UFCS - Earnings call transcript Q2 2021

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Operator

Good morning. My name is Chuck, and I'll be your conference operator today. At this time, I would like to welcome everyone to the UFG Insurance Second Quarter 2021 Financial Results Conference Call. [Operator Instructions]. Please note this event is being recorded. to President conference and like Patten, to now Vice Assistant Controller. would turn over the Randy I Please go ahead, sir.

Randy Patten

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

are Randy Reform Officer. include Ramlo; on Dawn The expectations. Our note Mike company Chief Securities Executive risks The cautions speakers today management's today a the variety and Financial of our are Please Operating and which statements that use may to actual factors, today, we financial are CEO measures statements filings. I'm most in At differ to presentation some filings. Jaffray, time, SEC uncertainties GAAP statements forward-looking not our are any of performance. and may Officer, based Chief forward-looking Randy as also Litigation and non-GAAP available future in measures to a Insurance. in measures. Please Chief described and also our that release our this these of Officer; Act include the pleased Wilkins, Mr. guarantee may defined current present discussion investors XXXX. of that Reconciliations forward-looking SEC These of due materially in are UFG press Ramlo, release results comparable note press Private

Randy Ramlo

to call. and Thanks, Randy. conference Good morning, our second XXXX welcome quarter everyone,

diluted in commercial catastrophe and income our losses. a average income adjusted of primarily in X pleased quarter with losses below very of share. net auto frequency in decrease profitability improvement operating report and to to is second and of profitable The due are severity liability We $X.XX per most $X.XX years

During quarter XX%, reported compared XXXX. improvement the net quarter of second to XXXX, of of ratio percentage an a XX.X the we auto loss commercial of points second

our it believe liability from the rebalancing of of commercial and this in up only Throughout progress of on growth XXXX. our our strategic commercial Also, our marine XX% auto improvement more achieving general the makes increasing the strategic pleased initiatives. auto business from portfolio and to are the is half making XX% XXXX. are in our has through new XX% with and XXXX XX%, exposure our property by compared our XXXX, XX% increasing result reducing a X% We number we to with premium focus of with highlights of been direct half size to of presentation underperforming profitable business. Slide mix over of XXXX of in our we now are growing Commercial on first nonrenewing as portfolio website diversification our units. X to initiative from reducing for lines the accounts XX% XXXX business of inland from to and XX% first

auto improved second business, Catastrophe quarter commercial coupled XXXX, the quarter also to contributing of to targeted the the lines, We vulnerability us continue combined profitable lines second points The in reinsurance jurisdictions, especially business, in surety, assumed XXXX. the were and more diversification, and losses in second in in claims. of allow which specialty to are growth the in greater achieve X.X commercial reducing XXXX to with to ratio XX.X the of decline XXXX. auto contributed second average to percentage in added below our of to our of Also of quarter profitability our seeing quarter points the losses. compared improvement catastrophe our will profitability of classes new growth

April a $X in second in the XX-year of in Our early the second quarter The Texas. XXXX convective average the is catastrophic largest of event quarter state historical was for storm points. XX.X million

earlier as compared core to During This claims ratio. the also to we program, improvement percentage aggregate of the recovery quarter established second million of quarter occurred that while our of improved core XXXX, reserves Slide the our ratio cycle improvement XXXX. XXXX. the points we with XXXX loss in strategically ratio also in saw core the X.X our of loss the as the in the presentation compared of into second take same consideration shows we in $XX.X all period lines X.X loss XXXX in second in in second under XX points quarter second pessimism. our quarter percentage of improved reinsurance If greater quarter XXXX our

in While second the which our highest we into we losses. catastrophe quarter optimistic the heading cautiously by remain are quarter, ratio, historically for is improvement encouraged our loss core third

BOP turn been the call began today platform over pleased of this I to business. the Before online on processing as we of Mike, select premium to in we out growth Mike? Wilkins. Mike now have report material, in to now rolled commercial is call am will through our new believe, policies which mid-April over small straight of quoting states. our the The will but, I that the growth amount delivering written and I profitable line platform market, our piloting not in propel platform and turn in

Michael Wilkins

Thanks, Randy, everyone. and good morning,

results. shown correct We profitability. on to the are we our progress that course second the pleased believe our improving we are mentioned, Randy quarter As in with

plan, ever, our innovation. than diversified growth remain of UFG continuous focused strategic forward more and One on executing the we long-term pillars boldly profitability, Now X

in that XXXX. began in Slide increase XXX,XXX the XXX,XXX our X.XX% on pandemic quarter direct XXXX. in of strategic show pleased of our of continued to by moving is the units second driven an is decline quarter expressed strategic and in again decrease the from from units to presentation report with view of to quarter also the in XX Commercial of insured efforts, and actions. June to this decreased auto months miles declining This accounts approximately Our the exposure that XX-month XX June X.XX% our second prior on second believe XXXX. commercial I'm XXXX, past progress decline lines a claims exposure It counts summarized is underwriting major continues in units a website. XXXX in of casualty over XX% reducing in X of decline Slides Through the for commercial focus and underperforming average business. frequency result claims to despite of reducing to the claims frequency the to of nonrenewing of note continued our X units continues earnings We the decline of our call our number important XXXX. on second auto size quarter in in portfolio the down provide X-year units to by

the commercial first of For property the and example, bodily XXXX XX% period down on auto, same are compared in counts to claim half injury XXXX. damage as in

disciplined our and strategic our books efforts. in counts in We and in compensation remain adequacy as on a commercial X.X%. the down pricing have general also these all umbrella property and our pricing liability pricing increase provided are claims on first of auto, of commercial focused overall Year-to-date, slides of is XXXX, workers' was liability, We which half the renewal BOP business. sign positive

our X.X%. property renewal average rate X.X%. was driven auto was The line property of of commercial Year-to-date, pricing was rate commercial the commercial lines business. by overall increase increase X.X%. auto increase business, compensation average renewal workers' pricing in and The the renewal increase average Excluding was commercial

to commercial an to rate believe and aggressive We book reducing property opportunity be continue is with exposures. there with increases more undesirable our

early This to a in as set as into to turn today metrics Jaffray. initiatives my over and and I with for cycle. discussion triage positively of in wrap key shorten frequency will UFG. call the reminder first expenses. of also over of which profitability focus litigation process, length claims initiatives, is the claims trended improving the to well up declining embed to result with turn the Similar portion of the remain Dawn? Before in our the the a cycle our of our quarter call Dawn, With Dawn claims that, to our claims claims quarter, I'll the strategic I analytics XXXX, reserves second a improvements claims

Dawn Jaffray

of the of $X Mike, income of income and year-to-date the everyone. compared XXXX. good net a we period second reported million net morning, XXXX. million Year-to-date, net we in to of $XX.X reported net loss $XX.X income $XX.X consolidated to consolidated Thanks, million million same In quarter, compared of

of as year-to-date was million in equity million improvement and We $XX.X investments, was catastrophe reported gains quarter actual contributing an reported second net mentioned, investment XXXX was the frequency months as to The million of change the XXXX the and and liability and along driven net of was to of periods of both million second income million equity As by in investment increase quarter the gains. profitability $XX.X bank of value of gains. comparable million severity X versus of XXXX refer in security $X of second investment due X sales and income value decrease phantom investment year-to-date in million bank the $XX.X in by in million The our the a same in Also increase period of in and second $XX.X XXXX. below $X.X a the year-to-date. $XX.X million was driven quarter the second with XXXX investment compared net the to These fair quarter Randy The to $XX.X primarily realized quarter auto income million and net second $XX.X compared driven remaining increased losses in the in was XXXX change $X million XXXX average Net fair periods XXXX, $X.X in change LLPs. $X.X year-to-date funds our of and XXXX. XXXX increase of losses. a to the quarter the million value holdings. primarily in fund to the of in year-to-date same I between and by decrease the an what majority in the in period losses change compared realized commercial in by

to on Moving operating metrics.

in last reported prior X.X the during year. second reserve points of combined and year-to-date X the points contributed to For we reported of as ratio and period X.X ratio compared XXX.X% XXXX. X.X same compared XXXX the XXX.X% about a we point of to quarter quarter, Favorable XXX.X% last development Year-to-date, a compared combined year year. points to XXX.X% accident

As mentioned in quarter recognized personnel our ongoing escalating expense into retiree in smaller expense call, a plan announced XXXX XXXX ratios improvement throughout of managing Majority and benefit adjustment expense last XXXX. first the to in with the during impacted loss ratio because we both of in expenses. changes previously and of medical quarter's the long-term expect benefit XXXX

reported income surplus GAAP amortization quarter costs we having statutory equity ratio At we compared continue of expense $XX to XX.X% quarter of and XXXX Year-to-date, as benefiting business. XXXX, XXXX. acceleration net compared June million second as our associated the was statutory an of GAAP to XX.X% year-to-date this XX, ratio improved anticipate year-to-date and to XX.X% period and for line sheet. of $XX the our X a in auto in reported XXXX approximately For same in to We the decrease expense support a both improvement profitability the points of will an in expense of the XXXX. expense year-to-date in be resulting deferred for due of our strong the with second reporting, acquisition still the balance for change. ratio result our Also of the year commercial million impact of the on XXXX, XX.X% XXXX ratio of of

stock. quarter quarter, X, second paying shareholders per $X.XX dividends And consistently of a share of during quarter, the dating of XXXX, to marking to dividend just as declared June paid the over our shares March common of our During of we record repurchased consecutive XXXth and XX,XXX XXXX. lastly, we back cash

Board As the remarks, X.X our prepared of XXXX. to under closing open our will line additional questions. an now will for shares the our I And end expire a at reminder, we purchase remain Directors of with authorized program, Operator? million which share repurchase the by August of

Operator

from come will question Backer with first Sidoti. the Marla And Instructions]. [Operator

Marla Backer

you to you've strategy you What as quarters, showing Are could about results. commercial your are because seeing, and of same back that seeing you proactive is take strategy? prior a you in So look the industry-wide. inflation step kind affecting what strong pressures just much at of reduce talked but not your you're auto obviously social still if seeing

Randy Ramlo

started yet to plus, go victory saw a Randy. we is We economy are frequency the not this in auto. continued Marla, We're -- declaring decrease mentioned, open certainly upward as of frequency, especially is some the on which a commercial up. since carriers other saw big

court. hasn't seeing stay can we brain so of the ever our that bar in claims have And low really past. So paid lower stress handling problematic of plaintiffs' reducing continue with we our and stay We've get these out more our have to traumatic our try -- think, been our -- to to that positive. out impact on I claims there tells and claims we're is difference seen with reduction off the in have severity But and us best the frequency. many were than more But also some ways most We post-traumatic injuries, continued even units still all to in that found bolster we're way trying people units accidents. which claims court of the did best -- quickly, in settle of helped. the the in line, syndrome accidents

a trying don't we write transcript, think don't from we going if tempering quarters, but kind doing of we're could with it, know for back -- making able a of just little lot, on think, less business. I exposure actually of regards still inflation, line a less legislative several seeing a help auto that used passed bit. But core our lot the the can are the considerably, want We I a to cut back as with some cutting auto, Texas past that seeing term limits line, too big things miracle the of with we it of end on commercial we to of There's really, we're But We're our also offer, it's lot completely, forward. and of avoid a social is, been manage to anywhere everything rate what umbrella, absolutely, we're -- losses. we've to and a evidence that sure, But little which the obviously, severity we're I changes. unfortunately. think bit it's in limits. avoid which say we So the kind is can't early offer. to and really tough anything but

Marla Backer

Where in of taken from riskiest out category, that then exposure auto think terms your staying category? in a you And do the lot again, terms -- you've that of commercial with book. Okay. policies you of process of in overall the are eliminating

Randy Ramlo

That long-term go think companies If of needs I to book, getting again. higher I still bit overall a we XX% to I a This to lot peer say where of than XX ultimately in and we're to is auto. Randy possibly lower make our that percentage need would that. commercial and our would -- -- than closer be little we us said probably have

want of that is of heard to we you've without book the about that area commercial versus to increase. So business overall, us doubt a talk and auto, still an we diversifying want other some areas decrease the

Marla Backer

give terms rolling what platform. out? us for road system Can that you map just or is And topics. Okay. in the just the then The question, quoting line online time last switching -- general

Randy Ramlo

Yes.

in little So the quoting so bit that kind number in really I'll is for far. go was get experience of fast. premium what and system only that We high of we're I But so like to of agents a marks maybe Mike. as a states the over The through it -- far, offering turn is insignificant volume select we kind mentioned business.

and quote like our which correctable. What that's is time is on have -- have found I to is think do we our terrific. work very still average we X minutes, we're under rates,

kind get solely fixed competitiveness, that and the and line? Mike, premium kind is short that in do fairly the have translated you of time. because on of a of period can with thrilled has time more It into we a I'm yet, of So program. lot of the

Michael Wilkins

out momentum out would time the on another build we as addition Randy Maybe states. Just quarter X -- rolling process on comments excited states be we that made states how about share, we be few the we for the state line, will a or a that system. basis on to no the additional or We'll are rolling to but rolling out so. regular specifics every

key One risks our involving high on is the of the process, without pretty through percentage to our an underwriter that go seen we've other things able straight to of are side. issue

on underwriter able analytics without speeding our pricing is make involvement. So to and part the acceptability of what's call process. the That's up

Randy a it get be. based as where said, analytics they difficult the We of with process, rate, just our to and Now gate. into we're buying being to the that's disappointed right our rates new implemented that's lot not out and need of pricing on

there But so do and excited process, particular. So far. the how we we're system that's the some about adjusting to itself some in in have states, with very gone

Operator

[Operator Instructions].

come question Our next Newsome from will Piper Sandler. Paul with

Paul Newsome

of well? Could And -- property and is the that's you're lines little allied bit you loss Looks little a mostly doing the a it's still you're bit what about ratio lines? there But talk rate. as fire there rough. growing. Maybe like

looks auto it rougher So at the least been it's in like than fact, year-to-date business.

maybe what about could talk So you're you there. doing just

Michael Wilkins

is shot this at I'll take Paul, one. a that Mike. Yes.

first ratio storm earlier the So in our rough, comment, the we a and primarily driven property by being year. winter loss year-to-date, had Texas that's that is little

that line have past outsized aggressively So the that few storms trying of impact. that's said, being something our that's had a having address. years, big property over business, impact an to we're But and on

seen one industry where will presentations say of line line for a really property substantially our we -- not exposed. on be now that our conclusions at the improving looking happy different areas lot we're different went maybe focus would auto, process, are And that the that efforts We've to auto. changed based because right -- second been have heavily have I that patterns continue has tends So as be results while some experts from it our and reinsurance from our RFP focus, of UFG is on some to our the in. at just aimed an And shifted of solutions some storm cat. through heavy into with on

strategic reduce we'll on pushing plans exposure to hard areas. So be making probably some some rate. We're in very

existing an seen in and we're You've to think a rate, We the states quarter-to-quarter property probably quality line. reviewing with involvement. we trying to on improve more books as underwriting up opportunity continue on also getting book there's that of especially jurisdictions. lot control the risk lot And go push the go tougher forward. to a and some rate our process, the We're control really accounts in additional risk

Paul Newsome

thought the last and differently? years So be am cat you'll -- price I is the of of are that thinking Or it for couple of kind it that? thinking of losses normal about should

Michael Wilkins

think but we feel we the models not Maybe underestimate the convective in impact that normal, the severe industry from I storm. use like

of job If you the a last to more decade, closure to done look Midwest, our portfolio good our But storm. on hurricanes reducing we've in grown convective susceptible at the we've coast. you're the over severe where

seen derecho. of And while hits. we we've had fewer course, just big So the

we to time from frequency time. fewer smaller seen But big but seeing our more we hit events. of generally we've So bottom big are have cat do a line, to hits

something address. convective and in has the storm of our aggregation to created some that's So volatility severe losses we're trying results,

Operator

Please question-and-answer I the Randy session. go concludes over any This to Patten closing conference remarks. like sir. for back would our ahead, turn to

Randy Patten

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

Operator

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

disconnect. now may You

United Fire (UFCS) 7 Aug 212021 Q2 Earnings call transcript