2018 first quarter earnings conference call · q2 2019 results $276m in net premiums earned in 2q...

2019 SECOND QUARTER EARNINGS

CONFERENCE CALL

AUGUST 7, 2019

Financial Highlights – 2Q 2019 & YTD 2019

2019 SECOND QUARTER EARNINGS CONFERENCE CALL

2Q2019 2Q2018 YTD2019 YTD2018

Net income (loss) per diluted share $ (0.17) $ 0.01 $ 1.57 $ 1.80

Gain on sale of discontinued operations, net of tax $ - $ - $ - $ 1.07

After-tax net realized investment gains (losses) $ 0.42 $ 0.04 $ 1.24 $ (0.23)

Adjusted operating income (loss) per share $ (0.59) $ (0.03) $ 0.33 $ 0.96

Catastrophe losses per share $ 0.69 $ 0.47 $ 0.79 $ 0.57

GAAP combined ratio 111.7% 107.9% 103.9% 100.9%

Book value per share $38.36 $38.52

Return on equity 8.7% 6.9%

2

Property and Casualty Business Highlights


Q2 2019 Results

$276M in net premiums earned in 2Q 2019 – an increase of 7.6% over 2Q 2018 primarily due to rate increases

Catastrophe losses added 8.0 percentage points to the combined ratio; lower than our historical 10-year average of 10.9

percentage points for 2nd quarters and up 2.1 percentage points compared to 2Q 2018.

Prior year unfavorable reserve development $9.4M in 2Q 2019 compared to favorable reserve development of $10.3M in 2Q

2018

Decrease driven by reserve strengthening in Gulf Coast region on commercial liability and commercial auto lines of

business

Core loss ratio improvement of 3.5 points after removing the impact of catastrophe losses and unfavorable reserve development

2019 Strategies

Focus on profitability

Underwriting action on underperforming accounts

Continue strategic initiatives with commercial automobile book of business

Increased utilization of our Enterprise Analytics group and incorporate technical pricing into underwriting

Claims initiatives by shorting cycle time, reduce claims costs and reduce impact of litigation3

P & C Market Conditions


Commercial lines renewal rates increases averaged mid-single digits

Renewal rate increases led by commercial auto

Commercial auto filed rate increases averaged in the low-double digits

Personal lines renewal rate increases – averaged mid-single digit

increases

4

P & C Geographic Footprint


Regional Underwriting Offices in Cedar Rapids, Iowa

(corporate headquarters); Denver, Colorado; Houston,

Texas; Pennington, New Jersey; Rocklin, California and

Phoenix, AZ.

Currently licensed and actively writing P & C and Surety

Bonds in the 33 states shaded dark blue. The 9 states

shaded light blue plus the District of Columbia are

currently licensed and able to write Surety Bonds only. 5

Consolidated GAAP ROE


7.4%

10.5%

5.5% 5.3%

3.0%

8.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2014 2015 2016 2017 2018 2019*

*Second quarter 2019 annualized6

Q2 2019 P & C Written Premium Change & Retention


P & C Written premium change› Commercial lines 4.0%

› Personal lines 0.7%

› Group (all lines) 3.6%

P & C Retention› Premium retention 84.5%

› Policy retention 80.9%

7

Core Loss Ratio vs. Catastrophe Losses


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2014 2015 2016 2017 2018 Q2 2018 YTD2018

Q2 2019 YTD2019

60

.0%

57

.2%

63

.2%

65

.4%

66

.0%

67

.7%

62

.8%

71

.6%

66

.5%

6.5%3.8%

6.5%7.4% 4.5%

5.9%3.7%

8.0%

4.8%

Core Losses Cat Losses

Cat losses in Q2 2019 added 8.0 percentage points to the loss ratio.8

Adjusted Combined Ratio


Adjusted Combined Ratio 2Q2019 2Q2018 2019 YTD 2018 YTD

P&C Loss Ratio (as reported) 79.6% 73.6% 71.3% 66.5%

Impact of Catastrophes -8.0% -5.9% -4.8% -3.7%

Loss Ratio Ex-Catastrophes 71.6% 67.7% 66.5% 62.8%

Impact of Reserve Development -3.4% 4.0% -0.9% 9.6%

Loss Ratio Ex - CAT and Ex-Development 68.2% 71.7% 65.6% 72.4%

P&C Expense Ratio 32.1% 34.3% 32.6% 34.4%

Adjusted Combined Ratio 100.3% 106.0% 98.2% 106.8%

9

Consolidated Income Yield


NOTE: Total Invested Assets excludes Cash & Cash Equivalents

3.3% 3.2% 3.3%

3.0%

2.7%2.5%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2014 2015 2016 2017 2018 2019

10

UFCS Stock Price (06/30/17 – 06/30/19)


52 Week High: $61.56 --- 52 Week Low: $40.8611

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

$65

Stock Price Book Value Linear (Stock Price)

Recognition


Rated A (Excellent) by A.M. Best Company.

Named Super Regional Property/Casualty Insurer™ every year since 2006 by Insurance Journal magazine.

Placed on Forbes’ list of “America’s 50 Most Trustworthy Financial Companies” for four consecutive years,

beginning in 2014.

Placed on July 2018 Best’s Review list of Top 200 U.S. Property/Casualty Writers.

Recipient of the 2015 Iowa Better Business Bureau Integrity Award

Placed on Iowa’s list of Top Workplaces in Iowa for 2018 by The Des Moines Register.

Named a Five-Star Carrier by Insurance Business America for 2019.

Named one of Sandler O’Neill’s 2016 Insurance Premium Players.

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2018 first quarter earnings conference call · q2 2019 results $276m in net premiums earned in 2q...

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