UFCS - Earnings call transcript Q1 2018

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Operator

Good morning, my name is Denise and I'll be your conference operator today. At this time, I would like to welcome everyone to the UFG Insurance First Quarter 2018 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. Thank you. to Finance conference and like Patten, to now of AVP Investor would turn over the Randy I Relations.

Randy Patten

the a Good for morning, please Relations and release visit issued Press at this the Investor slides joining you find on news releases this call. our tab. copy everyone, Earlier today, document, and of results. To thank are ufginsurance.com. under a website we located

statements financial to results SEC to of filings. actual measures. comparable on measures Randy Financial of Ramlo; filings. and XXXX. and Our UFG. Please some our most update Michael current our note expectations, press based are Private speakers Executive today we them. Act presentation Please to release factors, are Officer; Chief discussion any Reconciliations are Securities uncertainties The on Chief materially assume forward-looking investors that defined also and may and may no that a measures our in press forward-looking non-GAAP forward-looking statements not use Dawn available that Officer, a Reform we present SEC which I'm future in Jaffray, also At Ramlo, variety are include described of our today, statements release Officer. and time, pleased CEO company Chief note Operating Litigation of risks of and may the our in The Wilkins, management's include today guarantee this obligation as are to the GAAP cautions Randy these due Mr. These performance. differ

Randy Ramlo

culmination GAAP basis, adjusted previously On XXXX. and share ratio a sale diluted income XX.X% XX.X% was Kuvare quarter our of a first per share net Earlier of of $X.XX first of $X.XX of Holdings the details income of compares our adjusted combined diluted income $X.XX first will and UFG everyone sales per diluted reported consolidated with the financial income quarter $XX.X per the to $X call. morning net the Good GAAP XXXX. diluted of operating of gain the impact Insurance of for $X.XX the further Randy. This this we quarter Dawn provide announced US of call. company XXXX diluted later conference of share, of completed. ratio morning to this share, per operating On for Thanks per generated welcome an the on share. and million XXXX, in a GAAP XX, March life after-tax or sale combined

are investing addition the UFG. in process we in various management of capital we proceeds previously As stated solidifying the for to actions

As Company a Insurance and of was Casualty reminder, our Fire lead Company United United subsidiary a insurance company. Life

our result, the distribution dividend proceeds limits capacity any traditional a of approval. regulatory As requires beyond

special traditionally an pursuing share In extraordinary addition are of pay approval repurchases to quarterly beyond a the what we basis. on we dividend

Although of announce expect and we subject the amount next within to customary to approval the to Insurance of both of dividend timing the months. three the six Department the

we improvement see return operations put have we lines the level of months, our although in do our auto to P&C on to Moving initiatives desired probability. are over lines to due these XX to various to some we past until place the continuing work in still

during first anticipate our the and the report average of quarter pleased prospective quite resulting the and efforts analytics points quarter risk I'm storms favorably majority Notably, X.X of by from largest from from XXXX. of our or to of loss this current a ratio. improvement our ratio and heightened the the to which catastrophes our southern below hailstorm was Texas XXXX, further With state the book our quarter, remainder million the which $X.X first X.X were points continued X.X in premium focus $X.X loss winter of the were continued March of of on in and our our first percentage of XXXX, compares first in that coordination quarter We managing is cat the in points control the throughout historical or underwriting, losses also million business. Northeast.

lines to expense on The this of XX.X% was experience. the ratio elevated heightened quarter first commercial first of Moving at increase have expenses, our drivers of factors, in first combination compared to loss quarter personal for a in XXXX as and were our XXXX. the XX.X% auto had major

result, of deferred end experienced first based acquisition include the a quarter experience of accelerate the improvements quarter and costs. of prior accordingly calculation we doesn't the XXXX. As our timing on view the must This the uses in

is largest our second which impact in our our project, platform upgrade analytics to and initiative underwriting productivity. our enhance Oasis investment both was core decisions The related technology capabilities to multiyear and our modernize to

project. approximately we add to expense duration the will forward Moving the project anticipate ratio to the X.X Oasis of X annually for points the

of first to headed personal and we Wilkins. finally, seen signs I focused direction Mike. XXX turn and With maintaining we consecutive dividends are the payment Mike celebrating lines financial improvement And are we've are commercial on auto will this XXXX. continued momentum consistency. that in of confident XXXX, our our in we are UFG's and over During the throughout right of that strength the the quarter demonstrating some now quarterly discussion

Michael Wilkins

morning everyone. good Thanks and Randy

watch loss Randy continue our we're underwriting in sure our As rates closely stricter guidelines all and XXXX. initiatives practices, exposure lines for risk these ratios, some expanded improving had control auto getting adequate improvement lines we have we this improvement making targeted led these to indicated, the throughout will including to profit at and

underwriting continue and regions ensure review are actions and increases to to we necessary underperforming profitable writing accounts business. taking are rate our of All

help and in including will revolutionize be focus and enterprise is make component strategic selection, analytics renewal decisions, analytics initiative of underwriting to and aspect growth processing. our we tools way additional risk our pricing decisions. in the modernized key important underwrite believe will continued investment insights an remains Our and providing We a Enterprise of better system. this Oasis make

accounts. renewal all during commercial high Filed market quarters Moving Overall, compensation regions. to size workers XXXX both filed rate rate quarter. in lines averaged and single-digits. increases we on business The averaged during pricing auto decreased mid-single decreases and saw quarter very the in the our several increase region of during an processed with commercial has the varying slightly, change conditions for pricing digits across over workers quarter on past new depending the been line competition of average the for competitive the compensation in renewal the

increases with Our personal lines percentage renewal in mid-single digits. average increased the quarter during the pricing

the aggressively significant or We continue accounts country rate to increases. nonrenewal address poor through across performing

strong quarter first XXXX. retention remained at XX% Our the during premium of

return our auto financials, a With that as book profitability. our premium Quarter I'll business to decrease forward Dawn and of we is Going X Dawn. expectation retention continue let Jaffray our will to policy we that see discuss our in

Dawn Jaffray

good everyone. morning Mike Thanks and

reported in quarter XX.X business to in For over we consolidated income XXXX first the quarter the compared in the XXXX. net million The comparable million net of to change XX.X items. following the first period first due quarter income of of the is

investment. and gain March quarter the XX, one-time of The realized received with As regulatory Company. the closing with subsidiary March announcement our concluded the the at Randy our an approval with forma tax financials our Life The end the sale of values Previously United XX.X has associated the million transaction pro the of of of Insurance of financial million. estimated UFG in filed X.X was of carrying on release on sale and press final reported the sale after-tax XX, XXXX closing XX, earlier a based we the mentioned issued and estimate on after gain XXXX. December statement

securities recorded sheet. of balance have other net reporting principles XXXX During in reported income in have securities conditions. market to the that any share. in or accounting quarter companies the value to the been adopted recognizing or net during in on sale of United or investment gains interest million, changes these rates in in the which Life in new an per equity due section a peer recognizing the during our diluted equity X.X first securities losses involves or income. our we XXXX investment in equity a equity volatility after-tax in March not of accounting previously Prior the XXXX. resulted of realized our ultimate portfolio and that gains the XX, we of of losses rising fixed value portfolio, achieved realized investment in in in were of and this anticipate from many relative quarter this loss maturity any the our correspondingly accumulated also increase of the quarter decreased level at disposition at change changes income We first which decreased gain any value to book value comprehensive the net realized were $X.XX resulted guidance, first And Reporting as quarter as

operating items losses increase the costs catastrophe million adjusted compared reserve decrease improvements the deferred and These favorable by increase investment business, auto of Randy lines an X.X these a due Excluding as income year. diluted was to per same an This prior prior in to in quarter two improvement the in the share year or improved primarily $X.XX of at project development. beginning acceleration offset in were expenses call. partially in multiyear in the of commercial acquisition and our Oasis as our personal and from mentioned continued

compared increased consolidated XXXX. in X.X% first premium to of earned Moving as on to the net XXXX premiums quarter

Our insurance earned casualty in operations premiums by continuing X.X%. by was net This our and a discontinued property from business. increased earned XX.X% premiums net decrease offset life

net Consolidate The income first was achieving increase market XXXX on first current partnerships due a income increase We driven rate compared of investments the partnership and continue was growth focused and the liability an institution. of to assets expense change investment an not limited varies conditions be to in the in for our and we in The limited specifically of for to investment quarter in our liability financial discussed. to value initiatives, XXXX. these and XX.X net change to by increase quarter the investment invested management as quarter increases from of million period period previously valuation X.X% equity profitable investment related philosophy. in due of to the

accounting equity revenue, as new in decreased total reporting previously through value securities flowing we're of the requirements, the now revenues the X.X%. of with With mentioned change recognition

was deeper XXXX $X.XX increase development casualty period in on per $X.XX of share increase quarter first the the to favorable of look compared the share, first with XX.X of X%. compared Expanding experienced diluted of business a property the followed commercial of in was the million business We of only equity of property. favorable period development reinsurance, same million Excluding in driver quarter all during the losses for $X.XX quarter the compared XXXX income to a continuing and per at first we development income in our an diluted of XX.X an line in income the revenues saw XXXX, the development, same net in liability quarter our diluted of of consolidated favorable across on reported except of impact and XXXX of other lines net of assumed first change $X.XX of our realized The development diluted commercial insurance operations per further net XXXX. share per favorable in increased first biggest by share net we on XXXX. auto quarter investment reserve reserve Taking securities, of XXXX. of

the reserve first ratio quarter of within combined development XXXX, removing ratio reserve on quarter the in of development, impact ratio. in compared of catastrophe the was of the development of our the points percentage combined development the percentage XXXX during in reserve up on first slide very return with XXXX point provided to a our X.X% combined the March compared loss of for website first first detailed first of of deck points reported to losses actual of first-quarter compared X.X% we by XX.X% a in on we XXXX. of exceeded our slide XX% XXXX. XX.X core At XX, quarter Annualized and the ratio quarter first total impacts XXXX quarter quarter as the XX.X catastrophe the in reconciliation estimate, XX.X% was XXXX XXXX. remain the reserves to Referring Our percentage slightly was nine equity

March and shareholders on our dividend share to return $X.XX of declared to stockholders the per on a first record cash we Moving our quarter, XXXX. to paid X, during

this time We million. privately totaled arises. the stock opportunity to our stock mentioned, Randy quarter of common time an to repurchased of quarter, dividend paid Fire of year from we have price shareholders. common of paying making transaction March through dividends during every quarterly X.X at $XX.XX since market or note purchased Also, on average consecutive United open the As XXXX first of XXX,XXX which as quarterly XXth shares negotiated we the

and As always, of open on a when number timing the and market economic on the general corporate SEC any including available will within any purchase in and rules and amount discretion associated share with remain of the factors, depends management's purchasing purchases and regulatory including restricting the price, of the quote amount requirements, conditions market.

are purchase an common that open for questions. Directors We of and of which share stock line additional in Operator. to million Board by XXXX under the expires the program, authorized our now with August X.X repurchase I will shares

Operator

Please of And Paul Instructions] from first your question ahead. Sandler O’Neill. Newsome [Operator will be go

Paul Newsome

and us you something that’s it essentially was maybe that? that’s the payout in of I’d profitability way that talk a right give of return multiyear sense like about to expenses the this that’s expected go in you and an perspective a time timeframe kind of is just said prospectively of how -- to kind terms over permanent to project, to favorable ratio expenses, to return increased from in ask this XX think with XX you what little of go, expense do a want for about the going and increase

Randy Ramlo

add to but going and do We some do a are to anything more able some the it, PMO we forever, X.X in analytics the we add, tools in we’ll going then mentioned Mike to kind and of have two it’s five it’s additional one see conference project that, efficiencies, also we’re you think items, it Difficulty] year project ratio think hire required some purchase to with and Oasis us IT that points, this and redoing our to its building as to call, basically is help year into not additional further project, we with [Technical and staff, well. expense hardware our software be there? some also

Michael Wilkins

post would Randy to but efficiencies, system that expense new a I probably echo gains, I and additional point X.X at productivity. Randy’s think we’re the offset hope looking to a implementation comments, we with with as said

Paul Newsome

show be five I those had alone or in if years, in of quickly up, How could stock. productivity let five happy sort owning years, I’d gains your job

So, up is is next is five year we’d these after five something permanent our years see two? or efficiencies that show essentially permanent, from the essentially years it perspective, do in or

Randy Ramlo

the be see the be won’t year down road, and we the implementation the far, You implement. next then too won’t before start in the five away implement it parts we would it first year we of years it’ll system, it's over fully before

underwriting won’t hope see decisions. productivity term, better gains ratio that underwriters the are improvements the into in we system building tools make built we’ll from better have short we how the to their see, the for the we loss also and dashboard So, tools analytical to and

Paul Newsome

result a or you we’re conclusion of make gives middle companies your X%, adverse particularly in one, pricing, the every different results, targeting mean swapped and more companies have your different in area, different, other there what guess slightly than you’re something, or market it company are covered, you you I of of a sort expenses, up question down view question, on is X% some second second comp is I big something that is the from I kind that targeting, would small than I are commercial others that other others, workers that’s book about permanent that different are other so its So, that increasing down you’re difference?

Randy Ramlo

at little rate talking so around still pick that, bit rate quarter, we building QX but the than still year. up in you're increases was a line and three. on did smaller digit would were UFG competition down, of so of but down we in fourth we increases side, which positive getting which about accounts quite saw some was about We up a single quality increases QX, work say our side, XX% is range that so bit the and low we comp, commercial far as third rate second would as large X% commercial last line premiums pricing momentum not felt than were the in so X% a in group the X.X decelerating competition say less we of probably had we're quarter most, I and and pick being in But, work some was XXXX from our comp during up from we the and rates wording on than increases just most up, our particular looking peer a had little the exposure also other you on our second quarter fourth pick increases more was quarter, the there. we higher figure we still and QX. probably is competitive of the exposure getting saw got the quarter, points probably I was commercial plus momentum but growth still was we’re than pick higher poor job over but lines in quarter, auto from Paul, auto every there a saw measure building that, pricing, just up best not first, in smaller couple quarter out accounts system a quarter quarter exposure that's that first in increase saw our pricing pricing large for definitely so that fourth

Unidentified Analyst

other let ask much questions. okay more sense, that makes Okay, I'll you, folks thank some

Operator

next of go come question ahead. Brian please Sidoti, [Operator Hollenden the And from Instructions] will

Brian Hollenden

my and good morning Yeah thanks taking for question.

just you you're things characteristics of us maybe you're looking just one-time the able you closed acquisitions is the special just Life proceeds, being that give at purchase price, some any can date, talk at, in timing it anything just on thanks. book the business, of maybe could follow-up of to I sale it Insurance to guess any not your is terms dividend, and what looking maybe to just after-tax wanted for Just potential the Company, about of issue is broadly

Randy Ramlo

a growth smaller But Brian, we made XXXX growth that to really is just back prices so look well if right you risky, Randy, of very haven't insurance has this for even the a we a going lot acquisitions, us, kind haven't out so bit a of really than call. lot acquisitions maybe also the a is regularly, found it's a good lot very us thanks a little continue do organic look concentrated the we've of publicly that are and for of more We for a of fairly traded which is been look to on small confidence a for fit. organic we less found more now. haven't though are factor maybe of we've really kind effort on think focusing universe for us whole to got group worked there's we factor exact at lot and continue companies and there. just pretty probably

grow we’ve put can six-month card the bit to issues, been be insurance subject the but very a We we've to organically. that’s a mean are continue group timeframe of best anticipate little we of don't always a just the don't we with that now. we'll French right good kind though So, wild three the vague department to we to communications and in dividend we approval but be and in any even that estimate special regulatory Iowa's feel of timing about

Dawn Jaffray

the from million, about sale that’s and Insurance, in special any weigh in relative statutory approving to for record, dividend Department the XXX we’re the gain transaction on to Brian of decision And going or different, our is Iowa obviously extraordinary tax seeking. that that’s after the

Brian Hollenden

kind And or year-over-year. average points just is portfolio the weighted what income turnaround? with tick questions couple I yield of then at consolidated guess down sort of the rising up maybe income on rates overall of basis yield with point

Robert Cataldo

I'm Cataldo. Bob the is within Department. This Portfolio a Manager Investment

same philosophy pick improvement those we see seeing but still up redeploying with and cash. yields the in as we’re We’re investment now we’re very into an yields consistent starting with we’re high liquid, continue investment market, redeploy quality experiencing our back to money to

Brian Hollenden

And there then can of sort you fixed average duration your portfolio? your on just remind income what’s weighted us

Robert Cataldo

around Right it we to five keep and that range. within years intend

Operator

conclude hand to Randy will ladies And closing question-and-answer would like gentlemen to session. back and the our for Patten this remarks. I conference over

Randy Patten

call, now day. joining for great conference thank have us concludes our you and a This

Operator

Thank Ladies time, gentlemen, you, concluded. you for attending you Thank this sir. and your disconnect may today’s have conference At lines. the presentation.

United Fire (UFCS) 9 May 182018 Q1 Earnings call transcript