 percent for the six-month
period ended June 30, 2019. The increase in the combined ratio is
primarily driven by a combination of increases in the net loss
ratio and expense ratio.
Net Loss Ratio
The GAAP net loss ratio improved 1.8 percentage points during
the second quarter of 2020 as compared to the same period in 2019.
The decrease in the second quarter of 2020 was primarily due to the
improvement in the performance of our core book of business,
specifically our commercial auto and liability lines of business
partially offset by an increase in catastrophe losses. During the
six-month period ended June 30, 2020, the net loss ratio
deteriorated 2.2 percentage points as compared to the same period
in 2019 primarily due to an increase in catastrophe losses.
Pre-tax catastrophe losses in the second quarter of 2020 were
higher when compared to second quarter of 2019, with catastrophe
losses adding 19.2 percentage points to the combined ratio in 2020
as compared to 8.0 percentage points in 2019. During the second
quarter, the Company incurred losses from 20 catastrophic events
primarily from severe convective storms in the Midwest and Southern
United States. Our 10-year historical average for second quarter
catastrophe losses is 12.2 percentage points added to the combined
ratio. Year-to-date, catastrophe losses totaled $65.9 million
($2.08 per diluted share) compared to $25.6 million ($0.79 per
diluted share) for the same period in 2019.
The GAAP net loss ratio excluding catastrophe losses and prior
accident year reserve development improved by 5.8 percentage points
in the three-month period ended June 30, 2020 and was flat in the
six-month period ended June 30, 2020 as compared to the same
periods of 2019. This decrease in the GAAP net loss ratio in the
three-month period ended June 30, 2020 compared to the same period
of 2019 was due to an improvement in the performance of our core
book of business, specifically our commercial auto and liability
lines of business.
Expense Ratio
The expense ratio for the second quarter of 2020 was 33.6
percentage points, compared to 32.1 percentage points for the
second quarter in 2019. The increase in the expense ratio during
the second quarter of 2020 as compared to the same period in 2019
is primarily due to our continued investment in technology,
including our multi-year Oasis project, an upgrade to our
technology platform designed to enhance core underwriting
decisions, selection of risks and productivity. Year-to-date, the
expense rate was 34.7 percent compared to 32.6 percent in the same
period in 2019. The increase in our investment in technology
contributed to the increase in the expense ratio, along with the
acceleration of the amortization of our deferred acquisition costs
in our commercial auto line of business from lower than expected
profitability.
Capital Management
During the second quarter of 2020, we declared and paid a $0.33
per share cash dividend to shareholders of record as of June 5,
2020. We have paid a quarterly dividend every quarter since March
1968. During the second quarter of 2020 we did not repurchase any
shares of our common stock. Year-to-date, we repurchased 70,467
shares of our common stock for a total purchase price of
approximately $2.7 million.
Earnings Call Access Information
An earnings call will be held at 9:00 a.m. Central Time on
August 5, 2020 to allow securities analysts, shareholders and
other interested parties the opportunity to hear management discuss
the Company's second quarter 2020 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 19, 2020. The replay access
information is toll-free 1-877-344-7529; conference ID no.
10140521.
Webcast: An audio webcast of the teleconference can be accessed
at the Company's investor relations page at
http://ir.ufginsurance.com/event or
https://services.choruscall.com/links/ufcs200805. The archived
audio webcast will be available until August 19, 2020.
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 1,000 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, 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 the 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(s)
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, 2019, filed with the
Securities and Exchange Commission ("SEC") on February 28,
2020, as updated in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020, filed with the SEC on May 6, 2020.
The risks identified in our Annual Report on Form 10-K (as updated)
and in our other SEC filings 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 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) |
2020 |
|
2019 |
Change % |
|
2020 |
|
2019 |
Change % |
|
Income Statement Data |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
5,960 |
|
|
$ |
(4,196 |
) |
242.0 |
% |
|
$ |
(66,574 |
) |
|
$ |
40,325 |
(265.1 |
) |
|
Less: after-tax net realized investment gains (losses) |
12,466 |
|
|
10,737 |
|
16.1 |
% |
|
(61,326 |
) |
|
31,840 |
(292.6 |
) |
|
Adjusted operating income (loss) |
$ |
(6,506 |
) |
|
$ |
(14,933 |
) |
56.4 |
% |
|
$ |
(5,248 |
) |
|
$ |
8,485 |
(161.9 |
)% |
| Diluted Earnings Per
Share Data |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
0.24 |
|
|
$ |
(0.17 |
) |
241.2 |
% |
|
$ |
(2.66 |
) |
|
$ |
1.57 |
(269.4 |
) |
|
Less: after-tax net realized investment gains (losses) |
0.50 |
|
|
0.42 |
|
19.0 |
% |
|
(2.45 |
) |
|
1.24 |
(297.6 |
) |
|
Adjusted operating income (loss) |
$ |
(0.26 |
) |
|
$ |
(0.59 |
) |
55.9 |
% |
|
$ |
(0.21 |
) |
|
$ |
0.33 |
(163.6 |
)% |
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) |
2020 |
|
2019 |
Change % |
|
2020 |
|
2019 |
Change % |
|
Premiums: |
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
263,609 |
|
|
$ |
276,486 |
|
(4.7 |
)% |
|
$ |
532,458 |
|
|
$ |
538,800 |
|
(1.2 |
)% |
|
Less: change in unearned premiums |
(9,841 |
) |
|
(29,267 |
) |
66.4 |
% |
|
(25,639 |
) |
|
(47,062 |
) |
45.5 |
|
|
Less: change in prepaid reinsurance premiums |
2,817 |
|
|
606 |
|
NM |
|
|
4,956 |
|
|
1,049 |
|
NM |
|
|
Net premiums written |
$ |
270,633 |
|
|
$ |
305,147 |
|
(11.3 |
)% |
|
$ |
553,141 |
|
|
$ |
584,813 |
|
(5.4 |
)% |
NM = Not meaningful.
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) |
2020 |
|
2019 |
Change % |
|
2020 |
|
2019 |
Change % |
|
Revenue Highlights |
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
263,609 |
|
|
$ |
276,486 |
|
|
(4.7 |
)% |
|
$ |
532,458 |
|
|
$ |
538,800 |
|
(1.2 |
)% |
|
Net investment income |
12,696 |
|
|
14,120 |
|
|
(10.1 |
)% |
|
15,059 |
|
|
30,632 |
|
(50.8 |
)% |
|
Net realized investment gains (losses) |
15,779 |
|
|
13,591 |
|
|
16.1 |
% |
|
(77,628 |
) |
|
40,304 |
|
(292.6 |
)% |
|
Other income |
5,719 |
|
|
— |
|
|
NM |
|
|
5,719 |
|
|
— |
|
NM |
|
|
Total revenues |
297,803 |
|
|
304,197 |
|
|
(2.1 |
)% |
|
$ |
475,608 |
|
|
$ |
609,736 |
|
(22.0 |
)% |
| Income Statement
Data |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
5,960 |
|
|
(4,196 |
) |
|
242.0 |
% |
|
$ |
(66,574 |
) |
|
$ |
40,325 |
|
(265.1 |
)% |
|
After-tax net realized investment gains (losses) |
12,466 |
|
|
10,737 |
|
|
16.1 |
% |
|
(61,326 |
) |
|
31,840 |
|
(292.6 |
)% |
|
Adjusted operating income (loss)(1) |
$ |
(6,506 |
) |
|
$ |
(14,933 |
) |
|
56.4 |
% |
|
$ |
(5,248 |
) |
|
$ |
8,485 |
|
(161.9 |
)% |
| Diluted Earnings Per
Share Data |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
0.24 |
|
|
$ |
(0.17 |
) |
|
241.2 |
% |
|
$ |
(2.66 |
) |
|
$ |
1.57 |
|
(269.4 |
)% |
|
After-tax net realized investment gains (losses) |
0.50 |
|
|
0.42 |
|
|
19.0 |
% |
|
(2.45 |
) |
|
1.24 |
|
(297.6 |
)% |
|
Adjusted operating income (loss)(1) |
$ |
(0.26 |
) |
|
$ |
(0.59 |
) |
|
55.9 |
% |
|
$ |
(0.21 |
) |
|
$ |
0.33 |
|
(163.6 |
)% |
| Catastrophe
Data |
|
|
|
|
|
|
|
|
|
|
Pre-tax catastrophe losses |
$ |
50,634 |
|
|
$ |
22,006 |
|
|
130.1 |
% |
|
$ |
65,900 |
|
|
$ |
25,636 |
|
157.1 |
% |
|
Effect on after-tax earnings per share |
1.58 |
|
|
0.69 |
|
|
129.0 |
% |
|
2.08 |
|
|
0.79 |
|
163.3 |
% |
|
Effect on combined ratio |
19.2 |
% |
|
8.0 |
% |
|
140.0 |
% |
|
12.4 |
% |
|
4.8 |
% |
158.3 |
% |
| |
|
|
|
|
|
|
|
|
|
| Favorable (unfavorable)
reserve development experienced on prior accident years |
$ |
10,023 |
|
|
$ |
(9,391 |
) |
|
206.7 |
% |
|
$ |
23,770 |
|
|
$ |
(4,742 |
) |
NM |
|
| |
|
|
|
|
|
|
|
|
|
| GAAP combined ratio |
111.4 |
% |
|
111.7 |
% |
|
(0.3 |
)% |
|
108.2 |
% |
|
103.9 |
% |
4.1 |
% |
| Return on equity |
|
|
|
|
|
(15.0 |
)% |
|
8.7 |
% |
(272.4 |
)% |
| Cash dividends declared per
share |
$ |
0.33 |
|
|
$ |
0.33 |
|
|
— |
|
|
$ |
0.66 |
|
|
$ |
0.64 |
|
3.1 |
% |
| Diluted
weighted average shares outstanding |
25,255,604 |
|
|
25,210,354 |
|
|
0.2 |
% |
|
25,019,441 |
|
|
25,659,803 |
|
(2.5 |
)% |
NM = Not meaningful(1) Adjusted operating income 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 to net income
(loss).
|
Income Statement |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| (In Thousands, Except
Ratios) |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Revenues |
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
263,609 |
|
|
$ |
276,486 |
|
|
$ |
532,458 |
|
|
$ |
538,800 |
|
| Investment income, net of
investment expenses |
12,696 |
|
|
14,120 |
|
|
15,059 |
|
|
30,632 |
|
| Net realized investment gains
(losses) |
|
|
|
|
|
|
|
|
Change in the fair value of equity securities |
29,809 |
|
|
12,499 |
|
|
(60,838 |
) |
|
37,133 |
|
|
All other net realized gains (losses) |
(14,030 |
) |
|
1,092 |
|
|
(16,790 |
) |
|
3,171 |
|
| Net realized investment gains
(losses) |
15,779 |
|
|
13,591 |
|
|
(77,628 |
) |
|
40,304 |
|
| Other income |
5,719 |
|
|
— |
|
|
5,719 |
|
|
— |
|
|
Total Revenues |
$ |
297,803 |
|
|
$ |
304,197 |
|
|
$ |
475,608 |
|
|
$ |
609,736 |
|
| |
|
|
|
|
|
|
|
| Benefits, Losses and
Expenses |
|
|
|
|
|
|
|
| Losses and loss settlement
expenses |
$ |
204,973 |
|
|
$ |
220,009 |
|
|
$ |
391,476 |
|
|
$ |
384,249 |
|
| Amortization of deferred
policy acquisition costs |
51,893 |
|
|
54,795 |
|
|
106,345 |
|
|
107,014 |
|
| Other underwriting
expenses |
36,701 |
|
|
33,964 |
|
|
78,550 |
|
|
68,367 |
|
|
Total Benefits, Losses and Expenses |
$ |
293,567 |
|
|
$ |
308,768 |
|
|
$ |
576,371 |
|
|
$ |
559,630 |
|
| |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
4,236 |
|
|
(4,571 |
) |
|
(100,763 |
) |
|
50,106 |
|
|
Federal income tax expense (benefit) |
(1,724 |
) |
|
(375 |
) |
|
(34,189 |
) |
|
9,781 |
|
|
Net income (loss) |
$ |
5,960 |
|
|
$ |
(4,196 |
) |
|
$ |
(66,574 |
) |
|
$ |
40,325 |
|
|
|
|
|
|
|
|
|
|
|
GAAP combined ratio: |
|
|
|
|
|
|
|
|
Net loss ratio - excluding catastrophes |
58.6 |
% |
|
71.6 |
% |
|
61.1 |
% |
|
66.5 |
% |
| Catastrophes - effect on net
loss ratio |
19.2 |
|
|
8.0 |
|
|
12.4 |
|
|
4.8 |
|
|
Net loss ratio |
77.8 |
% |
|
79.6 |
% |
|
73.5 |
% |
|
71.3 |
% |
|
Expense ratio |
33.6 |
|
|
32.1 |
|
|
34.7 |
|
|
32.6 |
|
|
GAAP combined ratio |
111.4 |
% |
|
111.7 |
% |
|
108.2 |
% |
|
103.9 |
% |
|
Balance Sheet |
|
|
June 30, 2020 |
|
December 31, 2019 |
| (In Thousands) |
|
|
Invested assets |
$ |
2,031,740 |
|
|
$ |
2,155,099 |
|
| Cash |
146,262 |
|
|
120,722 |
|
| Total assets |
3,034,913 |
|
|
3,013,472 |
|
| Losses and loss settlement
expenses |
1,477,689 |
|
|
1,421,754 |
|
| Total liabilities |
2,174,246 |
|
|
2,103,000 |
|
| Net unrealized investment
gains, after-tax |
79,283 |
|
|
47,279 |
|
| Total
stockholders’ equity |
860,667 |
|
|
910,472 |
|
|
Net Premiums Written by Line of Business |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(In Thousands) |
|
|
|
|
Net Premiums Written(1) |
|
|
|
|
|
|
|
|
Commercial lines: |
|
|
|
|
|
|
|
|
Other liability(2) |
$ |
82,250 |
|
$ |
88,169 |
|
$ |
167,190 |
|
$ |
171,483 |
|
Fire and allied lines(3) |
64,161 |
|
64,611 |
|
131,003 |
|
127,515 |
|
Automobile |
71,842 |
|
89,268 |
|
151,028 |
|
171,579 |
|
Workers’ compensation |
19,417 |
|
24,447 |
|
41,156 |
|
48,905 |
|
Fidelity and surety |
8,636 |
|
7,335 |
|
15,611 |
|
13,503 |
|
Miscellaneous |
392 |
|
453 |
|
807 |
|
918 |
|
Total commercial lines |
$ |
246,698 |
|
$ |
274,283 |
|
$ |
506,795 |
|
$ |
533,903 |
|
|
|
|
|
|
|
|
|
|
Personal lines: |
|
|
|
|
|
|
|
|
Fire and allied lines(4) |
$ |
9,747 |
|
$ |
10,839 |
|
$ |
18,140 |
|
$ |
19,760 |
|
Automobile |
7,144 |
|
8,051 |
|
14,710 |
|
15,717 |
|
Miscellaneous |
307 |
|
330 |
|
610 |
|
624 |
|
Total personal lines |
$ |
17,198 |
|
$ |
19,220 |
|
$ |
33,460 |
|
$ |
36,101 |
|
Reinsurance assumed |
6,737 |
|
11,644 |
|
12,886 |
|
14,809 |
|
Total |
270,633 |
|
305,147 |
|
$ |
553,141 |
|
$ |
584,813 |
(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, Net Losses and Loss Settlement
Expenses and Net Loss Ratio by Line of Business |
|
Three Months Ended June 30, |
2020 |
|
2019 |
|
|
|
|
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 |
$ |
77,407 |
|
|
$ |
46,914 |
|
|
60.6 |
% |
|
$ |
79,452 |
|
|
$ |
57,582 |
|
|
|
72.5 |
% |
|
Fire and allied lines |
62,592 |
|
|
67,055 |
|
|
107.1 |
|
|
60,615 |
|
|
55,851 |
|
|
|
92.1 |
|
|
Automobile |
73,682 |
|
|
58,014 |
|
|
78.7 |
|
|
78,472 |
|
|
69,766 |
|
|
|
88.9 |
|
|
Workers' compensation |
19,200 |
|
|
6,247 |
|
|
32.5 |
|
|
22,621 |
|
|
9,378 |
|
|
|
41.5 |
|
|
Fidelity and surety |
6,332 |
|
|
110 |
|
|
1.7 |
|
|
6,146 |
|
|
(650 |
) |
|
|
(10.6 |
) |
|
Miscellaneous |
385 |
|
|
96 |
|
|
24.9 |
|
|
436 |
|
|
99 |
|
|
|
22.7 |
|
|
Total commercial lines |
$ |
239,598 |
|
|
$ |
178,436 |
|
|
74.5 |
% |
|
$ |
247,742 |
|
|
$ |
192,026 |
|
|
|
77.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Personal lines |
|
|
|
|
|
|
|
|
|
|
|
|
Fire and allied lines |
$ |
9,819 |
|
|
$ |
19,187 |
|
|
195.4 |
% |
|
$ |
10,302 |
|
|
$ |
14,386 |
|
|
|
139.6 |
% |
|
Automobile |
7,518 |
|
|
2,464 |
|
|
32.8 |
|
|
7,698 |
|
|
6,809 |
|
|
|
88.5 |
|
|
Miscellaneous |
304 |
|
|
52 |
|
|
17.1 |
|
|
307 |
|
|
552 |
|
|
|
179.8 |
|
|
Total personal lines |
$ |
17,641 |
|
|
$ |
21,703 |
|
|
123.0 |
% |
|
$ |
18,307 |
|
|
$ |
21,747 |
|
|
|
118.8 |
% |
|
Reinsurance assumed |
$ |
6,370 |
|
|
$ |
4,834 |
|
|
75.9 |
% |
|
$ |
10,437 |
|
|
$ |
6,236 |
|
|
|
59.7 |
% |
|
Total |
$ |
263,609 |
|
|
$ |
204,973 |
|
|
77.8 |
% |
|
$ |
276,486 |
|
|
$ |
220,009 |
|
|
|
79.6 |
% |
|
Net Premiums Earned, Net Losses and Loss Settlement
Expenses and Net Loss Ratio by Line of Business |
|
Six Months Ended June 30, |
2020 |
|
2019 |
|
|
|
|
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 |
$ |
156,716 |
|
|
$ |
90,637 |
|
|
57.8 |
% |
|
$ |
157,879 |
|
|
$ |
95,857 |
|
|
|
60.7 |
% |
|
Fire and allied lines |
124,261 |
|
|
118,980 |
|
|
95.8 |
|
|
119,789 |
|
|
92,637 |
|
|
|
77.3 |
|
|
Automobile |
151,700 |
|
|
123,319 |
|
|
81.3 |
|
|
153,706 |
|
|
140,337 |
|
|
|
91.3 |
|
|
Workers' compensation |
38,628 |
|
|
13,955 |
|
|
36.1 |
|
|
44,496 |
|
|
15,323 |
|
|
|
34.4 |
|
|
Fidelity and surety |
12,750 |
|
|
142 |
|
|
1.1 |
|
|
12,521 |
|
|
(901 |
) |
|
|
(7.2 |
) |
|
Miscellaneous |
780 |
|
|
188 |
|
|
24.1 |
|
|
863 |
|
|
— |
|
|
|
— |
|
|
Total commercial lines |
$ |
484,835 |
|
|
$ |
347,221 |
|
|
71.6 |
% |
|
$ |
489,254 |
|
|
$ |
343,253 |
|
|
|
70.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Personal lines |
|
|
|
|
|
|
|
|
|
|
|
|
Fire and allied lines |
$ |
19,789 |
|
|
$ |
25,921 |
|
|
131.0 |
% |
|
$ |
20,522 |
|
|
$ |
20,668 |
|
|
|
100.7 |
% |
|
Automobile |
15,148 |
|
|
7,613 |
|
|
50.3 |
|
|
15,180 |
|
|
12,476 |
|
|
|
82.2 |
|
|
Miscellaneous |
610 |
|
|
2,658 |
|
|
435.7 |
|
|
608 |
|
|
484 |
|
|
|
79.6 |
|
|
Total personal lines |
$ |
35,547 |
|
|
$ |
36,192 |
|
|
101.8 |
% |
|
$ |
36,310 |
|
|
$ |
33,628 |
|
|
|
92.6 |
% |
|
Reinsurance assumed |
$ |
12,076 |
|
|
$ |
8,063 |
|
|
66.8 |
% |
|
$ |
13,236 |
|
|
$ |
7,368 |
|
|
|
55.7 |
% |
|
Total |
$ |
532,458 |
|
|
$ |
391,476 |
|
|
73.5 |
% |
|
$ |
538,800 |
|
|
$ |
384,249 |
|
|
|
71.3 |
% |
United Fire (NASDAQ:UFCS)
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