IOWA DERECHO 2020

United Fire Group reports $88 million loss from Aug. 10 derecho

Plans were underway to sell personal insurance business before derecho storm

The UFG Insurance logo is displayed on a desk during an open house at its new corporate headquarters in Cedar Rapids in
The UFG Insurance logo is displayed on a desk during an open house at its new corporate headquarters in Cedar Rapids in 2019. (Liz Martin/The Gazette)
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The Aug. 10 derecho created $88 million in losses for Cedar Rapids-based insurer United Fire Group, which already had plans to exit the personal insurance business.

The company ended third quarter 2020 on Sept. 30 with a net loss of $37.2 million, compared with a net loss of $2.3 million for the same quarter of 2019.

“The third quarter of 2020, similar to the second quarter, was once again impacted by historically high catastrophe losses,” Randy Ramlo, United Fire Group president and chief executive officer, said in a statement.

“The catastrophe losses were from 25 catastrophe events, with the most notable catastrophe event being the August Midwest derecho, causing widespread storms and high winds.

“The August Midwest derecho was a full retention loss, with losses in excess of our stated reinsurance retention of $20 million. Total losses from this storm were $88.0 million, with $68.0 million of reinsurance recoveries.”

A UFG spokesman did not say how much of the $88 million came from personal insurance lines.

The insurer reached an agreement in May with Nationwide Mutual Insurance Group to sell the personal insurance policies.

Columbus, Ohio-based Nationwide had the ability to start offering contracts to UFG agents in the third quarter.

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Ramlo said in a May news release the move was “purely a strategic one as we concentrate our efforts on the growth and profitability of our core commercial lines business, including commercial insurance, excess and surplus lines insurance and surety bonds.”

To prevent any lapse in coverage for policyholders, Nationwide will provide replacement policies to UFG’s personal lines policyholders at the time of renewal, the Cedar Rapids company said on its website.

Those policies, UFG said, will “reflect nearly identical or improved coverage and pricing.”

Ramlo recently said United Fire Group continues to expect the impact of the COVID-19 pandemic to be manageable.

“As we mentioned the last two quarters, there was some impact to net premiums earned due to the impact of the COVID-19 pandemic but it was less significant than the impact from our focus on improving the profitability of our commercial auto book in the first nine months of 2020.” Ramlo said.

“Nearly all of the policies we have issued contain contract language that specifically excludes business interruption coverage for losses due to viruses such as the COVID-19 pandemic.

“However, we cannot determine how any changes in legislation, regulations and interpretations by the courts regarding these exclusions will impact the company in the future.”

Comments: (319) 398-8394; john.steppe@thegazette.com

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