GlobeNewswire Inc | Nov 4, 2020 07:00AM EST

November 04, 2020

CEDAR RAPIDS, Iowa, Nov. 04, 2020 (GLOBE NEWSWIRE) -- United Fire Group, Inc. (Nasdaq: UFCS)

Consolidated Financial Results - Highlights(1):

Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020Net income (loss) per $ (1.49 ) Net income (loss) per $ (4.15 ) diluted share diluted shareAdjusted operating Adjusted operatingincome (loss)^(2) per $ (1.37 ) income (loss)^(2) per $ (1.58 ) diluted share diluted shareNet realized investment Net realized investmentgains per diluted share $ 0.48 gains (losses) per $ (1.97 ) diluted shareGoodwill impairment $ (0.60 ) Goodwill impairment $ (0.60 ) GAAP combined ratio 124.4 % GAAP combined ratio 113.5 % Book value per share $ 32.77 Return on equity^(3) (16.0 ) %

United Fire Group, Inc. (the "Company" or "UFG") (Nasdaq: UFCS) today reported a consolidated net loss, including net realized investment gains and losses and changes in the fair value of equity securities, of $37.2 million ($1.49 per diluted share) for the three-month period ended September 30, 2020 (the "third quarter of 2020"), compared to consolidated net loss of $2.3 million ($0.09 per diluted share) for the same period in 2019. For the nine-month period ended September 30, 2020 ("year-to-date"), consolidated net loss, including realized investment gains and losses and changes in the fair value of equity securities, was $103.8 million ($4.15 per diluted share), compared to net income of $38.0 million ($1.48 per diluted share) for the same period in 2019.

The Company reported consolidated adjusted operating loss of $1.37 per diluted share for the third quarter of 2020, compared to consolidated adjusted operating loss of $0.40 per diluted share for the same period in 2019. Year-to-date, consolidated adjusted operating loss was $1.58 per diluted share compared to consolidated adjusted operating loss of $0.06 per diluted share for the same period in 2019.

"The third quarter of 2020, similar to the second quarter, was once again impacted by historically high catastrophe losses," stated Randy A. Ramlo, President and Chief Executive Officer. "Catastrophe losses in the third quarter of 2020 totaled $55.4 million and added 21.4 percentage points to the GAAP combined ratio. 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 $20.0 million. Total losses from this storm were $88.0 million with $68.0 million of reinsurance recoveries."___________(1) Per share amounts are after tax.(2) Adjusted operating income (loss) is a non-GAAP financial measure of net income excluding net realized investment gains and losses, changes in the fair value of equity securities and related federal income taxes, and goodwill impairment. Management evaluates this measure and ratios derived from this measure and the Company provides this information to investors because we believe it better represents the normal, ongoing performance of our business. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted operating income (loss) to net income (loss). (3) Return on equity is calculated by dividing annualized net income (loss) by average year-to-date stockholders' equity.

"Removing the impact of catastrophe losses and favorable prior year reserve development, our core loss ratio improved again in the third quarter 2020 and year-to-date 2020, with improvements of 0.4 and 0.3 percentages points, respectively, to the combined ratio. Year-to-date, our commercial auto loss ratio improved 4.8 points compared to the same period in 2019. This improvement is being driven by continuing decreases in the frequency of commercial auto claims and a decrease in the number of commercial auto exposure units, both positive signs of progress with our strategic initiatives. However, we know we have work to do, as our commercial auto loss ratio remains higher than acceptable with severity of commercial auto losses and reserve strengthening continuing in the third quarter of 2020."

"We continue 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. As a reminder, 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."

Financial Highlights

Net loss, including net realized investment gains and losses, totaled $37.2 million ($1.49 per diluted share) for the third quarter of 2020, compared to a net loss of $2.3 million ($0.09 per diluted share) in the same period in 2019. The increase in the net loss was primarily due to an increase in losses and loss settlement expenses, namely from catastrophe losses, and a decrease in net premiums earned. Year to date, consolidated net loss, including realized investment gains and losses and changes in the fair value of equity securities, was $103.8 million ($4.15 per diluted share), compared to net income of $38.0 million ($1.48 per diluted share) for the same period in 2019. The decrease in net income was primarily due to a decrease in the fair value of equity securities, a decrease in net investment income, a decrease in net premiums earned and increases in losses and loss settlement expenses.

Net premiums earned decreased 5.8 percent to $259.1 million in the third quarter of 2020, compared to $274.9 million in the same period in 2019. Year-to-date net premiums earned decreased 2.7 percent to $791.5 million compared to $813.7 million in the same period in 2019. The decrease in both the three- and nine-month periods ended September 30, 2020 was primarily due to our focus on improving profitability through non-renewal of under-performing accounts in our commercial auto line of business. Also, during the third quarter of 2020, we paid $9.0 million of reinstatement premium with our reinsurance program as a result of the August Midwest derecho catastrophe exceeding the reinsurance contract stated retention. There was also some impact to net premiums earned from the COVID-19 pandemic but it was less significant than the impact from our commercial auto profitability initiatives in the three- and nine-month periods ended September 30, 2020.

The average renewal pricing increases were driven by commercial auto and commercial property. During the third quarter of 2020, the commercial auto average renewal rate increase remained in the double digits at 11.5 percent. The commercial property average renewal rate increase was 5.8 percent, remaining in the mid-single digits again in the third quarter of 2020.

Net investment income was $7.2million for the third quarter of 2020, as compared to net investment income of $13.3million for the same period in 2019. Year-to date, net investment income was $22.3 million, compared to net investment income of $43.9 million for the same period in 2019. The decrease in net investment income in both periods in 2020 as compared to the same periods in 2019 was due to a combination of a decrease in the fair value of our investments in limited liability partnerships and a decrease in invested assets. The valuation of these investments in limited liability partnerships varies from period to period due to the current equity market conditions, specifically related to financial institutions.

The Company recognized net realized investment gains of $15.2 million during the third quarter of 2020, compared to net realized investment gains of $9.8 million for the same period in 2019. Year-to-date, the Company recognized net realized investment losses of $62.4 million compared to net realized gains of $50.1 million. The change in the three- and nine-month periods ended September 30, 2020 as compared to the same periods in 2019 was primarily due to the change in the fair value of equity securities.

Losses and loss settlement expenses increased by 10.8 percentage points and by 5.1 percentage points during the three- and nine-month periods ended September 30, 2020, compared to the same periods of 2019. The increase in losses and loss settlement expenses primarily was due to an increase in catastrophe losses as compared to the same period in 2019.

A one-time adjustment to write off goodwill of $15.1 million was made during the third quarter of 2020 after completing a quantitative goodwill analysis. This goodwill related to the acquisition of Mercer Insurance Group, Inc. in 2011.

Consolidated net unrealized investment gains, net of tax, totaled $82.5 million as of September30, 2020, an increase of $35.2 million from December31, 2019. The increase in net unrealized investment gains was primarily the result of a decrease in interest rates in the nine-month period ended September 30, 2020.

Total consolidated assets as of September30, 2020 were $3.0 billion, which included $2.0 billion of invested assets. The Company's book value per share was $32.77, which is a decrease of $3.63 per share, or 10.0 percent, from December31, 2019. This decrease is primarily attributed to a net loss of $103.8 million, shareholder dividends of $24.8 million and share repurchases of $2.7 million, partially offset by an increase in net unrealized investment gains on fixed maturity securities of $35.2 million, net of tax, during the first nine months of 2020.

The annualized return on equity was (16.0) percent year-to-date compared to 5.5 percent for the same period in 2019. The change in the annualized return on equity was primarily driven by a net loss of $103.8 million in the first nine months of 2020 compared to net income of $38.0 million in the same period in 2019.

Reserve Development

We experienced favorable development in our net reserves for prior accident years of $6.3 million in the third quarter of 2020, compared to favorable development of $5.5 million in the same period in 2019. The favorable prior year reserve development in the three-month period ended September 30, 2020 came primarily from our workers' compensation and commercial liability lines of business. Year-to-date, favorable development in our net reserves for prior accident years was $30.0 million, compared to $0.8 million favorable development in the same period in 2019. The favorable prior year reserve development in the nine-month period ended September 30, 2020 came primarily from our workers' compensation and commercial fire and allied lines of business. Development amounts can vary significantly from quarter- to- quarter depending on a number of factors, including the number of claims settled and the settlement terms. At September 30, 2020, our total reserves were within our actuarial estimates.

GAAP Combined Ratio

The GAAP combined ratio increased by 14.4 percentage points to 124.4 percent for the third quarter of 2020, compared to 110.0 percent in the same period in 2019. For the nine-month period ended September 30, 2020, the GAAP combined ratio increased 7.5 percentage points to 113.5 percent compared to 106.0 percent for the nine-month period ended September 30, 2019. The increase in the combined ratio during the three- and nine-month periods ended September 30, 2020 as compared to the same periods in 2019 was primarily driven by an increase in the net loss ratio.

Net Loss Ratio

The GAAP net loss ratio deteriorated 13.6 percentage points and 5.8 percentage points, respectively, during the three- and nine-month periods ended September 30, 2020, as compared to the same periods in 2019. The increase in the net loss ratio was primarily due to an increase in catastrophe losses.

Pre-tax catastrophe losses in the third quarter of 2020 were higher when compared to third quarter of 2019, with catastrophe losses adding 21.4 percentage points to the combined ratio in 2020, as compared to 7.0 percentage points in 2019. During the third quarter, the Company incurred losses from 25 catastrophe events, with the most significant losses from the August Midwest derecho and Hurricane Laura. Our 10-year historical average for third quarter catastrophe losses is 8.9 percentage points added to the combined ratio. Year-to-date, catastrophe losses totaled $121.3 million ($3.83 per diluted share) compared to $44.9 million ($1.38 per diluted share) for the same period in 2019.

The GAAP net loss ratio excluding catastrophe losses and prior accident year reserve development improved by 0.4 percentage points in the three-month period ended September 30, 2020 and 0.3 percentage points in the nine-month period ended September 30, 2020 as compared to the same periods of 2019. This decrease in the GAAP net loss ratio in the three- and nine-month periods ended September 30, 2020 compared to the same periods of 2019 was due to an improvement in the performance of our core book of business.

Expense Ratio

The expense ratio for the third quarter of 2020 was 33.8 percent compared to 33.0 percent for the third quarter in 2019. Year-to-date, the expense ratio was 34.4 percent compared to 32.7 percent in the same period in 2019. The increase in the expense ratio during the three- and nine-month periods ended September 30, 2020 as compared to the same periods in 2019 was primarily due to our continued investment in technology, including our multi-year Oasis project, an upgrade to our technology platform designed to enhance core underwriting decisions, selection of risks and productivity.

Capital Management

During the third quarter of 2020, we declared and paid a $0.33 per share cash dividend to shareholders of record as of September 4, 2020. We have paid a quarterly dividend every quarter since March 1968. During the third quarter of 2020, we did not repurchase any shares of our common stock. Year-to-date, we repurchased 70,467 shares of our common stock for a total purchase price of approximately $2.7 million.

Earnings Call Access Information

An earnings call will be held at 9:00 a.m. Central Time on November4, 2020 to allow securities analysts, shareholders and other interested parties the opportunity to hear management discuss the Company's third quarter of 2020 results.

Teleconference Dial-in information for the call is toll-free 1-844-492-3723. The event will be archived and available for digital replay through November 18, 2020. The replay access information is toll-free 1-877-344-7529; conference ID no. 10148230.

Webcast An audio webcast of the teleconference can be accessed at the Company's investor relations page at http://ir.ufginsurance.com/event or https://services.choruscall.com/links/ufcs201104. The archived audio webcast will be available until November 18, 2020.

Transcript A transcript of the teleconference will be available on the Company's website soon after the completion of the teleconference.

About UFG

Founded in 1946 as United Fire & Casualty Company, UFG, through its insurance company subsidiaries, is engaged in the business of writing property and casualty insurance.

Through our subsidiaries, we are licensed as a property and casualty insurer in 48 states, plus the District of Columbia, and we are represented by approximately 1,000 independent agencies. A.M. Best Company assigns a rating of A (Excellent) for members of the United Fire & Casualty Group.

For more information about UFG, visit www.ufginsurance.com or contact:

Randy Patten, AVP and Controller, 319-286-2537 or IR@unitedfiregroup.com.

Disclosure of Forward-Looking Statements

This release may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. The forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results to differ from those expected and/or projected. Such forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, the industry in which we operate, and beliefs and assumptions made by management. Words such as "expect(s)," "anticipate(s)," "intend(s)," "plan(s)," "believe(s)," "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "remain(s) optimistic," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will," "might," "hope," "can" and other words and terms of similar meaning or expression in connection with a discussion of future operations, financial performance or financial condition, are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Information concerning factors that could cause actual outcomes and results to differ materially from those expressed in the forward-looking statements is contained in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December31, 2019, filed with the Securities and Exchange Commission ("SEC") on February28, 2020, as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 6, 2020. The risks identified in our Annual Report on Form 10-K (as updated) and in our other SEC filings are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release or as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures

The Company prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Management also uses certain non-GAAP measures to evaluate its operations and profitability. As further explained below, management believes that disclosure of certain non-GAAP financial measures enhances investor understanding of our financial performance. Non-GAAP financial measures disclosed in this report include: adjusted operating income (loss) and net premiums written. The Company has provided the following definitions and reconciliations of the non-GAAP financial measures:

Adjusted operating income (loss): Adjusted operating income (loss) is calculated by excluding net realized investment gains and losses, after applicable federal and state income taxes, and goodwill impairment from net income. Management believes adjusted operating income (loss) is a meaningful measure for evaluating insurance company performance and a useful supplement to GAAP information because it better represents the normal, ongoing performance of our business. Investors and equity analysts who invest and report on the insurance industry and the Company generally focus on this metric in their analyses.

Net Income Reconciliation Three Months Ended September 30, Nine Months Ended September 30,(InThousands, ChangeExcept Per 2020 2019 % 2020 2019 Change %ShareData)IncomeStatement DataNet income $ (37,241 ) $ (2,342 ) NM $ (103,815 ) $ 37,983 NM(loss)Less:after-taxnetrealized 12,017 7,760 54.9 % (49,309 ) 39,600 (224.5 ) %investmentgains(losses)Less:goodwill (15,091 ) ? NM (15,091 ) ? NMimpairmentAdjustedoperating $ (34,167 ) $ (10,102 ) NM $ (39,415 ) $ (1,617 ) NMincome(loss)DilutedEarnings Per ShareDataNet income $ (1.49 ) $ (0.09 ) NM $ (4.15 ) $ 1.48 NM(loss)Less:after-taxnetrealized 0.48 0.31 54.8 % (1.97 ) 1.54 (227.9 ) %investmentgains(losses)Less:goodwill (0.60 ) ? NM (0.60 ) ? NMimpairmentAdjustedoperating $ (1.37 ) $ (0.40 ) NM $ (1.58 ) $ (0.06 ) NMincome(loss)

NM = Not meaningful.

Net premiums written: While not a substitute for any GAAP measure of performance, net premiums written is frequently used by industry analysts and other recognized reporting sources to facilitate comparisons of the performance of insurance companies. Net premiums written are the amount charged for insurance policy contracts issued and recognized on an annualized basis at the effective date of the policy. Management believes net premiums written are a meaningful measure for evaluating insurance company sales performance and geographical expansion efforts. Net premiums written for an insurance company consists of direct premiums written and reinsurance assumed, less reinsurance ceded. Net premiums earned is calculated on a pro rata basis over the terms of the respective policies. Unearned premium reserves are established for the portion of premiums written applicable to the unexpired term of insurance policy in force. The difference between net premiums earned and net premiums written is the change in unearned premiums and change in prepaid reinsurance premiums.

Net Premiums Earned Reconciliation Three Months Ended September 30, Nine Months Ended September 30,(InThousands, 2020 2019 Change % 2020 2019 Change %ExceptRatios)Premiums: Netpremiums $ 259,061 $ 274,942 (5.8 ) % $ 791,519 $ 813,742 (2.7 ) %earnedLess:change in 31,072 11,766 164.1 % 5,433 (35,296 ) 115.4 %unearnedpremiumsLess:change inprepaid (2,222 ) (163 ) NM 2,734 886 208.6 %reinsurancepremiumsNetpremiums $ 230,211 $ 263,339 (12.6 ) % $ 783,352 $ 848,152 (7.6 ) %written

NM = Not meaningful.

Supplemental Tables

Consolidated Financial Highlights(unaudited) Three Months Ended September 30, Nine Months Ended September 30,(InThousands,ExceptShare and 2020 2019 Change % 2020 2019 Change %Per ShareData andRatios)Revenue HighlightsNetpremiums $ 259,061 $ 274,942 (5.8 ) % $ 791,519 $ 813,742 (2.7 ) %earnedNetinvestment 7,244 13,291 (45.5 ) % 22,303 43,923 (49.2 ) %incomeNetrealizedinvestment 15,212 9,822 54.9 % (62,416 ) 50,126 (224.5 ) %gains(losses)Other 604 ? NM 6,323 ? NMincomeTotal 282,121 298,055 (5.3 ) % $ 757,729 $ 907,791 (16.5 ) %revenuesIncomeStatement DataNet income (37,241 ) (2,342 ) NM $ (103,815 ) $ 37,983 NM(loss)After-taxnetrealized 12,017 7,760 54.9 % (49,309 ) 39,600 (224.5 ) %investmentgains(losses)Goodwill (15,091 ) ? NM (15,091 ) ? NMimpairmentAdjustedoperating $ (34,167 ) $ (10,102 ) NM $ (39,415 ) $ (1,617 ) NMincome(loss)^(1)DilutedEarnings Per ShareDataNet income $ (1.49 ) $ (0.09 ) NM $ (4.15 ) $ 1.48 NM(loss)After-taxnetrealized 0.48 0.31 54.8 % (1.97 ) 1.54 (227.9 ) %investmentgains(losses)Goodwill (0.60 ) ? NM (0.60 ) ? NMimpairmentAdjustedoperating $ (1.37 ) $ (0.40 ) NM $ (1.58 ) $ (0.06 ) NMincome(loss)^(1)Catastrophe DataPre-taxcatastrophe $ 55,361 $ 19,292 187.0 % $ 121,261 $ 44,927 169.9 %lossesEffect onafter-tax 1.75 0.61 186.9 % 3.83 1.38 177.5 %earningsper shareEffect oncombined 21.4 % 7.0 % 205.7 % 15.3 % 5.5 % 178.2 %ratio Favorablereservedevelopmentexperienced $ 6,269 $ 5,513 13.7 % $ 30,038 $ 770 NMon prioraccidentyears GAAPcombined 124.4 % 110.0 % 13.1 % 113.5 % 106.0 % 7.1 %ratioReturn on (16.0 ) % 5.5 % NMequityCashdividends $ 0.33 $ 0.33 ? $ 0.99 $ 0.97 2.1 %declaredper shareDilutedweightedaverage 25,031,234 25,176,334 (0.6 ) % 25,023,401 25,643,744 (2.4 ) %sharesoutstanding

NM = Not meaningful(1) Adjusted operating income (loss) is a non-GAAP financial measure of net income (loss). See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of adjusted operating income (loss) to net income (loss).

Income Statement(unaudited) Three Months Ended September Nine Months Ended September 30, 30,(In Thousands, 2020 2019 2020 2019Except Ratios)Revenues Net premiums $ 259,061 $ 274,942 $ 791,519 $ 813,742 earnedInvestment income,net of investment 7,244 13,291 22,303 43,923 expensesNet realizedinvestment gains 15,212 9,822 (62,416 ) 50,126 (losses)Other income 604 ? 6,323 ? Total Revenues $ 282,121 $ 298,055 $ 757,729 $ 907,791 Benefits, Losses and ExpensesLosses and losssettlement $ 234,693 $ 211,752 $ 626,169 $ 596,001 expensesAmortization ofdeferred policy 52,095 54,828 158,440 161,842 acquisition costsOther underwriting 35,470 36,003 114,020 104,370 expensesGoodwill 15,091 ? 15,091 ? impairmentTotal Benefits,Losses and $ 337,349 $ 302,583 $ 913,720 $ 862,213 Expenses Income (loss)before income (55,228 ) (4,528 ) (155,991 ) 45,578 taxesFederal income tax (17,987 ) (2,186 ) (52,176 ) 7,595 expense (benefit)Net income (loss) $ (37,241 ) $ (2,342 ) $ (103,815 ) $ 37,983 GAAP combined ratio:Net loss ratio -excluding 69.2 % 70.0 % 63.8 % 67.8 %catastrophesCatastrophes -effect on net loss 21.4 7.0 15.3 5.5 ratioNet loss ratio 90.6 % 77.0 % 79.1 % 73.3 %Expense ratio 33.8 33.0 34.4 32.7 GAAP combined 124.4 % 110.0 % 113.5 % 106.0 %ratio

Balance Sheet(In Thousands) September 30, December 31, 2019 2020 (unaudited) Invested assets $ 2,041,452 $ 2,155,099 Cash 99,604 120,722 Total assets 3,048,480 3,013,472 Losses and loss settlement expenses 1,555,083 1,421,754 Total liabilities 2,228,198 2,103,000 Net unrealized investment gains, 82,492 47,279 after-taxTotal stockholders? equity 820,282 910,472

Net Premiums Written by Line of Business(unaudited) Three Months Ended Nine Months Ended September September 30, 30, 2020 2019 2020 2019(In Thousands) Net Premiums Written^ (1)Commercial lines: Other liability^(2) $ 71,140 $ 76,090 $ 238,330 $ 247,573 Fire and allied lines 54,766 61,846 185,769 189,361 ^(3)Automobile 63,419 75,222 214,447 246,801 Workers? compensation 16,325 18,988 57,481 67,893 Fidelity and surety 7,535 6,644 23,146 20,147 Miscellaneous 320 363 1,127 1,281 Total commercial $ 213,505 $ 239,153 $ 720,300 $ 773,056 lines Personal lines: Fire and allied lines $ 3,065 $ 11,255 $ 21,205 $ 31,015 ^(4)Automobile 4,838 8,396 19,548 24,113 Miscellaneous 203 337 813 961 Total personal lines $ 8,106 $ 19,988 $ 41,566 $ 56,089 Reinsurance assumed 8,600 4,198 21,486 19,007 Total 230,211 263,339 $ 783,352 $ 848,152

(1) Net premiums written is a non-GAAP financial measure of net premiums earned. See Definitions of Non-GAAP Information and Reconciliations to Comparable GAAP Measures for a reconciliation of net premiums written to net premiums earned.(2) Commercial lines Other liability is business insurance covering bodily injury and property damage arising from general business operations, accidents on the insureds premises and products manufactured or sold.(3) Commercial lines Fire and allied lines includes fire, allied lines, commercial multiple peril and inland marine.(4) Personal lines Fire and allied lines includes fire, allied lines, homeowners and inland marine.

Net Premiums Earned, Net Losses and Loss Settlement Expenses and Net Loss Ratioby Line of BusinessThree MonthsEnded 2020 2019September 30, Net Losses Net Losses and Loss and Loss Net Settlement Net Net Settlement Net(InThousands, Premiums Expenses Loss Premiums Expenses LossExceptRatios)(unaudited) Earned Incurred Ratio Earned Incurred RatioCommercial linesOther $ 78,302 $ 45,111 57.6 % $ 80,421 $ 50,656 63.0 %liabilityFire and 59,267 52,436 88.5 61,628 49,628 80.5 allied linesAutomobile 73,403 82,675 112.6 80,574 85,227 105.8 Workers' 19,245 10,250 53.3 22,041 3,076 14.0 compensationFidelity and 7,356 (128 ) (1.7 ) 6,755 1,437 21.3 suretyMiscellaneous 378 78 20.6 428 63 14.7 Totalcommercial $ 237,951 $ 190,422 80.0 % $ 251,847 $ 190,087 75.5 %lines Personal linesFire and $ 5,144 $ 29,451 NM $ 10,370 $ 13,469 129.9 %allied linesAutomobile 7,055 8,322 118.0 7,870 6,946 88.3 Miscellaneous 295 (97 ) (32.9 ) 312 (130 ) (41.7 ) Totalpersonal $ 12,494 $ 37,676 NM $ 18,552 $ 20,285 109.3 %linesReinsurance $ 8,616 $ 6,595 76.5 % $ 4,543 $ 1,380 30.4 %assumedTotal $ 259,061 $ 234,693 90.6 % $ 274,942 $ 211,752 77.0 %

NM = Not Meaningful

Net Premiums Earned, Net Losses and Loss Settlement Expenses and Net Loss Ratioby Line of BusinessNine MonthsEnded 2020 2019September 30, Net Losses Net Losses and Loss and Loss Net Settlement Net Net Settlement Net(InThousands, Premiums Expenses Loss Premiums Expenses LossExceptRatios)(unaudited) Earned Incurred Ratio Earned Incurred RatioCommercial linesOther $ 235,018 $ 135,748 57.8 % $ 238,300 $ 146,513 61.5 %liabilityFire and 183,528 171,416 93.4 181,417 142,265 78.4 allied linesAutomobile 225,103 205,994 91.5 234,280 225,564 96.3 Workers' 57,873 24,205 41.8 66,537 18,399 27.7 compensationFidelity and 20,106 14 0.1 19,276 536 2.8 suretyMiscellaneous 1,158 266 23.0 1,291 63 4.9 Totalcommercial $ 722,786 $ 537,643 74.4 % $ 741,101 $ 533,340 72.0 %lines Personal linesFire and $ 24,933 $ 55,372 222.1 % $ 30,892 $ 34,137 110.5 %allied linesAutomobile 22,203 15,935 71.8 23,050 19,422 84.3 Miscellaneous 905 2,561 283.0 920 354 38.5 Totalpersonal $ 48,041 $ 73,868 153.8 % $ 54,862 $ 53,913 98.3 %linesReinsurance $ 20,692 $ 14,658 70.8 % $ 17,779 $ 8,748 49.2 %assumedTotal $ 791,519 $ 626,169 79.1 % $ 813,742 $ 596,001 73.3 %