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United Fire posts lower net profit
United Fire Group on Tuesday reported that sharply lower third-quarter net income due primarily to catastrophic losses also led to an operating loss for the period.
The Cedar Rapids-based insurer recorded net income of $325 million, or 1 cent per share, for the quarter that ended on Sept. 30, compared with $11.7 million, or 45 cents per share, for the same quarter of 2013.
Third-quarter revenue rose 5.8 percent, to $235.9 million from $223 million in the same period last year.
Third-quarter net income missed analysts estimates by 1 cent per share. and the company's revenue was off by $550,000.
United Fire posted a third-quarter operating loss of $256,000, or 1 cent per share, compared with an operating profit of $10.9 million, or 42 cents per share, in the third quarter of 2013.
Operating income or loss is a commonly used financial measure of net income or loss that excludes realized investment gains and losses and related federal income taxes. Companies believe it better represents the normal, ongoing performance of a business.
Randy Ramlo, president and CEO of United Fire, said catastrophe losses for the third quarter lowered earnings by 60 cents per share.
'Although the third quarter was a rather benign quarter for catastrophic events, the quarter was affected by carry-over losses associated with late second-quarter convective storms,” Ramlo said. 'The storms were widespread throughout the United States and involved high winds, very large hail and to a lesser extent tornadoes.”
Ramlo said the effect on earnings from large losses - defined as losses greater than $500,000 net of reinsurance recovery - was $24.5 million. or 63 cents per share.
'It is not unusual in any given quarter to receive a multimillion-dollar fire claim. However, during third quarter, we experienced eight such events,” Ramlo said. 'A total of 28 large loss claims were processed during the third quarter primarily affecting our commercial property business.”