United Fire Group, Inc. Q3 FY2025 earnings call

• Net income nearly doubled from the prior year, combined ratio was excellent, and net written premium hit a record. - Core commercial business saw strong growth. - Fixed income and limited partnership investments contributed positively to income. - Expense ratio improved, and a $0.16 per share cash dividend was declared and paid.

Net income increased to $39.2 million in the third quarter, nearly doubling from the prior year and being the highest net income in the quarter in at least 20 years. The combined ratio was 91.9%, the best third quarter underwriting result in nearly 20 years. Net written premium reached a third quarter record of $328 million. Net written premium grew 7% in the quarter, led by a 22% growth in core commercial business. The fixed income portfolio generated 17% more net investment income than the prior year. The limited partnership investments portfolio generated $2.7 million in the quarter, an annualized return exceeding 10%. The expense ratio was 34.6% in the third quarter, improving 1.3 points from the prior year.

The company is well positioned to carry momentum through the end of 2025 and into 2026. It aims to achieve 15% ROE over an extended period by focusing on delivering superior financial and operational performance and increasing relevance with distribution partners.

Forward-looking statements include risks and uncertainties as actual results may differ materially due to various factors described in press releases and SEC filings, such as industry severity pressures and market volatility.

Q: How would UFG Insurance adjust its strategy into the soft market?

A: From a strategic point of view, it focuses on delivering superior financial and operational performance (including consistent profitability, diversifying growth, attracting talent, innovation, and expense management) and increasing relevance with distribution partners to gain access to wider business opportunities.

Q: Any changes in capital management philosophy and shift towards M&A?

A: No changes on the end. The first priority is to make sure there is the right amount of capital to continue to grow, and then continue with the dividend philosophy.