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United Fire Group (UFCS) Q1 Earnings Lag Estimates, Fall Y/Y

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United Fire Group, Inc. (UFCS - Free Report) reported first-quarter 2020 adjusted income of 5 cents per share, which missed the Zacks Consensus Estimate by 58.3%. The bottom line plunged 94.6% year over year.

The company witnessed increase in severity of catastrophe and non-catastrophe losses and a decrease in net investment income. Also, severity in other liability, commercial fire and allied and workers' compensation lines of business increased in the reported quarter.

United Fire Group Inc Price, Consensus and EPS Surprise

Operational Update

Operating revenues decreased 18.4% year over year to $271 million on higher net premiums earned. The top line missed the Zacks Consensus Estimate by 5.6%.

Net premiums written increased 1% to $282.5 million driven by higher premiums written in commercial lines, partially offset by lower premiums in personal lines

Net premiums earned rose 2.5% year over year to $268.8 million, driven by rate increases, premium audits and endorsements. Average renewal pricing change for commercial lines increased 100 bps sequentially driven by commercial auto rate increases. Commercial auto effective rate change remained in low-double digits while personal lines renewal pricing increases remained in mid-single digits.

Net investment income came in at $2.4 million, down 85.5% year over year, attributable to decrease in the fair value of investments in limited liability partnerships.

Total benefits, losses and expenses increased 12.7% year over year attributable to higher losses and loss settlement expenses, amortization of deferred policy acquisition costs and other underwriting expenses.

Expense ratio deteriorated 280 bps to 35.8% in the quarter. Combined ratio was 105.2% down 960 bps year over year.

Financial Update

Cash balance was $120.7 billion, flat from 2019 end level.

Shareholder equity at the end of the first quarter was $833.1 million down 8.5% from 2019 end level.

Book value per share was $33.30 as of Mar 31, 2020, down 8.5% from the level as of Dec 31, 2019.

Return on equity was (33%) against 19.3% reported in the year-ago quarter.

Capital Management

United Fire Group bought back shares worth $2.7 million in the quarter and paid out 33 cents per share as dividend.

Zacks Rank

United Fire Group currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.

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