UFCS

• Overall Financial Milestones

  • Delivered the best Q2 combined ratio in more than 15 years, alongside record net income, record net written premium, and the highest quarterly investment income in over a decade.
  • Achieved a 13.2% year-to-date return on equity through the first half of 2026, the best H1 performance in 20 years.
  • Q2 2026 catastrophe loss ratio was 2.7%, 2.8 percentage points below the prior year and well below 5-year and 10-year historical averages; H1 catastrophe loss ratio of 3.2% is trending favorably against the full-year estimate of 5%.
  • Overall underlying loss ratio was 57.2%, a slight improvement year-over-year and consistent with Q1 2026 results.
  • Expense ratio came in at 35.4%, a 0.5 percentage point increase year-over-year driven by a one-time lease buyout cost; the ongoing run rate expense ratio remains 35%.
  • Diluted net income was $1.29 per share, with non-GAAP adjusted operating income of $1.30 per share; adjusted book value per share increased to $39.72.

• Underwriting & Portfolio Strategy

  • Maintained disciplined underwriting, risk selection, and pricing, with over 50% of the current portfolio written from 2024 through Q2 2026, and new business meeting or exceeding performance expectations.
  • Prior year reserve development was neutral overall, with stable loss emergence for long-tail liability lines and favorable emergence in auto, property, and workers' compensation; favorable reserve releases were redeployed to retain conservative reserves in high-uncertainty lines.
  • Strategic transformation efforts including deepened underwriting expertise, strengthened distribution partner alignment, and improved investment performance have driven sustained improvements in financial performance.

• Capital & Operations Updates

  • Declared and paid a 20 cent per share cash dividend to shareholders in Q2.
  • Ongoing technology modernization investments are underway to drive long-term efficiency gains.

• Full-year 2026 catastrophe loss ratio is expected to come in at 5%, with year-to-date results trending favorably to this target.
• Management expects the expense ratio will see gradual reductions of 0.5 to 1 percentage point per year going forward, supported by efficiency initiatives and cost reduction actions.
• Management reaffirmed the company's long-term target return on equity of 15%.
• Management expects to continue delivering profitable top-line growth even in the current increasingly competitive market, while maintaining strict underwriting discipline.

1. Core Commercial Business (small business, middle market, construction): Net written premium grew 9% year-over-year, driving overall company growth. This segment represents the firm's core growth engine, contributing the majority of total revenue. Average overall renewal rate change was 2.9% for the quarter; property rates faced downward pressure, general liability saw modest pressure, auto rates held consistent with Q1 2026, and umbrella delivered strong double-digit rate increases. 2. Specialty, Excess and Surplus Lines: Net written premium declined year-over-year due to heightened competition for larger accounts impacting the segment's small portfolio, though quarter-over-quarter production remained stable and disciplined. 3. Surety: Delivered strong Q2 growth following a flat Q1 2026, supported by large project opportunities. 4. Alternative Distribution (treaty, programs, funds at Lloyds): Net written premium increased 13% year-over-year, driven by a strong January 2026 treaty and FAW renewal cycle, making this the fastest-growing segment for the quarter. 5. Investment Segment: Net investment income grew 33% year-over-year to $29 million, the highest quarterly level since 2016. Fixed maturity investment income reached $26.3 million, up 24% year-over-year, with a 16% growth in fixed maturity portfolio size over the past year and an average AA credit rating. Limited partnership investments ($100 million portfolio) generated $2.3 million in return for the quarter, with an 8.7% annualized yield over the past eight quarters.

• Persistent competitive market pressure, with downward pressure on property rates, modest pressure on general liability rates, and heightened competition across all property and casualty lines, particularly for specialty excess and surplus lines larger accounts and assumed reinsurance.
• Elevated interest rates increase unrealized losses on the fixed income investment portfolio, negatively impacting reported book value per share.
• Long-tail liability lines remain subject to uncertainty, requiring continued caution and maintenance of conservative reserve positions.
• Softening market conditions create pressure on rate achievement, which could pressure profitability if underwriting discipline is not maintained.

Q: How much impact does social inflation and higher judgment costs have on United Fire Group's commercial auto loss ratio, and what rate level is needed to hit targets? / A: UFG's commercial auto portfolio is focused on small to mid-size construction and middle market business, and the company does not participate in heavy trucking or large commercial auto. As a result, the portfolio has very limited exposure to social inflation. The company continues to achieve attractive, positive pricing for auto that meets its profitability requirements. / Q: The company hit 13.2% year-to-date ROE, below its 15% long-term target. What is the board's threshold for approving a share repurchase program, and how does this compare to the priority of the existing 20-cent per share dividend? / A: Capital management priorities are ordered first: holding sufficient capital to support planned profitable growth, second: maintaining the current 20-cent per share quarterly dividend, and third: evaluating share repurchases. The company already has 2 million shares authorized for buyback, and will continue to consider repurchases as a third-priority use of excess capital going forward. / Q: Can UFG continue to grow and scale its top line in the current competitive softening market, or will growth need to pause? / A: Management expects UFG can continue to grow and scale despite the softer market. The company's improved underwriting expertise and expanded capabilities have attracted new opportunities from agency partners that UFG had not previously accessed, creating a larger pool of eligible risks. By sticking to strict underwriting discipline and only pursuing appropriately priced exposures, profitable scalable growth remains achievable through the current market cycle. / Q: Is UFG's overall underlying combined ratio positioned to improve further, given current rate levels relative to inflation? / A: Management has high confidence in the current portfolio, with both new and renewal business performing within expectations thanks to deepened underwriting rigor. The company has built enhanced actuarial and analytical monitoring capabilities to adjust quickly to market changes, so management is confident it can maintain the underlying loss ratio at current favorable levels even amid market challenges.