United Fire Group, Inc. (Nasdaq: UFCS)

Consolidated Financial Results - Highlights(1):

Three Months Ended September 30, 2020     Nine Months Ended September 30, 2020  
Net income (loss) per diluted share $ (1.49 )     Net income (loss) per diluted share $ (4.15 )  
Adjusted operating income (loss)(2) per diluted share $ (1.37 )     Adjusted operating income (loss)(2) per diluted share $ (1.58 )  
Net realized investment gains per diluted share $ 0.48       Net realized investment gains (losses) per diluted share $ (1.97 )  
Goodwill impairment $ (0.60 )     Goodwill impairment $ (0.60 )  
GAAP combined ratio 124.4   %   GAAP combined ratio 113.5   %
      Book value per share $ 32.77    
      Return on equity(3) (16.0 ) %

United Fire Group, Inc. (the "Company" or "UFG") (Nasdaq: UFCS) today reported a consolidated net loss, including net realized investment gains and losses and changes in the fair value of equity securities, of $37.2 million ($1.49 per diluted share) for the three-month period ended September 30, 2020 (the "third quarter of 2020"), compared to consolidated net loss of $2.3 million ($0.09 per diluted share) for the same period in 2019. For the nine-month period ended September 30, 2020 ("year-to-date"), consolidated net loss, including realized investment gains and losses and changes in the fair value of equity securities, was $103.8 million ($4.15 per diluted share), compared to net income of $38.0 million ($1.48 per diluted share) for the same period in 2019.

The Company reported consolidated adjusted operating loss of $1.37 per diluted share for the third quarter of 2020, compared to consolidated adjusted operating loss of $0.40 per diluted share for the same period in 2019. Year-to-date, consolidated adjusted operating loss was $1.58 per diluted share compared to consolidated adjusted operating loss of $0.06 per diluted share for the same period in 2019.

"The third quarter of 2020, similar to the second quarter, was once again impacted by historically high catastrophe losses," stated Randy A. Ramlo, President and Chief Executive Officer. "Catastrophe losses in the third quarter of 2020 totaled $55.4 million and added 21.4 percentage points to the GAAP combined ratio. The catastrophe losses were from 25 catastrophe events, with the most notable catastrophe event being the August Midwest derecho, causing widespread storms and high winds. The August Midwest derecho was a full retention loss, with losses in excess of our stated reinsurance retention of $20.0 million. Total losses from this storm were $88.0 million with $68.0 million of reinsurance recoveries."___________(1) Per share amounts are after tax.(2) 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, and goodwill impairment. 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 (loss) to net income (loss). (3) Return on equity is calculated by dividing annualized net income (loss) by average year-to-date stockholders' equity.

"Removing the impact of catastrophe losses and favorable prior year reserve development, our core loss ratio improved again in the third quarter 2020 and year-to-date 2020, with improvements of 0.4 and 0.3 percentages points, respectively, to the combined ratio. Year-to-date, our commercial auto loss ratio improved 4.8 points compared to the same period in 2019. This improvement is being driven by continuing decreases in the frequency of commercial auto claims and a decrease in the number of commercial auto exposure units, both positive signs of progress with our strategic initiatives. However, we know we have work to do, as our commercial auto loss ratio remains higher than acceptable with severity of commercial auto losses and reserve strengthening continuing in the third quarter of 2020."

"We continue to expect the impact of the COVID-19 pandemic to be manageable. As we mentioned the last two quarters, there was some impact to net premiums earned due to the impact of 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 nine months of 2020. 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 regarding these exclusions will impact the Company in the future."

Financial Highlights

Net loss, including net realized investment gains and losses, totaled $37.2 million ($1.49 per diluted share) for the third quarter of 2020, compared to a net loss of $2.3 million ($0.09 per diluted share) in the same period in 2019. The increase in the net loss was primarily due to an increase in losses and loss settlement expenses, namely from catastrophe losses, and a decrease in net premiums earned. Year to date, consolidated net loss, including realized investment gains and losses and changes in the fair value of equity securities, was $103.8 million ($4.15 per diluted share), compared to net income of $38.0 million ($1.48 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, a decrease in net premiums earned and increases in losses and loss settlement expenses.

Net premiums earned decreased 5.8 percent to $259.1 million in the third quarter of 2020, compared to $274.9 million in the same period in 2019. Year-to-date net premiums earned decreased 2.7 percent to $791.5 million compared to $813.7 million in the same period in 2019. The decrease in both the three- and nine-month periods ended September 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. Also, during the third quarter of 2020, we paid $9.0 million of reinstatement premium with our reinsurance program as a result of the August Midwest derecho catastrophe exceeding the reinsurance contract stated retention. There was also 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 nine-month periods ended September 30, 2020.

The average renewal pricing increases were driven by commercial auto and commercial property. During the third quarter of 2020, the commercial auto average renewal rate increase remained in the double digits at 11.5 percent. The commercial property average renewal rate increase was 5.8 percent, remaining in the mid-single digits again in the third quarter of 2020. 

Net investment income was $7.2 million for the third quarter of 2020, as compared to net investment income of $13.3 million for the same period in 2019. Year-to date, net investment income was $22.3 million, compared to net investment income of $43.9 million for the same period in 2019. The decrease in net investment income in both periods in 2020 as compared to the same periods in 2019 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. 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 $15.2 million during the third quarter of 2020, compared to net realized investment gains of $9.8 million for the same period in 2019. Year-to-date, the Company recognized net realized investment losses of $62.4 million compared to net realized gains of $50.1 million. The change in the three- and nine-month periods ended September 30, 2020 as compared to the same periods in 2019 was primarily due to the change in the fair value of equity securities.

Losses and loss settlement expenses increased by 10.8 percentage points and by 5.1 percentage points during the three- and nine-month periods ended September 30, 2020, compared to the same periods of 2019. The increase in losses and loss settlement expenses primarily was due to an increase in catastrophe losses as compared to the same period in 2019.

A one-time adjustment to write off goodwill of $15.1 million was made during the third quarter of 2020 after completing a quantitative goodwill analysis. This goodwill related to the acquisition of Mercer Insurance Group, Inc. in 2011.

Consolidated net unrealized investment gains, net of tax, totaled $82.5 million as of September 30, 2020, an increase of $35.2 million from December 31, 2019. The increase in net unrealized investment gains was primarily the result of a decrease in interest rates in the nine-month period ended September 30, 2020.

Total consolidated assets as of September 30, 2020 were $3.0 billion, which included $2.0 billion of invested assets. The Company's book value per share was $32.77, which is a decrease of $3.63 per share, or 10.0 percent, from December 31, 2019. This decrease is primarily attributed to a net loss of $103.8 million, shareholder dividends of $24.8 million and share repurchases of $2.7 million, partially offset by an increase in net unrealized investment gains on fixed maturity securities of $35.2 million, net of tax, during the first nine months of 2020.

The annualized return on equity was (16.0) percent year-to-date compared to 5.5 percent for the same period in 2019. The change in the annualized return on equity was primarily driven by a net loss of $103.8 million in the first nine months of 2020 compared to net income of $38.0 million in the same period in 2019.

Reserve Development

We experienced favorable development in our net reserves for prior accident years of $6.3 million in the third quarter of 2020, compared to favorable development of $5.5 million in the same period in 2019. The favorable prior year reserve development in the three-month period ended September 30, 2020 came primarily from our workers' compensation and commercial liability lines of business. Year-to-date, favorable development in our net reserves for prior accident years was $30.0 million, compared to $0.8 million favorable development in the same period in 2019. The favorable prior year reserve development in the nine-month period ended September 30, 2020 came primarily from our workers' compensation and commercial fire and allied 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 September 30, 2020, our total reserves were within our actuarial estimates.

GAAP Combined Ratio

The GAAP combined ratio increased by 14.4 percentage points to 124.4 percent for the third quarter of 2020, compared to 110.0 percent in the same period in 2019.  For the nine-month period ended September 30, 2020, the GAAP combined ratio increased 7.5 percentage points to 113.5 percent compared to 106.0 percent for the nine-month period ended September 30, 2019. The increase in the combined ratio during the three- and nine-month periods ended September 30, 2020 as compared to the same periods in 2019 was primarily driven by an increase in the net loss ratio.

Net Loss Ratio

The GAAP net loss ratio deteriorated 13.6 percentage points and 5.8 percentage points, respectively, during the three- and nine-month periods ended September 30, 2020, as compared to the same periods in 2019. The increase in the net loss ratio was primarily due to an increase in catastrophe losses.

Pre-tax catastrophe losses in the third quarter of 2020 were higher when compared to third quarter of 2019, with catastrophe losses adding 21.4 percentage points to the combined ratio in 2020, as compared to 7.0 percentage points in 2019. During the third quarter, the Company incurred losses from 25 catastrophe events, with the most significant losses from the August Midwest derecho and Hurricane Laura. Our 10-year historical average for third quarter catastrophe losses is 8.9 percentage points added to the combined ratio. Year-to-date, catastrophe losses totaled $121.3 million ($3.83 per diluted share) compared to $44.9 million ($1.38 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 0.4 percentage points in the three-month period ended September 30, 2020 and 0.3 percentage points in the nine-month period ended September 30, 2020 as compared to the same periods of 2019. This decrease in the GAAP net loss ratio in the three- and nine-month periods ended September 30, 2020 compared to the same periods of 2019 was due to an improvement in the performance of our core book of business.

Expense Ratio

The expense ratio for the third quarter of 2020 was 33.8 percent compared to 33.0 percent for the third quarter in 2019. Year-to-date, the expense ratio was 34.4 percent compared to 32.7 percent in the same period in 2019. The increase in the expense ratio during the three- and nine-month periods ended September 30, 2020 as compared to the same periods in 2019 was 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.

Capital Management

During the third quarter of 2020, we declared and paid a $0.33 per share cash dividend to shareholders of record as of September 4, 2020. We have paid a quarterly dividend every quarter since March 1968. During the third 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 November 4, 2020 to allow securities analysts, shareholders and other interested parties the opportunity to hear management discuss the Company's third quarter of 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 November 18, 2020. The replay access information is toll-free 1-877-344-7529; conference ID no. 10148230.

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/ufcs201104. The archived audio webcast will be available until November 18, 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 48 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)," "intend(s)," "plan(s)," "believe(s)," "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "remain(s) optimistic," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will," "might," "hope," "can" and 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 (loss) and net premiums written. The Company has provided the following definitions and reconciliations of the non-GAAP financial measures:

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, and goodwill impairment 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.

Net Income Reconciliation
  Three Months Ended September 30,   Nine Months Ended September 30,
(In Thousands, Except Per Share Data) 2020   2019 Change %   2020   2019 Change %
Income Statement Data                                                
Net income (loss) $ (37,241 )     $ (2,342 )   NM   $ (103,815 )     $ 37,983     NM
Less: after-tax net realized investment gains (losses) 12,017       7,760     54.9 %   (49,309 )     39,600     (224.5 ) %
Less: goodwill impairment (15,091 )         NM   (15,091 )         NM
Adjusted operating income (loss) $ (34,167 )     $ (10,102 )   NM   $ (39,415 )     $ (1,617 )   NM
Diluted Earnings Per Share Data                  
Net income (loss) $ (1.49 )     $ (0.09 )   NM   $ (4.15 )     $ 1.48     NM
Less: after-tax net realized investment gains (losses) 0.48       0.31     54.8 %   (1.97 )     1.54     (227.9 ) %
Less: goodwill impairment (0.60 )         NM   (0.60 )         NM
Adjusted operating income (loss) $ (1.37 )     $ (0.40 )   NM   $ (1.58 )     $ (0.06 )   NM

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 September 30,   Nine Months Ended September 30,
(In Thousands, Except Ratios) 2020   2019 Change %   2020   2019 Change %
Premiums:                  
Net premiums earned $ 259,061       $ 274,942     (5.8 ) %   $ 791,519     $ 813,742     (2.7 ) %
Less: change in unearned premiums 31,072       11,766     164.1   %   5,433     (35,296 )   115.4   %
Less: change in prepaid reinsurance premiums (2,222 )     (163 )   NM   2,734     886     208.6   %
Net premiums written $ 230,211       $ 263,339     (12.6 ) %   $ 783,352     $ 848,152     (7.6 ) %

NM = Not meaningful.

Supplemental Tables

Consolidated Financial Highlights
(unaudited) Three Months Ended September 30,   Nine Months Ended September 30,
(In Thousands, Except Share and Per Share Data and Ratios) 2020   2019 Change %   2020   2019 Change %
Revenue Highlights                  
Net premiums earned $ 259,061       $ 274,942     (5.8 ) %   $ 791,519       $ 813,742     (2.7 ) %
Net investment income 7,244       13,291     (45.5 ) %   22,303       43,923     (49.2 ) %
Net realized investment gains (losses) 15,212       9,822     54.9   %   (62,416 )     50,126     (224.5 ) %
Other income 604           NM   6,323           NM
Total revenues 282,121       298,055     (5.3 ) %   $ 757,729       $ 907,791     (16.5 ) %
Income Statement Data                  
Net income (loss) (37,241 )     (2,342 )   NM   $ (103,815 )     $ 37,983     NM
After-tax net realized investment gains (losses) 12,017       7,760     54.9   %   (49,309 )     39,600     (224.5 ) %
Goodwill impairment (15,091 )         NM   (15,091 )         NM
Adjusted operating income (loss)(1) $ (34,167 )     $ (10,102 )   NM   $ (39,415 )     $ (1,617 )   NM
Diluted Earnings Per Share Data                  
Net income (loss) $ (1.49 )     $ (0.09 )   NM   $ (4.15 )     $ 1.48     NM
After-tax net realized investment gains (losses) 0.48       0.31     54.8   %   (1.97 )     1.54     (227.9 ) %
Goodwill impairment (0.60 )         NM   (0.60 )         NM
Adjusted operating income (loss)(1) $ (1.37 )     $ (0.40 )   NM   $ (1.58 )     $ (0.06 )   NM
Catastrophe Data                  
Pre-tax catastrophe losses $ 55,361       $ 19,292     187.0   %   $ 121,261       $ 44,927     169.9   %
Effect on after-tax earnings per share 1.75       0.61     186.9   %   3.83       1.38     177.5   %
Effect on combined ratio 21.4   %   7.0   % 205.7   %   15.3   %   5.5   % 178.2   %
                   
Favorable reserve development experienced on prior accident years $ 6,269       $ 5,513     13.7   %   $ 30,038       $ 770     NM
                   
GAAP combined ratio 124.4   %   110.0   % 13.1   %   113.5   %   106.0   % 7.1   %
Return on equity           (16.0 ) %   5.5   % NM
Cash dividends declared per share $ 0.33       $ 0.33           $ 0.99       $ 0.97     2.1   %
Diluted weighted average shares outstanding 25,031,234       25,176,334     (0.6 ) %   25,023,401       25,643,744     (2.4 ) %

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
(unaudited) Three Months Ended September 30,   Nine Months Ended September 30,
(In Thousands, Except Ratios) 2020   2019   2020   2019
Revenues              
Net premiums earned $ 259,061       $ 274,942       $ 791,519       $ 813,742  
Investment income, net of investment expenses 7,244       13,291       22,303       43,923  
Net realized investment gains (losses) 15,212       9,822       (62,416 )     50,126  
Other income 604             6,323        
Total Revenues $ 282,121       $ 298,055       $ 757,729       $ 907,791  
               
Benefits, Losses and Expenses              
Losses and loss settlement expenses $ 234,693       $ 211,752       $ 626,169       $ 596,001  
Amortization of deferred policy acquisition costs 52,095       54,828       158,440       161,842  
Other underwriting expenses 35,470       36,003       114,020       104,370  
Goodwill impairment 15,091             15,091        
Total Benefits, Losses and Expenses $ 337,349       $ 302,583       $ 913,720       $ 862,213  
               
Income (loss) before income taxes (55,228 )     (4,528 )     (155,991 )     45,578  
Federal income tax expense (benefit) (17,987 )     (2,186 )     (52,176 )     7,595  
Net income (loss) $ (37,241 )     $ (2,342 )     $ (103,815 )     $ 37,983  
               
GAAP combined ratio:              
Net loss ratio - excluding catastrophes 69.2   %   70.0   %   63.8   %   67.8 %
Catastrophes - effect on net loss ratio 21.4       7.0       15.3       5.5  
Net loss ratio 90.6   %   77.0   %   79.1   %   73.3 %
Expense ratio 33.8       33.0       34.4       32.7  
GAAP combined ratio 124.4   %   110.0   %   113.5   %   106.0 %
Balance Sheet
(In Thousands) September 30, 2020   December 31, 2019
  (unaudited)    
Invested assets $ 2,041,452     $ 2,155,099  
Cash 99,604     120,722  
Total assets 3,048,480     3,013,472  
Losses and loss settlement expenses 1,555,083     1,421,754  
Total liabilities 2,228,198     2,103,000  
Net unrealized investment gains, after-tax 82,492     47,279  
Total stockholders’ equity 820,282     910,472  
Net Premiums Written by Line of Business
(unaudited) Three Months Ended September 30,   Nine Months Ended September 30,
  2020   2019   2020   2019
(In Thousands)      
Net Premiums Written(1)              
Commercial lines:              
Other liability(2) $ 71,140     $ 76,090     $ 238,330     $ 247,573  
Fire and allied lines(3) 54,766     61,846     185,769     189,361  
Automobile 63,419     75,222     214,447     246,801  
Workers’ compensation 16,325     18,988     57,481     67,893  
Fidelity and surety 7,535     6,644     23,146     20,147  
Miscellaneous 320     363     1,127     1,281  
Total commercial lines $ 213,505     $ 239,153     $ 720,300     $ 773,056  
               
Personal lines:              
Fire and allied lines(4) $ 3,065     $ 11,255     $ 21,205     $ 31,015  
Automobile 4,838     8,396     19,548     24,113  
Miscellaneous 203     337     813     961  
Total personal lines $ 8,106     $ 19,988     $ 41,566     $ 56,089  
Reinsurance assumed 8,600     4,198     21,486     19,007  
Total 230,211     263,339     $ 783,352     $ 848,152  

(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 September 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 $ 78,302     $ 45,111       57.6   %   $ 80,421     $ 50,656       63.0   %
Fire and allied lines 59,267     52,436       88.5       61,628     49,628       80.5    
Automobile 73,403     82,675       112.6       80,574     85,227       105.8    
Workers' compensation 19,245     10,250       53.3       22,041     3,076       14.0    
Fidelity and surety 7,356     (128 )     (1.7 )     6,755     1,437       21.3    
Miscellaneous 378     78       20.6       428     63       14.7    
Total commercial lines $ 237,951     $ 190,422       80.0   %   $ 251,847     $ 190,087       75.5   %
                       
Personal lines                      
Fire and allied lines $ 5,144     $ 29,451       NM   $ 10,370     $ 13,469       129.9   %
Automobile 7,055     8,322       118.0       7,870     6,946       88.3    
Miscellaneous 295     (97 )     (32.9 )     312     (130 )     (41.7 )  
Total personal lines $ 12,494     $ 37,676       NM   $ 18,552     $ 20,285       109.3   %
Reinsurance assumed $ 8,616     $ 6,595       76.5   %   $ 4,543     $ 1,380       30.4   %
Total $ 259,061     $ 234,693       90.6   %   $ 274,942     $ 211,752       77.0   %

NM = Not Meaningful

Net Premiums Earned, Net Losses and Loss Settlement Expenses and Net Loss Ratio by Line of Business
Nine Months Ended September 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 $ 235,018     $ 135,748     57.8 %   $ 238,300     $ 146,513     61.5 %
Fire and allied lines 183,528     171,416     93.4     181,417     142,265     78.4  
Automobile 225,103     205,994     91.5     234,280     225,564     96.3  
Workers' compensation 57,873     24,205     41.8     66,537     18,399     27.7  
Fidelity and surety 20,106     14     0.1     19,276     536     2.8  
Miscellaneous 1,158     266     23.0     1,291     63     4.9  
Total commercial lines $ 722,786     $ 537,643     74.4 %   $ 741,101     $ 533,340     72.0 %
                       
Personal lines                      
Fire and allied lines $ 24,933     $ 55,372     222.1 %   $ 30,892     $ 34,137     110.5 %
Automobile 22,203     15,935     71.8     23,050     19,422     84.3  
Miscellaneous 905     2,561     283.0     920     354     38.5  
Total personal lines $ 48,041     $ 73,868     153.8 %   $ 54,862     $ 53,913     98.3 %
Reinsurance assumed $ 20,692     $ 14,658     70.8 %   $ 17,779     $ 8,748     49.2 %
Total $ 791,519     $ 626,169     79.1 %   $ 813,742     $ 596,001     73.3 %