United Fire Group, Inc

Good day, and welcome to the United Fire Group Insurance 2022 First Quarter Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Randy Patton, Assistant Vice President and Corporate Controller. Please go ahead.

Good morning, everyone, and thank you for joining this call. This morning, we issued a news release on our results. To find a copy of this document, please visit our website at ufginsurance.com. Press releases and slides are located under the Investor Relations tab. Joining me today on the call are Chief Executive Officer Randy Ramlow and Chief Operating Officer Mike Wilkins. We also have other members of management available to answer questions at the end of our prepared remarks. Before I turn the call over to Randy Ramlow, a couple of reminders. First, Please note that our presentation today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and are not a guarantee of future performance. These forward-looking statements are based on management's current expectations. The actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings. Also, Please note that our discussion today, we may use some non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are also available in our press release and SEC filings. At this time, I will now turn the call over to Mr. Randy Lamlow, CEO of U of T Insurance.

Thanks, Randy. Good morning, everyone, and welcome to our first quarter 2022 conference call. Today, I am pleased to report strong results for the first quarter of 2022, which I am confident in saying is a direct result of our one UFG strategic plan and initiatives aimed at improved profitability. For the second consecutive quarter, we have reported a combined ratio under 90%. This marks the first time in seven years that we've delivered back-to-back quarters with combined ratios below 90%, dating back to the fourth quarter of 2014 and the first quarter of 2015. In addition, for the fourth consecutive quarter, we saw improvements in both our core loss ratio and commercial auto loss ratio when compared to the same quarter in the prior year. We are pleased with this significant improvement in our profitability and a promising start to 2022. In the first quarter of 2022, our core loss ratio, which removed the impact of catastrophe losses and prior year reserve development, improved 17.4 percentage points. This improvement is being driven by continuing decreases in frequency and severity of claims. For a summary of our core loss ratio calculation, refer to the slide 11 in the presentation on our website. The improvement in the core loss ratio contributed to the reported combined ratio of 89.5% in the first quarter of 2022. which is a significant improvement over the 107.2% combined ratio reported in the same period in 2021. Contributing to the improvement in our combined ratio is the decrease in catastrophe losses. Our strategic decision to exit from personal lines has paid off in less catastrophe exposure and thus less volatility in the first quarter of 2022. Pre-tax catastrophe losses added 2.6 percentage points to the combined ratio in the first quarter of 2022, which is lower than our first quarter historical average of 3.3 percentage points and 8.7 points lower than the 11.3 percentage points added to the combined ratio in the first quarter of 2021. As a reminder, the first quarter of 2021 included losses from winter storm URI, which was a full retention loss with losses in excess of our reinsurance retention of $20 million. The line of business with the most significant loss ratio improvement was commercial auto, which improved 41.2 percentage points in the first quarter of 2022 as compared to the same period of 2021. The improvement in profitability in our commercial auto line of business was from decreased severity of losses and increased favorable prior year reserve development. The combined ratio also benefited from favorable prior year reserve development at 2.9 points during the first quarter of 2022, compared to favorable reserve development of 5.1 points in the first quarter of 2021. Most of the favorable reserve development in the current quarter was in our commercial auto line of business. As a company, we have reported favorable reserve development every year since 2009, a trend that continued in the first quarter of 2022. Before I turn the call over to Mike, I would like to take this opportunity to introduce our newest member of our UFG leadership team. Eric Martin is our new chief financial officer, and we are pleased to have him here with us this morning. Eric began with UFG just a couple of weeks ago on April 18th, and is quickly getting up to speed in his new role. We are excited to have Eric on board, contributing to the momentum we've experienced in improving our profitability over the last year. Also, as many of you know, after nearly 40 years at UFG, I am planning to retire at the end of October this year. Today, I am confident that the timing is right and UFG is on a solid path forward, evidenced by the recent trend of strong quarterly results. It is an honor to serve as CEO for these past 15 years, and I am proud of the growth and success we have had during my tenure. Our board of directors is actively conducting a search and have some great internal and external candidates. Time will tell who will be named the sixth leader in USG's history, but I can assure you that our board will choose the very best person for the job, and I am confident USG is in for an upgrade. I will now turn the call over to Mike Wilkins. Mike?