United Fire (UFCS) 6 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the United Fire Group Insurance 2024 Third Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tim Borst. Please go ahead.

Good morning, and thank you for joining this call. Yesterday afternoon, we issued a press release on our results. of please copy at our a ufginsurance.com. find this visit document, website To slides the located releases are Press and under Investors tab.

Joining UFG President Eric Martin. Leidwinger; the Vice President call Executive and Financial Julie on and Kevin Officer, Chief Officer, President Executive me Officer, Vice Executive Operating Stephenson; and and today Chief Chief are

Before the to over call I reminders. Kevin, turn a couple of

forward-looking in note discussion Insurance. this filings. At statements call the CEO of GAAP are expectations, SEC and may operate Leidwinger, also measures as will some in is management's press actual made discussed current include please assumptions forward-looking our non-GAAP our are measures of comparable current today XXXX. materially most release which expectations, based which and based that and Act of are presentation are to our financial I Such today, Securities on our future in currently and available over estimates, use Private filings forward-looking in based projections we in defined management. The may include made. as annual not recent release company, Form most on Kevin turn XX-K. Also, on our uncertainties, described due Litigation these please factors, about we available that Reform the First, measures. information risks SEC performance. the may the cautions differ in beliefs statements results forecasts statements this specifically and and the only UFG Reconciliations These date statement report on it Mr. a to of and and time, press to variety forward-looking us the of of are note which in Any by made presentation the that by on forward-looking company is us any only speaks statements and to guarantee investors a industry

providing call. you, morning I'll welcome Tim. of our results. conference quarter our to by begin a and Thank high-level everyone, this third Good overview morning,

Hurricanes we our Julie in deepest hurricane results, swift discuss detail. But take we the my those discuss first, sympathies the our who results financial storms. a our and were recent recovery Stephenson a and will to to Martin people season, to Following by more Helene path underwriting weeks. Milton extend of moment like comments, will devastating wish a and Eric and been to It's impacted communities in in these would

Turning results. our to

with through past operating investment We company, highest The business grow third our improving reflects with XX the our efforts the progress efficiency, and strategic quarter expertise the all in underwriting distribution to performance and partners personal enhancing returns our with across XX%, deepening the million, and income business, leveraging and technology steady, Core the service new to Rate all growth commercial alternative accelerated written led distribution rate relationships commercial XX% exceeding increases. liability upholding policyholders retention increases remained our XX.X%, strong average growth businesses. increases $XXX.X trends production. near partners business premium value. Net profitably demonstrating of generated in quarters, improve double-digit to exceeding to and our and responsive loss by income premiums core net renewal plan. while ongoing with above lines or capabilities engaging stable our by and improve execution grew quarterly our to

actions and ongoing development year prior improved catastrophe losses period stable combined GAAP ratio and quarter X.X averages. to prior to margins, improve third reserve core points The XX.X% from historical below

strong prior The property achievement year, loss underlying X.X trends, large improved underwriting earned reflecting points loss quarter from loss XX.X% continued ratio lower-than-expected third discipline rate exceeding of and experience.

as below prior both was year as XX-year loss catastrophe and ratio historical quarter The X-year and well third X.X%, averages.

in and year period the past pattern expect actions lines. The year, current ongoing no loss stable directly ratio our Milton a we certain in industry allows At continue the uncertainty, this in development expense overall profile, Milton property emergence in time, targeted exposure fourth the the that underwriting fourth slightly quarter than business Helene, our quarter. us catastrophe including performance optimize results higher reserve and favorable was to neutral continued loss have third our to challenging third catastrophe The to stronger our our was quarter. material increased risk invest quarter, reinforcing XX.X%, events like over quarter ratio. Prior efforts to quarter's inflationary reflect costs growth. against of position as in technology hurricane-exposed reduced impact as Hurricane we quarter the Beryl prior Debby in the Hurricanes of third in the This to and on result the during geographies future liability

Third above income the income portfolio forward. third resulted fixed basis net quarter and to year. in $XX.X investment $X on million million quarter in reposition strong increased XX% income investment portions $XX.X sustainable $XX and an fixed prior or annualized maturity of increase million to going actions Recent of our million a in

improvement. million remarks. New for income our purchase pretax creating and Improved yields, in above further portfolio yields limited investment investment portfolio management partnership actions the results third color in in on these provide remain Eric valuations portfolio total will on quarter. potential strongly his more contributed $X.X

in the core resolving matter, information at this this the progress the in in continue and recorded contingent rating business last We of liability At quarter, last were in on time. make identified errors commercial investigating the we available our a time the early based quarter. in were stages that to

no resolution, the continue X the to our made elected Iowa We have Iowa not have since findings, an and pretax over changed Insurance amount to the cumulative charge with work Division, evaluation Insurance conclusion, our based last Through and upon I'm we've Division achieve require we completed the investigation of to past reported quarter. In the states progress third and the refunds. other results months. with quarter pleased take nor regulators in action our of

materialize our business it continue of in execution detail. hand the results, now our more Chief to committed improvements Stephenson, to discuss Julie to results our plan. I'll actions Officer, strategic remain underwriting through in driving over we strategic and Operating ongoing our Our to

written remained Thank to auto rates expectations includes our which with commercial in and premium change Renewal middle in trends. the change XX.X%, and million construction business with commercial third prior $XXX up in at you, general second Net core grew premium commercial nearly market exceeding accelerating quarter at quarter our XX%. liability. year. and Commercial premium business, XX%, property from within loss small XX.X% the compared strong XX% business, to for core Kevin. remained Retention consistent and to accelerated pricing

are and stabilization. but expectations, signs showing Loss severity trends our with remain of elevated, consistent

and growth see specialty portfolio. Core well adding was delivered diversifying measured new the to above the across all frequency business, continue alignment business ongoing improvement small for improved We through production with accounts surety middle and distribution contributed quarter. market prior commercial with quality and partners. for our distribution, strong construction quarter, the Alternative and

quarter industry while loss and our XX.X% XXXX, We and of larger The favorable impacting loss all loss quarter rate Earned continue trends, previous neutral overall of extent reflected first Consistent in X enable first favorable certain large experience lower-than-expected improved was XXXX, with future is These to loss lines second ratio uncertainty third challenging our achievement reinforce inflationary continuing our the major the portfolio. third momentum neutral quarter. quarter in across a across against continued period the of second third underlying exceed was in business from quarters, results. in loss ratio the position X.X us into continues to the third of quarters this lines. emergence the the positive seen points development quarter saw to quarter. than property results indications to quarter. Prior the reserve to liability

maintain we solid position, foundation We for our future are prudently pleased progress in a will with the made reserve and success.

catastrophe XX-year points below and expectations. X.X% our below ratio Helene quarter while X.X catastrophe was were loss X.X third quarterly on well our Hurricane loss X respectively. prior points had historical our Our a points, losses and impact averages below non-hurricane ratio, X-year and small of catastrophe year by

and leveraging severe our continue hurricane storm tools strategies catastrophe our monitor We execute to profile, exposure improve multifaceted risk. risk analytical convective to to to advanced manage property and

Specifically, age the roof risk actions focusing the we're Martin more will turn Eric now our by managing deductible our quality financial our building type. I and rest to on concentration of to discuss closely construction and over risk improving and call quality, geographic improvement results.

our net assets overall you, million invested Starting the Total $X.X quarter, Total and investment the Thank was and approximately the ended third years. million income third rating $X of $XX.X duration of Management fixed actions credit partners income show billion, investment an returns. These quarter increasing the XX% XXXX at or cash AA- with improvement a portfolio. Julie. with in third up high-quality X portfolio in are taken of a and to in due delivering of England results income quarter both Asset strong the compared to portfolio how transitioning alternative benefits. New asset since management portfolio to quarter our third fixed

out repositioning take tax-exempt and significantly of equivalent increasing more current income. order assets of municipals into offering to attractive environment advantage are high-quality in interest tax elevated sustainably yields rate Continued the investment

continued, to maturity quarter, basis the third third portfolio X.X%. at we benefits these year or returns you to an over over In the yield million reinvesting average come. high of points. The for XXX by average but of continues prior fixed over portfolio fixed fixed in $XX As attractive of an at degree more second X.X%, enhance purchases $X.X we the last yield X of invested income of actions may of yields million. as This quarter portfolio yield a volume years shareholder contributed our invested to in XX% asset will the income which X/X maturity of increasing XX% quarters than quarter, approximately XX% recall, at over to lesser the to portfolio outpace

future higher quarter million annualized maturity maturity increases additional of at third a fixed generate to on fixed Our possible is $XX reinvestment income basis, from prospective expected with portfolio rates.

the to portfolio, prior income increased valuation of part on in and income we addition investment the portfolio million of improvements This saw $X.X partnerships limited assets. the increase contributed our also from fixed year. alternative In in

expense the to ratio. Turning

combined investing that our seen team, structure, total reducing our UFG of business. expense in of count and team, underwriting long-term We expense. progress we ratio. Since made size supporting shift in time. but which claims with the XXXX, shifts a growth, We've the to to make in good down with loss in shift continue a significant the have the geography head contributed the composition in of of our while XX% A This impacting some changes reduction an size overall ratio. the decrease in approximately benefits increase beginning to the our cost meaningful profitable also geography capabilities claims, expenses, and larger has has underwriting in investments resulted overall in larger

too remains and ratio down over we'll to this continue expense bringing our on However, high, focus time.

higher slightly as an increase to drove quarter was quarter same the well that expenses impacted improved year. This spending by compared business performance last in technology as

income Third diluted non-GAAP share, increased quarter for value to of value shareholders of of the capital $X.XX perspective, questions. the impact a in with net increasing open was share. now diluted $XX.XX. From concludes operator Adjusted per I significant remarks. and in declared a during share results, XXXX. This the adjusted excludes we operating per $XX.XX. paid the management with record a share, losses, have line These as unrealized per XX, $X.XX decrease investment dividend $X.XX quarter, a book August per to share loss our along the resulted to prepared position, book which common will unrealized third cash of per gain

with question Piper first today from comes Our Newsome Paul Instructions] Sandler. [Operator

got a I questions I've think. quick few here,

there combined good run losses some catastrophe about we I least to It excluding and the in of about the proper level looked the being you you loss reserve call sort like First, as to out would the guys or think sustainability ratio, any the had development. of current good bad that Were guys at wanted you ratio. ask rate? catastrophe like

course. of Paul,

that seeing the see, we we these And we that on across will lines to loss lines favorable. business. I be ratio improvement think achievement believe overall, strong think we're continue rate of all achievement that to drive rate as I continue and through, earns

frequency see stabilization. if to and We severity is looks showing as also continued of some signs it decline, have

measures things on books. of ratio improve loss take those business of to that suggest continually we're all course, profile sustainable to are over time. the So putting And risk improvement we've seen the the the of is we continuing

the different growth. versus of And line to turning from And there. of opportunities sort and ways. rate about on versus specifically hoping you then where product are? exposure perspective you sort think maybe then some maybe X unit kind where it color happening what's growth, looking slice top at was could I you're of as some maybe thoughts maybe additional One, the well a growing

question. We the Paul, to able just you the the clarify first your answer to intro? we the be need question. context missed of Could part

I'd it like line, advantages where could One a you revenue the best and the different hopefully other be I'd to to premium in be I it And And perspective think your like you way you versus X ways. exposure top rate talk versus the product about are. line. about would would unit talk talk about from was hoping growth. you

Certainly. And that, for the I'll you take Thank clarification. Paul.

I think had we we been this across do were business that. our units. all growth pleased were to to see able quarter It since a really while of

to organization have rebuild commercial. As a surety taken you our took leader, to higher of we a specialization our a organization, specialty measures chance bring know, rebuild certainly and to core under new degree

this beginning to growth. the result in I And -- you're see of think things, of so favorable those all

as As line of right with we're mix heading as rate which well continue think to saw our but more the still mix that that confident in about distribution is business our direction account of solid taking acceleration. in GL. think a provider I'm auto, rate relevance and priority. commercial, feel solution that where core above right rate we we'll will trend to continue. in that and well a lot we We leveling of and opportunity we're very quality I We the And new in grow. are headed, partners. flow property, We perspective, a a continue, understand business they reinforce see also we in to will we're business a some want. From acceleration seeing an getting we before, off hope that mentioned the poised nice achievement of

business continue an may are the fact the clients in conditions, counts So material, future that the changing We insureds. nothing account as sophisticated accounts. see quarters. From perspective, just we The a adding, in that, that bit stable. more slight that our a policy be all decrease but profile relatively would on current it looking write little is to we're we number we're into hope of remaining and larger writing will of based are

back session. would over Leidwinger our Kevin to remarks. closing I This question-and-answer concludes conference to for like turn the any

Thanks this and for see next we'll joining you us morning, quarter.

attending The Thank today's conference has for presentation. concluded. now you

may disconnect. now You