United Fire Group, Inc · NASDAQ:UFCS
United Fire — Merger or Acquisition (July 2011)
27 slides from United Fire's merger presentation, Jul 5, 2011
Slide 1: Form 8-K/A United Fire & Casualty Company
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 8-K/A (Amendment No. 1) ______________ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 29, 2011 ______________ Unit
Slide 2: Explanatory Note
Explanatory Note: On June 29, 2011, United Fire & Casualty Company and United Fire Group, Inc. filed a Current Report on 8-K (the “Report”) under Rule 425 of the Securities Act to disclose presentation materials posted on the Investor Relations section of our public website (www.unitedfiregroup.com)
Slide 3: Forward-looking statements and Items 8.01, 9.01
May 10, 2011. The risks identified on Form 10-K are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-l
Slide 4: Exhibit Index
EXHIBIT INDEX Exhibit Description of Exhibit Number 99.1 Investor presentation booklet of United Fire Group, dated June 29, 2011.
Slide 5: Protecting dreams - United Fire Group
Exhibit 99.1 protecting dreams United Fire Group® INVESTOR PRESENTATION June 29, 2011
Slide 6: United Fire Group: A Solid Investment
UNITED FIRE GROUP: A SOLID INVESTMENT Reasons supporting United Fire Group as a compelling investment include: 1. Emphasizing heavy commercial lines writings, where pricing is the softest — Our price reductions are less than when compared to the overall industry — Use of CATography™ and predictive a
Slide 7: United Fire Group: A Solid Investment (continued)
U NIT E D F I RE G ROUP: A SO L I D I NV ESTM EN T — Repurchase of common stock; 323,597 in the 2nd Q of 2011 1. Average price of $18.80 2. Total cost of $6 million — Niche products acquired in Mercer Insurance Group purchase — Implementation of 5-year organic growth plan — Life company emphasis on
Slide 8: Company Overview & Operating Philosophy
COMPANY OVERVIEW & OPERATING PHILOSOPHY Founded by Scott McIntyre Sr. in 1946, United Fire Group provides protection to individuals, businesses and organizations through several ■ Iowa Corporation: regional insurance companies. We are represented by professional independent P&C and life insurance in
Slide 9: Geographic Presence and Direct Premium Breakdown
CO M PA N Y O V ER V I E W & O PE R AT I NG PH ILOSOPH Y GEOGRAPHIC PRESENCE Property and casualty insurance ■ More than 1,200 independent agencies, including Mercer Insurance Companies (as of 3/31/2011) ■ Licensed in 43 states (and D.C.), primarily Midwest, West and South ■ Active in 33 states (inc
Slide 10: 2010 Direct Premium by State and Product Line
C OM PAN Y OVER VIEW & OPERATIN G PHI L OS OP H Y 2010 DIRECT PREMIUM BY STATE (In THOUSANDS) PROPERTY & CASUALTY LIFE INSURANCE CA $ 77,057 13.2% IA $ 45,336 32.6% TX $ 68,655 11.8% WI $ 13,942 10.0% IA $ 68,373 11.7% IL $ 13,629 9.8% NJ $ 44,760 7.7% MN $ 11,875 8.5% MO $ 40,350 6.9% NE $ 11,317 8
Slide 11: Top 15 Classes
CO M PA NY O V E R V I E W & O PE R AT I NG PH ILOSOPH Y TOP 15 CLASSES (in force as of 12/13/2009) WRITTEN PREMIUM DESCRIPTION ALL LINES COMBINED (IN THOUSANDS) % Concrete Construction $38,243 8% Carpentry (Residential) $33,292 7% Excavation $30,231 7% Building or Premises (Lessors Risk) $29,080 6%
Slide 12: Historical Performance: Statutory Surplus and Direct Premium Growth
HISTORICAL PERFORMANCE STATUTORY SURPLUS (IN THOUSANDS) $648,452 $594,308 $602,597 $575,983 $553,058 $556,265 $383,971 $383,136 $303,111 $249,375 $183,604 $194,989 00 01 02 03 04 05 06 07 08 09 10 3/31/11 DIRECT PREMIUM GROWTH AND MARKET CYCLE (IN THOUSANDS) 500,000 $492,019 $490,430 $483,292 $471,9
Slide 13: Statutory Combined Ratio and 10-Year Return on Equity
H IST O RI CA L P E R F OR MANCE STATUTORY COMBINED RATIO 113.4 114.2 112.5 110.1 106.1 107.4 104.7 105.1 101.9 103.0* 100.1 101.2 101.2 99.9 97.6 95.5 93.1 92.4 89.7 86.4 82.1 00 01 02 03 04 05 06 07 08 09 10 UFG INDUSTRY *AM Best estimate 10-YEAR RETURN ON EQUITY 40.14% 20.29% 17.93% 16.44% 15.30%
Slide 14: Reserve Redundancy (Deficiency) and Book Value
H ISTORIC AL PERF ORM A N C E RESERVE REDUNDANCY (DEFICIENCY) BOOK VALUE 27.63 27.35 27.42 (Adjusted for Splits) 25.35 24.62 24.10 22.46 21.20 18.62 14.47 13.90 12.92 12.70 12.83 11.82 10.62 9.64 7.88 7.14 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 3/31/11 9
Slide 15: Competitive Advantages and Underwriting Experience
COMPETITIVE ADVANTAGES RATE CHANGE COMPARISON ■ Disciplined underwriting ■ Exceptional customer service ■ Superior loss control services ■ Fair and ethical UNDERWRITING EXPERIENCE claims handling UNDERWRITING LEVEL NUMBER OF EMPLOYEES UFG AVERAGE TOTAL ■ Efficient and AT EACH LEVEL EXPERIENCE EXPERIE
Slide 16: Agency Relationships, Agency Force and Enterprise Risk Management
C OM PETITIVE AD VA N TA GE S AGENCY RELATIONSHIPS ■ We provide coverage our customers need at a reasonable price, preferring quality over volume ■ Continually monitor agencies for compatibility ■ Criteria: loss ratio, volume, relationship ■ Seek “Top Three” position (as measured by direct premiums
Slide 17: Bond Portfolio Breakdown and Investment Write-downs
CO M P E T I T I V E A DVANTAG E S BOND PORTFOLIO BREAKDOWN 0RUWJDJH%DFNHG TOP 10 EQUITIES Market Value at 12/31/10 (IN THOUSANDS) 86*RY US Bancorp ............. 12.9% )RUHLJQ Cincinnati Financial 0XQLFLSDOV Corporation ............... 6.8% Abbott Laboratories .............. 6.6% 8WLOLWLHV Cummins I
Slide 18: Capital Management
C OM PETITIVE ADVA N TA GE S CAPITAL MANAGEMENT ■ Strong economic capital position (BCAR) ■ Prudent reinsurance programs ■ Modest debt to capital ratio ■ Conservative investments ■ History of consistently conservative reserves ■ Use of capital—Mercer Insurance companies purchase ■ Share repurchase ■
Slide 19: 2008-2009 Underperformance and Catastrophes
2008-2009 UNDERPERFORMANCE EVENTS IN 2008-2009 ■ Hurricane Katrina development of $65 million due to unfavorable court rulings ■ Record number of catastrophe events in 2008 contributed $76 million to our losses ■ A flood in 2008 forced us from our home office to a temporary location for 11 weeks ■ H
Slide 20: CAT Management
CAT MANAGEMENT $285 $278 EXPOSURE REDUCTION* $279 $271 100-year Probable Maximum Losses (PMLs) Total Exposure $196 $186 Louisiana Exposure $154 $143 $134 $133 $125 $126 $119 $118 $114 $114 $105 $107 $102 $91 06-06 12-06 06-07 12-07 06-08 12-08 06-09 12-09 06-10 12-10 REALISTIC DISASTER SCENARIOS* BA
Slide 21: Initiatives & Strategies Moving Forward
INITIATIVES & STRATEGIES MOVING FORWARD UTILIZE NEW UNDERWRITING TOOLS ■ Use CATography™ to ■ Improve risk selection process ■ Improve exposure management ■ Use predictive analytics for risk selection and improved profitability Using CATography™ By simply entering the address or clicking on a locati
Slide 22: Acquisition of Mercer Insurance Group
ACQUISITION OF MERCER INSURANCE GROUP GEOGRAPHIC DIVERSIFICATION ■ Provides expansion of core commercial business outside of Midwest into Mid- Atlantic and West Coast states ■ Diversifies risk profile of the company and adds a significant amount of premium ■ (20%+) in states where United Fire does n
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Slide 24: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS ■ Experienced senior management ■ Proactive capital management ■ Financial strength ■ Consistent reserving practices and historically reported loss redundancies ■ Conservative investment philosophy ■ Renewed focus on organic growth ■ Local market knowledge, with decentr
Slide 25: Senior Management
SE NIO R M A N A GE ME NT RANDY A. RAMLO MICHAEL T. WILKINS President/Chief Executive Officer Executive Vice President Years at UFG: 27 Years at UFG: 25 Years in industry: 27 Years in industry: 25 ■ Directs and monitors the business operations of ■ Responsible for Mercer Insurance Group all our offi
Slide 26: Senior Management
SEN IOR M AN A GE M E N T MICHAEL J. SHEELEY BARRIE W. ERNST VP/COO UNITED LIFE VP/CIO INSURANCE COMPANY Years at UFG: 8 Years at UFG: 25 Years in industry: 31 Years in industry: 25 DIANNE M. LYONS Vice President/Chief Financial Officer Years at UFG: 27 Years in industry: 27 ■ Directs the company’s
Slide 27: United Fire Group
UNITED FIRE GROUP ® 118 Second Avenue SE Cedar Rapids, Iowa 52401 www.ufgAgent.com 1-800-332-7977 ADM-2009 (updated 06292011)
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