- Earnings call transcript Q2 2022

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Operator

Good morning, my name is Jordan, and I will be your conference operator today. At this time, I would like to welcome everyone to the UFG Insurance Second Quarter of 2022 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Eric Martin, Chief Financial Officer. Please go ahead.

Eric Martin

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

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

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

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

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

Randy Ramlo

core improvement in our second growth. our time call. Thanks, premium in pleased ratio, the to report morning, quarter XXXX conference Eric. continued welcome years, and Good Today, I'm and X to first loss for

start growth. Let with premium me

This focusing growth on putting personal over same X.X%. our new was premium our of of was through by specialty and positive lines. lines signs books. last up commercial business of on led of X.X% and reinsurance This premium after underperforming assumed business. was auto quarter, our years our quarter year the up written nonrenewal growth by growth business some profitability Profitable we of line X is improving exit #X the accounts in saw and Earned when consideration

improvement ratio, impact quarter, prior development. consecutive the And our and our improved XX.X In to addition, quarter loss favorable saw core the improved removes percentage fifth the we ratio second the points. loss X.X our points XXXX, in year-to-date, core of In percentage for core as the of same loss catastrophe reserve periods in ratio losses year. which compared

For our core a on loss to calculation, XX website. our of ratio refer Slide in the summary presentation

in average combined have the XXXX, of For than the a above-average XXX.X%, quarter percentage XXXX, quarter of second added ratio of catastrophe XXXX. second X.X reported last despite historical than Pretax year, quarter than XXX.X% which we in the points our losses and second higher the second of reported catastrophe ratio lower the the in we quarter of second is is slightly higher XX.X which the losses points combined of quarter second XXXX. point X to having quarter

events, in higher-than-average the quarter losses. collectively above-average the During of catastrophe catastrophe which driven XXXX, was by catastrophic XX resulted losses second

take this proud the had for to to have as last past the my will serve and to opportunity this during honor and like has an It be Mike, I as XX turn the we call. my I thank I Before say years, over CEO been would success growth am to call you, earnings of tenure.

forethought my of our policyholders been shareholders, needle move kind a of will success lead direction it's communities. promise that As UFG and employees, in for positive a the CEO, agents, with to

direction. XX UFG, my career on keep in back our moving I'm proud to of reflect I years and we As positive success, of at intend a

am luck Kevin UFG great than join good he, UFG our and in the XX-year history. wish along CEO, heights. take company's on Kevin team, the will will I to Monday, as XX. I management new more in Kevin with that August serve sixth new confident the Our will future, Leidwinger, leader

turn to will successful I for the call UFG. over future Mike a Wilkins. to Here's now Mike?

Michael Wilkins

Thanks, Randy, and good morning, everyone.

Randy of our in ratio. auto loss our this mentioned, over been primary frequency contributor has the to we decrease of trend core and success last years. commercial A As consistently have improving the X continued severity losses

believe premium growing we lines from leveling unit end to business. out are of growth profitability in marine our increasing quarter and we we These units XXXX, part the counts. our of that auto As the business At core profitable of targeted XXXX. specialty general new of Also, commercial At leading to These rate size increases. quarter implementing quality business and of profitability lines for strategy, are through assumed second focused auto mentioned portfolio the on XX% exposure are composition our efforts accounted XX% ratio achieving the to compared improved portfolio commercial historically management the our and with to XX% the decreasing QX. loss and end XXXX. in XX% from growth. second of our are portfolio number commercial XX% we close in to auto our inland commercial of targeted of our our XXXX auto are improvement point, and and in of reductions premium our between for of at contributing XX% have reinsurance lines our the book Randy of also this liability

Slides loss in ratio line X provide view XX.X% a X-year second casualty our of major of counts XXXX. claim of surety a the approximately Our commercial XX%, business. and assumed X reported lines and of by quarter reported reinsurance

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

and strategic provided general a all as is these also down XXXX, compensation year-to-date our liability which commercial claim slides are workers' reflection liability, product counts positive of have We on efforts.

back average the rate X.X%, commercial From business. commercial increase increases. turn comment to renewal change standpoint, exposure the Before rate we lines are pricing and property of the the inflation in auto from commercial renewal X.X%. pricing changes and rates X.X% average loss particularly was by and from is lines and we of We seeing on with the This driven establishing our the X.X% I exceeding true and feel rate in The inflation. to property The renewal premiums auto, commercial our are commercial like like call pricing overall where currently increases cost I'd in a Eric, impacting overall rate over was increase was property X% are commercial was book. increase opportunities. strongest

turn will we However, Eric to dynamic portfolio appropriate environment, to make underwriting Martin. I'll monitor Eric? this the discussion our and in economic adjustments to that, and conditions over With strategies. pricing, continue

Eric Martin

gains catastrophe primarily second second investment million we XXXX everyone. operating and we consolidated loss of losses again, $XX.X a year XXXX. quarter. period compared $XX.X quarter, in of net the removes year-to-date of was which $X quarter of million. increase adjusted consolidated compared income reported last in in in to net net to losses, income income Thanks, reported decrease in income, XXXX same was Adjusted Mike, in The quarter and income of to due and million the of an second $X.X the in $XX.X the of good net year-to-date million of net million an the quarter morning net the of operating second adjusted operating to income income On compared in In $XX.X XXXX. basis, million

lower million of XXXX, in adjusted losses loss XXXX versus the primarily of in our ratio $X.X $XX.X first same and lower during However, operating income core by catastrophe year-to-date the XXXX driven million in half period.

prior to of commercial liability development from compared of XXXX. second Randy of auto favorable X.X points quarter in combined quarter second and mentioned, commercial was our combined favorable of unchanged was The development lines XXXX. ratio XXXX nearly business. As quarter reserve development the reserve ratio our accident the points benefited at in of of the X.X from favorable the quarter year in Most current the reserve second during

a favorable reserve in company, that every continued As of development half trend XXXX, a reported we year first XXXX. the since have

During in investment net losses that Year-to-date, income X net compared periods in million equity of of $XX.X million portfolio equity of for the gains was investment decline in the in the $XX.X Net points the the value quarter to net XX% largely losses same the income investment between was Year-to-date, recognized we million the compared investment driven XXXX. the than $XX.X of XXXX. to to quarter million net $X the as quarter of limited income This $XX.X return liability gains period we our second by reported in The as over second net partnerships. second change the net XXXX, X investments in our same primarily due income. was The to $XX.X investment net in million XXX our period about change is S&P investment value was fair on million of of of XXXX compared security are $XX.X recognized XXXX. reported the change year-to-date investment better to compared XXXX. in fair as million Index. million quarter of of of $X.X the in

equity the portion the post-retirement the second effects in to value to compared quarter was the ratio first quarter statutory was XXXX. XX.X% expense employee the ratio increased today in this of capital will changes last the between fair In expense periods market discussing retirement in on more decreases the The change Moving XX.X% to XX.X% design plans, than underwriting expense my call was surplus year. quarter from basis, a surplus position. the XX.X% second net benefit for ratio quarter primarily On onetime income. of to in in the our XXXX on to of health XXXX. X.X%, year offsetting our the conclude due primarily for recognized approximately The benefit compared and XXXX, of second expenses. of year-to-date change due the the portfolio X the I

X.X%. Our on return equity annualized was

shareholders declared quarter previous the to second X.X% record dividend of a we paid increase the back share XXXX. March as over $X.XX marking our June of During dating consecutive or consistently XXXth to quarter, of X, cash dividend, and per dividends, a paying of

discretion not timing shares. questions. several the for and share the now at factors, general The amount requirements. and the regulatory quarter, any line during including we depends Operator? prepared economic market That I repurchase open on Lastly, concludes any of price, will is purchases conditions remarks. and did our management's and

Operator

Our Backer from Instructions] from Sidoti. comes question [Operator first Marla

Marla Backer

process So you've quarters. several the a in restructuring been engaged past over

remarks, profit rightsized a scripted kind much your What been any, lines mentioned growing some auto transitions? this book changes of the as pretty of during expect has focus at there's on commercial the of, point. we if you And business. management can As higher

Randy Ramlo

a is the question. Thanks This That's question. Randy. good probably for

As see our that proven around ideas strategy organization, and to going pretty Kevin is things know, you has working. what think outside is have kind he turned we've I of forward. we'll from the well. But It's

be will I I any not but So would anticipate here. changes, huge

tell So can about the that's best I you.

Marla Backer

Okay. for seeing out. the And more prepared follow-up this comments then in of and on of Are one a marine the those a remarks competitive focus you landscape and quick other to business just of point? types businesses at surety lines

A –Randy Ramlo

Mike Maybe about talk let assumed I’ll reinsurance. the

pretty specialty assumed always We you mostly on Maybe are especially. seeing and competitive, competition on let like through he’s is a and the lines, service bit underwriting. it’s increased little I’ll on Mike reinsurance. Surety the compete what comment seeing –

A –Michael Wilkins

Sure. Thanks, Randy.

partners side, and the is would have with there, reinsurance to next. that I business different is business the that is business various and that. And the to business with model do don’t at The assumed say, we see same with similar assumed we we we relationship-driven. who the no, want the we it doing we’re a The access we partners channel to that want On do with multiyear time. strategy know and business

not competitive necessarily it’s before. more it than So was

that we’re there. situations really lot business are the coming oversubscribed, a we’re relying into on on to Our it’s get to there and we relationships of support limits want where us

satisfied one We’re that with. we’re whether we’re of our is treaty. criteria fact, in doing any business underwriting not entirely love with not or in not that And

the support is don’t or far. the constraints do, it. capital I plan. we results very not and want so means we competitiveness are been are expected we’ve And primary to so concern, that have access than successful a have the we to we there whether do think even with our business better The but rather And to business

about excited our in reinsurance book. really next So we’re assumed comes what

Operator

for question-and-answer presentation. conference Thank today's This you concludes concluded. has the session. The now attending

disconnect. You may now

United Fire (UFCS) 6 Aug 222022 Q2 Earnings call transcript