United Fire swings to profit

The hot, dry weather that has caused crops to struggle is providing a silver lining for insurers - fewer storms resulting in catastrophic damage.

United Fire Group on Monday reported $12 million of catastrophic losses in the quarter that ended June 30, down from $36.9 million in the second quarter of 2011. Catastrophic losses in the first six months of 2012 totaled $26.1 million, down from $53.1 million in the first half of 2011.

"The unusually dry weather much of the country has been experiencing has reduced the number of severe storms that normally occur this time of year," said Randy Ramlo, president and chief executive officer of United Fire Group.

"Our core book of business has performed well during the quarter, with a reduction in non-catastrophe losses incurred. It bears noting that while we are based in the Midwest, United Fire Group does not write crop insurance."

United Fire Group swung to a second-quarter profit of $14.7 million or 58 cents per share, from a loss of $17.9 million, or 69 cents per share, in the same quarter of 2011. Revenue rose 9.8 percent to $199.6 million in the quarter from $181.8 million in the second quarter of 2011.

Ramlo said "solid growth" continued in the second quarter, with net premiums earned up approximately 12 percent.

"We are pleased to see a good portion of that growth is the result of rate increases," Ramlo said. "We continue to experience solid retention rates while also picking up new business from other carriers who are employing across-the-board rate increases."

He said the Cedar Rapids-based insurer converted  Mercer Insurance Group's West Coast business to United Fire Group's systems in the most recent quarter and has started the planning process for moving the East Coast business onto its platforms.

Ramlo said United Life Insurance continues to leverage the Mercer Insurance acquisition by expanding its geographical footprint and writing new business in new states.

United Life revenues increased to $34.5 million in the quarter that ended June 30, from $32.4 million in the same three months of 2011. Net premiums earned rose from $13.2 million in the second quarter of 2011, to $16.2 million in the same period this year.

Net income slipped $300,000, to $1.4 million in the second quarter, from $1.7 million in the second quarter of 2011. The decline was attributed to lower investment income, an increase in annuity benefits and traditional life insurance death benefits, and an increase in liability for future policy benefits.

"The ongoing low interest rate environment continues to be a challenge," Ramlo said. "We are adhering to our investment philosophy of quality and appropriate duration, and working to better manage our invested capital."