United Fire Group CEO sees positive economic trend forming

CEDAR RAPIDS -- Shareholders attending the annual meeting Wednesday at United Fire Group Inc. heard some encouraging news from President and Chief Executive Officer Randy Ramlo.

"We had a really good fourth quarter in 2011 and we're starting to see some real positives," Ramlo said. "We're starting to see some rate increases, which the property and casualty insurance industry badly needs.

"The good thing about the market changing is the competition is not as fierce. While you would be reluctant to increase rates to appropriate levels when competition for coverage is keen, you can do the right thing when your agents are not worried about losing a policyholder when rates are rising throughout the industry."

Earlier this month, United Fire Group post sharply higher first-quarter net income and revenues.

The Cedar Rapids-based insurer reported net income of $19.2 million, or 75 cents per share -- up 230.2 percent from $5.8 million, or 22 cents per share, in the same quarter of 2011. Revenues rose 34.4 percent to $193.7 million in the quarter that ended March 31, from $144.1 million in the same period a year ago.

Net premiums earned rose 41.4 percent, to $146.8 million, in the first quarter of 2012, from $101.8 million in the same period in 2011.

Ramlo said the overall economy is not getting worse -- as it has for the last couple of years -- and there are some "pockets" of encouragement.

"I think it's going to be a very slow improvement from year to year, and that's kind of what we're preparing for," he said. "The recovery is probably going to take a dozen years from 2008, so we have a ways to go.

"We can't invest banking on interest rates going up in the short term because we're not sure they will. It's a very difficult time to find places to invest your money that make sense from a safety standpoint that will give you any kind of return."

Ramlo said the number of companies that are not renewing because they're going out of business has slowed dramatically. He said payrolls are starting to increase and sales are improving for many of the businesses insured by United Fire Group.

United Fire Group acquired Pennington, N.J.-based Mercer Insurance Group in March 2011, expanding the territory of its property and casualty insurance unit to include businesses and individuals in New Jersey, Pennsylvania, Arizona, California, Nevada and Oregon.

Ramlo said Mercer policies have begin the transition to United Fire Group's computers, enabling the Cedar Rapids insurer to look for opportunities in new markets. He said that will especially be true for United Life Insurance, which expects to add even more policyholders in states along the East and West Coasts.