United Fire Group Q3 Earnings Call Highlights

Key Points

• Strong operating results: UFG reported a 94.6% third-quarter combined ratio and $1.34 per diluted share in net income and adjusted operating income. The company said nine-month earnings were record-high, with a 14% return on equity.
• Premiums grew despite moderating prices: Net written premiums rose 13%, driven by core commercial business and alternative distribution. Average renewal rate change was 2% as competition increased, but management said it remains focused on disciplined underwriting and profitable risks.
• Losses remained manageable and investment income rose: The underlying loss ratio was 57.3%, while year-to-date catastrophe losses were below UFG’s full-year estimate. Fixed-maturity investment earnings increased 25%, though higher rates pushed unrealized losses to $145 million without affecting income.

United Fire Group NASDAQ: UFCS reported a 94.6% combined ratio for the third quarter of 2026, extending what President and Chief Executive Officer Kevin Leidwinger described as strong operating performance through the first nine months of the year. The insurer said its results contributed to record earnings over that nine-month period and a 14% return on equity.

Leidwinger said the company has spent several years strengthening underwriting expertise, operational capabilities, agency relationships and efficiency. Those efforts, he said, have expanded the company’s access to profitable growth opportunities while improving the quality and resilience of its portfolio.

Management said commercial insurance pricing is moderating and competition is increasing in much of the market. UFG said it remains focused on business that meets its profitability objectives, while maintaining underwriting discipline and allocating capital toward attractive risk-adjusted returns.

Premium Growth Supported by Core Commercial and Alternative Distribution

Executive Vice President and Chief Operating Officer Julie Stephenson said net written premium rose 13% in the third quarter, led by continued growth in UFG’s core commercial operations, including small business, middle market and construction.

Average renewal rate change was 2% during the quarter. Stephenson said property pricing remained under the greatest pressure, while casualty pricing also moderated. Umbrella rates remained in the upper single digits.

While rate increases have moderated, Stephenson said UFG continues to benefit from its underwriting discipline, pricing rigor and risk selection. More than half of the company’s portfolio now consists of business written since 2024 under a more stringent underwriting framework, she said, and that business has continued to meet or exceed management’s expectations.

Alternative distribution, including treaty, programs and Funds at Lloyd’s, generated nearly $100 million of net written premium in the third quarter. Stephenson said the January 1 treaty and Funds at Lloyd’s renewal cycle continued to support third-quarter growth.

In specialty excess and surplus lines, UFG saw year-over-year growth in new business despite increased competition across property and casualty products. However, net written premium in that segment was down slightly for the quarter because of the timing of ceded reinsurance premiums, which had created noise in 2025 comparisons. Surety premiums also declined slightly from the prior-year quarter but remained favorable through the first nine months.

Loss Ratio Remains Steady as Catastrophe Costs Stay Below Historical Levels

UFG’s third-quarter underlying loss ratio was 57.3%, slightly higher than a year earlier because the company received less favorable impact than in what management called an exceptional third quarter of 2025. Stephenson said the underlying loss ratio was generally steady through the first three quarters of 2026.

The company cited favorable frequency trends, stable but elevated severity trends, positive rate earning through the portfolio and large-loss activity within expectations. Management said the company’s portfolio has become less susceptible to large losses following underwriting and portfolio actions taken during the past several years.

Prior-year reserve development was neutral overall in the third quarter. UFG experienced favorable emergence in commercial auto and property, then used that benefit to preserve a conservative position in areas with greater uncertainty, Stephenson said.

The third-quarter catastrophe loss ratio was 2.4%, compared with 1.3% in the prior-year quarter. Although event frequency was nearly twice as high as in 2025, management said more modest severity limited the impact. UFG’s year-to-date catastrophe loss ratio was 2.9%, below its full-year estimate of 5%.

Investment Income Rises, While Higher Rates Expand Unrealized Losses

Executive Vice President and Chief Financial Officer Eric Martin said earnings from UFG’s fixed-maturity investment portfolio increased 25% from the prior-year quarter. The company used higher market interest rates to modestly extend duration while adding high-quality credits with an average AA- rating during the quarter.

New fixed-income purchases carried an average yield of 5.6%, roughly 100 basis points above the portfolio average, Martin said. The overall portfolio had a duration of about 4.5 years and an average credit rating of AA-.

Higher market interest rates during the quarter increased UFG’s unrealized loss position to $145 million. Martin said the fixed-income portfolio had no impairments and that the change in unrealized losses did not affect income or the company’s investment strategy.

Limited partnership investments of approximately $100 million generated $1.3 million in income during the quarter. Management noted that income from these investments can vary quarter to quarter.

Expense Ratio and Capital Management

UFG reported a third-quarter expense ratio of 34.9%. Martin said the measure has continued a gradual, though occasionally uneven, decline as the company balances investment in the business with efficiency gains and premium growth. For the first nine months of 2026, the expense ratio was 0.7 percentage point lower than in the same period of 2025.

During the question-and-answer session, Martin said management believes an approximately 10% growth rate could lower the expense ratio by about 0.5 point, supported by premium leverage and expense-management actions.

Third-quarter net income and non-GAAP adjusted operating income were both $1.34 per diluted share. Adjusted book value per share, excluding unrealized investment losses, rose to $40.94, while reported book value per common share was $36.51.

UFG declared and paid a cash dividend of $0.20 per share during the third quarter to shareholders of record as of Sept. 4, 2026. Leidwinger said the company remains focused on disciplined underwriting, profitable growth and prudent capital management as market conditions evolve.

About United Fire Group (NASDAQ:UFCS)

United Fire Group, Inc NASDAQ: UFCS is an insurance holding company headquartered in Cedar Rapids, Iowa. Through its insurance subsidiaries, the company provides property and casualty insurance products to businesses, individuals, and organizations, primarily through a network of independent insurance agents.

Its product portfolio includes commercial property and liability coverage, commercial automobile insurance, workers' compensation, surety bonds, and specialty insurance products.

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