UNITED FIRE GROUP INC Q3 FY2024 earnings call

• Generated highest quarterly net income and operating income in past 10 quarters. • Net written premiums grew 23% to $305.6 million, led by core commercial and alternative distribution. • GAAP combined ratio improved 3.8 points to 98.2% due to actions to improve core margins, stable prior period reserve development, and catastrophe losses below prior year and historical averages. • Underlying loss ratio improved 2.6 points to 57.9% reflecting strong earned rate achievement, underwriting discipline, and lower-than-expected property large loss experience. • Catastrophe loss ratio was 4.4%, below prior year and historical averages. • Net investment income increased 49% to $24.4 million with fixed income and alternative asset portfolio returns improving. • Resolved rating errors in core commercial with Iowa Insurance Division taking no action, and working with regulators in other states to achieve resolution.

Net written premiums grew 23% to $305.6 million. The core commercial business, which includes small business, middle market, and construction, saw net written premiums grow 13% to $186 million in the third quarter. Core commercial renewal premium change accelerated to 12.4% with rates up 11.2% and exceeding loss trends. Alternative distribution, surety, and specialty contributed diversifying and measured growth. Core commercial represents a significant portion of the revenue, with its net written premiums at $186 million out of $305.6 million total, so approximately 60.9% of total net written premiums.

• Expect rate acceleration to continue, with hope that rate achievement in auto will continue above trend and solid rate achievement in GL will persist. • Confidence in continuing to see favorable growth as a result of rebuilding surety and specialty organizations and focusing on core commercial specialization. • Anticipate continued benefits from repositioning fixed income portfolio with prospective annualized fixed maturity income of $78 million and potential for further investment income improvement from future reinvestment at higher rates.

• Forward-looking statements are subject to risks and uncertainties due to factors described in press release and SEC filings, which could cause actual results to differ materially. • Inflation uncertainty challenging the industry in certain liability lines poses a risk. • Catastrophe events, although actions are taken to optimize property catastrophe risk profile, still present potential impact on results.

Q: Asked about the sustainability of the combined ratio excluding catastrophe losses and reserve development, and about top-line growth, specifically rate versus exposure versus unit growth and product perspective opportunities.

A: Julie Stephenson responded that overall improvement across all lines of business is seen, rate achievement earning through is expected to continue favorable loss ratio, frequency decline is observed and severity showing signs of stabilization; growth across all business units is noted with rebuilding of surety and specialty organizations and focus on core commercial specialization, rate acceleration hoped to continue with levelling off in property but acceleration in auto and solid rate achievement in GL, and policy counts remaining stable with shift to writing more sophisticated insureds