United Fire Group expects losses of between $7 million and $10 million from the Los Angeles wildfires, the company said amid its release of its financial results for the fourth quarter and the full year ending Dec. 31, 2024.
The company reported fourth-quarter net income of $31.4 million, up from $19.6 million a year earlier.
For the full year, net income increased to $62 million, while net investment income rose 37.5% to $82 million.
UFG president and chief executive Kevin Leidwinger stated that the company’s financial results reflect the continued execution of its strategic business plan. He noted that actions taken to enhance underwriting expertise, develop capabilities, align with distribution partners and improve investment returns have contributed to these results.
Leidwinger highlighted that UFG achieved the highest level of net written premiums in its 79-year history, along with the best annual combined ratio and highest adjusted operating income since 2015. He attributed these results to ongoing business initiatives aimed at enhancing financial and operational performance.
During the fourth quarter, net written premiums increased by 13%, driven by core commercial and assumed reinsurance business. Growth in the core commercial segment was attributed to average renewal increases of 11.9%, an increase in new business production, and stable retention. For the full year, net written premiums grew 15% to $1.2 billion.
The combined ratio for the fourth quarter improved to 94.4%, the lowest in 11 quarters, while the full-year combined ratio improved by 10.1 points to 99.2%. Prior year reserve development remained neutral, and catastrophe losses were below historical averages at 1.6% for the quarter and 5.4% for the year.
Expense ratios for both the fourth quarter and full year reflected investments in talent, development of a new policy administration system, and increased performance-based compensation for employees and agents.
Net investment income improved to $23.2 million in the fourth quarter and $82.0 million for the full year. Fixed maturity income for the year increased to $70 million due to strong new money yields. Improved valuations on the limited partnership portfolio also contributed to investment income. Fixed maturity income is expected to exceed $80 million annually, with potential for further improvement from reinvestment at higher rates.
Meanwhile, book value per share declined slightly in the fourth quarter due to changes in after-tax unrealized losses from increased interest rates. However, improved earnings and an 8.2% return on equity contributed to an adjusted book value per share increase of $1.95 to $33.64.
Leidwinger also addressed the resolution of rating errors identified in the second quarter, stating that they had no financial impact and led to the reversal of a $3.2 million contingent liability.
Looking ahead, he emphasized the company’s ongoing commitment to executing its business plan for continued performance improvements.
