United Fire Group, Inc. (UFCS) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of United Fire Group, Inc. Please note that today's meeting is being recorded. [Operator Instructions]. It is now my pleasure to turn today's meeting over to Jim Noyce, Chairperson of the Board of Directors of United Fire Group Inc. Mr. Noyce, the floor is yours.

Thank you. The meeting will please come to order. Good morning, and welcome to the Annual Meeting of Shareholders of United Fire Group, Inc., and thank you all for attending. I am Jim Noyce, Chairperson of the Board of Directors and in accordance with our bylaws, I will be presiding at this meeting. Today's meeting is being broadcast by live audio webcast. We believe this virtual meeting option will maximize participation of shareholders regardless of their location. Thank you very much to those who are participating virtually today. We will conduct our meeting in 2 parts today. First, we will address our formal items of business, followed by a question-and-answer session. You may submit questions through the virtual meeting website. An agenda that outlines the order of business for the meeting has been made available. The matters on which the shareholders at the meeting are voting include: election of the 3 Class B directors identified in the proxy statement; ratification of the Audit Committee's appointment of Ernst & Young LLP as our independent registered public accounting firm for 2025; and approval on an advisory basis of the compensation of the company's named executive officers. Sarah Madsen, Senior Vice President, Chief Legal Officer and Corporate Secretary, will serve as Secretary of the meeting. Computershare, the registrar and transfer agent for our common stock will be acting as the Inspector of Election for this meeting. Now, I would like to take this opportunity to introduce a few members of the UFG executive team, including Kevin Leidwinger, President and Chief Executive Officer and also a Director; Julie Stephenson, Executive Vice President and Chief Operating Officer; and Eric Martin, Executive Vice President and Chief Financial Officer. I would also like to introduce you to my fellow directors participating in today's meeting. John-Paul Besong, Scott Carlton, Brenda Clancy, Christopher Drahozal, Matthew Foran, Mark Green, Lura McBride, George Milligan, and Susan Voss. Chris Yusca and Syed Raza of Ernst & Young LLP, are also attending virtually and are available to make a statement if desired, and to answer questions concerning our financial statements. I call your attention to the rules of conduct for this meeting. These were made available to each shareholder in the document section in the top right corner of the screen upon entering the virtual meeting room. To conduct an orderly meeting, we ask that you abide by these rules. If you need a copy of the annual report or the proxy statement, please refer to the company's website or the hyperlinks provided with the proxy materials. Corporate Secretary, Sarah Madsen has delivered an affidavit of mailing from Computershare, establishing that notice of this meeting was duly given. A copy of the notice of the meeting and the affidavit of mailing will be incorporated into the minutes of this meeting. All shareholders of record at the close of business on March 24, 2025, are entitled to vote at this meeting. The Inspector of Elections has the shareholder list of the company as of the close of business on March 24, 2025, the record date of the meeting, which shows the shareholders and the respective number of shares entitled to vote at this meeting. I am advised by the Inspector of Election that no less than a majority of the outstanding shares of common stock, which constitutes a quorum are present virtually by live webcast or by proxy at the meeting. So I declare the meeting duly and lawfully convened. We will now begin the formal business of the meeting. The polls are open for voting on the 3 proposals before the meeting. If you have not voted or wish to change your vote, you may do so now through the virtual meeting website. Any shareholder who has already voted by proxy and does not want to change their vote, should not take any further action. There are 3 proposals on the agenda for this year's Annual Meeting of Shareholders. Our articles of incorporation require that our Board of Directors be divided into 3 classes: A, B and C, with one class elected at each annual meeting. The Board of Directors must consist of no more than 15 and no less than 9 members, with the exact number fixed by the Board of Directors. The membership of our Board of Directors will be fixed at 11 directors following today's meeting with 3 directors in Class B and 4 directors in each of Classes A and C. The first proposal is the election of 3 Class B directors to serve a term expiring in 2028. The Board of Directors recommends a vote for the election of each of the following Director nominees: John-Paul Besong, Matthew Foran and me, James Noyce as Class B Directors. The second proposal is ratification of the Audit Committee's appointment of Ernst & Young LLP as our independent registered public accounting firm for 2025. The Board of Directors recommends a vote for this proposal. The third proposal is the approval on an advisory basis of the compensation of our named executive officers. The Board of Directors recommends a vote for this proposal. No other matters for consideration at this meeting were brought to the company's attention by our shareholders in accordance with the requirements set forth by our bylaws or the applicable rules of the SEC. If you have not yet completed delivery of your proxies or ballot online, please do so now as we will be closing the polls for voting at this time. [Voting]

The online voting will now be closed. Based on a preliminary count, the Inspector of Election has informed me that: one, all director nominees have been elected; two, the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2025 has been ratified; and three, the advisory resolution relating to the compensation of our named executive officers has been approved. A final vote count with respect to the matters voted on today will be reported on a Form 8-K as required by the SEC. I hereby request that the final report of the Inspector of Election be filed with the minutes of this meeting. I'll now turn the meeting over to UFG President and CEO, Kevin Leidwinger, for his update.

Thank you, Jim. Good morning, everyone, and thank you for joining us today. 2024 was a year of continued transformation at UFG, one driven by decisive actions over the past 2 years to deepen expertise across the company with all of our capabilities to better serve customers' needs and to improve alignment with our distribution partners. From bringing on new talent to investing in technology, we've transformed UFG into a company with fully established business units, delivering specialized expertise in middle market, construction, small business, surety, specialty excess and surplus and alternative distribution. With our deep underwriting knowledge and aligned risk control claims and premium audit expertise, we now have the capability to write complex accounts in every business unit. In 2024, we also expanded the availability of workers' compensation across all regions to establish UFG as a one carrier solution for policyholders. Additionally, we completed the launch of our new small business quoting platform, delivering a seamless quoting experience to our agents. Today, we are in the midst of launching a new policy administration system, underwriting workbench and renewal underwriting center at UFG, intended to equip our people with the tools needed to process business more effectively going forward. Collectively, we believe these actions position us to successfully deliver on UFG's value proposition of providing deep expertise and specialized capabilities to meet the evolving needs of today's business owners, underpinned by the personal relationships, responsive service, our distribution partners and policyholders value. This value proposition is fulfilled day in and day out by our outstanding people and serves as a solid foundation from which to execute our business plan to achieve superior financial and operational performance in the years ahead. Turning now to last year's financial performance. UFG produced the highest level of net written premium in our company's history, the best combined ratio and adjusted operating income since 2015, and a substantially improved return on equity of 8.2%. We ended the year with a strong balance sheet in place, including $3.5 billion in total assets, $782 million in total stockholders' equity and $2.1 billion investment portfolio. In May of 2024, we completed a $70 million capital raise with Ares Management Corporation as a lead investor. This capital raise supports our long-term growth strategies and enhances our capital adequacy, which is an important measure of financial strength for insurance carriers. Another important measure of financial strength is our A- excellent rating from AM Best, which I'm pleased to share was reaffirmed in August of 2024 with a stable outlook. Throughout 2024, we paid a total quarterly dividends totaling $0.64 per share, returning $16.2 million to our shareholders, marking 57 years of consecutive dividend payments. Alongside our commitment to paying dividends is a commitment to paying it forward. As part of our mission at UFG, we promised to support the communities where our people live and work through charitable giving. In 2024, the UFG Foundation proudly celebrated its 25th anniversary awarding nearly $1 million in nonprofit grants and scholarships in communities around the country and more than $17 million since its establishment in 1999. That brings us to 2025 in the recent release of our first quarter results. Through the continued diligent execution of our strategic business plan, we delivered net income of $0.67 per diluted share, a combined ratio of 99.4% and a return on equity of 8.9% for the first quarter of the year. In addition to generating a record level of new business production in the first quarter, UFG delivered an underwriting profit for the third quarter in a row as our strategic actions continue to materialize in our results. Book value per share increased $1.33 to $32.13 as of March 31, 2025, compared to December 31, 2024. And looking back at where we've been as a company to where we are today, it's clear UFG's transformation is well underway. I'm pleased with the progress we've made over the past 2 years and immensely proud of our people who have shown great resilience and overcoming challenges, embracing change and developing new skills to meet UFG's needs. Through the strong and steady execution of our strategic business plan, we've changed the trajectory of our company while ensuring that our deeply valued people-centered culture remains firmly intact. Our work is far from finished, and we're striving to accelerate our progress in 2025, while navigating the shifting economic and industry landscape. As we look ahead to celebrating UFG's 80th anniversary on January 2, 2026, I remain grateful for the dedication of our employees, the support of our Board of Directors, the loyalty of our distribution partners and policyholders and the enduring trust of our shareholders. Together with our people, I'm excited to continue to move UFG boldly forward in 2025 and I'm confident in our ability to deliver improved financial and operational performance in the years ahead. Thank you, Jim.

Thank you, Kevin. Before we adjourn the meeting today, I would like to congratulate Kevin and the UFG leadership team on their delivery of improved results in 2024. Their strong execution of the business plan is transforming UFG for the future, and the Board expects continued positive developments from their strategic actions in the quarters ahead. I would also like to recognize my fellow Board members for their steadfast commitment to creating long-term value for our shareholders. As I begin my fifth year as Chairperson and 15th year on the Board, I look forward to continuing to benefit from their valuable guidance and collaboration. The Board remains confident in the future direction of UFG as the leadership team continues to advance strategies centered on long-term profitability, diversified growth, continuous innovation, retaining and attracting talent and expense management. In closing, I extend my sincere thanks to our shareholders for your trust and confidence in UFG, to my fellow directors for your esteemed oversight and governance, and to the employees of UFG for your unwavering dedication to delivering on the company's value proposition of deep expertise, specialized capabilities, personal relationships and responsive service. As Kevin indicated, UFG will celebrate its 80th year in business in 2026, and I am confident that the work underway today will place the company in a strong and competitive position for its next 80 years. And with that, this concludes the formal business of today's shareholder meeting, and the meeting is hereby adjourned. We will now proceed to the question-and-answer session. Okay. Thank you. We'll wait a moment to see if there's any questions. Okay. On behalf of the entire Board and Management team, I would like to express our gratitude to all of our shareholders for their continued support. Thank you for attending our meeting, and I look forward to continued positive momentum in 2025 and beyond.

This concludes the meeting. You may now disconnect.