United Fire Group, Inc. Reports Estimates for Second Quarter 2020 Results
United Fire Group, Inc.
(the "Company" or "UFG")
(Nasdaq: UFCS) announced today that the second quarter 2020 results
include pre-tax catastrophe losses of $50.6 million. Catastrophe
losses for the second quarter added 19.2 percentage points to the
GAAP combined ratio. Our 10-year historical average for the second
quarter is 12.2 percentage points of the GAAP combined ratio. The
higher than average catastrophe losses in the second quarter of
2020 are primarily the result of 20 severe convective storms in the
Midwest and Southern United States. The majority of the losses are
from 7 of these 20 catastrophic events.
With respect to the COVID-19 pandemic, we continue to expect the
impact of the COVID-19 pandemic to be manageable. 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.
Including the impact of the catastrophe losses, the estimated
GAAP combined ratio will be in the range of 110 percent to 112.5
percent in the second quarter of 2020. The Company estimates
reporting net income in the range of $0.22 to $0.25 per diluted
share and an adjusted operating loss(1) in the range of $0.25 to
$0.28 per diluted share in the second quarter of 2020. These
numbers are unaudited.
United Fire Group, Inc. will report second quarter 2020 earnings
before the market opens on August 5, 2020, and will host a
conference call to discuss its financial results at 9:00 a.m.
Central time on that date.
Adjusted operating income (loss) 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,
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.
Contact: Randy Patten, AVP &
Controller, 319-286-2537 or firstname.lastname@example.org
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
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 release include adjusted operating income (loss). The
Company has provided the following definitions and reconciliations
of adjusted operating income (loss):
Adjusted operating income (loss): Adjusted
operating income (loss) 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 (loss) 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. The difference
between estimated net income in the range of $0.22 to $0.25 per
diluted share and adjusted operating loss in the range of $0.25 to
$0.28 per diluted share in the second quarter of 2020 is estimated
after-tax net realized investment gains in the range of $0.47 to
$0.53 per diluted share.