UFCS Beats Earnings Est, Lags YoY - Analyst Blog

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United Fire Group Inc. ( UFCS ) reported second quarter 2013 operating earnings of 50 cents per share, far ahead of the Zacks Consensus Estimate of 25 cents. However, results compare unfavorably with 56 cents per share earned in the year-ago quarter.

Including after-tax net realized investment gains United Fire reported a net income of 61 cents per share in the second quarter, compared to a net income of 58 cents per share in the year-ago period. Higher premiums written by the property and casualty segment and new business volume growth mainly led to the upside.

Quarterly Operational Update

Total revenue of United Fire increased 10.1% year over year to $219.7 million in the second quarter driven mainly by an improvement in net premiums earned (up 9.6%). Total revenue also surpassed the Zacks Consensus Estimate of $216 million.

Net written premiums in the quarter increased 9.1% year over year to $214.2 million. Net premiums written by the Commercial line of business were $175.8 million, up 9.5% year over year. This was on account of higher premiums written by workers' compensation and fire and allied lines. Net premiums written in the Personal line of business was $17.9 million, up 9.5% year over year. This was on account of freight adjustments initiated as a result of predictive analytics evaluations, higher premiums written by fire and allied lines and personal auto lines. Strong policy retention and high renewals in both the lines of businesses mainly led to the increase.

Net investment income of United Fire increased 0.9% year over year to $29 million in the reported quarter.

Total benefits, losses and expenses in the quarter increased 10.5% year over year to $199.4 million. The increase was driven by higher loss and loss settlement expenses, increase in liability for future policy benefits, amortization of deferred policy acquisition costs and other underwriting expenses.

The combined ratio deteriorated 320 basis points year over year to 99.5% although it was within company expectations. The deterioration was mainly due to higher catastrophe losses spread out across the United States.

Quarterly Segment Update

The Property and Casualty segment of United Fire reported net income of $13.2 million compared to a net income of $13.4 million in the prior-year period. Net premiums written in the segment were $198.4 million, up 10.1% year over year.

The Life Insurance segment of United Fire reported net income of $2.3 million, up 69.1% year over year. Net premiums written in the segment were $19.4 million, down 2% year over year.

Dividend Update

In the second quarter, United Fire declared and paid dividends of 18 cents per share to shareholders of record as of Jun 1, 2013.

Financial Position

As of Jun 30, 2013, United Fire had cash and investments of $3.1 billion, down 1.9% from $3.2 billion as of Mar 31, 2013.

As of Jun 30, 2013, total assets of United Fire were $3.70 billion, down 0.5% from $3.72 billion as of Mar 31, 2013.

Shareholders' equity as of Jun 30, 2013 was $734.4 million, down 3.1% from $758.1 million as of Mar 31, 2013.

Performance of a Few Other Property and Casualty Insurers

On Jul 29, 2013, XL Group Plc ( XL ) reported second-quarter 2013 net operating net income of 75 cents per share that breezed past the Zacks Consensus Estimate of 64 cents. Earnings improved 5.6% year over year.

On Jul 29, 2013, American Financial Group Inc. ( AFG ) reported second quarter adjusted earnings of 96 cents that breezed past the Zacks Consensus Estimate of 85 cents by 12.9%. Results were also up 5.5% year over year from 91 cents earned in the year-ago quarter.

On Jul 23, 2013, ACE Limited ( ACE ) reported second quarter 2013 operating net income of $2.29 per share, beating the Zacks Consensus Estimate of $1.92 by 19.3%. Results improved 5.5% from $2.17 earned in the year-ago quarter. Operating income was $790 million, up 6.3% over the prior-year quarter.

Zacks Rank

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







ACE LIMITED (ACE): Free Stock Analysis Report

AMER FINL GROUP (AFG): Free Stock Analysis Report

UNITED FIRE GRP (UFCS): Free Stock Analysis Report

XL GROUP PLC (XL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ACE , AFG , UFCS , XL

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