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United Fire Group, Inc. Reports Fourth Quarter and Year End 2018 Results

CEDAR RAPIDS, Iowa, Feb. 20, 2019 (GLOBE NEWSWIRE) -- United Fire Group, Inc. (UFCS)

Consolidated Financial Results - Highlights(1):

Quarter Ended December 31, 2018     Year Ended December 31, 2018  
Net income (loss) per diluted share(2) $ (1.17 )   Net income per diluted share(2) $ 1.08  
Adjusted operating income (loss)(3) per diluted share(2) $ (0.30 )   Adjusted operating income(3) per diluted share(2) $ 0.67  
Gain on sale of discontinued operations per diluted share(2) $     Gain on sale of discontinued operations per diluted share(2) $ 1.07  
Net realized investment gains (losses) per share(2) $ (0.87 )   Net realized investment gains (losses) per share(2) $ (0.66 )
GAAP combined ratio 108.5 %   GAAP combined ratio 104.0 %
      Book value per share $ 35.40  
      Return on equity(4) 3.0 %

United Fire Group, Inc. (the “Company” or "UFG") (UFCS) today reported consolidated net loss, including net realized investment gains and losses, of $29.3 million ($1.17 per diluted share) for the three-month period ended December 31, 2018 (the "fourth quarter"), compared to consolidated net income of $46.0 million ($1.81 per diluted share) for the same period in 2017. For the year ended December 31, 2018 (the "full year"), consolidated net income, including investment gains and losses, was $27.7 million ($1.08 per diluted share) compared to $51.0 million ($1.99 per diluted share) for the same period in 2017.

The Company reported a consolidated adjusted operating loss of $0.30 per diluted share for fourth quarter 2018 compared to consolidated adjusted operating income of $1.78 per diluted share for the same period in 2017. For the year ended December 31, 2018, the Company reported consolidated adjusted operating income of $0.67 per diluted share compared to consolidated adjusted operating income of $1.79 per diluted share for 2017.

"The fourth quarter of 2018 was a challenging quarter," stated Randy A. Ramlo, President and Chief Executive Officer. "During 2018, we made steady progress improving the profitability of our commercial auto line of business. However, during the fourth quarter we experienced an increase in severity of losses in both our commercial auto and general liability lines of business from auto related claims, due to several factors including a trend toward higher jury awards. In response to this setback to profitability we are taking several initiatives in pricing adequacy, underwriting and claims."

Consolidated net unrealized investment losses, net of tax, totaled $9.3 million as of December 31, 2018, a decrease of $224.2 million, compared to December 31, 2017. The decrease in net unrealized investment gains is primarily the result of the cumulative change in accounting principles on recognizing the change in the value of equity securities in the income statement. The change in accounting principles required unrealized gains on equity securities of $191.2 million, after-tax, as of January 1, 2018, to be reclassified to retained earnings from accumulated other comprehensive income, both within shareholders equity. The remaining decrease is due to a decrease in the value of the fixed maturity portfolio due to rising interest rates in 2018.

Total consolidated assets as of December 31, 2018 were $2.8 billion, which included $2.1 billion of invested assets. The Company's book value was $35.40 per share, which is a decrease of $3.66 per share or 9.4 percent from December 31, 2017. The decrease is primarily attributed to shareholder dividends of $105.4 million, a decrease in net unrealized investment gains of $32.9 million, net of tax, and share repurchases of $5.4 million, all partially offset by net income of $27.7 million and the change in benefits and the valuation of our post retirement benefit obligations of $25.4 million.

__________________
(1) Consolidated financial results include results from both continuing operations and life insurance business discontinued operations, unless otherwise noted.
(2) Per share amounts are after tax.
(3) Adjusted operating income is a non-GAAP financial measure of net income excluding net realized investment
gains and losses, changes in the fair value of equity securities, the one-time gain on the sale of discontinued operations and related federal income taxes. Management evaluates this measure and ratios derived from this measure and the Company provides this information to investors because we believe it better represents the normal, ongoing performance of our business. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted operating income to net income.
(4) Return on equity is calculated by dividing annualized net income by average year-to-date equity.

Property and Casualty Insurance

Net loss for the property and casualty insurance business including net realized investment gains and losses, totaled $29.3 million ($1.17 per diluted share) for the fourth quarter, compared to net income of $45.3 million ($1.78 per diluted share) for the fourth quarter of 2017. For the full year, net income totaled $2.3 million ($0.09 per diluted share), compared to net income of $44.9 million ($1.75 per diluted share) for the full year 2017.

The decrease in net income in the fourth quarter 2018 compared to the same period in 2017 is due to the decrease in the fair value of equity securities, an increase in loss and loss settlement expenses incurred, primarily due to an increase in the severity of losses in commercial auto and general liability lines of business, and an increase in catastrophe losses.

The decrease in net income in the full year 2018 compared to the same period in 2017 is due to the decrease in the fair value of equity securities and an increase in other underwriting expenses partially offset by an increase in net premiums earned.

Net premiums earned increased 4.1 percent to $270.7 million for the fourth quarter, compared to $260.1 million in the fourth quarter 2017. For the full year, net premiums earned increased 4.0 percent to $1,037.5 million, compared to $997.5 million in 2017, primarily due to continued organic growth from new business writings and geographical expansion and rate increases. The growth in premiums in commercial auto is due to rate increases, while the number of insured units has decreased.

The average renewal pricing increases for commercial lines remained in the mid-single digits during the fourth quarter 2018 with pricing varying depending on the region and size of the account. The renewal pricing increases continue to be driven by commercial auto pricing. Filed commercial auto rate increases during the fourth quarter 2018 averaged in the low-double digits. Personal lines filed rate and renewal pricing increases also remained in the mid-single digits.

Pre-tax catastrophe losses totaled $15.9 million ($0.50 per share after tax) and $46.7 million ($1.44 per share after tax) for the three- and twelve-month periods ended December 31, 2018, respectively, compared to $5.3 million ($0.13 per share after tax) and $74.0 million ($1.88 per share after tax) for the same periods in 2017.

"Catastrophe losses for the fourth quarter of 2018 added 5.9 percentage points to the combined ratio, which is above our 10-year historical catastrophe load of 4.3 percentage points for the fourth quarter. The fourth quarter of 2018 included $9.2 million of losses from the California wildfires," stated Ramlo. "For the full year of 2018, catastrophe losses added 4.5 percentage points to the combined ratio which is below our 10-year historical catastrophe load of 6.4 percentage points. We believe this is due to effective management of our geographic concentration despite an increase in catastrophic events in 2018."

Reserve development

The property and casualty insurance business experienced $6.5 million and $54.2 million of favorable reserve development in our net reserves for prior accident years during the three- and twelve-month periods ended December 31, 2018, respectively, compared to $16.3 million and $54.3 million of favorable reserve development in the same periods of 2017. The decrease in favorable development in the fourth quarter of 2018 as compared to the fourth quarter of 2017 was primarily driven by reserve increases in commercial liability and commercial fire, offset by workers compensation and reinsurance assumed lines of business. For the twelve-months ended December 31, 2018, favorable reserve development was comparable to the same period in 2017. Development amounts can vary significantly from quarter to quarter and year to year depending on a number of factors, including the number of claims settled and the settlement terms. At December 31, 2018, our total reserves were within our actuarial estimates.

GAAP combined ratio

The GAAP combined ratio increased 14.7 percentage points to 108.5 percent for the fourth quarter 2018, compared to 93.8 percent for the fourth quarter of 2017, primarily driven by an increase in the loss ratio due to an increase in severity in commercial auto and general liability line of business along with an increase in catastrophe losses in commercial fire and allied lines of business. For the year ended December 31, 2018, the combined ratio was flat at 104.0 percent as compared to the same period of 2017.

Expense Levels

The expense ratio for the fourth quarter 2018 was 33.1 percentage points, a slight decrease compared to 33.3 percentage points for the fourth quarter of 2017. For the full year, the expense ratio was 33.5 percentage points, compared to 31.2 percentage points for 2017.

The increase in the expense ratio during for the full year of 2018 as compared to 2017 is primarily due to our continued investment in our multi-year Oasis project to upgrade our technology platform to enhance core underwriting decisions, selection of risks and productivity. As we stated the last few quarters, the expectation is this project will add 1.0 to 2.0 percentage points annually to the expense ratio for the duration of the project.

Investment Income and Realized Investment Gains and Losses

The Company recognized net realized investment losses from continuing operations of $27.6 million and $20.2 million, respectively, for the fourth quarter and full year 2018 compared to net realized investment gains of $0.7 million and $4.1 million, respectively, for the fourth quarter and full year 2017. The change in net realized investment gains and losses for the fourth quarter and full year compared to the same periods in 2017 was primarily due to a decrease of $27.6 million and $22.3 million, respectively, in the fair value of our equity securities investments.

Net investment income was $9.0 million for the fourth quarter 2018 and $52.9 million for the full year 2018 with a decrease of 29.0 percent for the quarter and an increase of 3.3 percent for the full year, compared to net investment income of $12.6 million and $51.2 million, respectively, for the fourth quarter and full year 2017. The change in net investment income for the quarter was due to a decrease in the value of our investments in limited liability partnerships resulting from the decrease in the equity markets in the fourth quarter, partially offset by an increase in invested assets. The change in net investment income for the full year was driven by an increase in invested assets and not due to a change in our investment philosophy. The valuation of these investments in limited liability partnerships varies from period to period due to current equity market conditions, specifically related to financial institutions.

Life Insurance Business

On September 18, 2017, the Company signed a definitive agreement to sell its subsidiary, United Life Insurance Company, to Kuvare US Holdings, Inc. and on March 30, 2018, the sale transaction was completed. As a result, the life insurance business is presented as discontinued operations in all periods presented in this press release.

Capital Management

During the fourth quarter, we declared and paid a $0.31 per share cash dividend to stockholders of record as of December 1, 2018. We have paid a quarterly dividend every quarter since March 1968.

During the fourth quarter, we did not repurchase any shares of our common stock. In the year ended December 31, 2018, we purchased 120,372 shares of our common stock for $5.4 million, at an average cost of $44.90 per share. As of December 31, 2018, we were authorized by our Board of Directors to purchase an additional 2,116,200 shares of common stock under our share repurchase program, which expires in August 2020.

Earnings Call Access Information

An earnings call will be held at 9:00 a.m. Central Time on February 20, 2019 to allow securities analysts, shareholders and other interested parties the opportunity to hear management discuss the Company's fourth quarter and year ended December 31, 2018 results.

Teleconference: Dial-in information for the call is toll-free 1-844-492-3723. The event will be archived and available for digital replay through March 6, 2019. The replay access information is toll-free 1-877-344-7529; conference ID no. 10127979.

Webcast: An audio webcast of the teleconference can be accessed at the Company's investor relations page at
http://ir.unitedfiregroup.com/event or https://services.choruscall.com/links/ufcs190220. The archived audio webcast will be available until March 6, 2019.

Transcript: A transcript of the teleconference will be available on the Company's website soon after the completion of the teleconference.

About UFG

Founded in 1946 as United Fire & Casualty Company, UFG, through its insurance company subsidiaries, is engaged in the business of writing property and casualty insurance.

Through our subsidiaries, we are licensed as a property and casualty insurer in 46 states, plus the District of Columbia, and we are represented by approximately 1,100 independent agencies. A.M. Best Company assigns a rating of "A" (Excellent) for members of the United Fire & Casualty Group.

For more information about United Fire Group, Inc. visit www.ufginsurance.com or contact:

Randy Patten, AVP of Finance and Investor Relations, 319-286-2537 or IR@unitedfiregroup.com.

Disclosure of Forward-Looking Statements

This release may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. The forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results to differ from those expected and/or projected. Such forward-looking statements are based on current expectations, estimates, forecasts and projections about our company, the industry in which we operate, and beliefs and assumptions made by management. Words such as "expect(s)," "anticipate(s)," "intends(s)," "plan(s)," "believe(s)" "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "remain optimistic," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will," "might," "hope," "can" and other words and terms of similar meaning or expression in connection with a discussion of future operations, financial performance or financial condition, are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Information concerning factors that could cause actual outcomes and results to differ materially from those expressed in the forward-looking statements is contained in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission ("SEC") on February 28, 2018.The risks identified in our 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 the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release or as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures

The Company prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Management also uses certain non-GAAP measures to evaluate its operations and profitability. As further explained below, management believes that disclosure of certain non-GAAP financial measures enhances investor understanding of our financial performance. Non-GAAP financial measures disclosed in this report include: adjusted operating income and net premiums written. The Company has provided the following definitions and reconciliations of the non-GAAP financial measures:

Adjusted operating income: Adjusted operating income is calculated by excluding net realized investment gains and losses and the one-time gain from the sale of discontinued operations after applicable federal and state income taxes from net income. Management believes adjusted operating income is a meaningful measure for evaluating insurance company performance and a useful supplement to GAAP information because it better represents the normal ongoing performance of our business. Investors and equity analysts who invest and report on the insurance industry and the Company generally focus on this metric in their analyses.

Net Income Reconciliation
  Three Months Ended December 31,   Twelve Months Ended December 31,
(In Thousands, Except Per Share Data) 2018   2017 Change %   2018   2017 Change %
Income Statement Data                  
Net income (loss) $ (29,336 )   $ 45,993   (163.8 )%   $ 27,650     $ 51,023   (45.8 )%
Less: gain on sale of discontinued operations, net of tax        %   27,307       NM  
Less: after-tax net realized investment gains (losses) (21,790 )   693   NM     (16,776 )   5,241   NM  
Adjusted operating income (loss) $ (7,546 )   $ 45,300   (116.7 )%   $ 17,119     $ 45,782   (62.6 )%
Diluted Earnings Per Share Data                  
Net income (loss) $ (1.17 )   $ 1.81   (164.6 )%   $ 1.08     $ 1.99   (45.7 )%
Less: gain on sale of discontinued operations, net of tax        %   1.07        %
Less: after-tax net realized investment gains (losses) (0.87 )   0.03   NM     (0.66 )   0.20   NM  
Adjusted operating income (loss) $ (0.30 )   $ 1.78   (116.9 )%   $ 0.67     $ 1.79   (62.6 )%
NM=Not meaningful                                      
                                       

Net premiums written: While not a substitute for any GAAP measure of performance, net premiums written is frequently used by industry analysts and other recognized reporting sources to facilitate comparisons of the performance of insurance companies. Net premiums written are the amount charged for insurance policy contracts issued and recognized on an annualized basis at the effective date of the policy. Management believes net premiums written are a meaningful measure for evaluating insurance company sales performance and geographical expansion efforts. Net premiums written for an insurance company consists of direct premiums written and reinsurance assumed, less reinsurance ceded. Net premiums earned is calculated on a pro rata basis over the terms of the respective policies. Unearned premium reserves are established for the portion of premiums written applicable to the unexpired term of insurance policy in force. The difference between net premiums earned and net premiums written is the change in unearned premiums and change in prepaid reinsurance premiums.

Net Premiums Earned Reconciliation
  Three Months Ended December 31,   Twelve Months Ended December 31,
(In Thousands) 2018   2017 Change %   2018   2017 Change %
Premiums:                  
Net premiums earned $ 270,684     $ 275,437   (1.7 )%   $ 1,050,454     $ 1,058,860   (0.8 )%
Less: change in unearned premiums 15,932     25,050   (36.4 )%   (27,527 )   (21,585 ) (27.5 )%
Less: change in prepaid reinsurance premiums 1,207     (72 ) NM     3,312     (33 ) NM  
Net premiums written $ 253,545     $ 250,459   1.2 %   $ 1,074,669     $ 1,080,478   (0.5 )%
                                       


Supplemental Tables

Consolidated Financial Highlights
  Three Months Ended December 31,   Years Ended December 31,
(In Thousands Except Shares and Per Share Data and Ratios) 2018   2017 Change %   2018   2017 Change %
Revenue Highlights                  
Net premiums earned:                  
P&C continuing operations $ 270,684     $ 260,068   4.1 %   $ 1,037,451     $ 997,492   4.0 %
Life discontinued operations     15,369   (100.0 )%   13,003     61,368   (78.8 )%
Consolidated net premiums earned 270,684     275,437   (1.7 )%   1,050,454     1,058,860   (0.8 )%
Net investment income:                  
P&C continuing operations 8,961     12,629   (29.0 )%   52,894     51,190   3.3 %
Life discontinued operations     12,490   (100.0 )%   12,663     49,720   (74.5 )%
Consolidated net investment income 8,961     25,119   (64.3 )%   65,557     100,910   (35.0 )%
Total revenues:                  
P&C continuing operations 252,062     273,355   (7.8 )%   1,070,166     1,052,737   1.7 %
Life discontinued operations     28,386   (100 )%   24,755     115,713   (78.6 )%
Total revenues 252,062     301,741   (16.5 )%   1,094,921     1,168,450   (6.3 )%
Income Statement Data                  
Net income (loss) $ (29,336 )   $ 45,993   (163.8 )%   $ 27,650     $ 51,023   (45.8 )%
Gain on sale of discontinued operations, net of tax        %   27,307       NM  
After-tax net realized investment gains (losses) (21,790 )   693   NM     (16,776 )   5,241   NM  
Adjusted operating income (loss)(1) $ (7,546 )   $ 45,300   (116.7 )%   $ 17,119     $ 45,782   (62.6 )%
Diluted Earnings Per Share Data                  
Net income (loss) $ (1.17 )   $ 1.81   (164.6 )%   $ 1.08     $ 1.99   (45.7 )%
Gain on sale of discontinued operations, net of tax        %   1.07       NM  
After-tax net realized investment gains (losses) (0.87 )   0.03   NM     (0.66 )   0.20   NM  
Adjusted operating income (loss)(1) $ (0.30 )   $ 1.78   (116.9 )%   $ 0.67     $ 1.79   (62.6 )%
Catastrophe Data                  
Pre-tax catastrophe losses $ 15,948     $ 5,273   202.4 %   $ 46,693     $ 74,039   (36.9 )%
Effect on after-tax earnings per share 0.50     0.13   284.6 %   1.44     1.88   (23.4 )%
Effect on combined ratio 5.9 %   2.0 % 195.0 %   4.5 %   7.4 % (39.2 )%
                   
Favorable reserve development experienced on prior accident years 6,494     16,265   (60.1 )%   54,167     54,253   (0.2 )%
                   
GAAP combined ratio 108.5 %   93.8 % 15.7 %   104.0 %   104.0 % %
Return on equity           3.0 %   5.3 % (43.4 )%
Cash dividends declared per share $ 0.31     $ 0.28   10.7 %   $ 4.21     $ 1.09   286.2 %
Diluted weighted average shares outstanding 25,077,593     25,413,148   (1.3 )%   25,622,812     25,640,604   (0.1 )%
NM=Not meaningful                              
(1) Adjusted operating income is a non-GAAP financial measure of net income. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted operating income to net income.
 


Income Statement
  Three Months Ended December 31,   Years Ended December 31,
(In Thousands) 2018   2017   2018   2017
Revenues              
Net premiums earned $ 270,684     $ 260,068     $ 1,037,451     $ 997,492  
Investment income, net of investment expenses 8,961     12,629     52,894     51,190  
Net realized investment gains (losses)              
Change in the fair value of equity securities (27,492 )   100     (21,994 )   332  
All other net realized gains (losses) (91 )   558     1,815     3,723  
Net realized investment gains (losses) (27,583 )   658     (20,179 )   4,055  
Total Revenues $ 252,062     $ 273,355     $ 1,070,166     $ 1,052,737  
               
Benefits, Losses and Expenses              
Losses and loss settlement expenses $ 204,070     $ 157,357     $ 731,611     $ 725,713  
Amortization of deferred policy acquisition costs 54,025     52,901     206,232     207,746  
Other underwriting expenses 35,479     33,728     141,473     103,628  
Total Benefits, Losses and Expenses $ 293,574     $ 243,986     $ 1,079,316     $ 1,037,087  
               
Income (loss) before income taxes from continuing operations (41,512 )   29,369     (9,150 )   15,650  
Federal income tax benefit (12,176 )   (15,890 )   (11,405 )   (29,220 )
Net income (loss) from continuing operations $ (29,336 )   $ 45,259     $ 2,255     $ 44,870  
Net income (loss) from discontinued operations     734     (1,912 )   6,153  
Gain on sale of discontinued operations, net of tax         27,307      
Net income (loss) $ (29,336 )   $ 45,993     $ 27,650     $ 51,023  
               
GAAP combined ratio:              
Net loss ratio - excluding catastrophes 69.5 %   58.5 %   66.0 %   65.4 %
Catastrophes - effect on net loss ratio 5.9     2.0     4.5     7.4  
Net loss ratio 75.4 %   60.5 %   70.5 %   72.8 %
Expense ratio 33.1     33.3     33.5     31.2  
Combined ratio 108.5 %   93.8 %   104.0 %   104.0 %
                       


Balance Sheet
  December 31, 2018   December 31, 2017
(In Thousands)  
       
Invested assets - continuing operations $ 2,074,123     $ 1,888,933  
Cash - continuing operations 64,454     95,562  
Total assets:      
Continuing operations 2,816,698     2,597,297  
Assets held for sale     1,586,134  
Total assets 2,816,698     4,183,431  
Loss and loss settlement expenses      
Continuing operations $ 1,312,483     $ 1,224,183  
Total liabilities:      
Continuing operations 1,928,323     1,862,923  
Liabilities held for sale     1,347,135  
Total liabilities 1,928,323     3,210,058  
Net unrealized investment gains (losses), after-tax $ (9,323 )   $ 214,865  
Total stockholders’ equity 888,375     973,373  
           


Discontinued Operations(1)
  Three Months Ended December 31,   Years Ended December 31,
(In Thousands) 2018   2017   2018   2017
Revenues              
Net premiums earned $   $ 15,369     $ 13,003     $ 61,368  
Investment income, net of investment expenses   12,490     12,663     49,720  
Net realized investment gains (losses)   408     (1,057 )   4,008  
Other income   119     146     617  
Total Revenues $   $ 28,386     $ 24,755     $ 115,713  
               
Benefits, Losses and Expenses              
Losses and loss settlement expenses $   $ 9,772     $ 10,823     $ 40,451  
Increase in liability for future policy benefits   8,291     5,023     27,632  
Amortization of deferred policy acquisition costs   (343 )   1,895     5,181  
Other underwriting expenses   3,829     3,864     13,281  
Interest on policyholders’ accounts   4,543     4,499     18,525  
Total Benefits, Losses and Expenses $   $ 26,092     $ 26,104     $ 105,070  
               
Income (loss) before income taxes $   $ 2,294     $ (1,349 )   $ 10,643  
Federal income tax expense   1,560     563     4,490  
Net income (loss) $   $ 734     $ (1,912 )   $ 6,153  
(1) On September 18, 2017, the Company signed a definitive agreement to sell its subsidiary, United Life Insurance Company, to Kuvare US Holdings, Inc. The sale closed on March 30, 2018. The life insurance business is presented as discontinued operations in all periods presented in this table.
 


Net Premiums Written by Line of Business
  Three Months Ended December 31,   Years Ended December 31,
  2018   2017   2018   2017
(In Thousands)      
Net Premiums Written(1)              
Continuing operations:              
Commercial lines:              
Other liability(2) $ 73,403     $ 68,421     $ 315,977     $ 311,226  
Fire and allied lines(3) 56,802     55,192     237,410     230,934  
Automobile 73,895     63,441     301,055     266,055  
Workers’ compensation 20,247     20,095     92,711     101,037  
Fidelity and surety 6,460     5,925     26,684     25,813  
Miscellaneous 410     407     1,728     1,766  
Total commercial lines $ 231,217     $ 213,481     $ 975,565     $ 936,831  
               
Personal lines:              
Fire and allied lines(4) $ 10,111     $ 10,054     $ 41,242     $ 42,138  
Automobile 7,616     6,865     30,488     28,265  
Miscellaneous 291     278     1,222     1,193  
Total personal lines $ 18,018     $ 17,197     $ 72,952     $ 71,596  
Reinsurance assumed 4,310     4,408     13,147     10,686  
Total net premiums written from continuing operations $ 253,545     $ 235,086     $ 1,061,664     $ 1,019,113  
Total net premiums written from discontinued operations     15,373     13,005     61,365  
Total $ 253,545     $ 250,459     $ 1,074,669     $ 1,080,478  
(1) Net premiums written is a non-GAAP financial measure of net premiums earned. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of net premiums written to net premiums earned. 
(2) Commercial lines “Other liability” is business insurance covering bodily injury and property damage arising from general business operations, accidents on the insured’s premises and products manufactured or sold.
(3) Commercial lines “Fire and allied lines” includes fire, allied lines, commercial multiple peril and inland marine.
(4) Personal lines “Fire and allied lines” includes fire, allied lines, homeowners and inland marine.
 


Net Premiums Earned, Losses and Loss Settlement Expenses and Loss Ratio by Line of Business
Three Months Ended December 31, 2018   2017
(In Thousands)
Unaudited
Net Premiums Earned   Net Losses and Loss Settlement Expenses Incurred   Net Loss Ratio   Net Premiums Earned   Net Losses and Loss Settlement Expenses Incurred   Net Loss Ratio
Commercial lines                      
Other liability 81,086     66,305     81.8 %   $ 78,230     $ 33,112     42.3 %
Fire and allied lines 60,161     39,253     65.2     59,205     28,660     48.4  
Automobile 75,098     82,319     109.6     66,777     63,970     95.8  
Workers' compensation 24,102     10,763     44.7     26,074     15,168     58.2  
Fidelity and surety 7,293     (450 )   (6.2 )   6,940     1,898     27.3  
Miscellaneous 439     101     23.0     455     40     8.8  
Total commercial lines $ 248,179     $ 198,291     79.9 %   $ 237,681     $ 142,848     60.1 %
                       
Personal lines                      
Fire and allied lines 10,331     4,776     46.2 %   $ 10,705     $ 4,667     43.6 %
Automobile 7,561     6,315     83.5     7,015     6,719     95.8  
Miscellaneous 307     34     11.1     299     150     50.2  
Total personal lines $ 18,199     $ 11,125     61.1 %   $ 18,019     $ 11,536     64.0 %
Reinsurance assumed 4,306     (5,346 )   (124.2 )%   $ 4,368     $ 2,973     68.1 %
Total $ 270,684     $ 204,070     75.4 %   $ 260,068     $ 157,357     60.5 %
                                           


Net Premiums Earned, Losses and Loss Settlement Expenses and Loss Ratio by Line of Business
Years Ended December 31, 2018   2017
(In Thousands)
Unaudited 
Net Premiums Earned   Net Losses and Loss Settlement Expenses 
Incurred
  Net Loss Ratio   Net Premiums Earned   Net Losses and Loss Settlement Expenses Incurred   Net Loss Ratio
Commercial lines                      
Other liability $ 311,931     $ 183,692     58.9 %   $ 306,480     $ 121,054     39.5 %
Fire and allied lines 234,612     165,097     70.4     227,711     178,768     78.5  
Automobile 284,274     271,248     95.4     250,465     266,272     106.3  
Workers' compensation 95,203     57,601     60.5     104,166     71,053     68.2  
Fidelity and surety 24,437     1,878     7.7     24,981     2,206     8.8  
Miscellaneous 1,728     449     26.0     1,829     312     17.1  
Total commercial lines $ 952,185     $ 679,965     71.4 %   $ 915,632     $ 639,665     69.9 %
                       
Personal lines                      
Fire and allied lines $ 41,581     $ 32,959     79.3 %   $ 43,005     $ 34,503     80.2 %
Automobile 29,247     25,016     85.5     27,046     28,997     107.2  
Miscellaneous 1,210     (213 )   (17.6 )   1,159     268     23.1  
Total personal lines $ 72,038     $ 57,762     80.2 %   $ 71,210     $ 63,768     89.5 %
Reinsurance assumed $ 13,228     $ (6,116 )   (46.2 )%   $ 10,650     $ 22,280     209.2 %
Total $ 1,037,451     $ 731,611     70.5 %   $ 997,492     $ 725,713     72.8 %