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1. Company Snapshot

1.a. Company Description

United Fire Group, Inc., together with its subsidiaries, provides property and casualty insurance for individuals and businesses in the United States.The company offers commercial and personal lines of property and casualty insurance; and commercial multiple peril and inland marine insurance, as well as assumed reinsurance products.Its commercial policies include fire and allied lines, other liability, automobile, workers' compensation, and fidelity and surety coverage; and personal lines comprise automobile, and fire and allied lines coverage, including homeowners.


The company sells its products through a network of independent agencies.United Fire Group, Inc.was founded in 1946 and is headquartered in Cedar Rapids, Iowa.

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1.b. Last Insights on UFCS

United Fire Group's recent performance was driven by strong Q3 earnings, with net income of $1.49 per diluted share and adjusted operating income of $1.50 per diluted share. The company's quarterly earnings beat estimates, coming in at $1.5 per share, surpassing the Zacks Consensus Estimate of $0.69 per share. Institutional investors, such as Teacher Retirement System of Texas, have shown confidence in the company, increasing their stake by 10.3%. A new board appointment with extensive legal expertise and insurance industry knowledge may also bring valuable guidance.

1.c. Company Highlights

2. UFG Insurance Posts Strong Q3 Earnings with Improved Underwriting and Investment Income

UFG Insurance reported outstanding third-quarter results, with net income nearly doubling to $39.2 million, the highest in at least 20 years. The company's combined ratio improved to 91.9%, its best third-quarter underwriting result in nearly 20 years. Net written premium grew 7% to a third-quarter record of $328 million, driven by a 22% increase in the core commercial business. Earnings per share (EPS) came in at $1.5, significantly beating estimates of $0.69.

Publication Date: Nov -26

📋 Highlights
  • Net Income Surge: Rose to $39.2M, a 100% YOY increase, marking the highest third-quarter profit in at least 20 years.
  • Combined Ratio Improvement: Achieved 91.9%, the best third-quarter underwriting performance in nearly 20 years.
  • Underlying Loss Ratio Decline: Improved by 1.9 points to 56% in Q3, with a 2-point YTD improvement to 56.7%.
  • Core Commercial Growth: Contributed 22% premium growth in Q3, with new business accounting for 27% of total premium.
  • Investment Gains: Net investment income rose 17% in Q3, with $2.7M generated from a $100M limited partnership portfolio (10%+ annualized return).

Underwriting Performance

The underlying loss ratio improved 1.9 points to 56% in the third quarter, with year-to-date improvements of 2 points to 56.7%. Favorable results were seen across several lines of business, including auto, property, and business owner's policy (BOP), which offset strengthening in certain casualty lines. As Julie Stephenson noted, "our exceptional loss ratio results" were a key driver of the company's performance.

Investment Income and Expense Ratio

Net investment income rose 17% in the third quarter, driven by portfolio repositioning actions in 2024. The company's limited partnership investments generated a strong return of $2.7 million, an annualized return exceeding 10%. The expense ratio improved 1.3 points from the prior year, reflecting the benefits of ongoing growth and disciplined management actions.

Valuation and Outlook

With a Price-to-Book Ratio (P/B) of 1.05, the stock appears to be fairly valued. The company's strong underwriting performance and investment income growth are positives. Analysts estimate revenue growth of 2.3% next year. The Dividend Yield is 1.72%, providing a relatively stable return. The company's ability to navigate evolving market dynamics, with a focus on deepening underwriting expertise and developing additional capabilities, positions it well for future growth.

Capital Management

Eric Martin stated that there are no changes planned in the company's capital management philosophy and buyback strategy, prioritizing the right amount of capital to continue growing and maintaining its dividend philosophy.

3. NewsRoom

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Ensign Peak Advisors Inc Sells 1,850 Shares of United Fire Group, Inc $UFCS

Dec -01

Source: defenseworld.net

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United Fire Group, Inc. declares quarterly cash dividend of $0.16 per share

Nov -21

Source: globenewswire.com

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12,943 Shares in United Fire Group, Inc $UFCS Bought by Campbell & CO Investment Adviser LLC

Nov -17

Source: defenseworld.net

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Best Value Stocks to Buy for Nov.10

Nov -10

Source: zacks.com

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United Fire Group, Inc. (UFCS) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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United Fire Group (UFCS) Q3 Earnings and Revenues Beat Estimates

Nov -04

Source: zacks.com

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United Fire Group, Inc. reports third quarter 2025 results

Nov -04

Source: globenewswire.com

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Teacher Retirement System of Texas Has $1.80 Million Stock Holdings in United Fire Group, Inc $UFCS

Nov -04

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.31%)

6. Segments

Property and Casualty - Other Liability

Expected Growth: 11.5%

United Fire Group's 11.5% growth in Property and Casualty - Other Liability is driven by increased premiums from expanded product offerings, favorable loss trends, and strategic partnerships. Additionally, improved underwriting practices, enhanced risk management, and a strong capital position have contributed to the segment's growth.

Property and Casualty - Fire & Allied Lines

Expected Growth: 11.2%

United Fire Group's 11.2% growth in Property and Casualty - Fire & Allied Lines is driven by increased premiums from commercial and personal lines, favorable loss trends, and strategic expansion into new markets. Additionally, improved underwriting practices, enhanced risk selection, and effective reinsurance programs contribute to the segment's growth.

Property and Casualty - Automobile

Expected Growth: 10.8%

United Fire Group's 10.8% growth in Property and Casualty - Automobile is driven by increased premiums from expanded geographic presence, favorable underwriting results, and a rise in average premiums per policy. Additionally, a low loss ratio and improved expense management contribute to the segment's growth.

Property and Casualty - Reinsurance Assumed

Expected Growth: 11.8%

United Fire Group, Inc.'s 11.8% growth in Property and Casualty - Reinsurance Assumed is driven by increasing demand for catastrophe reinsurance, expansion into new geographic markets, and a favorable pricing environment. Additionally, the company's diversified portfolio and strong relationships with cedants have contributed to its growth.

Property and Casualty - Workers Compensation

Expected Growth: 11.0%

United Fire Group's 11.0% growth in Property and Casualty - Workers Compensation is driven by a strong economy, low unemployment rates, and increasing payroll growth. Additionally, the company's expansion into new markets, improved underwriting practices, and favorable regulatory environment have contributed to this growth.

Property and Casualty - Fidelity & Surety

Expected Growth: 11.5%

United Fire Group's 11.5% growth in Property and Casualty - Fidelity & Surety is driven by a combination of factors, including a strong underwriting discipline, favorable market conditions, and strategic expansion into new geographic markets. Additionally, the company's focus on niche products, such as surety bonds and fidelity insurance, has contributed to its growth momentum.

Property and Casualty - Other

Expected Growth: 11.2%

United Fire Group's Property and Casualty - Other segment growth of 11.2% is driven by increased premiums from expanded product offerings, strategic partnerships, and geographic expansion. Additionally, favorable underwriting results, improved claims management, and a low combined ratio contribute to the segment's growth.

7. Detailed Products

Personal Lines Insurance

United Fire Group, Inc. offers personal lines insurance products, including auto, home, and umbrella insurance, designed to protect individuals and families from unforeseen events.

Commercial Lines Insurance

The company provides commercial lines insurance products, including property, liability, and workers' compensation insurance, designed to protect businesses from various risks and liabilities.

Reinsurance

United Fire Group, Inc. offers reinsurance products, which provide insurance coverage to other insurance companies, helping them manage their risk and improve their capital position.

8. United Fire Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for United Fire Group, Inc. is medium due to the presence of alternative insurance providers and financial institutions that offer similar products and services.

Bargaining Power Of Customers

The bargaining power of customers for United Fire Group, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for United Fire Group, Inc. is medium due to the company's dependence on a few key suppliers for certain services and products.

Threat Of New Entrants

The threat of new entrants for United Fire Group, Inc. is low due to the high barriers to entry in the insurance industry, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry for United Fire Group, Inc. is high due to the competitive nature of the insurance industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.38%
Debt Cost 5.71%
Equity Weight 93.62%
Equity Cost 5.71%
WACC 5.71%
Leverage 6.81%

11. Quality Control: United Fire Group, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
United Fire Group

A-Score: 7.2/10

Value: 8.9

Growth: 5.9

Quality: 6.5

Yield: 5.0

Momentum: 9.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Safety Insurance

A-Score: 6.3/10

Value: 7.4

Growth: 3.9

Quality: 7.1

Yield: 8.0

Momentum: 1.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Heritage Insurance Holdings

A-Score: 5.9/10

Value: 8.3

Growth: 5.4

Quality: 8.2

Yield: 1.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Stewart Information Services

A-Score: 5.6/10

Value: 6.5

Growth: 3.0

Quality: 5.1

Yield: 6.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Palomar Holdings

A-Score: 5.6/10

Value: 4.1

Growth: 9.4

Quality: 7.4

Yield: 0.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Global Indemnity

A-Score: 5.3/10

Value: 6.1

Growth: 4.2

Quality: 5.9

Yield: 8.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

34.92$

Current Price

34.92$

Potential

-0.00%

Expected Cash-Flows