United Fire Group, Inc · NASDAQ:UFCS
United Fire — Merger or Acquisition (September 2011)
23 slides from United Fire's merger presentation, Sep 8, 2011
Slide 1: United Fire Group Investor Presentation
protecting dreams investor presentation UNITED FIRE GROUP Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This report may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides issuers the opportunity to make cautionary statements regarding for forward- looking st
Slide 3: Company Overview
Company Overview Regional provider of a complete line of insurance products, including traditional commercial and personal P&C insurance, niche specialty programs (e.g. waste haulers, religious institutions, surety bonds) and life insuranceP&C companies rated "A" and United Life Insurance Company ra
Slide 4: Operating Segment Premium Analysis
P & C (90%)(2) Life (10%)(2) DPW by Line of Business DPW by State DPW by Line of Business DPW by State 2010 full year results from United Fire 10-K.Of net premiums earned for the 12 months ended December 31, 2010. OPERATING SEGMENT PREMIUM ANALYSIS(1) 4
Slide 5: Acquisition of Mercer Insurance Group
Acquisition of Mercer Insurance Group The acquisition of Mercer Insurance Group enhances United Fire's strategy of providing protection to individuals, businesses and organizations through regional insurance companies operating through a network of independent agents Provides expansion of core comme
Slide 6: Expanded Geographic Footprint
EXPANDED Geographic Footprint WV WA OR CA NV ID MT WY UT CO NM OK KS NE SD ND MN IA MO AR LA MS AL GA SC NC TN KY IL IN OH MI WI VA PA MD DE NJ NY VT NH MA RI ME AZ TX FL CO CT DC = UFCS states that individually represent greater than 0.01% of DPW Direct Written Premiums (2010) = Top 6 States by DPW
Slide 7: United Fire Responses to Investor Concerns
United Fire Responses Investor Concerns and United Fire Responses Investor Concerns Greater underwriting discipline than the overall industryThe level of rate decreases are slightly moderatingSecond consecutive year of personal lines rate increases (comprise ~11% of United Fire's P&C writings)Pricin
Slide 8: Rate Change Comparison
Rate Change Comparison 1 2 3 Quarterly rate change for U.S.-based property and casualty accounts.Quarterly rate change for the commercial property and casualty market.Quarterly rate change for United Fire per management. -0.9% -6.7% -6.1% Median: DISCIPLINED UNDERWRITING 8
Slide 9: 100-Year Probable Maximum Losses Exposure Reduction
100-Year Probable Maximum Losses (PMLs) Exposure Reduction ($ in Millions) Cat management Decrease: $178mm (62%) Decrease: $188mm (67%) 9
Slide 10: 2008-2009 Underperformance
2008-2009 Underperformance Hurricane Katrina development of $65 million due to unfavorable court rulingsRecord number of catastrophe events in 2008 contributed $76 million to United Fire's lossesA flood in 2008 forced us from our home office to a temporary location for 11 weeksHurricanes Ike and Gus
Slide 11: Initiatives & Strategies Moving Forward
Initiatives & strategies moving forward Utilize New underwriting toolsUse CATography(tm) to:Improve risk selection processImprove exposure managementUse predictive analytics for risk selection and improved profitability 11
Slide 12: Financial Summary
See GAAP to Non-GAAP reconciliation at the end of this presentation. FINANCIAL SUMMARY 12 $248,18533,0443,29729,747 $295,355)(12,104)2,455)(14,559) $496,897)(13,064)(6,749)(6,315) 97.6 (1.9%) $467,427)(10,441)(8,566)(1,875) $463,892)47,513)(5,518)41,995) 1.80 6.8%6.0% $1.121.25 30.7 94.389.1 4.8%4.3
Slide 13: Operating Segment Financial Highlights
OPERATING SEGMENT FINANCIAL HIGHLIGHTS 13 13,291 16,773 20,359 83.9%
Slide 14: Historical Performance: Book Value and Dividends per Share
Reported Book Value Per Share Book Value Growth BVPS CAGR: 7.3% Dividends per Share CAGR: 5.5% (1) (1) Six months ended June 30, 2011 annualized. HISTORICAL PERFORMANCE 14
Slide 15: Historical Performance: Return Profile
9.5% 9.7% Average: HISTORICAL PERFORMANCE 15 Return Profile 10-Year Return on Equity Excluding Hurricane Katrina See GAAP to Non-GAAP reconciliation at the end of this presentation. 2010 6/30/2011 (CHART)
Slide 16: Historical Performance: Underwriting Profile
93.1% 101.9% Average: HISTORICAL PERFORMANCE 16 Underwriting Profile Statutory Combined Ratio Excluding Hurricane Katrina (CHART)
Slide 17: Historical Performance: Strength of Reserves
Strength of Reserves Net Reserve Redundancy (Deficiency) 6.7% Median: HISTORICAL PERFORMANCE 17
Slide 18: Investment Portfolio
(2) Overview(1) Total Portfolio Breakdown (%) Fixed Income Portfolio Breakdown Fixed Income Portfolio Breakdown by Rating Total Portfolio Breakdown ($) At December 31, 2010.Other is comprised of trading securities, mortgage loans, policy loans, and other long term investments. Source: United Fire SE
Slide 19: Capital Management
CAPITAL MANAGEMENT Strong economic capital position (BCAR)Prudent reinsurance programsModest debt-to-capital ratio (12%)Conservative investment portfolioHistory of consistently conservative reservesUse of capital - acquisition of Mercer Insurance CompanyShare repurchaseExtension of existing share re
Slide 20: Key Investment Considerations
Key investment considerations Experienced senior managementProactive capital managementFinancial strengthConsistent reserving practices and historically reported loss redundanciesConservative investment philosophyRenewed focus on organic growthLocal market knowledge, with decentralized underwriting
Slide 21: Thank You
thank you UNITED FIRE GROUP
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION 22 (In Thousands) 6/30/11 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Net income (loss) excluding Hurricane Katrina (1) $(20,468) $53,088 $14,244 $4,244 $115,513 $108,719 $125,967 $78,817 $55,574 $17,686 $24,093 After-tax realized investment (gains) losses (4,91
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION 23 At or For the 12 Months Ended December 31, At or For the 12 Months Ended December 31, At or For the 12 Months Ended December 31, At or For the 6 Months Ended June 30, At or For the 6 Months Ended June 30, (In Thousands) 2008 2009 2010 2010 2011 Net income (loss) $(
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