A.M. Best Affirms Credit Ratings of United Fire Group, Inc. and Its Property/Casualty Subsidiaries

A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the property/casualty (P/C) subsidiaries of United Fire Group, Inc. (UFG) [NASDAQ:UFCS] (collectively known as United Fire & Casualty Group), which operate under an inter-company pooling agreement led by United Fire & Casualty Company. Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb” of UFG. The outlook of these Credit Ratings (ratings) remains stable. All companies are headquartered in Cedar Rapids, IA. (See below for a detailed listing of the companies and ratings.)

The rating affirmations reflect United Fire & Casualty Group’s solid risk-adjusted capitalization, diversified commercial product offerings, historically favorable core reserve levels, long-standing agency relationships, solid regional franchise and the financial flexibility afforded by UFG. These positive rating factors are offset partially by the variability in United Fire & Casualty Group’s underwriting and operating results in recent years, driven in part by its exposure to catastrophe and weather-related losses, and the continued challenging market conditions in the group’s core markets. The rating affirmations also are based on A.M. Best’s expectation that catastrophe losses incurred during the recent hurricanes will be within stated risk tolerances that the group provided to A.M. Best.

The Long-Term ICR of UFG recognizes the capital strength of its subsidiaries and the fact that it has no outstanding debt. Positive rating actions could occur if the group were to achieve consistent profitable results that outperform its peers over a sustained period. Negative rating actions could occur if there is a severe reduction in the profitability of the core operating entities’ core books of business, material losses in the risk-adjusted capitalization of the operating units, or acute deterioration of the group’s reserve strength affecting surplus.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed with stable outlooks for United Fire & Casualty Company and its following P/C subsidiaries:

Lafayette Insurance Company
Addison Insurance Company
United Fire & Indemnity Company
United Fire Lloyds
Mercer Insurance Company
Financial Pacific Insurance Company
Mercer Insurance Company of New Jersey, Inc.
Franklin Insurance Company
UFG Specialty Insurance Company

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. BestRobert Valenta, +1 908 439 2200, ext. 5291Senior Financial Analystrobert.valenta@ambest.comorRaymond Thomson, CPCU, ARe, ARM, +1 908 439 2200, ext. 5621Associate Directorraymond.thomson@ambest.comorChristopher Sharkey, +1 908 439 2200, ext. 5159Manager, Public Relationschristopher.sharkey@ambest.comorJim Peavy, +1 908 439 2200, ext. 5644Director, Public Relationsjames.peavy@ambest.com