United Fire posts profit in 4th quarter

United Fire & Casualty Co. on Tuesday reported a fourth-quarter profit and a narrower annual loss.

The Cedar Rapids-based insurer posted net income of $1.78 million, or 7 cents per diluted share, in the quarter that ended Dec. 31, up 112 percent from a $14.8 million loss, or 56 cents per diluted share, in the final quarter of 2008.

For the year, United Fire recorded a net loss of $10.4 million, or 39 cents per diluted share, an

improvement over a $13.1 million loss, or 48 cents per diluted share, in 2008.

Randy Ramlo, United Fire president and chief executive officer, said 2009 was a “disappointing year” for the company.

“Our combined ratio was at 114.1 percent for the fourth quarter and 115.2 percent for the full year, indicating an underwriting loss,” Ramlo said. “We incurred $38 million of additional Hurricane Katrina-related losses for the full year.”

Ramlo said net premium income was down 10.9 percent in the fourth quarter and 5.9 percent for the full year, primarily due to the weak economy. He added that residential and government-funded projects sustained a decline, which reduced the volume of business for commercial and residential contractors that United Fire insures and bonds.

Ramlo said premium income also was reduced by the nonrenewal of accounts that no longer meet United Fire's underwriting or pricing guidelines. As pricing in the industry continues to decline, Ramlo said United Fire is avoiding accounts that have become too underpriced for the risk.

“As part of our business philosophy, we are committed to managing our book of business based on quality rather than quantity, a philosophy that has allowed us to outperform the industry in many prior years,” he said.

Ramlo said United Fire's life insurance

segment was a bright spot in the company's 2009 finances. Life insurance premiums increased 35.1 percent in the fourth quarter and 14.1 percent for the year.

“Our annuity product was very popular in the first half of the year, as consumers sought products with guaranteed rates of return,” Ramlo said. “In 2010, we plan to concentrate on further increasing life insurance sales to balance the mix of our products.”