UFCS - Earnings call 4 2023 | United Fire Group, Inc.

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Operator

Good day, and welcome to the United Fire Group Insurance 2023 Fourth Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded. And now I would like to turn the conference over to Tim Borst. Please go ahead.

Tim Borst

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

Joining UFG President Eric Martin. Leidwinger; the Vice President call Executive and Financial Julie on and Kevin Officer, Chief Officer, President Executive me Officer, Vice Executive Operating Stephenson; and and today Chief Chief are

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

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

Kevin Leidwinger

begin morning providing a by Thank you, of Tim. conference results. Good morning, everyone, and this quarter call. high-level welcome to our I'll fourth our overview

to to expertise and in our Julie time. In $XXX results business Core with led operational growth as reinsurance with underwriting financial quarter will detail, XXXX. of and compared units. to efficiency discuss our the well the in business progress assumed improved continued pleased to written improvement our commercial we've our Stephenson our net deliver profitability, the over and Eric comments, I'm as discuss will incremental UFG as premium strong Following increased production drive by million, new core fourth position and results. my Martin grew results quarter X% fourth deepen commercial further and performance retention operational financial made more quarter, superior fourth remained

premium net just lowest exceeding loss X.X% year the ratio, profitability contributed to fourth combined to deliver late level XX.X%, in a underlying well year growth sustainably loss consistent developing to period last property In in offset the show lines. trends. helped or written quarter of the on signs to historical XX.X%. Expense lowest to Prior addition, surety losses led a million was basis, lowest accelerated severity as averages. ratio the of ratio On $X to The quarters. the the bringing the the full efforts claims quarter, premium loss casualty fourth X since ratio long-term loss production strategic underlying reduce in increased was to XX.X%, elevated billion, activity, quarter trends combined continue Catastrophe expenses. and increased due below the our we from in XXXX X%, average improvement full renewal a ratio resulting ratio combined over XXXX. The highest of commercial our as well few fourth $X.X X.X% few reserves XX.X%, in early the in pressure XXXX. Core was XX% results as increases

contributed In will workforce in to program we in expense more to enterprise impactful XXXX. fourth to our and XX% early management, the addition disciplined retirement in ongoing ratio voluntary a provide decline completed vacancy benefit a that quarter

our the expenses a year prior to benefited was on reported full XXXX XXXX actions basis, due Our to slightly XXXX. offsetting impact expense elevated both largely and year that reduce ratio to onetime quarterly in expense of items ratio,

the depth XX% income compared loss to fourth the and fourth continued it's quarter, the income through insurance In improving quarter, also growth, to talent benefited $X to to expertise. exiting unrealized by increased over conditions the increase capital claims on underwriting, fixed from per million, investment in partnership quarter valuation UFG quarter. in fourth continued profitability share and share our XXXX. and actuarial book highest higher market valuations maturity limited $XX.X life UFG's by reduced per evolve addition investments net we incremental and bond the the value the in of to the position over third fourth leadership business Improved strategic Increases In improvement investments in quarter company in the XXXX. of

level efficiency reinsurance We placed and programs achieve also processes. More January of XXXX. organizational streamlined recently, more specialization continue to we X, enhance structure on to with a successfully XXXX improve our higher our

manage In New to our with investment England addition, partnership we portfolio. announced Management Asset the

proud As we're the we UFG. the progress year, new making I'm enter of at

the our actions and to are Officer, underwriting in in our partners. With that, underwriting are hand superior by these not greatly Julie fully reflected path confident and results, committed achieving While detail. Operating our so financial over to remain Chief more with forward yet that agency in over our personal the service discuss time Stephenson, by relationships valued deep responsive we it results expertise to delivering I'll performance

Julie Stephenson

price of new core change approximately of in meet and Kevin. year you, our our all for XXXX. the continued commercial price basis of Starting recorded supported quarter $XXX supports a million million. Renewal healthy premium to lesser growth dimensions compensation year prior full renewal business for pricing which quality fourth includes risk business degree in core in million fourth of of but segment adequacy construction mix production XX% but longer growth, we remain printing XXXX the acceleration no adding prior fourth production quarter XX% grew a the premium business, which in quarters responsible year, was first and Thank our in premium with than to remained $XX accounts change in as of accounts the small XXXX. change to Retention to written XX% or commercial commercial was business the of increases profile. Core X%. X to Workers' negative, of well needs trends contributing. quarter growing still with allows a fourth growth, pleased in above commercial middle with core fourth to premium in that XX% X% X% and million exposure line business core I the across property written net Improved all focused the quarter the of as fourth the industry lines well Commercial in and quarter on quarter increases year $XX compared with rate net business, our of XX.X% with Commercial its business. of the quarter-over-quarter of $XXX compared we're market to portfolio. remain full on

The written fourth both fourth and ratio improving underlying costs, made full introduced growth distribution loss regional rate repositioning coming Specialty net the consistency the loss the XX% quarter our our premium that the and ago while portfolio staffing was surplus and we approximately declined in and ratio business underlying frequency year net in flat year results. These in by continued surety the lines relationships. quarter consistent activity noticeable across core fourth due for to previous and enhance Our The because increased losses achievement year, premiums reinsurance to commercial full prior premium property strengthen despite a net which organization. leadership the and challenges. year alternative and than reflect of new we as to a to year, driven structure quarter, quarter surety improving underwriting sustainable, the third X% lines to for the to fourth from full prior declined deliver quarter year as was the more a mix in lines in premiums year we to on diversifying full quarter, to short-term profitability. Surety distribution compared and the written strategy results X-point direct better core increase to full increased grew additional for our in ratio year portfolio quarter excess prior investments execute governance profitable year continue XX% loss year in primarily large the more grew loss underlying expected, In underwriting continue written will to from increased and brought quarters. declined discussed fourth sequentially the delivering full of from our commercial written our benefits XX.X%. produce

increases also commercial driven in prior accident majority severity period increases increase we by losses medical and influencing reflected shows as a where X.X from to in to However, continue There auto our million in our actions defect were modest developing in results portfolio, reflecting this impact core as costs. recent stabilizing Workers' came of pressure construction severity. late increasing adverse few small social quarter, business or of $X.X we outlook trends see from severity liability improvement prior on our was this The fourth some from a saw underwriting over There year, we a shows large benefit we points on quarter compensation development. umbrella inflation XXXX. the property modest factors portfolio. In smaller years. and this experienced improve

XXXX in expectations, for to within increase still in an we've accident resulting trend, observations and XXXX indemnity early Although our XXXX years our view are pressure from of and medical severity updated of observed XXXX. prospective

potential a reflects the emerging to of proactive recent periods moderate adjustment Our to stance trends. effect

loss a Field distribution Officer in ratio Head expectations fourth Unit on year new hurricane a profitable quarter take loss a XX-year profiles, shows volume for adjustment and we Construction that improving the our a We and and in Despite driving we geographies this fostering of below created While meet make continue drive to is and organizational execution for X.X% catastrophe investments risk averages, material fourth expectations. In on Business the role high-risk our continued better in evolve risk a driving given nonrenewing Chief convective and underwriting relatively severe action The deductibles, X.X%. the not our premium structure. at on increases of the line, underwriting to our cat do Underrating pricing light full profitable X- and supports small the continued to talent ratio by result focused of our and outlook. was storm year-to-date new reflection impact expertise relationships a field. historic deepen We strategic loss in the this and Leader the quarter productive being quarter, Operations our ratio welcomed raising ongoing accounts new growth.

and leverage adding processes how continued and technology and Officer, enablement build across drive Chief evolve to team, technology new actuarial leaders to out reserving pricing, Our this information month, for Administrative efficiency teams business improve Chief we across business, Actuary Earlier his combined we new a our under reinsurance. UFG.

X. increase turn and January first retention the Finally, our we the of and we of outperformed that our pricing financial improved cat will rest other over with to call the renewal layer reduced to our successful the to a terms by catastrophe on the and pleased Eric in treaty discuss excess placing surety loss results. $XX our with modest programs Overall, Martin multiline million of are fully expectations. I risk-adjusted reinsurance now conditions on

Eric Martin

will you, expense provide commentary some the I Thank Julie. first ratio. additional on

as than headcount quarter we've you retirement been the has of broader our our provide intensely impactful management fourth of reducing voluntary ratio fourth will These to impacts is a growth. of declined significant of to our XXXX. part of strategies of around know, expense X,XXX early the XXX completion since attrition corporate at XXXX. end on the the ratio the decline reductions more in significant program to benefits thoughtful XXXX. As quarter, more to focused a sustainable, and from in The profitable in headcount Due most the deliver these of beginning expense

full premium Our rate actions year expense run expense points. full ratio expense by operational ratio from quarter our point leverage expense through over over the by a X fourth growth ratio reduce reduce to and and management

to positive employee tenths above this momentum benefits we and year expense of builds, primarily impact year point a of results XX.X% levels, of few of previously prior onetime were While post-retirement a the a design in quarter ratio favorable for for change from our XX.X% XXXX reported a have full both fourth because discussed. the that

in XX% the fourth fixed to of portfolio. approximately to the was $XX.X allocated billion million assets is ended fourth up high-quality Turning Invested the quarter investment compared to of a income XXXX. quarter XX% investment fourth book. which Net income the quarter, at $X.X

rate interest in We investing exceeding continue money of environment quarter. the the higher realize to new yields fourth a benefits in with X%

with partnership increased full as compared million portfolio the core of to We value market $X These on to limited high-quality diluted manage providing England quarter, per portfolio. million position portfolio, investment which in XXXX. Earlier consistent announced a significant favorable per way experienced valuation a earnings as increased $XX net also was in improvement XX% month, positive New income increased gains maintain diluted of realized the net to million per strategy impacts a share manage our cost-effective our along with scalable to $X.XX unrealized investment portfolio. year we trends this and to and adjusted as of income equity partnership of equity UFG favorable benefited Fourth the returns Management investment loss fourth $X non-GAAP assets. with operating quarter intend well, Fourth $XX.XX. Asset with and our book common share to quarter income a our value We $X.XX share.

to of a and declared our to for history XX-year March as line we $X.XX prepared of record During remarks. paying continuing per shareholders XXXX. This our XXXX, will the X, the share I now cash dividends operator have dividend questions. quarter, concludes the back open fourth December of paid

Operator

Our Paul Instructions] first [Operator Sandler. Piper question comes Newsome from from

Jon Paul Newsome

you And was there is more for little of any Congratulations pronounced areas sort quarter. bit hoping the could I that the places? a headcount than firm more the other talk it about decline. of was

Eric Martin

more This is pronounced area in Really other. not Eric Martin. or the one anywhere

offered As And take we early that in the XXXX, pretty program had board. on we well was -- about across that and people an XXX mentioned, us was we late up that. retirement

late team, year. the people downside in We also XX came IT that that also had about in a maybe was small our

a maybe heavier kind there. the bit But it overall, organization. of is little So across

Jon Paul Newsome

could construction and you how fairly to claims a little particularly we the little defect. related of like of Certainly, and for delve of I a bit inflation you about you development. Maybe more the questions. reserve are casualty inflation had you're talk a little And about book think social casualty-focused the thinking Great. umbrella question the of has general. in that bit in into Looks quarter kind the been areas? reserves yourself in sort the cost Could those heavily industry

So maybe thoughts there. some

Julie Stephenson

From that this continued umbrella, I can see We extreme magnitude. and severity ahead Julie. think perspective, XXXX years. in actions But effects. increased our move. construction the driven that not accident the really year certainly in on liability see us social the It's this do XXXX for but by severity good move prior certainly terribly earlier in we pressure in we that It's leave of and years point were to a and stay inflationary to we position took think is a We defect accident it. those

movement for of XXXX. our recent the queue updating most so and quarter this XXXX is more years, accident and the about really So trend

that quickly we ahead of So stance, our to proactive we see news here stay a this sort being slowly philosophy more of news. really to of adverse problematic. see But anything favorable see and as we as responding would don't

Jon Paul Newsome

types of these peg sense. sorts of Where books for point? loss you at makes trend do That this

Julie Stephenson

And our focus. pace think liability are making it mid-single sure and is keeping trend in ongoing on pricing see now. focused Yes, digits our the for that certainly as lines I a we with

Jon Paul Newsome

workers' workers' in there workers' Turning from comp? comp change change frequency that sort seems general. year, a a any to comp decline -- perspective Was in for in every of the it your for Any the frequency there's like -- in book for piece.

Julie Stephenson

that. So and coming we still to down see the certainly frequency pleased trends do

experiencing is though trend. negative that we're even So persistently rates there, that outpacing frequency decreasing

with So that. we're pleased

our see recent years. some proactively update what view I saw the our you pressure for which we trend to think on upward reflected severity, accident in what most decision of is is

Jon Paul Newsome

made the other I'll missed going I on on folks question. assumed What's comments the any business you book. last And that with one, moment? reinsurance at ask the let

Julie Stephenson

the time I'm Paul, hard question? hearing can sorry, you. had you repeat We a little

Jon Paul Newsome

reinsurance Could comments book? you is that a on you and missed talk Sorry. little of the how that about bit any book performing I made late?

Julie Stephenson

Absolutely.

And felt renewal. about XX% at program did most about determining book. see growth. We into of book our We little achieve I the were tell So about you X we that XXXX. able growth to very bit that [ recent pretty conditions good ]. assumed a we our feel and X, coming good renewed can About in that

very to consistent our XX% overall to diversifying portfolio of keeping impact across staying and it portfolio to goal still about provide count on So our of book. whole that continue the

Operator

[Operator Instructions] Okay.

finished are you. Thank some closing I We then to conference will CEO UFG of Kevin back with question-and-answer And session. Leidwinger, for turn the the remarks. over

Kevin Leidwinger

you thank today, us you. you, for Thank to Yes. joining and we'll next Thank and you quarter. talk

Operator

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

day. disconnect. You great may now a Have

United Fire (UFCS) 14 Feb 242023 Q4 Earnings call transcript