United Fire Group, Inc

And welcome to the United Fire Group Insurance 2023 fourth 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. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, if need be, please press star, then two. Please note this event is being recorded. And now, I would like to turn the conference over to Tim Burst. Please, go ahead.

Good morning and thank you for joining this call. Yesterday afternoon, we issued a press 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 Investors tab. Joining me today on the call are UFG President and Chief Executive Officer Kevin Leidwinger, Executive Vice President and Chief Operating Officer Julie Stevenson, and Executive Vice President and Chief Financial Officer Eric Martin. Before I turn the call over to Kevin, 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 in 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 turn the call over to Mr. Kevin Leidwinger, CEO of UFG Insurance.

Thank you, Tim. Good morning, everyone, and welcome to our fourth quarter conference call. I'll begin this morning by providing a high-level overview of our results. Following my comments, Julie Stevenson will discuss our underwriting results in more detail and Eric Barton will discuss our financial results. I'm pleased with our fourth quarter results as the incremental improvement in profitability, continued growth, and progress we've made to deepen our expertise as well as drive operational efficiency further position UFG to deliver superior financial and operational performance over time. In the fourth quarter, net written premium grew 5% to $247 million, led by our core commercial and assumed reinsurance business units. Core commercial production remained strong with increased new business and improved retention compared to the fourth quarter of 2022. In addition, average annual premium increases accelerated to 11.6%, exceeding loss trends. On a full year basis, increased production trends led to net written premium growth of 8%, just over a billion dollars, the highest level since 2019. The combined ratio in the fourth quarter was 99.2%, the lowest in the last seven quarters. Catastrophe losses contributed 1.5% to the combined ratio, well below historical averages. Prior period reserves increased $8.8 million, or 3.3% on the combined ratio, due to a few late developing property claims, as well as severity pressure and a few casualty lines. The underlying loss ratio was 60% in the fourth quarter, the lowest of 2023. Core commercial results show early signs of improvement resulting from our strategic efforts to deliver consistent long-term profitability and helped offset elevated surety loss activity, bringing our full-year underlying loss ratio to 62.2%. The expense ratio in the fourth quarter was 34.4%, the lowest in 2023, as we continue to sustainably reduce expenses. In addition to ongoing discipline vacancy management, we completed a voluntary early retirement program in the fourth quarter that contributed to a 22% decline in enterprise workforce and will provide more impactful benefit to our expense ratio in 2024. Our reported 2023 expense ratio is slightly elevated to prior year on both a quarterly and four-year basis, largely due to one-time items that benefited 2022 expense ratio, offsetting the impact of our actions to reduce expenses in 2023. In addition to the incremental improvement in profitability and continued growth, UFG also benefited from capital market conditions in the fourth quarter. Increases in fixed maturity income and higher valuation on limited partnership investments increased fourth quarter net investment income to $19.1 million, the highest since exiting the life insurance business in 2018. Improved bond valuations reduced UFG's unrealized loss position by over 40% in the fourth quarter, improving book value per share by over $2 per share compared to the third quarter of 2023. In the fourth quarter, we continue to evolve the company through strategic investments and leadership talent to increase the depth of our underwriting, actuarial, and claims expertise. We also continue to enhance our organizational structure to improve specialization and achieve a higher level of efficiency with more streamlined processes. More recently, we successfully placed our 2024 reinsurance programs on January 1st, 2024. In addition, we announced the partnership with New England Asset Management to manage our investment portfolio. As we enter the new year, I'm proud of the progress we're making at UFG. While these actions are not yet fully reflected in our financial results, we remain confident in the path forward and committed to achieving superior performance over time by delivering deep underwriting expertise with the personal relationships and responsive service that are so greatly valued by our agency partners. With that, I'll hand it over to Julie Stevenson, our Chief Operating Officer, to discuss our underwriting results in more detail.