United Fire Group sets Jan. 24 shareholder vote on holding company

CEDAR RAPIDS -- United Fire Group has scheduled a special shareholders meeting for Jan. 24 to consider adopting a new corporate structure for the Cedar Rapids-based insurance company.

Stockholders will be asked to approve the formation of a new holding company structure. The 10 a.m. meeting will be held at United Fire's headquarters, 118 Second Ave. SE in downtown Cedar Rapids.

United Fire stockholders of record as of Nov. 28, 2011, will be eligible to vote at the special meeting.

Randy Ramlo, United Fire president and chief executive officer, said May18  that company management and the board of directors had been working for more than six months on the formation of a holding company.

"You can raise capital a bit more expensively without a holding company and there's a few more regulations that you have to go through. For years, we've been saying that we really should develop a holding company," Ramlo said at the company's annual shareholders meeting  in Cedar Rapids.

Ramlo said United Fire has no plans to do anything in terms of raising capital with the holding company structure.

"It's kind of a more modern, streamlined corporate structure that we probably should have done years ago," he said. "Ultimately, if we were to experience another Hurricane Katrina, we could go out and raise capital easier under the holding company structure.

"We're a larger organization now (with the Mercer Insurance merger earlier in the year) and it makes even less sense to be unique."

One of the advantages of a holding company is that shares of stock in a subsidiary company are held as assets on its books and can be used as collateral for additional debt financing.

The purchase of Mercer Insurance Group of Pennington, N.J., on March 28 for $191 million was the largest single acquisition in United Fire's history. The merger expanded United Fire's market into New Jersey, Pennsylvania, Arizona, California, Nevada and Oregon.

United Fire & Casualty is licensed as a property and casualty insurer in 43 states, plus the District of Columbia, and is represented by more than 1,200 independent agencies. A subsidiary, United Life Insurance, is licensed in 29 states and represented by more than 900 independent life insurance agencies.