United Fire Group, Inc
) reported operating earnings of 56 cents per share in the second
quarter of 2012, striding ahead of the Zacks Consensus Estimate of
26 cents. Results rebounded from the loss of 71 cents incurred in
the year-ago quarter.
A combination of higher premium and net investment income aided
United Fire to deliver the strong quarter. Lower share count due to
share repurchases during the quarter aided the bottom line.
Including net realized investment gains of $0.37 million or 2
cents per share, the company reported a net income of $14.72
million, reversing the loss of $17.91 million or 69 cents per share
in the second quarter of 2011.
Total revenue in the quarter under review was $199.65 million,
rising 9.8% from the year-ago quarter, driven by the increase in
premiums earned coupled with an increase in net investment
Net written premiums during the quarter increased 11.7% year
over year to $170.09 million, largely attributable to increases in
various rates and increased business opportunities.
Net investment income for the reported quarter edged up 3.6%
year over year to $28.75 million, largely attributable to change in
value of investments that are accounted for under the equity
Catastrophe ("cat") losses incurred totaled $11.96 million, much
lower than $36.85 million incurred in the prior-year quarter,
as dry weather lowered the number of severe storms.
Property and Casualty Insurance
: Net premium earned increased 10.7% year over year to $153.91
million in the quarter, largely driven by increases in renewal
pricing followed by increasing rates in all lines of business,
coupled with strong policy retention rates in all lines of
The combined ratio improved 3540 basis points year over year to
96.3%, mainly due to reduced cat losses.
Net income was $13.36 million in the second quarter of 2012,
reversing the loss of $19.57 million incurred in the year-ago
quarter, attributable to increased top-line and lesser losses and
: Net premium earned in the quarter under review surged 22.5% year
over year to $16.18 million, primarily due to a rise in sales of
single premium whole life product.
Net income for this segment decreased 18% year over year to
$1.36 million in the second quarter of 2012, attributable to
decreasing investment income, increasing loss and loss settlement
expenses and increasing liability for future policy benefits.
Total assets with United Fire at second quarter end were valued
at $3.74 billion compared to $3.62 billion as on December 31, 2011.
The book value per share increased 5.9% over 2011-end to $28.91 as
on June 30, 2012.
As on June 30, the company's stockholders' equity totaled
$735.36 million versus $696.14 million as on 2011-end.
Dividend and Share Repurchase
During the quarter, United Fire spent $2.1 million to buyback
101,901 shares. The Board also approved the buyback of an
additional 1 million shares to be repurchased by August 2014.
The company also paid $7.6 million as cash dividends during the
The Travelers Companies
), a close competitor of United Fire reported earnings of $1.26 per
share in the second quarter of 2012, lagging the Zacks Consensus
Estimate of $1.38 per share. Results rebounded from the loss of 88
cents incurred in the year-ago quarter.
United Fire carries a Zacks #1 Rank, implying a short-term
Strong Buy rating. Travelers competes with a Zacks #3 Rank,
implying a short-term Hold rating.
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UNITED FIRE GRP (UFCS): Free Stock Analysis
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