AM Best Affirms Credit Ratings of United Fire Group, Inc. and Its Property/Casualty Subsidiaries

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and Long-Term Issuer Credit Rating (ICR) of 'a' (Excellent) for United Fire Group (UFCS) and its property/casualty subsidiaries, indicating strong balance sheet strength. However, the outlook for these ratings is negative, reflecting execution risks in their strategic plan to enhance operational performance amidst competitive conditions. Key factors include solid risk-adjusted capitalization and diversified products, offset by variability in underwriting results and exposure to catastrophe events.

Positive

• Affirmed Financial Strength Rating of A (Excellent).
• Long-Term ICR of 'a' (Excellent) for UFCS subsidiaries.
• Strong balance sheet strength and solid risk-adjusted capitalization.
• Diversified product offerings and long-standing agency relationships.

Negative

• Negative outlooks maintained since December 2020.
• Execution risks related to strategic plan implementation.
• Variability in underwriting and operating results due to challenging market conditions.
• Exposure to catastrophe and weather-related losses.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of the property/casualty (P/C) subsidiaries of United Fire Group, Inc. (UFG) [NASDAQ: UFCS] (collectively known as United Fire & Casualty Group), which operate under an intercompany pooling agreement led by United Fire & Casualty Company. Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of UFG. The outlook of these Credit Ratings (ratings) is negative. All companies are headquartered in Cedar Rapids, IA. (See below for a detailed listing of the companies and ratings.)

The ratings reflect United Fire & Casualty Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. In maintaining the negative outlooks that were assigned in December 2020, AM Best recognizes the execution risk associated with the implementation of the enterprise-wide strategic plan intended to improve operational and financial performance given competitive market conditions, as well as ongoing exposure to catastrophe events that could potentially result in additional pressure on balance sheet fundamentals.

The ratings also reflect the group’s solid risk-adjusted capitalization, diversified product offerings, long-standing agency relationships, solid regional franchise and the financial flexibility afforded by UFG. These positive rating factors are offset partially by the variability in United Fire & Casualty Group’s underwriting and operating results in recent years, driven primarily by continued challenging market conditions and resulting adverse reserve devleopement, particularly in its commercial auto liability line of business, and exposure to catastrophe and weather-related losses. The Long-Term ICR of UFG recognizes the capital strength of its operating subsidiaries.

The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed with negative outlooks for United Fire & Casualty Company and its following P/C subsidiaries:

• Lafayette Insurance Company
• Addison Insurance Company
• United Fire & Indemnity Company
• United Fire Lloyds
• Mercer Insurance Company
• Financial Pacific Insurance Company
• Mercer Insurance Company of New Jersey, Inc.
• Franklin Insurance Company
• UFG Specialty Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Gordon McLean

Senior Financial Analyst

+1 908 439 2200, ext. 5304

gordon.mclean@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Raymond Thomson, CPCU, ARe, ARM

Associate Director

+1 908 439 2200, ext. 5621

raymond.thomson@ambest.com



Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What are the latest ratings for United Fire Group (UFCS)?

AM Best has affirmed an A (Excellent) Financial Strength Rating and 'a' (Excellent) Long-Term ICR for United Fire Group and its P/C subsidiaries.

Why is the outlook for United Fire Group's ratings negative?

The negative outlook reflects execution risks in their strategic plan and ongoing exposure to catastrophe events impacting financial stability.

What factors contribute to the ratings of United Fire Group?

Their ratings reflect strong balance sheet strength, solid risk-adjusted capitalization, and diversified product offerings, though tempered by challenging market conditions.

What does AM Best assess as United Fire Group's operating performance?

AM Best assesses United Fire Group's operating performance as adequate, but it has faced variability in recent years due to market challenges.

When were the negative outlooks first assigned to United Fire Group?

The negative outlooks for United Fire Group were first assigned in December 2020.