US property and casualty insurer, United Fire Group (UFG), has reported its estimates for the second quarter of 2023 results which include pre-tax catastrophe losses of $33 million.
The company expects a net loss of $2.23 per diluted share, and an adjusted operating loss of $2.27 per diluted share. The preliminary estimates also include pre-tax reserve strengthening for prior accident years of $53 million.
As a result, UFG estimates its GAAP combined ratio to be 133% in the second quarter of 2023.
“During the second quarter, we increased prior period loss reserves by approximately $53 million to strengthen our position relative to loss trends across a range of commercial liability lines of business,” said UFG President and CEO Kevin Leidwinger.
“This action reflects the impact of ongoing economic and social inflation, as well as continued development of actuarial insights that allow us to more confidently assess and respond to potential risks.”
He continued: “Over the past four quarters, we have significantly advanced the breadth and depth of our reserving analyses, providing a greater understanding of the underlying factors shaping our loss experience.
“These insights now allow us to react more quickly and assuredly in today’s dynamic loss cost environment. We will continue to invest in the talent and process that is necessary to further enhance our analytical rigor and continuously extract actionable insights that are essential in managing the portfolio to long-term financial success.”
According to Leidwinger, the Q2 2023 results were also impacted by elevated catastrophe activity from 18 separate weather events.
The estimated cat losses, of approximately $33 million, add around 13.0 points to the combined ratio, which is 2.0 points above the company’s 5-year and 10-year historic average, the CEO highlighted.
“We continue to take action to improve the risk profile of our property business to reposition the portfolio and reduce volatility. During the second quarter, our property average premium increase was 19%, with rate increases of 12% and exposure increases of 7%,” Leidwinger added.
“The increase in pricing for our property portfolio over the last four quarters and additional improvement in rate achievement for our liability products resulted in the highest level of rate achievement in the overall portfolio since the fourth quarter of 2021.”
He concluded: “While it was clearly a challenging quarter for us, we continue to successfully execute strategies to grow our entire portfolio, sustainably reduce expenses, and invest in the talent and capabilities needed to become a top-performing commercial lines insurer. We are confident in our strategies and remain committed to executing the actions necessary for UFG to deliver superior financial and operational performance over time.”
