United Fire Group Inc · Q3 2020 earnings

Briefing

Reported a consolidated net loss primarily due to an increase in losses and loss settlement expenses, namely from catastrophe losses, and a decrease in net premiums earned.

United Fire Group reported a net loss of $37.2 million, or $1.49 per diluted share, for the third quarter of 2020, compared to a net loss of $2.3 million, or $0.09 per diluted share, for the same period in 2019. The increase in net loss was primarily due to an increase in losses and loss settlement expenses, namely from catastrophe losses, and a decrease in net premiums earned.

• Net loss totaled $37.2 million ($1.49 per diluted share) for the third quarter of 2020, compared to a net loss of $2.3 million ($0.09 per diluted share) in the same period in 2019.
• Net premiums earned decreased 5.8 percent to $259.1 million in the third quarter of 2020, compared to $274.9 million in the same period in 2019.
• Net investment income was $7.2 million for the third quarter of 2020, as compared to net investment income of $13.3 million for the same period in 2019.
• The GAAP combined ratio increased by 14.4 percentage points to 124.4 percent for the third quarter of 2020, compared to 110.0 percent in the same period in 2019.

Headline financials

Revenue & EPS history

We continue to expect the impact of the COVID-19 pandemic to be manageable. As we mentioned the last two quarters, there was some impact to net premiums earned due to the impact of the COVID-19 pandemic but it was less significant than the impact from our focus on improving the profitability of our commercial auto book in the first nine months of 2020. As a reminder, nearly all of the policies we have issued contain contract language that specifically excludes business interruption coverage for losses due to viruses such as the COVID-19 pandemic. However, we cannot determine how any changes in legislation, regulations and interpretations by the courts regarding these exclusions will impact the Company in the future.