UFCS - Earnings call transcript Q3 2019

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Operator

Good morning. My name is Keith, and I'll be your conference operator today. At this time, I would like to welcome everyone to the UFG Insurance third-quarter 2019 financial results conference call. [Operator instructions] Thank you.

I will now turn the call over to Randy Patten, assistant vice president and controller. sir. ahead, go Please

Randy Patten

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

Company and current cautions forward-looking a Securities may future Chief include Please assume note investors Private that Our speakers that management's Officer, any to Reform Executive in These and Officer. Chief Litigation expectations, statements Randy forward-looking guarantee Ramlo; defined presentation uncertainties XXXX. statements risks Financial today include obligation statements of today performance. are and forward-looking as Dawn The Jaffray, on them. Act no our not and based we are are update of the

Reconciliation may The At of our SEC UFG in Please actual are Ramlo, measures and note of discussion which GAAP to comparable results pleased SEC due filings. release press available most filings. are and we materially CEO the some may of also in also time, a factors, variety present measures Mr. in differ I'm use our that non-GAAP release Insurance. to Randy financial press measures. this described to these today,

Randy Ramlo

adjusted Thanks, Earlier net in of for consolidated loss the Randy. $X.XX, diluted and XXX.X% our than this operating combined less share loss compares to third-quarter Good ratio income $X.XX call. XXX%. This $X.XX with net and GAAP results, adjusted the morning, diluted of including income XXXX. of of a a combined of and everyone, quarter ratio a third GAAP third-quarter morning, share of our conference operating and per welcome per XXXX we reported $X.XX

along the commercial not losses severity Catastrophe for third of current uncommon our the XXXX, in loss quarters, year quarters. of our third quarter are second XX.X in catastrophe most Increased few increase quarter third discuss lines losses XXXX. in of incurred catastrophe reported a with period we million are reserve the XXXX. with will and of quarters, primary detail Dawn of the liability of volatile losses which, catastrophe same additions in drivers compared are net more in in historically minutes. $XX.X losses million auto business accident In and and the losses for

the In the reserve and additional of auto litigious to business strengthening losses states auto incurred challenging reserves is in severity and year commercial increase the accident increase due liability quarter, in environment, and from third business. lines of current we particularly an also and lines in of of added continuation of in in a losses This the our Florida. an commercial Texas liability in

auto our of reminder, being we auto inflation liability the commercial our our Similar experience concentration bodily calls, is termed to impact our and peers with commercial legal claims umbrella, business. of to what lines. has continue auto with associated with conference higher-than-expected injury our As and state settlements in highest largest of a industry business, Texas with mentioned the line as commercial prior on social

handling improve to initiatives shortening liability auto to claims on respect These reducing at and assign to implement reserves, will cycle With book. establishing costs efficiently response continue adjusters enhancements and our litigation our time impact claims, process and new allow claims we claims. of up the to aimed us the of time speed in

XXXX the our June of first has of used improved enterprise analytics, renewals. which with the delivered auto On subjects an model, predictive team commercial was analytics

in year improve fourth model of the closely We commercial accelerated, that quarter compensation continue pricing the model of model been monitor this small a help to of effectiveness to will begin and analytical half in model workers' with in has our updated technical an first underwriting commercial the use XXXX. implement in for Team decisions. developing the schedule plans line. property The to

strategic profitability, reflect results improvement reported encouraged yet to we underlying initiatives the in are improve not the our it operations. are remains focus, do experiencing by Although continued our and our we primary

as despite come driver core these with operations of positives date. industry-wide with include inflation catastrophe However, that are a showing jury loss higher focused strong our key in distracted word declining commercial claims, claims, operating to in pricing remains the in of The points metrics decrease costs, frequency driving X.X auto of commercial counts higher improvement outpacing on driven, miles ratio awards, and annual caution industry social improvement of year in are that auto the the we an the challenge, a claim skilled repair shortages. increases increase and

seen have we the we our of are decline commercial especially of that severity an frequency in pleased losses, line. increase Although losses, in in auto

of third-quarter frequency declining fourth The the quarter marks claims. flat consecutive auto or of

year In addition, in claim in to we claims have despite had in a increase XXXX. a catastrophe decrease counts date XX% the

increases. in two is average for key was that quarter, pricing X.X%. we change over Last UFG seen our Another have at lines pricing we for mentioned renewal highest commercial years the metric

XXXX. the XX.X% quarter was effective topped be third and compared commercial mark, X.X% MarketScout. lines of by pricing. X%, XXXX auto XXXX which continue of to recently auto quarter this change the for XXXX, change in commercial was by In significantly in increases average rising pricing X%. rate driven Renewal the XX.X% increases of pricing The to third our are with industry quarter the quarter of average renewal pricing commercial second outpacing third in third quarter reported These of in the the for

auto aggressive is at continue to rates as XXXX bottom we that the do business declining align end commercial place of opportunities underperforming put non-renewing the focus with UFG's for verifying use risk appetite. in on XX% not policies new of book, reviewing our advocating vehicle have to increase stronger the This initiatives and insured in accounts, attributable we and

our increase but flat, been earned aggressive units increases. This Over been the rate commercial has by of number premiums has increasing. past year, driven being the exposure auto is

portion a up operations. prepared remarks with our surety my I'll of of our mention wrap

is steady Although to year after surety's our given future performance in surety of year. performance. discuss of business expand plan the strong rarely continued provide business continues this an we This and outstanding our we area that line operations, to

With will that, Jaffray. Dawn? I Dawn discussion to over the turn

Dawn Jaffray

was In Year million good to X.X the quarter and consolidated to morning, million we Randy, net XX consolidated of quarter of XXXX. the to Thanks, million XXXX, net compared of in everyone. million XX.X third compared loss third reported income a of date, XXXX. income XX net in

the current driven net lines loss auto mentioned, in reserve losses in was and quarter XXXX catastrophe of our commercial year liability Randy business. by As additions severity increase the in of and losses and accident third of

were results has net business. of premiums increases by increase quarter investment market date. Benefiting the primarily largest in an was and the equity period the increase in of driven third impacting occurring increased for positively line year of the gain XXXX XX our continued higher year XXXX. with after-tax X.X% quarter an Premium million rates, earned commercial strong X.X% of This resulting and million growth our to and nine-month securities, been auto value in X.X in Also with of to quarter the in rate equity date the performance.

year to date development million we lines investment and changes liability for XXXX, in of auto of are in reserve to with Year-to-date Year million income of the the favorable compared compared net in third date X.X XX.X XXXX. to favorable compared our $XXX,XXX to the development at year of commercial reserve and recognized million quarter In experienced of business period reserve was XXXX. third XXXX development prior XX.X of XX.X in Coast in development we $XXX,XXX from favorable third the million basically unfavorable strengthening XXXX, XXXX. primarily in for flat quarter Gulf reserve region. of quarter development same our

XXth, September the total remained reserves At within actuarial our XXXX, estimates.

which losses average had and from below of in points. of quarter is mentioned, of the XX four combined Wyoming majority see, events we third-quarter losses. tornado ratio, a our million the losses X.X for typically having These XXXX, third we Randy of events, in As hailstorm a of Dakota. XX.X to the included seven account in points Cat added historical XX-year which a slightly what South cat

quarter, the the Dallas wildfires, million fourth early in to the ongoing to our loss preliminary tornado from in respect October to estimate million With too range. is $X the ahead it to are $X Looking losses. estimates

However, date and the State in as personal a to same California, XX combined quarter year of reminder, of of compared losses we event have XXX% write XXX%, and XXXX. limited to was in property for the million. catastrophe XXX.X% we in lines exposure, and do reinsurance from single we up have to period XXXX with and not the retention ratio a in XXX.X% place in third The respectively,

date. X.X on deteriorated website, provided a reserve impact the our reconciliation and the percentage and of Referring Removing impact X X.X the on combined ratio year the ratio. XXXX points our points in improved quarter detailed to development, loss catastrophe deck a of slide development losses of core to Slide in in catastrophe we've and percentage

is compared XX.X% ratio date, the expense primarily the upgrading third in our Project the same quarterly OASIS the expense third in to The XX.X% expenses of increase XX% quarter XXXX. the with for underwriting our The of XXXX. XXXX was was due of during technology quarter Year ratio ratio for to platform. for quarter period XX.X% in the third compared expense extensively to fluctuations

we a decrease made benefit expenses the in end to continued retirement of the we from In our at addition, benefits with changes to XXXX employee plan. benefit

XXXX. capital X.X% Moving period in the of compared months during to first the equity on nine was Annualized on X.X% to XXXX matters. return same of

to the share as XXth, of During paid per $X.XX cash shareholders we dividend XXXX. and third quarter, of declared a August record

of We quarters dividends the XXX March past consecutively for have XXXX. quarterly paid since

also million shares, the repurchased third quarter. X.X in XXX,XXX totaling We

to which directors of additional under common XXXX. authorized expire by board repurchase our are will X.X the of We share stock program, an shares of in purchase million August

our now prepared the will Operator? I remarks, the of with questions. And closing for line open

Operator

comes Newsome O'Neill. from [Operator Sandler the with instructions] first Paul And question

Paul Newsome

talk the outside what you auto kind Good commercial auto. a sort of issue I seeing could that hoping the have commercial and into noncommercial little in expanded experienced morning. severity have of auto you bit about you was how of were areas

Randy Ramlo

Randy. one, Paul, the Number also losses some umbrella. this have, umbrella, went and through these in so of policy into gotten the is underlying

are have liability the umbrella. injuries, but no line, line, severe on of shown It's the But awards if but predominantly it. juries using and particularly know I or aspect like don't in courts we're where where situations really leaking the but commercial auto court and that in also that's are negligence and yet injury of, bit one. of kind into a So seeing situations inflation, all that's seeing. I the or general negligence, hitting we're little still bodily semi-severe and little also overlooking And a number increasing term pattern bodily there jury social just always

Paul Newsome

Is just principally the auto access? the umbrella commercial

Randy Ramlo

Principally, Yes. yes.

Paul Newsome

And then to talk I claim process. was, the about to increased speed wanted

So the I why want claim an accelerated of there understand themselves would a an lower certainly claims or recognition quarter is have fourth ultimate claim you that in process will accelerated but to do that the to beyond? possibility cost,

Randy Ramlo

payments, I'll Ruehle can and -- you or any claim you you he is the of here, than this a other some chief possible lower settle quarter any let have we amounts. studies that? as claim term. So That shown officer, I But him you do at claims Corey, can two. is other there's all you're in if our mean, short if Long settle maybe have a Corey a comments. quicker, this, possibility implement have term, usually dollar of that comments right, it has acceleration for

Corey Ruehle

with agree Randy would says. I what

to We impact we in the on that And pretty are up not speed or that short eye have will keeping are run not. feverishly or an an process. working whether

Paul Newsome

process, reduced claims because to adjustments, reserving plan less? the frequency speed any be increased IBNR claims make because think don't the will ultimately do you to if you assuming see But you of the

Randy Ramlo

not no, at would say I this point.

always could point, any some that the be through. plans no. see But actuaries that if don't coming said, we this to at possible I that, have As of do

Paul Newsome

-- reserve quarterly the the between -- And then different will fourth-quarter be from for process finally, the the ones? how

Randy Ramlo

Paul? do mean, you How

Paul Newsome

Well, sometimes much more it's involved.

a just what a seen where being careful recognition Sometimes sometimes the of quarterly of trends, it up really is that in just recognition more ends quarter. just you've

Dawn Jaffray

actuarial is review With internal this external an to an the Paul, respect reserving actuarial review. we Dawn. process, and have both

have at We done quarter of that ends. the each

be our is I develop, of robust, regard. Certainly, throughout So more foresee our could items, changing if etc., potential remain the the don't changes, process reserve and that other any year but consistent feel us so approach for in things overall will process there consistent. we more

Operator

any return present Thank you. there Patten like [Operator more closing I to nothing for to Randy would As at comments. instructions] the is the floor time,

Randy Patten

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

Operator

concluded. presentation. has attending This disconnect for you. today's lines. Thank conference your Please you Thank now

United Fire (UFCS) 9 Nov 192019 Q3 Earnings call transcript