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Mar 31, 2020
United Fire Group Q1 2020 Earnings Report
Reported a consolidated net loss due to a decrease in the value of investments in equity securities, an increase in severity of catastrophe and non-catastrophe losses and a decrease in net investment income.
Key Takeaways
United Fire Group reported a net loss of $72.5 million, or $2.90 per diluted share, for the first quarter of 2020, compared to a net income of $44.5 million, or $1.74 per diluted share, for the same period in 2019. The company's GAAP combined ratio increased to 105.2% compared to 95.6% in the same period in 2019. Net premiums earned increased 2.5 percent to $268.8 million.
Net loss was $72.5 million ($2.90 per diluted share) for Q1 2020, compared to net income of $44.5 million ($1.74 per diluted share) for the same period in 2019.
Adjusted operating income was $0.05 per diluted share for Q1 2020, compared to $0.91 per diluted share for the same period in 2019.
GAAP combined ratio increased to 105.2% for Q1 2020, compared to 95.6% in the same period in 2019.
Net premiums earned increased 2.5% to $268.8 million in Q1 2020, compared to $262.3 million in the same period in 2019.
Revenue by Segment
Forward Guidance
Depending on the duration of the suppressed economy in the second quarter and beyond, the company anticipates that there could be an adverse impact to its business, including lower premiums and demand for its products. Based on information available, the company expects the effect of the COVID-19 pandemic on claims currently under its policy coverage to be manageable.
Positive Outlook
- Company is fully operational, but has limited travel for non-essential employees
- Company has dispatched its staff to work remotely
- The increase in net unrealized investment gains is primarily the result of a decrease in interest rates in the first quarter of 2020.
- The average renewal pricing change for commercial lines increased 7.6 percent in the first quarter of 2020 compared to 6.6 percent in the fourth quarter of 2019.
- Experienced favorable development in net reserves for prior accident years of $13.7 million in the first quarter of 2020
Challenges Ahead
- Net loss reported in the first quarter 2020 was driven primarily by the decrease in the value of investments in equity securities
- Net loss reported in the first quarter 2020 was driven primarily by an increase in severity of catastrophe and non-catastrophe losses
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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