United Fire Exits on a Mixed Note - Analyst Blog
United Fire Group Inc.
) reported fourth-quarter operating loss of 12 cents per share,
narrower than the Zacks Consensus Estimate loss of 23 cents.
Results compare unfavorably with 62 cents per share earned in the
Including after-tax net realized investment gains of 2 cents, United Fire reported a net loss of 10 cents per share in the fourth quarter, compared to a net income of 66 cents per share in the year-ago period.
Quarterly Operational Update
Total revenues increased 11.4% year over year to $213.3 million in the fourth quarter driven by an improvement in net premiums earned (up 15.6% year over year). It surpassed the Zacks Consensus Estimate of $205 million.
Net written premiums in the quarter increased 15.1% year over year to $174.4 million.
Net premiums written by the Commercial line of business including the Mercer Insurance Group premiums were $135.2 million, up 13.6% year over year. Net premiums written in the Personal line of business was $15 million, up 0.6% year over year.
Net investment income decreased 8.7% year over year to $25.3 million in the reported quarter.
Total benefits, losses and expenses in the quarter increased 30.4% year over year to $221.3 million. The increase was driven by higher loss and loss settlement expenses (up 45.3% year over year), increase in liability for future policy benefits (up 101.5% year over year) and other underwriting expenses (up 30.4% year over year).
The combined ratio deteriorated 1710 basis points year over year to 111.1%.
Quarterly Segment Update
The Property and Casualty segment reported net loss of $4.1 million compared to a net income of $15.3 million in the prior-year period. Net premiums written in the segment were $155.0 million, up 11.7% year over year. Combined ratio deteriorated 1940 basis points to 112.6%.
The Life Insurance segment reported net income of $1.7 million, up 2.6% year over year. Net premiums written in the segment were $19.4 million, up 52.2% year over year.
Full Year Highlights
In 2012, the company reported operating earnings of $1.44 per share rebounding from an operating loss of 16 cents in the year-ago period,
Including after-tax net realized investment gains of 14 cents, United Fire reported net income of $1.58 per share in 2012. The company broke even in 2011.
Total revenues for full year 2012 increased 15.4% year over year to $813.2 million.
Combined ratio improved 1090 basis points to 101.2% in 2012.
Share Repurchase Update
In the fourth quarter, United Fire spent $4.4 million to buy back 0.2 million shares at an average price of $21.75. In 2012, it spent $7.3 million to repurchase 0.3 million shares at an average price of $21.46 per share. The board of directors has authorized a share buyback program, expiring in Aug 2014, to repurchase an additional 1.1 billion shares.
United Fire exited 2012 with cash and investments of $3.2 billion, up 3.3% year over year.
As of Dec 31, 2012, total assets of the company were $3.7 billion, up 2.1% year over year.
Shareholders' equity increased 4.7% year over year to $729.2 million at 2012 end.
Performance of Few Other Property and casualty Insurers
Navigators Group Inc. 's ( NAVG ) fourth-quarter adjusted earnings of 59 cents breezed past the Zacks Consensus Estimate loss of 25 cents Results were up 43.9% year over year from 41 cents earned in the year-ago quarter.
American Financial Group Inc. 's ( AFG ) fourth-quarter adjusted earnings of 67 cents breezed past the Zacks Consensus Estimate by 3.1%. However, results were down 36.2% year over year from $1.05 earned in the year-ago quarter.
XL Group Plc 's ( XL ) fourth-quarter 2012 operating income of 13 cents per share outpaced the Zacks Consensus Estimate of a loss of 35 cents. Earnings rebounded from a loss of 25 cents incurred in the year-ago quarter.
United Fire currently carries a Zacks Rank #3 (Hold).
AMER FINL GROUP (AFG): Free Stock Analysis Report
NAVIGATORS GRP (NAVG): Free Stock Analysis Report
UNITED FIRE GRP (UFCS): Free Stock Analysis Report
XL GROUP PLC (XL): Free Stock Analysis Report
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