UFCS - Earnings call transcript Q3 2021

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Operator

Good morning and welcome to the United Fire Group, Inc. Q3 2021 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Randy Patten. Please go ahead.

Randy Patten

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

and on the Chief Randy Operating Joining me Mike call Chief today Wilkins, Executive are Officer, Ramlo Officer.

questions have other answer management of end available of also the our We to members at prepared remarks.

measures note defined include call over Litigation of couple the first, please factors, a forward-looking Securities to of may today non-GAAP as Ramlo, the that release Randy to discussion turn are Reform measures are am presentation I present include cautions and of measures. release note due these comparable our press CEO Also, of guarantee in XXXX. that Mr. forward-looking some in management’s may SEC time, Before our Private that Randy The SEC of company investors in statements our performance. materially pleased use in financial At and reminders, The variety our future and any and may described I filings. statements to a forward-looking not expectations. Ramlo, to this statements please available based also Reconciliations Insurance. on results we filings. UFG current risks are are These uncertainties which today the actual most of Act GAAP differ press

Randy Ramlo

our I points loss into year. will a loss by third as all ratio X.X XX.X and loss same consideration same million points in everyone morning, and program, be aggregate core and core our period of year the Good taking Summary which year-to-date quarter year-to-date the can last $X.X of the today core percentage last in respectively. our year. catastrophe compared under percentage which and points welcome prior on of website. core conference ratio last removes to begin respectively Randy. the million improved third quarter, the the call. On on quarter to found lines the compared $XX.X impact Thanks, XX our in percentage to in loss third points, XX.X strong reinsurance recovery improved the our X.X discussing percentage development, When our ratio basis, ratio, period favorable our Slide reserve improvement losses year improved XXXX presentation

are direct result our strategic We which a significant initiatives. this pleased with is improvement, of

ratio in points. ratio our average the to XXXX percentage the our compared line Offsetting third percentage XX.X of percentage ratio historical loss decrease in quarter the to of we the For percentage X.X third a year. was added points points was compared compared of of at XXXX a the X.X a combined quarter, third of XXXX. year year. Year-to-date, and to of percentage of XX.X XXX.X%, decrease X.X points year-to-date points development combined and ratio auto a reported year reported XXX.X%, last as points, the in X.X quarter the of last respectively, as points we The during favorable to to year-to-date quarter X.X was Most X.X and our quarter same most last reserve development loss in ratio, compared reserve XXXX and commercial to in periods commercial of improved accident third XX.X significant to losses. ratio accident combined benefit improvement business. from losses The year. improvement catastrophe combined continued catastrophe to XX.X points auto favorable prior in periods as prior points Pre-tax which percentage this compared our the quarter core third year same the points higher-than-average third year-to-date

Hurricane floods most Ida assumed quarter, significant and the events During XX European experienced events, reinsurance catastrophic the the third our we from being with business.

reducing by size strategy, our book. management of on increased we the exposure has the double-digit have quality reducing which and commercial of of XXXX, of focused and and implementing auto profitability throughout the XXXX part our portfolio our auto number increases, rate nearly portfolio As units commercial

XXXX. also X and experience portfolio up in in has marine this We continue Also, last to X% frequency year. our X written in to highlights XX% from rebalancing XX% period auto liability presentation between portfolio to year-to-date business increasing our of compared by now achieving from our profitable business. and for premium business commercial to XX% new on in progress website, with Slides business, mix as our to lines XXXX. XX% claims. growth a to XXXX our the compared inland severity same of auto the and Commercial of growing diversifying decreased year general more of XX% decrease we our XX.X% XXXX our makes Commercial in year-to-date auto are new premium XX% in for to

seeing are reinsurance the profitability and to ratio which contributed our We improvement loss also of growth business, surety, our and underlying E&S in assumed lines core year-to-date. in

are to skill as profitability, core pillars in over to opportunity including strategic on from we continuous the me to some Boldly continuous call Forward innovation. X last long-term and two plan of loss the be to an In evident on growth working, this It scale time is A focused in are profitability and in would clear like I Mike, Before our consistency, our diversified fully the plan significant to execution implemented, and UFG: core momentum with this improvement of our quality quarters. we on strategic improvement. the pillar, take emphasis relentlessly takes progress is seeing all gaining share is One progress plan. we plan, I strategic ratio that believe and turn our

scale a mindset fostered and practices UFG across best to One identify our have organization. We

can all and to assist and well direct standard underwriting profitably our we our effective fit write our risk making scaling UFG the best-in-class are branches to across right in the portfolio with appetite We tightly pillar, underwriters managing our that decisions. we tools now growth business data In of with are markets know analytic in partners.

and E&S lines. presence We in expanding are our inland marine surety,

a and developed platform quoting within deployed small also state-of-the-art online digital our business division. for have We

we our broadened upskilled growth Finally, we and have through developed in our pillar, strategies. our employees. assumed have market a our reinsurance scope innovation mindset In

We cat have working our modeling the across deployed decision-making and capabilities. enterprise, including data-driven on analytics strengthening

We and key partnerships. our strengthened optimized have agency

We and faster speed to to have drive expanded our delivery market. business agility

transformed UFG an creating have We into that environment ideas by inspires innovative action.

we all progressing As Wilkins. Mike? the I are turn will results. In are to improving, seeing convinced we a right consistent, scale XXXX, I this and takes call over on take Mike sustainable now our laid were wish the and for of profitable faster, foundation we root. we’re time. deliver path things to mentioned, XXXX, plan plan. in the are And but metrics the plan Overall, we

Mike Wilkins

and good believe are Thanks, echo to will Randy, everyone. on transforming our are and morning, improving we correct profitability. that course comments we I Randy’s the UFG

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

bodily compared year-to-date in auto, XX% commercial injury property and down claim as are our the XXXX. period counts example, same XXXX to For damage

BOP We compensation focus business. on workers’ of strategic our sign also strategic counts overall all as provided Part our the and Year-to-date, are slides, is auto, general X.X%. these liability of and umbrella a increase down our on positive of claim to average have price commercial which is pricing was books liability, in efforts. commercial property renewal XXXX, year-to-date adequacy plan

renewal average the was of business. property with increase property commercial second rate compensation overall workers’ line was average pricing Year-to-date, X.X%. auto was our increase The These of in are rate commercial Excluding pricing X.X%. increase average of renewal X.X%. was lines consistent the very commercial changes renewal driven quarter the by auto our XXXX. increase and Commercial business, rate

We rate continue aggressive to reduce will undesirable be exposures. and increases with

and progress in reduction initiatives fees a claims in primarily litigation continued legal net are Our during settling well extremely by also quarter quicker income, from cycle. the third claims avoidance to contributing to through the and management claims

reduce to the and plan continually for discuss turn review quarters. I in experienced business Patten, in to our I call our to strategic model catastrophe the Before recent losses book Randy our catastrophe of want over We volatility losses.

broker where reinsurance CAT modeling modeling with optimize past professional in our recently brokers also in-house, relied CAT we select program reinsurance part effort of this reinsurance an We hired the modeling CAT capabilities. CAT for our Earlier program. a RFP have and we year, brought reinsurance as did to on the capabilities

cats, as diversifying and book reinsurance reduce assumed the addition E&S, with In non-CAT-exposed inland marine impact of business we to of such strategically business, non-CAT-exposed these efforts are to business. also surety, our

lines catastrophe increase strategic to our our of was of our the significantly third note plan our that It assumed of book of business, to in exposure due on place for volatility CAT in personal years. losses. ratio to is the in which loss losses quarter will addition, and has legacy reinsurance reduce to In completed, business, many is exit materially XXXX business been line which during important

reinsurance our With below turn to very Patten. to of the non-CAT diversification part has for profitable Randy? is our assumed traditionally, combined discussion XXXX, it Randy During XXX%. us ratios over as been strategy I’ll business with grow that,

Randy Patten

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

was due investment in in points our XXXX. to mentioned, and by quarter. $XX.X net and periods losses, in compared in million core fair offset year-to-date million or income an which our XXXX income limited $XX.X to in period quarter $XX.X and $X.X million which Net Randy our quarter The and third third to is $XX.X million $XX.X as in $X.X XXXX the is than year-to-date As equity a $X same million quarter to contributing by primarily loss was reported both and net year-to-date period million our change The in value million of X.X Also the of change but holdings. in by security third and improve was periods partnerships, in losses We in third to of quarter actual was of the third increase period of equity increase primarily realized million in investment of million in liability fund two income. XXXX. to remaining $XX.X value compared investment $XX.X of was average quarter, the which the XXXX, of the XXXX change continued higher and net the realized required million of $XX.X driven and ratio a change value increased catastrophe driven and bank for $X.X was same the in majority investment the The million $XX.X compared fair of $XX.X of same million gains sales million the third to as gains net of of reported investment realized in be of by investments, losses investment the million XXXX. net decrease the between year-to-date the income.

post-retirement year-to-date of XXXX. earnings a loss our compared expect A reported we our the XXXX during both benefit and to this call XXXX adjustment plan. expense mentioned the of expense the ratio medical announced smaller XX.X% benefit XXXX, in XXXX of impacted As and because of in quarter improvement recognized in the year, majority an ongoing of expense previously X.X with ratio points throughout Year-to-date, improvement. expense XX.X% we first or to ratios changes

the expense profit-sharing We to ratio in as did business compared improved book of points accruals expense resulting for in position. the the third our and third employees of compared is agents, the year the the additions For still the see in due for to program of of quarter quarter XXXX today portion to improvement anticipate X of X.X call capital an our X.X ratio XXXX, will to as I of of in This XXXX. our to performance business. of approximately points increase full conclude we XXXX. full year discussing our my

XX, XXXX, September surplus approximately statutory of increased X% year-to-date. As

quarter, third consecutive the and $X.XX to September quarter paying back During dividends shareholders dividend XXX we a record X, of consistently XXXX. as share of cash to paid of dating per declared March marking of our

including management’s at our factors, concludes and our I about stock. market conditions This $X quarter, any will open share the The we the general common and on and or during repurchased regulatory shares prepared depends Lastly, and XX,XXX now remarks. timing the several of economic for is million of purchases line questions. price, amount discretion over Operator? requirements. just

Operator

Instructions] from Marla with today first question [Operator Our Backer Sidoti. go comes Please ahead.

Marla Backer

you. Thank

you So to in commercial a do How category? you’ve in job you pruning think exposure want reducing very much auto. at done more do that strong

Randy Ramlo

it. I is would say to more we’re There this substantially go. is through Marla, Randy.

our we’ve to to XX% like so. And is auto. percentage that think we’d get kind highlighted down of I of what about of book business ultimately, in or

little So we’re it we a now. to substantially do but have I think right through ways go,

Marla Backer

categories. is impacting any seen I’m growth, Okay. nice lot from right there many the a now. categories now and category in of of that other that those marine the of are right how issues flipside, Is again, on also curious And of doing then we’ve global inland you’re specifically where emphasizing logistics growth sectors? some about greater some some impact the

Randy Ramlo

global well. but I’m mean that not line logistics, you is sure what by doing

of underwriters that a specialize have business. couple really We in that

material buildings course line – think that of seen risk the construction, do kind from that we’ve of that we impact We’re insuring of we’re a builder’s in any area. don’t in I lot But shortages global on seeing.

Marla Backer

back were business that the of that you’ve updates risk was question And potential is, the business claims. Okay. interruption that’s But potential industry your overall said regarding more past factor? last the not you as risk of finally, a I book when And a height, in of there there of the business. risk within that lot any has the foresee think then been talk regarding we guess, interruption around pandemic, I at

Randy Ramlo

So a in and guess, we manageable to didn’t it’s say very zero continued kind call, positive mention couple it’s been conference We’ve has of last been the our they in it a a court I which, is exposure, good thing. not but quarter, have cases exposure. There ones. of

virus the As almost requirement write. we of direct loss. on that policy every exclusion have a physical the have we we Plus, reminder,

it seen the positive. we cases have claims, in seen that covered So most But all would what like manageable. been, in upholding loss. to them, as are we going is cause we’ve be to quarter far, watch continue to part, the pay that, But court has the we for be courts the they And everything so last of looks very a had develop. not of if

Operator

any Instructions] questions, Randy this conclude for being back question-and-answer to the There over remarks. Patten would [Operator conference further like to our session. no closing will turn I

Randy Patten

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

Operator

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

disconnect. now You may

United Fire (UFCS) 7 Nov 212021 Q3 Earnings call transcript