UFG(US:UFCS)2025-08-06 16:19Part I. Financial Information Financial Statements and Supplementary Data This section presents the unaudited consolidated financial statements for United Fire Group, Inc. as of June 30, 2025, and for the three and six-month periods then ended Consolidated Balance Sheets Total assets reached $3.66 billion, liabilities $2.82 billion, and stockholders' equity $845.7 million as of June 30, 2025 Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | $2,199,897 | $2,093,094 | | Total Assets | $3,661,130 | $3,488,469 | | Total Liabilities | $2,815,462 | $2,706,938 | | Total Stockholders' Equity | $845,668 | $781,531 | Consolidated Statements of Income The company reported a significant turnaround in profitability, driven by higher net earned premiums and net investment income Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Earned Premium | $314,802 | $287,569 | $623,213 | $568,428 | | Total Revenues | $335,473 | $301,169 | $666,588 | $597,168 | | Net Income (Loss) | $22,947 | $(2,735) | $40,647 | $10,767 | | Diluted EPS | $0.87 | $(0.11) | $1.54 | $0.42 | Consolidated Statements of Cash Flows Net cash from operations was $89.1 million in H1 2025, with significant cash used in investing and financing activities Six-Month Cash Flow Summary (in thousands) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $89,064 | $127,507 | | Net Cash from Investing Activities | $(78,505) | $(134,604) | | Net Cash from Financing Activities | $(9,359) | $58,481 | | Net Change in Cash | $1,200 | $51,384 | Notes to Unaudited Consolidated Financial Statements Notes detail accounting policies, investments, and loss reserves, highlighting a $30 million debt offering and $11.9 million favorable reserve development - The company completed a private offering of $30 million in senior unsecured 9.0% Series B notes on July 10, 2025, with proceeds intended for growth and general corporate purposes33 - For the six months ended June 30, 2025, the company experienced $11.9 million of favorable reserve development, driven by better-than-expected catastrophe experience and lower loss adjustment expense payments82 - There have been no changes to significant accounting policies since the 2024 Annual Report on Form 10-K31 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting significant net income growth, improved underwriting results, and a lower combined ratio Results of Operations Operational results improved substantially in H1 2025, with net income rising to $40.6 million and the combined ratio improving to 97.9% Key Performance Ratios | Ratio | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Loss Ratio | 61.5% | 67.0% | | Underwriting Expense Ratio | 36.4% | 35.2% | | Combined Ratio | 97.9% | 102.2% | | Underlying Loss Ratio (Non-GAAP) | 57.0% | 59.1% | | Underlying Combined Ratio (Non-GAAP) | 93.4% | 94.3% | - Net written premium increased by 9.4% for the six months ended June 30, 2025, primarily due to growth in core commercial lines from new business and increased retention151154 - Pre-tax catastrophe losses for H1 2025 were $32.8 million, a decrease of $12.1 million from H1 2024, adding 5.3 points to the combined ratio, which is below the five-year historical average168 Net Loss Ratios by Line Commercial lines net loss ratio improved to 61.9% in Q2 2025, with significant improvements in Commercial Automobile and Fire and Allied lines Net Loss Ratio by Commercial Line (Q2 2025 vs Q2 2024) | Line of Business | Q2 2025 Net Loss Ratio | Q2 2024 Net Loss Ratio | Point Change | | :--- | :--- | :--- | :--- | | Other liability | 78.7% | 83.3% | -4.6 | | Fire and allied lines | 49.7% | 61.9% | -12.2 | | Automobile | 57.9% | 77.6% | -19.7 | | Workers' compensation | 56.1% | 62.2% | -6.1 | | Fidelity and surety | 36.1% | 47.6% | -11.5 | Investments The investment portfolio grew to $2.2 billion, with net unrealized losses improving to $44.7 million due to falling interest rates - The investment portfolio increased by $107 million to $2.2 billion since December 31, 2024194 - Net unrealized investment losses, after tax, decreased from $72.2 million at year-end 2024 to $44.7 million at June 30, 2025, primarily due to falling bond market interest rates201 - The weighted average effective duration of the fixed maturity portfolio was 4.12 years at June 30, 2025, slightly down from 4.22 years at December 31, 2024200 Liquidity and Capital Resources The company maintains strong liquidity, with $89.1 million in operating cash flow and stockholders' equity increasing to $845.7 million - Stockholders' equity increased to $845.7 million at June 30, 2025, from $781.5 million at December 31, 2024. Book value per share increased by 7.7% to $33.18223 - The company has access to a credit facility from FHLB Des Moines with a borrowing capacity of up to $499.6 million, with no outstanding balance as of June 30, 2025107219 - The company has a remaining potential contractual obligation of $21.1 million through 2030 for capital contributions to its limited liability partnership investments222 Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's market risk components during Q2 2025, as detailed in the 2024 Annual Report - There were no material changes in the company's market risk components for the three-month period ended June 30, 2025225 Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period226 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls228 Part II. Other Information Legal Proceedings The company is involved in routine legal proceedings not expected to materially affect its financial condition or operations - Management believes all pending legal proceedings as of June 30, 2025, are ordinary and routine and are not expected to have a material adverse effect on the Company230 Risk Factors No material changes occurred to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - The company's business is subject to risks identified in its Annual Report on Form 10-K for the year ended December 31, 2024231 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common stock in Q2 2025, but remains authorized to purchase up to one million shares - The Company did not repurchase any shares of its common stock during the three-month period ended June 30, 2025233 - As of June 30, 2025, the company is authorized to purchase up to one million additional shares of its common stock233 Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025 - During the second quarter of 2025, no directors or officers adopted or terminated Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements236 Exhibits This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL financial data files