UFG(US:UFCS)2022-05-05 15:48Financial Performance - For the three-month period ended March 31, 2022, net income was $28,349,000, compared to $18,702,000 for the same period in 2021, representing a year-over-year increase of 51.5%[165] - Basic earnings per share (EPS) for Q1 2022 was $1.13, up from $0.75 in Q1 2021, reflecting a 50.7% increase[165] - Net investment losses for the three months ended March 31, 2022, totaled $465 million, compared to net gains of $24,508 million in the same period of 2021[81] - Total incurred losses and loss settlement expenses for the current year were $130,376, significantly lower than $652,155 for the prior year, indicating a decrease of approximately 80%[139] - The company paid a total of $167,465 in losses and loss settlement expenses during the current year, down from $697,078 in the prior year, representing a reduction of about 76%[139] Investment Valuation - The total fair value of investments as of December 31, 2021, was $1,719,790 million, with an amortized cost of $1,656,797 million, indicating a gross unrealized appreciation of $71,642 million[76] - The fair value of available-for-sale fixed maturities was $1,651,468 million, with an amortized cost of $1,671,758 million, reflecting a gross unrealized depreciation of $38,346 million[73] - The fair value of equity securities decreased from $213,401 on December 31, 2021, to $194,230 on March 31, 2022, representing a decline of about 9%[109] - The fair value of mortgage loans is estimated at $46,998 as of March 31, 2022, down from $48,815 at the end of 2021, indicating a decrease of approximately 4%[109] - The fair value of Level 3 securities was $1,039 million as of March 31, 2022, down from $1,670 million at the beginning of the year[125] Debt and Liabilities - The company had no outstanding balance on its $50,000 revolving credit facility as of March 31, 2022, and did not incur any interest expense related to the credit facility during the three-month periods ended March 31, 2022, and 2021[174] - Long-term debt fair value is estimated at $42,598 as of March 31, 2022, compared to $46,047 as of December 31, 2021, reflecting a decrease of approximately 7%[109] - The company’s net liability for losses and loss settlement expenses decreased to $1,364,276 from $1,401,365 at the end of 2021, reflecting a reduction of approximately 2.7%[139] Reserves and Losses - The company conducts quarterly reviews of its reserves for losses and loss settlement expenses, adjusting as necessary based on new information[135] - The favorable reserve development in the three-month period ended March 31, 2022, was primarily driven by the commercial automobile line, which saw reductions in reserves for unpaid liabilities[144] - The company experienced unfavorable reserve development in commercial other liability due to paid loss exceeding the reduction in unpaid claim reserves[145] - The allowance for mortgage loan losses decreased from $71 million to $66 million during the first quarter of 2022[131] Accounting and Compliance - The company adopted new accounting guidance for defined benefit plans and income taxes effective January 1, 2021, which did not impact its financial position or results of operations[69][70] - The company evaluated all material subsequent events for potential recognition or disclosure in its financial statements[68] - The company has not adjusted the net asset value provided by fund managers for its long-term investments in limited liability partnerships[106] Market and Risk Exposure - The company has exposure to market risk from potential losses in its investment portfolio due to adverse changes in interest rates and market prices[280] - The company does not utilize financial hedges or derivative financial instruments to manage risks, focusing instead on active portfolio management[281] - As of March 31, 2022, the company had no direct exposure to investments in sub-prime mortgages or other credit-enhancement exposures[281] Capital Contributions and Investments - The company is contractually committed to make capital contributions of $21,518 million through July 10, 2030, related to a limited liability partnership investment[85] - The fair value of a limited liability partnership investment fund was $24,720 million as of March 31, 2022, with no remaining capital contributions required[86] Stock and Compensation - Stock-based compensation expense recognized for the three-month periods ended March 31, 2022, and 2021 was $979 and $1,008, respectively, showing a slight decrease[158] - As of March 31, 2022, there were 1,253,180 authorized shares remaining available for future issuance under the Stock Plan[152] - The company had $4,867 in stock-based compensation expense that has yet to be recognized, expected to be recognized over the remainder of 2022 and subsequent years[159]