United Fire expects lower earnings

CEDAR RAPIDS - Catastrophic losses are expected to sharply reduce United Fire Group's third-quarter operating earnings, potentially resulting in a loss for the period.

The Cedar Rapids-based insurer is estimating that third-quarter operating earnings will be in the range of a 3 cents per diluted share loss to a 1 cent per share profit. United Fire will report its third-quarter earnings before the market opens on Nov. 4.

Randy Ramlo, president and CEO of United Fire Group, said third-quarter catastrophic losses are estimated to add roughly 12 percentage points to the company's combined ratio.

'Although third quarter was a rather benign quarter for catastrophic events, during the latter weeks of the second quarter, a significant number of catastrophic events occurred resulting in more carry-over claims than originally anticipated,” Ramlo said.

'Third-quarter catastrophe losses reflect these carry-over claims.”

In August, United Fire reported the numerous catastrophic events during second quarter were geographically disbursed and individually insignificant, but the total amount of losses was significant. It expected to process about 1,800 claims associated with second-quarter catastrophic losses, primarily from its commercial property, personal auto and homeowners lines of business.

United Fire said it had experienced an increase in the number of large losses - defined as losses greater than $500,000, net of reinsurance - in its commercial property line of business primarily due to fire losses.

'We currently expect large losses to impact (third-quarter) earnings by approximately 61 cents to 65 cents per share,” Ramlo said.

'It is not unusual in any given quarter to receive a multimillion-dollar fire claim. However, in the third quarter, we experienced eight such events.

'Some were new claims and some were reserve changes due to additional information from prior events.”