Yahoo Finance United Fire Group Inc (UFCS) Q1 2024 Earnings Call Transcript Highlights: Strong Performance ...
Net Income: Increased to $13.5 million.
Net Written Premium: Grew 17.6% to $321 million.
Investment Income: Rose 28.5% to $16.3 million.
Combined Ratio: Improved to 98.9%.
Underlying Loss Ratio: Improved to 59.4%.
Expense Ratio: Improved to 34.9%.
Earnings Per Share (EPS): Reported at $0.52 per diluted share.
Book Value Per Share: Increased to $29.13.
Dividend: Paid a $0.16 per share cash dividend.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Net income increased to $13.5 million, driven by improved underwriting results and higher investment income.
Net written premium grew 17.6% to $321 million, led by core commercial and assumed reinsurance business.
First quarter combined ratio improved four points to 98.9%, the lowest over the past eight quarters.
Investment income increased 28.5% to $16.3 million, benefiting from reinvesting at higher interest rates.
Continued robust execution of strategic initiatives, positioning United Fire Group Inc for improved long-term performance.
Negative Points
Specialty excess and surplus lines net written premiums declined approximately $1 million from the prior year.
Surety net written premium declined slightly in the first quarter due to a measured approach to growth.
Other Liability and Surety loss ratios are elevated relative to the first quarter of 2023.
Approximately $1 million of realized losses in the first quarter from adjustments in the fixed income portfolio.
Ongoing challenges with inflationary pressures, particularly impacting general liability lines.
Q & A Highlights
Q: Can you provide an overview of United Fire Group's financial performance in the first quarter of 2024? A: Kevin Leidwinger, President and CEO, reported that United Fire Group Inc achieved a net income of $13.5 million, driven by improved underwriting results and higher investment income. Net written premium grew by 17.6% to $321 million, primarily led by the core commercial and assumed reinsurance business. The company also saw a significant increase in investment income, up 28.5% to $16.3 million.
Q: How did the underwriting results fare in this quarter compared to previous ones? A: Julie Stephenson, COO, noted that the first quarter combined ratio improved by four points to 98.9%, marking the lowest in the past eight quarters. The underlying loss ratio improved to 59.4%, reflecting ongoing underwriting and pricing discipline. Catastrophe losses were in line with the previous year and slightly below the five-year average.
Q: What were the key drivers behind the growth in net written premiums? A: Julie Stephenson explained that the core commercial business, encompassing small business, middle market, and construction, grew by 12% to $223 million. This growth was fueled by a renewal premium change of 10.9%, with rates increasing by 9%, which exceeded loss trends. Additionally, commercial property and auto sectors showed robust rate achievements and exposure increases.
Q: What strategic financial moves did United Fire Group make in this quarter? A: Eric Martin, CFO, highlighted the strategic reallocation of public equity assets into fixed maturities and the transition of investment portfolio management to New England Asset Management. These moves are part of a broader strategy to optimize the company's investment portfolio in response to the current economic environment.
Q: Can you discuss any challenges or areas of concern noted during the quarter? A: Julie Stephenson pointed out that while there was favorable development in property, workers' compensation, and surety, other liability and surety loss ratios were elevated compared to the first quarter of 2023. This reflects the company's cautious stance towards ongoing inflationary pressures and the need for continued underwriting discipline.
Q: What is the outlook for United Fire Group moving forward after these results? A: Kevin Leidwinger expressed confidence in the company's strategic initiatives and its position to deliver improved long-term performance. The focus will remain on maintaining underwriting discipline, managing cost structures, and leveraging new business opportunities to sustain growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
