United Fire Group Inc 10-Q for FY2026 Q2
United Fire Group Inc (UFCS)
10-Q
2026-08-04
For: 2026-06-30
View Original
Added on
August 04, 2026
About this 10-Q
United Fire Group Inc filed this 10-Q on August 4, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $383.73M
- up 14.4% from $335.47M a year earlier
- Net income
- $33.37M
- up 45.4% from net income of $22.95M a year earlier
- Diluted EPS
- $1.29
- up 48.3% from $0.87 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended June 30, 2026
or
Commission File Number 001-34257
________________________
(Exact name of registrant as specified in its charter)
| (State of incorporation) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) (Zip Code) | ||||||||
Registrant's telephone number, including area code: (319 ) 399-5700
Securities Registered Pursuant to Section 12(b) of the Exchange Act of 1934:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of July 29, 2026, 25,705,439 shares of common stock were outstanding.
United Fire Group, Inc.
Index to Quarterly Report on Form 10-Q
June 30, 2026
| Page | |||||
Signatures | |||||
FORWARD-LOOKING INFORMATION
This report 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, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 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 United Fire Group, Inc. ("UFG," the "Registrant," the "Company," "we," "us," or "our"), 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. See Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 and in our other filings with the Securities and Exchange Commission (the "SEC") for more information concerning factors that could cause actual results to differ materially from those in the forward-looking statements.
Risks and uncertainties that may affect the actual financial condition and results of the Company include, but are not limited to, the following:
◦The success of our strategy may be adversely impacted by various internal and external factors;
◦Our core insurance business is dependent on strong and beneficial relationships with a large network of independent insurance agents. A strain in these relationships could result in loss of sufficient business opportunities within our expertise and stated risk appetite;
◦We will be at a competitive disadvantage if, over time, our competitors are more effective in pricing their products, development of new product offerings, implementation of technology or data analytics;
◦Our strategy's success could be affected by our timely ability to recognize and adapt to our position in the insurance cycle;
◦Changing weather patterns and climate change add to the unpredictability, frequency and severity of catastrophe losses and may adversely affect the results of our operations, liquidity and financial condition;
◦Our success depends primarily on our ability to underwrite risks effectively and adequately price the risks we insure;
◦We may be unable to predict the rising cost of insurance claims resulting from changing societal expectations that lead to increasing litigation, broader definitions of liability, broader contract interpretations, more plaintiff-friendly legal decisions and larger compensatory jury awards;
◦Our reserves for property and casualty insurance losses and loss settlement expenses are based on estimates and may be inadequate, adversely impacting our financial results;
◦We insure property that is exposed to various natural perils that can give rise to significant claims costs;
◦We are subject to certain risks related to our investment portfolio that could negatively affect our profitability;
◦A downgrade in our financial strength or issuer credit ratings could result in a loss of business and could have a material adverse effect on our financial condition, results of operations and liquidity;
◦We may be unable to secure reinsurance capacity that provides necessary risk protection at a reasonable cost;
◦We may be unable to attract, retain or effectively manage the succession of key personnel;
◦Unauthorized data access, cyber attacks and other security breaches could have an adverse impact on our business and reputation;
◦We are subject to comprehensive laws and regulations, which may have an adverse effect on our financial condition and results of operations;
◦Macroeconomic conditions could materially and adversely affect our business, results of our operations, financial condition, and growth;
1
◦Our stock price could become more volatile, and your investment could lose value;
◦Efforts to disrupt the structure, management or ownership of the Company could diminish the value of our common stock; and
◦The ability of our subsidiaries to pay dividends may affect our liquidity and ability to meet our obligations.
These are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in 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 report 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.
2
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
| United Fire Group, Inc. Consolidated Balance Sheets | ||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||
| (In thousands, except share data) | (unaudited) | ||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost $ | $ | $ | |||||||||
Mortgage loans (net of allowance for credit loss of $ | |||||||||||
| Other long-term investments | |||||||||||
| Total investments | |||||||||||
| Cash and cash equivalents | |||||||||||
| Accrued investment income | |||||||||||
Premiums receivable (net of allowance for doubtful accounts of $ | |||||||||||
| Deferred policy acquisition costs | |||||||||||
Property and equipment, at cost (less accumulated depreciation of $ | |||||||||||
Reinsurance receivables (net of allowance for credit losses of $ | |||||||||||
| Prepaid reinsurance premiums | |||||||||||
| Intangible assets | |||||||||||
| Deferred tax asset | |||||||||||
| Income taxes receivable | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Losses and loss settlement expenses | $ | $ | |||||||||
| Unearned premium | |||||||||||
| Accrued expenses and other liabilities | |||||||||||
| Income taxes payable | |||||||||||
| Long term debt | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Stockholders' Equity | |||||||||||
Common stock, $ | $ | $ | |||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive income (loss), net of tax | ( | ( | |||||||||
| Total stockholders' equity | $ | $ | |||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
United Fire Group, Inc.
Consolidated Statements of Income (Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In thousands, except share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Net earned premium | $ | $ | $ | $ | |||||||||||||||||||
| Net investment income | |||||||||||||||||||||||
| Net investment gains (losses) | ( | ( | ( | ( | |||||||||||||||||||
| Other income (loss) | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
| Benefits, Losses and Expenses | |||||||||||||||||||||||
| Losses and loss settlement expenses | $ | $ | $ | $ | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | |||||||||||||||||||||||
| Other underwriting expenses | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Other non-underwriting expenses | |||||||||||||||||||||||
| Total benefits, losses and expenses | $ | $ | $ | $ | |||||||||||||||||||
| Income (loss) before income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Income tax expense (benefit) | |||||||||||||||||||||||
| Net Income (loss) | $ | $ | $ | $ | |||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
United Fire Group, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In thousands, except share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net Income (loss) | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||||||||
| Change in net unrealized gain (loss) on investments | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Change in net benefit asset plans and obligations | ( | ( | ( | ( | |||||||||||||||||||
| Foreign currency translation adjustment | ( | ||||||||||||||||||||||
| Other comprehensive income (loss), before tax and reclassification adjustments | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Income tax effect | ( | ( | |||||||||||||||||||||
| Other comprehensive income (loss), after tax, before reclassification adjustments | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Reclassification adjustments: | |||||||||||||||||||||||
| Change in unrealized (gains) losses on investments included in net investment gains (losses) | $ | $ | $ | $ | |||||||||||||||||||
| Total reclassification adjustments, before tax | $ | $ | $ | $ | |||||||||||||||||||
| Income tax effect | ( | ( | ( | ( | |||||||||||||||||||
| Total reclassification adjustments, after tax | $ | $ | $ | $ | |||||||||||||||||||
| Comprehensive income (loss) | $ | $ | $ | $ | |||||||||||||||||||
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
United Fire Group, Inc.
Consolidated Statement of Stockholders' Equity (Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In thousands, except share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Stock based compensation | — | — | — | ||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
| Additional paid-in capital | |||||||||||||||||||||||
| Balance, beginning of period | |||||||||||||||||||||||
| Stock based compensation | |||||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
| Retained earnings | |||||||||||||||||||||||
| Balance, beginning of period | |||||||||||||||||||||||
| Net income (loss) | |||||||||||||||||||||||
Dividends on common stock (1) | ( | ( | ( | ( | |||||||||||||||||||
| Foreign currency translation adjustment, tax impact | — | — | |||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | |||||||||||||||||||||||
| Balance, beginning of period | ( | ( | ( | ( | |||||||||||||||||||
Change in net unrealized investment gain (loss)(2) | ( | ( | |||||||||||||||||||||
Change in liability for underfunded employee benefit plans(2) | ( | ( | ( | ( | |||||||||||||||||||
Foreign currency translation adjustment(2) | ( | ||||||||||||||||||||||
| Balance, end of period | ( | ( | ( | ( | |||||||||||||||||||
| Total stockholders' equity | $ | $ | $ | $ | |||||||||||||||||||
| Common stock shares outstanding | |||||||||||||||||||||||
| Balance, beginning of period | |||||||||||||||||||||||
| Stock based compensation | |||||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
(1)Dividends on common stock ($0.20 and $0.40 for three- and six-month periods ended 2026; $0.16 and $0.32 for three- and six-month periods ended 2025, per share)
(2)Amount is net of reclassification adjustment, as applicable, and income taxes.
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
United Fire Group, Inc.
Consolidated Statements of Cash Flows (Unaudited)
| Six months ended June 30, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Cash Flows From Operating Activities | |||||||||||
| Net income (loss) | $ | $ | |||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||||||||||
| Net accretion of bond premium | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation expense | |||||||||||
| Net investment (gains) losses | |||||||||||
| Deferred income tax expense (benefit) | ( | ||||||||||
| Changes in: | |||||||||||
| Accrued investment income | ( | ( | |||||||||
| Premiums receivable | ( | ( | |||||||||
| Deferred policy acquisition costs | ( | ( | |||||||||
| Reinsurance receivables | ( | ||||||||||
| Prepaid reinsurance premiums | ( | ||||||||||
| Other assets | ( | ||||||||||
| Losses and loss settlement expenses | |||||||||||
| Unearned premium | |||||||||||
| Accrued expenses and other liabilities | ( | ( | |||||||||
| Income taxes receivable/payable | |||||||||||
| Other, net | ( | ||||||||||
| Net cash provided by (used in) operating activities | $ | $ | |||||||||
| Cash Flows From Investing Activities | |||||||||||
| Proceeds from sale of available-for-sale investments | $ | $ | |||||||||
| Proceeds from call and maturity of available-for-sale investments | |||||||||||
| Proceeds from sale of other investments | |||||||||||
| Purchase of available-for-sale investments | ( | ( | |||||||||
| Purchase of other investments | ( | ( | |||||||||
| Net purchases and sales of property and equipment | ( | ( | |||||||||
| Net cash provided by (used in) investing activities | $ | ( | $ | ( | |||||||
| Cash Flows From Financing Activities | |||||||||||
| Issuance of common stock | $ | ( | $ | ( | |||||||
| Payment of cash dividends | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | $ | ( | $ | ( | |||||||
| Net Change in Cash and Cash Equivalents | $ | ( | $ | ||||||||
| Cash and Cash Equivalents at Beginning of Period | |||||||||||
| Cash and Cash Equivalents at End of Period | $ | $ | |||||||||
| Supplemental Disclosures of Cash Flow Information | |||||||||||
| Income taxes paid (refunded) | $ | $ | |||||||||
| Interest paid | $ | $ | |||||||||
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
UNITED FIRE GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share amounts or as otherwise noted)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
United Fire Group, Inc. ("UFG," the "Registrant," the "Company," "we," "us," or "our") and its consolidated subsidiaries and affiliates are engaged in the business of writing property and casualty insurance through a network of independent agencies. Our insurance company subsidiaries are licensed as property and casualty insurers in 50 states and the District of Columbia.
Basis of Presentation
The financial information for interim periods presented in these Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Regulation S-X promulgated by the SEC. Certain financial information that is included in our Annual Report on Form 10-K for the year ended December 31, 2025, including financial statement footnote disclosures, is not required by the rules and regulations of the SEC for interim financial reporting and has been condensed or omitted.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statement categories that are most dependent on management estimates and assumptions include: investments; losses and loss settlement expenses; and pension benefit obligations.
Management believes the accompanying Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. All significant intercompany transactions have been eliminated in consolidation. The results reported for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 26, 2026.
Updates to Significant Accounting Policies
Since our Annual Report on Form 10-K for the year ended December 31, 2025, we have had no changes to significant accounting policies, which have been followed in preparing the accompanying Consolidated Financial Statements.
Subsequent Events
Recently Issued Accounting Standards
Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of
Income Statement Expenses. This update requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. We do not expect to early adopt this standard and are in the process of assessing its impact on our disclosures upon adoption.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments in this ASU remove all references to prescriptive and sequential software development stages (referred to as "project stages") throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: (1) Management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). Further, the ASU specifies that the disclosures in Subtopic 360-10, Property, Plant, and Equipment-Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Additionally, the ASU clarifies that the intangibles disclosures in paragraphs 350-30-50-1 through 50-3 are not required for capitalized internal-use software costs. This ASU supersedes the website development costs guidance and incorporates the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The amendment can be applied using the prospective, retrospective or modified transition approach. We do not expect to early adopt this standard and are in the process of assessing its impact on our disclosures upon adoption.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments in this update clarify interim disclosure requirements and the applicability of Topic 270. This ASU requires a comprehensive list of interim disclosures to provide clarity about the current requirements, and includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The ASU further clarifies the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The amendment can be applied using the prospective or retrospective transition approach for any or all prior periods presented in the financial statements. Early adoption is permitted. We do not expect to early adopt this standard and are in the process of assessing its impact on our disclosures upon adoption.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. Thirty-three issues are addressed in this ASU covering technical corrections, unintended application of the Codification, clarifications, and other minor improvements. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. If an entity adopts the ASU in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. The amendment can be applied using the prospective or retrospective transition approach for any or all prior periods presented in the financial statements and an entity may elect the transition method on an issue-by-issue basis. Early adoption is permitted. We do not expect to early adopt this standard and are in the process of assessing its impact on our disclosures upon adoption.
NOTE 2. SUMMARY OF INVESTMENTS
Fair Value of Investments
A reconciliation of the amortized cost to fair value of investments in our available-for-sale fixed maturity portfolio, as of June 30, 2026 and December 31, 2025, is provided below:
| June 30, 2026 | ||||||||||||||||||||
| Type of Investment | Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Allowance for Credit Losses | Fair Value | |||||||||||||||
| AVAILABLE-FOR-SALE | ||||||||||||||||||||
| US Treasury and government agencies | $ | $ | $ | $ | $ | |||||||||||||||
| States, municipalities and political subdivisions | ||||||||||||||||||||
| Corporate | ||||||||||||||||||||
| Residential mortgage-backed | ||||||||||||||||||||
| Commercial mortgage-backed | ||||||||||||||||||||
| Other asset-backed | ||||||||||||||||||||
| Total Fixed Maturity, Available-for-Sale | $ | $ | $ | $ | $ | |||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Type of Investment | Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Allowance for Credit Losses | Fair Value | |||||||||||||||
| AVAILABLE-FOR-SALE | ||||||||||||||||||||
| US Treasury and government agencies | $ | $ | $ | $ | $ | |||||||||||||||
| States, municipalities and political subdivisions | ||||||||||||||||||||
| Corporate | ||||||||||||||||||||
| Residential mortgage-backed | ||||||||||||||||||||
| Commercial mortgage-backed | ||||||||||||||||||||
| Other asset-backed | ||||||||||||||||||||
| Total Fixed Maturity, Available-for-Sale | $ | $ | $ | $ | $ | |||||||||||||||
Maturities
The amortized cost and fair value of available-for-sale fixed maturity securities at June 30, 2026, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.
| Available-For-Sale | |||||||||||||||||||||||
| June 30, 2026 | Amortized Cost | Fair Value | |||||||||||||||||||||
| Due in one year or less | $ | $ | |||||||||||||||||||||
| Due after one year through five years | |||||||||||||||||||||||
| Due after five years through 10 years | |||||||||||||||||||||||
| Due after 10 years | |||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
Allowance for Credit Losses
We regularly review available-for-sale fixed-maturity securities for declines in fair value that we determine to be credit-related. For our fixed maturity securities, we generally consider the following in determining whether our unrealized losses are credit-related, and if so, the magnitude of the credit loss:
•The extent to which the fair value is less than the amortized cost basis;
•The reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening);
•The financial condition and near-term prospects of the issuer (including issuer's current credit rating and the probability of full recovery of principal, based upon the issuer's financial strength);
•Current delinquencies and nonperforming assets of underlying collateral;
•Expected future default rates;
•Collateral value by vintage, geographic region, industry concentration or property type;
•Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and
•Contractual and regulatory cash obligations and the issuer's plans to meet such obligations.
We recognize an allowance for credit losses on fixed maturity securities in an unrealized loss position when it is determined, using the factors discussed above, a component of the unrealized loss is related to credit. We recognize the credit loss in "Net investment gains (losses)" in the Consolidated Statements of Income, with an offset for the amount of non-credit impairments recognized in accumulated other comprehensive income. We do not measure an allowance for credit losses on accrued investment income because we write-off accrued interest through net investment income when collectability concerns arise.
We consider the following in determining whether write-offs of a security's amortized cost are necessary:
•We believe amounts related to securities have become uncollectible;
•We intend to sell a security; or
•It is more likely than not that we will be required to sell a security prior to recovery.
If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, we will write down the security to current fair value, with a corresponding charge, net of any amount previously recognized as an allowance for credit losses, to "Net investment gains (losses)" in the Consolidated Statements of Income. If we do not intend to sell a fixed maturity security or it is more likely than not that we will not be required to sell a fixed maturity security before recovery of its amortized cost basis but believe amounts related to a security are uncollectible, an impairment is deemed to have occurred and the amortized cost is written down to the estimated recovery value with a corresponding charge, net of any amount previously recognized as an allowance for credit losses, to "Net investment gains (losses)" in the Consolidated Statements of Income. The remainder of unrealized loss is held in "Accumulated other comprehensive income (loss)" in the Consolidated Statements of Stockholders' Equity.
As of June 30, 2026, we had no allowance for credit losses for the available-for-sale fixed maturity securities portfolio.
Unrealized Gain and Loss
Changes in unrealized gains and losses on available-for-sale fixed maturity securities do not affect net income and earnings per share but do impact comprehensive income, stockholders' equity and book value per share. A summary of changes in net unrealized investment gain (loss), net of taxes, during the reporting period is as follows:
| Six months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Change in net unrealized investment gain (loss) | |||||||||||
Available-for-sale fixed maturities(1) | $ | ( | $ | ||||||||
| Income tax effect | ( | ||||||||||
| Total change in net unrealized investment gain (loss), net of tax | $ | ( | $ | ||||||||
The following tables summarize our fixed maturity securities that were in an unrealized loss position at June 30, 2026 and December 31, 2025. The securities are presented by the length of time they have been continuously in an unrealized loss position.
| June 30, 2026 | Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||
| Type of Investment | Number of Issues | Fair Value | Gross Unrealized Loss | Number of Issues | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||||||||||
| AVAILABLE-FOR-SALE | ||||||||||||||||||||||||||||||||
| US Treasury and government agencies | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| States, municipalities and political subdivisions | ||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | ||||||||||||||||||||||||||||||||
| Other asset-backed | ||||||||||||||||||||||||||||||||
| Total Available-for-Sale | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| December 31, 2025 | Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||
| Type of Investment | Number of Issues | Fair Value | Gross Unrealized Loss | Number of Issues | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||||||||||
| AVAILABLE-FOR-SALE | ||||||||||||||||||||||||||||||||
| US Treasury and government agencies | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| States, municipalities and political subdivisions | ||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | ||||||||||||||||||||||||||||||||
| Other asset-backed | ||||||||||||||||||||||||||||||||
| Total Available-for-Sale | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
We believe that any unrealized losses on our available-for-sale fixed maturity securities at June 30, 2026 are temporary based upon our current analysis of the issuers of the securities we hold and current market conditions. We invest in high quality assets to provide protection from future credit quality issues. Non-credit related unrealized losses are recognized as a component of other comprehensive income and represent other market movements that are not credit related, for example, interest rate changes. We have no intent to sell, and it is more likely than not that we will not be required to sell these securities until the fair value recovers to at least equal our cost basis or the securities mature.
Mortgage Loans
The mortgage loan portfolio consists entirely of commercial mortgage loans. We did not acquire new loans during the six months ended June 30, 2026. The following tables present the carrying value of our commercial mortgage loans and additional information at June 30, 2026 and December 31, 2025:
| Commercial Mortgage Loans | |||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||
| Loan-to-value | Carrying Value | Carrying Value | |||||||||
| Less than 65% | $ | $ | |||||||||
| 65%-75% | |||||||||||
| Total mortgage loans at amortized cost | $ | $ | |||||||||
| Allowance for mortgage loan losses | ( | ( | |||||||||
| Mortgage loans, net | $ | $ | |||||||||
| Commercial Mortgage Loans by Region | |||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Value | Percent of Total | Carrying Value | Percent of Total | ||||||||||||||||||||
| East North Central | $ | % | $ | % | |||||||||||||||||||
| Southern Atlantic | |||||||||||||||||||||||
| East South Central | |||||||||||||||||||||||
| Middle Atlantic | |||||||||||||||||||||||
| Mountain | |||||||||||||||||||||||
| West North Central | |||||||||||||||||||||||
| Total mortgage loans at amortized cost | $ | % | $ | % | |||||||||||||||||||
| Commercial Mortgage Loans by Property Type | |||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Value | Percent of Total | Carrying Value | Percent of Total | ||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Multifamily | $ | % | $ | % | |||||||||||||||||||
| Office | |||||||||||||||||||||||
Industrial | |||||||||||||||||||||||
Retail | |||||||||||||||||||||||
Mixed use/Other | |||||||||||||||||||||||
| Total mortgage loans at amortized cost | $ | % | $ | % | |||||||||||||||||||
Mortgage loans are evaluated on a quarterly basis for impairment on an individual basis through a monitoring process and review of key credit indicators, such as economic trends, delinquency rates, property valuations, occupancy and rental rates and loan-to-value ratios. A loan is considered impaired when the Company believes it will not collect the principal and interest set forth in the contractual terms of the loan. An internal grade is assigned to each mortgage loan, with a grade of 1 being the highest and least likely for an impairment and a grade of 7 being the lowest and most likely for an impairment. An allowance for credit losses on mortgage loans is established on each loan for those amounts we believe will not be collected according to the contractual terms of the respective loan agreement. The table below shows mortgage loans by year of origination as of June 30, 2026.
| 2023 | 2022 | 2020 | 2019 | 2018 | Total | |||||||||||||||||||||||||||||||||
| Commercial mortgage loans: | ||||||||||||||||||||||||||||||||||||||
| Risk Rating: | ||||||||||||||||||||||||||||||||||||||
| 1-2 internal grade | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Total commercial mortgage loans | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
As of June 30, 2026, the Company had a credit loss allowance of $284 , summarized in the following rollforward:
Beginning balance, January 1, 2026 | $ | |||||||
| Recoveries of amounts previously written off, if any | ( | |||||||
Ending balance, June 30, 2026 | $ | |||||||
As of June 30, 2026, the Company had one commercial mortgage loan with a carrying value of $4.0 million with principal and interest payments past due. Other than the commercial office mortgage loan, all other loan receivables were current, with no delinquencies, as of June 30, 2026.
Accrued interest of $103 has been excluded from commercial mortgage loans carrying value and is reported within "Accrued investment income" on the accompanying Consolidated Balance Sheets.
Net Investment Gains and Losses
Details of net investment gains (losses) reported on the accompanying Consolidated Statements of Income were as follows:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||
| Available-for-sale | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Allowance for credit losses | |||||||||||||||||||||||
| Mortgage loans allowance for credit losses | ( | ( | |||||||||||||||||||||
| Other long-term investments | |||||||||||||||||||||||
| Total net investment gains (losses) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The proceeds and gross realized gains (losses) on the sale of available-for-sale fixed maturity securities are as follows:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Proceeds from sales | $ | $ | $ | $ | |||||||||||||||||||
| Gross realized gains | |||||||||||||||||||||||
| Gross realized losses | ( | ( | ( | ||||||||||||||||||||
Net Investment Income
Net investment income is comprised of the following:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Investment income: | |||||||||||||||||||||||||||||
| Interest on fixed maturities | $ | $ | $ | $ | |||||||||||||||||||||||||
| Income on other long-term investments | |||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Total investment income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Less investment expenses | |||||||||||||||||||||||||||||
| Net investment income | $ | $ | $ | $ | |||||||||||||||||||||||||
Funding Commitment
Pursuant to agreements with our limited liability partnership investments, we are contractually committed through 2030 to make capital contributions upon the request of certain of the partnerships. The timing of these additional contributions is unknown and based upon the timing of when investments and agreements are executed or signed compared to when the actual commitments are funded or closed. Our remaining potential contractual obligation was $11.0 million at June 30, 2026.
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS
Current accounting guidance on fair value measurements includes the application of a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Our financial instruments that are recorded at fair value are categorized into a three-level hierarchy, which is based upon the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (i.e., Level 1) and the lowest priority to unobservable inputs (i.e., Level 3). Financial instruments recorded at fair value are categorized in the fair value hierarchy as follows:
•Level 1: Valuations are based on unadjusted quoted prices for identical financial instruments in active markets that we have the ability to access at the measurement date.
•Level 2: Valuations are based on quoted prices for similar financial instruments in active markets, in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument.
•Level 3: Valuations are based on pricing or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management's own assumptions about the assumptions a market participant would use in pricing the financial instrument.
If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the financial instrument. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. We review our fair value hierarchy categorizations on a quarterly basis at which time the classification of certain financial instruments may change if the input observations have changed. Transfers between levels, if any, are recorded as of the beginning of the reporting period.
When a determination is made to classify an asset or liability within Level 3 of the fair value hierarchy, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. Because certain securities trade in less liquid or illiquid markets with limited or no pricing information, the determination of fair value for these securities is inherently more difficult. In addition to the unobservable inputs, Level 3 fair value investments may include observable components, which are components that are actively quoted or can be validated to market-based sources.
The following tables present the categorization for our financial instruments measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025:
| June 30, 2026 | Fair Value Measurements | |||||||||||||
| Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| Fixed Maturity, Available-for-Sale: | ||||||||||||||
| US Treasury and government agencies | $ | $ | $ | $ | ||||||||||
| States, municipalities and political subdivisions | ||||||||||||||
| Corporate | ||||||||||||||
| Residential mortgage-backed | ||||||||||||||
| Commercial mortgage-backed | ||||||||||||||
| Other asset-backed | ||||||||||||||
| Total Fixed Maturity, Available-for-Sale | $ | $ | $ | $ | ||||||||||
| Money Market Accounts | ||||||||||||||
| Corporate-Owned Life Insurance | ||||||||||||||
| Total Assets Measured at Fair Value | $ | $ | $ | $ | ||||||||||
| December 31, 2025 | Fair Value Measurements | |||||||||||||
| Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| Fixed Maturity, Available-for-Sale: | ||||||||||||||
| US Treasury and government agencies | $ | $ | $ | $ | ||||||||||
| States, municipalities and political subdivisions | ||||||||||||||
| Corporate | ||||||||||||||
| Residential mortgage-backed | ||||||||||||||
| Commercial mortgage-backed | ||||||||||||||
| Other asset-backed | ||||||||||||||
| Total Fixed Maturity, Available-for-Sale | $ | $ | $ | $ | ||||||||||
| Money Market Accounts | ||||||||||||||
| Corporate-Owned Life Insurance | ||||||||||||||
| Total Assets Measured at Fair Value | $ | $ | $ | $ | ||||||||||
The Company receives updated pricing information from a third-party on a monthly basis to determine the fair value for the majority of our investments. The third-party obtains pricing information from independent pricing services and brokers on a monthly basis and validates for reasonableness prior to use for reporting purposes. At least annually, we review the methodologies and assumptions used by our third-party and verify they are reasonable and representative of the fair value of the underlying securities held in the investment portfolio. In our opinion, the pricing information obtained as of June 30, 2026 and December 31, 2025 was reasonable.
We use quoted market prices when available to determine the fair value of fixed maturities and short-term investments. When quoted market prices do not exist, we base estimates of fair value on market information obtained from our third-party. Such inputs may reflect management's own assumptions about the assumptions a market participant would use in pricing the financial instrument. The most appropriate valuation methodology is selected based on the specific characteristics of the fixed maturity or short-term investment and we consistently apply the valuation methodology to measure the security’s fair value.
The fair value of securities categorized as Level 1 is based on quoted market prices that are readily and regularly available.
We use a market-based approach for valuing all of our Level 2 securities via third-party valuation service providers. The service providers use a market approach to find pricing of similar financial instruments. The market inputs our service providers normally use to value our securities include the following: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. The method and inputs for securities classified as Level 2 are the same regardless of industry category, credit quality, duration, geographical concentration or economic characteristics. For our mortgage-backed securities, collateralized mortgage obligations and asset-backed securities, our service providers use additional market inputs to value these securities, including the following: new issue data, periodic payment information, monthly payment information, collateral performance and real estate analysis from third parties. Our service providers prioritize inputs based on market conditions, and not all inputs listed are available for use in the valuation process for each security on any given day.
The fair value of Level 3 securities is determined by unobservable inputs reflecting assumptions market participants would use, including assumptions about risk. There is inherent uncertainty of the fair value measurement of Level 3 securities due to the use of significant unobservable inputs. A change in significant unobservable inputs may result in a significantly higher or lower fair value measurement as of the reporting date.
The Company formed a rabbi trust in 2014 to fund obligations under the United Fire & Casualty Company Supplemental Executive Retirement and Deferral Plan (the "Executive Retirement Plan"). Within the rabbi trust, corporate-owned life insurance ("COLI") policies are utilized as an investment vehicle and source of funding for the Executive Retirement Plan. The COLI policies invest in mutual funds, which are priced daily by independent sources. The cash surrender value of the COLI policies is equal to the fair value measured using Level 2 inputs, based on the underlying assets of the COLI policies, and is included in the "Other assets" line in the Consolidated Balance Sheets.
For the six-month period ended June 30, 2026, the change in our available-for-sale securities categorized as Level 1 and Level 2 was the result of investment purchases, disposals, and the change in unrealized gains.
For the six-month period ended June 30, 2026, we have no Level 3 assets measured at fair value on a recurring basis.
The fair value of financial instruments that are not carried at fair value on a recurring basis in the financial statements at June 30, 2026 and December 31, 2025 are summarized below:
| June 30, 2026 | |||||||||||||||||
| Description | Fair Value Total | Level 1 | Level 2 | Level 3 | Net Asset Value | ||||||||||||
| Financial assets: | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||
Other Long Term Investments(1) | |||||||||||||||||
| Mortgage Loans | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
| Financial Liabilities: | |||||||||||||||||
| Long Term Debt | $ | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
(1) As a member of Lloyd's, the Company participates in the syndicate results which include the fair value of the investments. The fair value of Lloyd's syndicate investments included in "Other long-term investments" was $116.0 million at June 30, 2026. Also included in "Other long-term investments" on the Consolidated Balance Sheets is our interest in limited liability partnerships with a fair value of $103.4 million at June 30, 2026.
| December 31, 2025 | |||||||||||||||||
| Description | Fair Value Total | Level 1 | Level 2 | Level 3 | Net Asset Value | ||||||||||||
| Financial assets: | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||
Other Long Term Investments(1) | |||||||||||||||||
| Mortgage Loans | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
| Financial Liabilities: | |||||||||||||||||
| Long Term Debt | $ | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
(1) As a member of Lloyd's, the Company participates in the syndicate results which include the fair value of the investments. The fair value of Lloyd's syndicate investments included in "Other long-term investments" was $127.9 million at December 31, 2025. Also included in "Other long-term investments" on the Consolidated Balance Sheets is our interest in limited liability partnerships with a fair value of $99.2 million at December 31, 2025.
For cash and cash equivalents, carrying value is a reasonable estimate of fair value due to the short-term nature of these financial instruments.
Our other long-term investments consist primarily of interests in limited liability partnerships that are recorded on the equity method of accounting and investments related to our participation in Lloyd's of London ("Lloyd's") syndicates which are measured at fair value. The fair value of the limited liability partnerships is obtained from the fund managers, which is based on the fair value of the underlying investments held in the limited liability partnerships. The fair value of the Lloyd's syndicate investments is based on the fair value of the investments held for each syndicate and the Company's respective participation percentage. In management's opinion, these values represent a reasonable estimate of fair value. We have not adjusted the net asset value provided by the fund managers or fair value provided by the Lloyd's syndicates.
The fair value of our mortgage loans is determined by modeling performed by our third-party fund manager based on the stated principal and coupon payments provided for in the loan agreements. These cash flows are then discounted using an appropriate risk-adjusted discount rate to determine the security's fair value.
The fair value of our long-term debt is estimated using Level 2 inputs based on quoted prices for similar financial instruments. The fair value is estimated using a discounted cash flow analysis.
NOTE 4. RESERVES FOR LOSSES AND LOSS SETTLEMENT EXPENSES
Property insurance indemnifies an insured with an interest in physical property for loss of, or damage to, such property or the loss of its income-producing abilities. Casualty insurance is primarily concerned with losses caused by injuries to persons and legal liability imposed on the insured for such injury or for damage to property of others. In most cases, casualty insurance also obligates the insurance company to provide a defense for the insured in litigation, arising out of events covered by the policy.
Liabilities for losses and loss settlement expenses reflect management's best estimates at a given point in time of what we expect to pay for claims that have been reported and those that have been incurred but not reported ("IBNR"), based on known facts, circumstances, and historical trends. Because property and casualty insurance reserves are estimates of the unpaid portions of incurred losses that have been reported to us, as well as losses that have been IBNR, the establishment of appropriate reserves, including reserves for catastrophes, is an inherently uncertain and complex process. The ultimate cost of losses and related loss settlement expenses may vary materially from recorded amounts. We regularly update our reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in prior year reserve estimates, which may
be material, are reported as a component of losses and loss settlement expenses incurred in the period such changes are determined.
The determination of reserves (particularly those relating to liability lines of insurance that have relatively longer lag in claim reporting) requires significant estimation to reasonably project expected future claim reporting and payment patterns. If, during the course of our regular monitoring of reserves, we determine that coverages previously written are incurring higher than expected losses, we will evaluate an appropriate response that may include, among other things, increasing the related reserves. Any adjustments we make to reserves are reflected in operating results in the year in which we make those adjustments. In addition to our internal process, we engage a third-party firm to provide an independent and unbiased assessment of our reserves to assist in establishing appropriate reserves.
On a quarterly basis, we perform a detailed review of IBNR reserves. There are two fundamental types or sources of IBNR reserves. We record IBNR reserves for "normal" types of claims and also specific IBNR reserves related to unique circumstances or events. A major hurricane is an example of an event that might necessitate establishing specific IBNR reserves because an analysis of existing historical data would not provide an appropriate estimate.
We do not discount loss reserves based on the time value of money.
The following table provides an analysis of changes in our property and casualty losses and loss settlement expense reserves at June 30, 2026 and December 31, 2025 (net of reinsurance amounts):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Gross liability for losses and loss settlement expenses at beginning of year | $ | $ | |||||||||
| Ceded losses and loss settlement expenses | ( | ( | |||||||||
| Net liability for losses and loss settlement expenses at beginning of year | $ | $ | |||||||||
| Losses and loss settlement expenses incurred for claims occurring during | |||||||||||
| Current year | $ | $ | |||||||||
| Prior years | ( | ( | |||||||||
| Total incurred | $ | $ | |||||||||
| Losses and loss settlement expense payments for claims occurring during | |||||||||||
| Current year | $ | $ | |||||||||
| Prior years | |||||||||||
| Total paid | $ | $ | |||||||||
| Net liability for losses and loss settlement expenses at end of period | $ | $ | |||||||||
| Ceded losses and loss settlement expenses | |||||||||||
| Gross liability for losses and loss settlement expenses at end of period | $ | $ | |||||||||
Generally, we base case reserves for each claim on the estimated ultimate exposure for that claim. However, due to the uncertainty associated with the ultimate claim settlement values and additional claims not yet reported, we believe that it is appropriate and reasonable to establish a best estimate for reserves within a range of reasonable estimates, especially when we are reserving for claims for bodily injury, disabilities and similar claims as settlements and verdicts can vary widely. We believe our approach produces recorded reserves that are consistent as to their relative position within a range of reasonable reserves from year-to-year. However, conditions and trends that affect the reserve development for a given year do change. Therefore, such development cannot be used to project future reserve redundancies or deficiencies.
Our IBNR methodologies and assumptions are reviewed periodically for appropriateness and reasonability. Items reviewed and revised include development factors for paid and reported loss, paid development factors for allocated loss adjustment expense ("LAE"), expected loss and LAE ratios, as well as selected frequency and severity trend factors.
Because of the type of property coverage we write, we have potential exposure to environmental pollution, mold and asbestos claims. Our underwriters are aware of these exposures and use riders or endorsements to limit exposure. We are not aware of any significant contingent liabilities related to environmental issues.
Reserve Development
The Company experienced $5.4 million and $5.6 million of favorable reserve development in net reserves for prior accident years for the three- and six-month periods ended June 30, 2026, respectively. The improvement in reserve development was driven by catastrophe experience with losses emerging more favorable than expected.
NOTE 5. EMPLOYEE BENEFITS
Net Periodic Benefit Cost
The components of the net periodic benefit cost for our pension benefit plan are as follows:
| Three months ended June 30, | 2026 | 2025 | |||||||||||||||||||||
| Net periodic benefit cost | |||||||||||||||||||||||
| Service cost | $ | $ | |||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||||||||
| Amortization of prior service credit | ( | ( | |||||||||||||||||||||
| Net periodic benefit cost | $ | ( | $ | ( | |||||||||||||||||||
| Six months ended June 30, | 2026 | 2025 | |||||||||||||||||||||
| Net periodic benefit cost | |||||||||||||||||||||||
| Service cost | $ | $ | |||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||||||||
| Amortization of prior service credit | ( | ( | |||||||||||||||||||||
| Net periodic benefit cost | $ | ( | $ | ( | |||||||||||||||||||
A portion of the prior service cost component of net periodic pension benefit costs is capitalized and amortized on a straight-line basis as part of deferred acquisition costs and is included in the line "Amortization of deferred policy acquisition costs" within the Consolidated Statements of Income. The portion not related to the compensation and the other components of net periodic pension benefit costs are included in "Other underwriting expenses" within the Consolidated Statements of Income.
We previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 that we are not required to make a contribution to the pension plan during 2026. See our 2025 Annual Report on Form 10-K, Item 8, Note 8 "Employee Benefits" for information on our retirement benefits.
NOTE 6. EARNINGS PER COMMON SHARE
The components of basic and diluted earnings per share were as follows for the three- and six-month periods ended June 30, 2026 and 2025:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (Amounts in thousands, except ratios) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income (loss) | $ | ||||||||||||||||||||||
| Weighted-average common shares outstanding - basic | |||||||||||||||||||||||
| Dilutive effect of restricted stock awards | |||||||||||||||||||||||
| Dilutive effect of stock options | |||||||||||||||||||||||
| Weighted-average common shares outstanding - diluted | |||||||||||||||||||||||
| Earnings (loss) per share available to common shareholders | |||||||||||||||||||||||
| Basic - net | $ | $ | $ | $ | |||||||||||||||||||
| Diluted - net | $ | $ | $ | $ | |||||||||||||||||||
Anti-dilutive shares(1) | |||||||||||||||||||||||
NOTE 7. DEBT
Long Term Debt
The carrying amounts of long term debt are summarized as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
2020 Notes due 2040 | $ | $ | |||||||||
Total | $ | $ | |||||||||
Interest expense on the Company’s outstanding long term debt for the three- and six-month periods ended June 30, 2026 and 2025 was as follows:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
2020 Notes due 2040 | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Amortization of deferred issuance costs are recognized as a component of interest expense.
The Company is required to maintain an investment grade rating for each series of the 9 % UFG Notes from a rating agency. The 9 % UFG Notes also require and impose certain operating restrictions, financial restrictions, and financial covenants on the Company. As of June 30, 2026, we were in compliance with all covenants.
Credit Facilities
NOTE 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables show the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the three-month periods ended June 30, 2026 and 2025:
| Net benefit | Foreign | ||||||||||||||||||||||
| Net unrealized | plan assets | currency | |||||||||||||||||||||
| gain (loss) | and | translation | |||||||||||||||||||||
| on investments | obligations | adjustment | Total | ||||||||||||||||||||
Balance as of March 31, 2026 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
| Change in accumulated other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||
| Reclassification adjustments from accumulated other comprehensive income (loss) | |||||||||||||||||||||||
Balance as of June 30, 2026 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
| Net benefit | Foreign | ||||||||||||||||||||||
| Net unrealized | plan assets | currency | |||||||||||||||||||||
| gain (loss) | and | translation | |||||||||||||||||||||
| on investments | obligations | adjustment | Total | ||||||||||||||||||||
Balance as of March 31, 2025 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
| Change in accumulated other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||
| Reclassification adjustments from accumulated other comprehensive income (loss) | |||||||||||||||||||||||
Balance as of June 30, 2025 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
The following tables show the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the six-month periods ended June 30, 2026 and 2025: | |||||||||||||||||||||||
| Net benefit | Foreign | ||||||||||||||||||||||
| Net unrealized | plan assets | currency | |||||||||||||||||||||
| gain (loss) | and | translation | |||||||||||||||||||||
| on investments | obligations | adjustment | Total | ||||||||||||||||||||
Balance as of December 31, 2025 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
| Change in accumulated other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | |||||||||||||||||||
| Reclassification adjustments from accumulated other comprehensive income (loss) | |||||||||||||||||||||||
Balance as of June 30, 2026 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
| Net benefit | Foreign | ||||||||||||||||||||||
| Net unrealized | plan assets | currency | |||||||||||||||||||||
| gain (loss) | and | translation | |||||||||||||||||||||
| on investments | obligations | adjustment | Total | ||||||||||||||||||||
Balance as of December 31, 2024 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Change in accumulated other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||
| Reclassification adjustments from accumulated other comprehensive income (loss) | |||||||||||||||||||||||
Balance as of June 30, 2025 | $ | ( | $ | $ | $ | ( | |||||||||||||||||
Income tax effects are released from accumulated other comprehensive income (loss) for unrealized gains or losses when the gains or losses are realized.
NOTE 9. LEASE COMMITMENTS
The Company has operating leases consisting of office space, vehicle leases, computer equipment, and office equipment. Lease terms and options in the Company's operating leases vary dependent upon the underlying leased asset. As of June 30, 2026, we have leases with remaining terms of less than five years , some of which may include no options for renewal and others with options to extend the lease terms from six months to five years .
As of June 30, 2026, the Company is the lessor for four lease agreements related to office space and parking. The terms of the leases vary depending on the property, with remaining terms of less than eight years for each lease, which may include options for renewal or to extend the lease terms.
The components of our operating leases were as follows for the three- and six-month periods ended June 30, 2026 and 2025:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Components of lease expense: | ||||||||||||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||||||||||||
| Less: lessor income | ||||||||||||||||||||||||||
| Less: sublease income | ||||||||||||||||||||||||||
| Net lease expense | $ | $ | $ | $ | ||||||||||||||||||||||
| Cash flows related to leases: | ||||||||||||||||||||||||||
| Operating cash outflow from operating leases | $ | $ | $ | $ | ||||||||||||||||||||||
NOTE 10. REINSURANCE
The following table provides a roll-forward of the allowance for credit losses in our reinsurance recoverable balance at June 30, 2026:
Beginning balance, January 1, 2026 | $ | |||||||
| Recoveries of amounts previously written off, if any | ( | |||||||
Ending balance, June 30, 2026 | $ | |||||||
NOTE 11. INCOME TAX
Income tax expense (benefit) is composed of the following:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Current | $ | $ | $ | $ | |||||||||||||||||||
| Deferred | ( | ( | ( | ||||||||||||||||||||
| Income tax expense (benefit) | $ | $ | $ | $ | |||||||||||||||||||
Our effective tax rates for the three- and six-month periods ended June 30, 2026 and 2025 are different than the federal statutory rate of 21 percent, due primarily to the net effect of tax-exempt municipal bond interest income and tax adjustments related to equity-based compensation.
As of June 30, 2026 and 2025, the Company has recorded no
For the six-month periods ended June 30, 2026 and 2025, we made payments for income taxes totaling $13,799 and $19,133 , respectively. For the six-month periods ended June 30, 2026 and 2025, we received a federal tax refund of
$0 and $9,283 , respectively. Interest on the federal tax refund of $1,392 was also received in the second quarter of 2025.
NOTE 12. SEGMENT INFORMATION
The Company operates as one operating segment. The Company's chief operating decision maker ("CODM") is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated net income to assess financial performance and allocate resources. This financial metric is used by the CODM to make key operating decisions, such as determination of which products to market and sell; determination of distribution networks with insurance agents; and allocation of budgets between sales and marketing, technology, and general and administrative expenses. Refer to the Consolidated Financial Statements for financial information regarding the Company's one operating segment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Part I, Item 1 "Financial Statements and Supplementary Data."
CRITICAL ACCOUNTING POLICIES
Critical accounting policies are defined as those that are representative of significant judgments and uncertainties and that may result in materially different results under different assumptions and conditions. We base our discussion and analysis of our consolidated financial condition and results of operations on the amounts reported in our Consolidated Financial Statements, which we have prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). As we prepare these Consolidated Financial Statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Our critical accounting policies are more fully described in our Management's Discussion and Analysis of Financial Condition and Results of Operations presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 26, 2026. There have been no changes in our critical accounting policies from December 31, 2025.
INTRODUCTION
The purpose of this Management's Discussion and Analysis is to provide an understanding of our results of operations and consolidated financial condition. Our Management's Discussion and Analysis should be read in conjunction with our Consolidated Financial Statements and related notes, including those in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025. Our Consolidated Financial Statements are prepared in accordance with GAAP. We also prepare financial statements for each of our insurance company subsidiaries based on statutory accounting principles and file them with insurance regulatory authorities in the states where they do business.
When we provide information on a statutory or other basis, we label it as such, otherwise all other data is presented in accordance with GAAP.
BUSINESS OVERVIEW
Originally founded in 1946 as United Fire & Casualty Company, United Fire Group, Inc. ("UFG," the "Company," "we," "us," or "our") and its consolidated insurance subsidiaries provide insurance protection for individuals and businesses through several regional companies. Our property and casualty insurance company subsidiaries are licensed in 50 states and the District of Columbia and are represented by approximately 850 independent property and casualty agencies, along with contract surety and commercial surety bonds offered through approximately 160 surety agencies.
Reportable Segments
Our property and casualty insurance business operates and reports as one business segment. For more information, refer to Note 12 "Segment Information" in Part I, Item 1.
Products and Lines of Business
Our business consists primarily of commercial lines property and casualty insurance, including surety bonds. Our core commercial products support a wide variety of customers including small business owners and middle market businesses operating in industries such as construction, services, retail trade, financial and manufacturing, along with contract surety and commercial surety bonds offered through approximately 850 independent property and casualty agencies. We also provide specialty and surplus lines coverage written exclusively through wholesale brokers on an admitted and non-admitted basis. The Company also participates as a member of Lloyd's of London syndicates through our insurance subsidiary, McIntyre Cedar Corporate Member LLP. Additionally, the Company offers reinsurance coverage for property and casualty insurance through traditional treaty reinsurance channels. The reinsurance operation supports primarily commercial lines of business but also assumes risk in professional, financial and personal lines of insurance. We also partner with Management General Agents ("MGAs") to offer delegated underwriting programs providing niche products including marine specialty, professional liability and earthquake coverages.
We review and report our results using lines of business. The following table shows the principal types of property and casualty insurance policies we write and issue, and in which lines of business they are reported:
| Direct Writer | Treaty Reinsurance(1) | Lloyd's of London | MGAs | |||||||||||
| Commercial Lines | ||||||||||||||
| Other Liability | x | P | x | |||||||||||
| Fire and allied lines | x | P | x | |||||||||||
| Automobile | x | P | ||||||||||||
| Workers' compensation | x | P | ||||||||||||
Surety(2) | x | P | ||||||||||||
| Miscellaneous | x | x | ||||||||||||
| Personal Lines | ||||||||||||||
| Fire and allied lines | P | |||||||||||||
| Automobile | P | |||||||||||||
| Miscellaneous | P | |||||||||||||
| Reinsurance Assumed | NP | x | ||||||||||||
(1) Treaty Reinsurance is split between proportional reinsurance (P) and non-proportional reinsurance (NP).
(2) Commercial lines "Surety" previously referred to as "Fidelity and surety."
Commercial other liability - primarily business insurance covering bodily injury and property damage including construction defect, excess and surplus lines excess casualty, and standard umbrella. Proportional assumed reinsurance on these lines and professional liability coverage managed by an MGA partner.
Commercial fire and allied lines - primarily multi-peril non-liability property coverage and inland marine. Proportional assumed reinsurance on these lines and earthquake coverage managed by an MGA partner.
Commercial automobile - physical damage to an insured's vehicle, as well as liabilities to third parties. Automobile physical damage insurance covers loss or damage to vehicles from collision, vandalism, fire, theft, flood or other causes. Automobile liability insurance covers bodily injury, damage to property resulting from automobile accidents caused by the insured, uninsured or under-insured motorists and the legal costs of defending the insured against lawsuits. Proportional reinsurance on these lines is also included.
Workers' compensation - business coverage for employees who are injured or become ill as a result of their job, including proportional assumed reinsurance for this coverage. Our workers' compensation insurance covers primarily small- to mid-sized accounts.
Surety - contract and commercial surety bond coverage which guarantees performance and payment by our bonded principals, protects owners from failure to perform on the part of our principals, and protects material suppliers and subcontractors from nonpayment by our contractors. Proportional reinsurance on these lines is also included.
Commercial miscellaneous - commercial theft coverage, boiler and machinery and ocean marine business managed by an MGA partner.
Personal fire and allied lines - proportional assumed reinsurance for homeowners multi-peril coverage.
Reinsurance assumed - primarily non-proportional assumed reinsurance and Funds at Lloyd's property and casualty syndicates.
Lloyd's of London ("Lloyds") Syndicates
The Company is a member of Lloyd's through its insurance subsidiary, McIntyre Cedar Corporate Member LLP. Lloyd's operates as an insurance marketplace whereby members join syndicates to underwrite property and casualty and reinsurance business through a managing agent in return for receiving premiums. The Company participates in 14 syndicates as of June 30, 2026. The Company is required to maintain capital at Lloyd's, referred to as Funds at Lloyd's ("FAL"), to support participation in these syndicates.
Pooling Arrangement
All of our property and casualty insurance subsidiaries belong to an intercompany reinsurance pooling arrangement. Pooling arrangements permit the participating companies to rely on the capacity of the entire pool's capital and surplus, rather than being limited to policy exposures of a size commensurate with each participant's own surplus level. Under such arrangements, the members share substantially all of the insurance business that is written and allocate the combined premiums, losses and expenses based on percentages defined in the arrangement.
Geographic Concentration
For the six-month period ended June 30, 2026, approximately 50 percent of our property and casualty premiums were written in Texas, California, New Jersey, Iowa, and Missouri.
NON-GAAP FINANCIAL MEASURES
We evaluate profit or loss based upon operating and investment results. Profit or loss described in the following sections of this Management's Discussion and Analysis is reported on a pre-tax basis. Our primary sources of revenue are premiums and investment income. Major categories of expenses include losses and loss settlement expenses, underwriting and other operating expenses. Management uses metrics to provide financial statement users with a better understanding of results of operations, including adjusted operating income and three components of the loss ratio: underlying loss ratio, impacts of catastrophes and non-catastrophe prior period reserve development.
Adjusted operating income is calculated by excluding net investment gains and losses, after applicable federal and state income taxes from net income (loss). Management believes adjusted operating income 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 in and report on the insurance industry and the Company generally focus on this metric in their analyses.
Underlying loss ratio represents the net loss ratio less the impacts of catastrophes and non-catastrophe prior period reserve development. The underlying combined ratio represents the combined ratio less the impacts of catastrophes and non-catastrophe prior period reserve development. The Company believes that the underlying loss ratio and underlying combined ratio are meaningful measures to understand the underlying trends in the core business in the current accident year, removing the volatility of catastrophes and prior period impacts. Management believes separate discussions on catastrophe losses and prior period reserve development are important to understanding how the Company is managing catastrophe risk and in identifying reserve developments in longer-tailed business.
Catastrophe losses is an operational measure that utilizes the designations of the Insurance Services Office ("ISO") and is reported with losses and loss adjustment expense amounts net of reinsurance recoverables, unless specified otherwise. In addition to ISO catastrophes, we also include as catastrophes those events which may include U.S. or international losses, that we believe are, or will be, material to our operations, either in amount or in number of claims made. Catastrophes are not predictable and are unique in terms of timing and financial impact. While management estimates catastrophe losses as incurred, due to the inherently unique nature of catastrophe losses, the impact in a reporting period is inclusive of catastrophes that occurred in the reporting period, as well as development on catastrophes that may have occurred in prior periods.
Prior period reserve development is the increase (unfavorable) or decrease (favorable) in incurred loss and loss adjustment expense reserves at the valuation dates for losses which occurred in previous calendar years. This measure excludes reserve development on catastrophe losses.
RESULTS OF OPERATIONS
The following table includes the consolidated results of our operations for the three- and six-month periods ended June 30, 2026 and 2025, with more detailed components and discussion in the sections that follow. Discussions of the components of net income are presented on a pre-tax basis, unless otherwise noted.
FINANCIAL HIGHLIGHTS
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| (In thousands, except ratios) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Net earned premium | $ | 354,127 | $ | 314,802 | $ | 697,102 | $ | 623,213 | |||||||||||||||||||||||||||
| Net investment income | 28,928 | 21,673 | 55,968 | 45,131 | |||||||||||||||||||||||||||||||
| Net investment gains (losses) | (428) | (1,002) | (682) | (1,756) | |||||||||||||||||||||||||||||||
| Other income (loss) | 1,099 | — | 780 | — | |||||||||||||||||||||||||||||||
| Total revenues | $ | 383,726 | $ | 335,473 | $ | 753,168 | $ | 666,588 | |||||||||||||||||||||||||||
| Benefits, Losses and Expenses | |||||||||||||||||||||||||||||||||||
| Losses and loss settlement expenses | $ | 212,274 | $ | 193,732 | $ | 420,399 | $ | 383,428 | |||||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 84,041 | 74,413 | 166,082 | 151,767 | |||||||||||||||||||||||||||||||
| Other underwriting expenses | 41,158 | 35,307 | 78,725 | 74,893 | |||||||||||||||||||||||||||||||
| Interest expense | 3,186 | 2,484 | 6,369 | 4,967 | |||||||||||||||||||||||||||||||
| Other non-underwriting expenses | 1,123 | 335 | 1,637 | 477 | |||||||||||||||||||||||||||||||
| Total benefits, losses and expenses | $ | 341,782 | $ | 306,271 | $ | 673,212 | $ | 615,532 | |||||||||||||||||||||||||||
| Income (loss) before income taxes | $ | 41,944 | $ | 29,202 | $ | 79,956 | $ | 51,056 | |||||||||||||||||||||||||||
| Income tax expense (benefit) | 8,579 | 6,255 | 16,539 | 10,409 | |||||||||||||||||||||||||||||||
| Net income (loss) | $ | 33,365 | $ | 22,947 | $ | 63,417 | $ | 40,647 | |||||||||||||||||||||||||||
| Combined ratio: | |||||||||||||||||||||||||||||||||||
| Net loss ratio | 59.9 | % | 61.5 | % | 60.3 | % | 61.5 | % | |||||||||||||||||||||||||||
| Underwriting expense ratio | 35.4 | 34.9 | 35.1 | 36.4 | |||||||||||||||||||||||||||||||
| Combined ratio | 95.3 | % | 96.4 | % | 95.4 | % | 97.9 | % | |||||||||||||||||||||||||||
Additional ratios(1): | |||||||||||||||||||||||||||||||||||
| Net loss ratio | 59.9 | % | 61.5 | % | 60.3 | % | 61.5 | % | |||||||||||||||||||||||||||
| Catastrophes | 2.7 | 5.5 | 3.2 | 5.3 | |||||||||||||||||||||||||||||||
| Reserve development (favorable) unfavorable | — | (1.6) | — | (0.8) | |||||||||||||||||||||||||||||||
Underlying loss ratio (non-GAAP) | 57.2 | % | 57.6 | % | 57.1 | % | 57.0 | % | |||||||||||||||||||||||||||
| Underwriting expense ratio | 35.4 | 34.9 | 35.1 | 36.4 | |||||||||||||||||||||||||||||||
| Underlying combined ratio (non-GAAP) | 92.6 | % | 92.5 | % | 92.2 | % | 93.4 | % | |||||||||||||||||||||||||||
(1) Underlying loss ratio and underlying combined ratio are non-GAAP financial measures. See "Non-GAAP Financial Measures" in Part I, Item 2 for additional information.
Net Written Premium
Net written premium is the amount charged for insurance policy contracts issued and recognized on an annualized basis at the effective date of the policy. Net written premium is frequently used by industry analysts and other recognized reporting sources to facilitate comparisons of the performance of insurance companies. Management believes net written premium is a meaningful measure for evaluating insurance company sales performance and geographical expansion efforts. Net written premium for an insurance company consists of direct written premium and assumed premiums, less ceded premiums. The following shows our written premium for the three- and six-month periods ended June 30, 2026 and 2025.
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| (In thousands, except ratios) | 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||
| Direct written premium | $ | 390,812 | $ | 362,103 | 7.9 | % | $ | 741,571 | $ | 694,030 | 6.8 | % | |||||||||||||||||||||||
| Assumed written premium | 55,756 | 49,887 | 11.8 | 115,593 | 103,877 | 11.3 | |||||||||||||||||||||||||||||
| Ceded written premium | (40,210) | (39,106) | 2.8 | (73,879) | (89,647) | (17.6) | |||||||||||||||||||||||||||||
| Net written premium | $ | 406,358 | $ | 372,884 | 9.0 | % | $ | 783,285 | $ | 708,260 | 10.6 | % | |||||||||||||||||||||||
Net written premium increased by 9.0% and 10.6% in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. For the three-month period ended June 30, 2026, core commercial average renewal premiums increased 4.6% with rates increasing 2.9% and exposure changes of 1.7%. Excluding the workers' compensation line of business, the overall average increase in renewal premiums was 5.0%, with 3.5% from rate increases and 1.5% from exposure changes.
Revenues
Net Earned Premium
Net earned premium is calculated on a pro-rata basis over the terms of the respective policies. Unearned premium reserves are established for the portion of written premium applicable to the unexpired terms of the insurance policies in force. The difference between net earned premium and net written premium is the change in unearned premium and the change in prepaid reinsurance premiums. Direct earned premium is recognized ratably over the life of a policy and differs from direct written premium, which is recognized on the effective date of the policy. The following shows our earned premium for the three- and six-month periods ended June 30, 2026 and 2025.
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| (In thousands, except ratios) | 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||
| Direct earned premium | $ | 335,193 | $ | 312,204 | 7.4 | % | 662,076 | 612,781 | 8.0 | % | |||||||||||||||||||||||||
| Assumed earned premium | 55,582 | 46,747 | 18.9 | 107,221 | 104,257 | 2.8 | |||||||||||||||||||||||||||||
| Ceded earned premium | (36,648) | (44,149) | (17.0) | (72,195) | (93,825) | (23.1) | |||||||||||||||||||||||||||||
| Net earned premium | $ | 354,127 | $ | 314,802 | 12.5 | % | $ | 697,102 | $ | 623,213 | 11.9 | % | |||||||||||||||||||||||
Net earned premium increased by 12.5% and 11.9% in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. This increase in net earned premium was consistent with the trend in net written premium.
Net Investment Income
Net investment income was $28.9 million for the three-month period ended June 30, 2026, an increase of $7.3 million compared to the same period in 2025. The increase was primarily from our fixed income portfolio increase of $5.0 million as a result of portfolio growth and reinvestment at higher yields. The pre-tax average yield on fixed income securities was 4.57% as of June 30, 2026 compared to 4.32% for the same period in 2025. Income on other long-term investments increased $2.2 million due to an increase in valuation of the underlying investments.
Net investment income was $56.0 million for the six-month period ended June 30, 2026, an increase of $10.8 million compared to the same period in 2025. The increase was primarily from our fixed income portfolio increase of $8.8 million as a result of portfolio growth and reinvestment at higher yields. The pre-tax average yield on fixed income securities was 4.50% as of June 30, 2026 compared to 4.32% for the same period in 2025. Income on other long-term investments increased $1.7 million due to an increase in valuation of the underlying investments.
Refer to Note 2 "Investments" in Part I, Item 1 for more information on net investment income.
Net Investment Gains (Losses)
Net investment losses were $0.4 million and $0.7 million for the three- and six-month periods ended June 30, 2026, respectively, as compared to net investment losses of $1.0 million and $1.8 million for the same periods in 2025. The primary reason for the change relates to opportunistic trading within the fixed maturity portfolio.
Refer to Note 2 "Investments" in Part I, Item 1 for more information on net investment gains and losses.
Benefits, Losses and Expenses
Losses and Loss Settlement Expenses
The following is a summary of losses and loss settlement expenses for the three- and six-month periods ended June 30, 2026 and 2025:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In Thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Loss and loss settlement expenses, excluding catastrophes and prior year reserve development | $ | 202,675 | $ | 181,349 | $ | 398,141 | $ | 355,673 | |||||||||||||||
| Impact of catastrophes, including prior year reserve development | 9,599 | 17,424 | 22,258 | 32,845 | |||||||||||||||||||
| Prior year (favorable) unfavorable reserve development on non-catastrophe losses | — | (5,041) | — | (5,090) | |||||||||||||||||||
| Loss and loss settlement expenses | $ | 212,274 | $ | 193,732 | $ | 420,399 | $ | 383,428 | |||||||||||||||
| Net loss ratio | 59.9 | % | 61.5 | % | 60.3 | % | 61.5 | % | |||||||||||||||
For the three-month period ended June 30, 2026, our loss and loss settlement expenses were $18.5 million, or 9.6%, higher than the same period in 2025, and our net loss ratio improved 1.6 points compared to the same period in 2025. This loss ratio improvement was driven by improvements in the underlying loss ratio and catastrophe ratio, partially offset by neutral prior year reserve development in 2026 as compared to favorable reserve development in 2025. The underlying loss ratio and catastrophe loss ratio improvements were driven by improvements in the core commercial lines.
The Company experienced neutral prior year reserve development, excluding catastrophe losses, during the three- and six-month periods ended June 30, 2026.
In the three- and six-month periods ended June 30, 2026, our pre-tax catastrophe losses decreased by $7.8 million and $10.6 million, respectively, compared to the same periods in 2025. Catastrophe losses in the three- and six-month periods ended June 30, 2026 added 2.7 and 3.2 points to the combined ratio, respectively, which is below our five-year and 10-year historical averages. Our catastrophe losses included 20 new events in the three-month period ended June 30, 2026.
Amortization of Deferred Policy Acquisition Costs ("DAC")
The following is a summary of the components of DAC, including amortization:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In Thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Deferred policy acquisition costs asset, beginning of period | $ | 162,728 | $ | 151,850 | $ | 158,184 | $ | 147,224 | |||||||||||||||
| Underwriting costs deferred | 97,121 | 83,900 | 183,922 | 165,402 | |||||||||||||||||||
Amortization of deferred policy acquisition costs(1) | (83,960) | (73,775) | (166,217) | (150,516) | |||||||||||||||||||
| Deferred policy acquisition costs asset, end of period | $ | 175,889 | $ | 161,976 | $ | 175,889 | $ | 161,976 | |||||||||||||||
(1) Amortization of deferred policy acquisition costs includes impact of changes in foreign currency exchange rates on the Lloyd's of London business, which is included as a component of accumulated other comprehensive income (loss).
DAC is amortized over the period the related premiums are earned. Amortization expense increased for the three- and six-month periods ended June 30, 2026, primarily reflecting an increase in deferred underwriting costs associated with continued premium expansion.
Net Loss Ratios by Line
The following tables display our net loss ratio for the three- and six-month periods ended June 30, 2026 and 2025:
| Three months ended June 30, | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| (In thousands, except ratios) | Net Earned Premium | Net Losses and Loss Settlement Expenses Incurred | Net Loss Ratio | Net Earned Premium | Net Losses and Loss Settlement Expenses Incurred | Net Loss Ratio | |||||||||||||||||||||||||||||
| Commercial lines | |||||||||||||||||||||||||||||||||||
| Other liability | $ | 115,318 | $ | 75,756 | 65.7 | % | $ | 93,118 | $ | 73,305 | 78.7 | % | |||||||||||||||||||||||
| Fire and allied lines | 64,744 | 27,340 | 42.2 | 66,522 | 33,043 | 49.7 | |||||||||||||||||||||||||||||
| Automobile | 77,967 | 51,076 | 65.5 | 69,147 | 40,024 | 57.9 | |||||||||||||||||||||||||||||
| Workers' compensation | 21,918 | 15,590 | 71.1 | 15,259 | 8,555 | 56.1 | |||||||||||||||||||||||||||||
Surety(2) | 15,855 | 6,205 | 39.1 | 15,464 | 5,575 | 36.1 | |||||||||||||||||||||||||||||
| Miscellaneous | 234 | 260 | 111.1 | 2,975 | 2,032 | 68.3 | |||||||||||||||||||||||||||||
| Total commercial lines | $ | 296,036 | $ | 176,227 | 59.5 | % | $ | 262,485 | $ | 162,534 | 61.9 | % | |||||||||||||||||||||||
| Personal lines | |||||||||||||||||||||||||||||||||||
| Fire and allied lines | $ | 5,932 | $ | 2,229 | 37.6 | % | $ | 3,405 | $ | 1,134 | 33.3 | % | |||||||||||||||||||||||
| Automobile | (1) | (379) | NM | 362 | 232 | 64.1 | |||||||||||||||||||||||||||||
| Miscellaneous | — | 1 | NM | 1 | (8) | NM | |||||||||||||||||||||||||||||
| Total personal lines | $ | 5,931 | $ | 1,851 | 31.2 | % | $ | 3,768 | $ | 1,358 | 36.0 | % | |||||||||||||||||||||||
Reinsurance assumed(1) | $ | 52,160 | $ | 34,196 | 65.6 | % | $ | 48,549 | $ | 29,840 | 61.5 | % | |||||||||||||||||||||||
| Total | $ | 354,127 | $ | 212,274 | 59.9 | % | $ | 314,802 | $ | 193,732 | 61.5 | % | |||||||||||||||||||||||
NM = Not meaningful
(1) Reinsurance assumed includes Lloyd's of London.
(2) Commercial lines "Surety" previously referred to as "Fidelity and surety."
| Six months ended June 30, | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| (In thousands, except ratios) | Net Earned Premium | Net Losses and Loss Settlement Expenses Incurred | Net Loss Ratio | Net Earned Premium | Net Losses and Loss Settlement Expenses Incurred | Net Loss Ratio | |||||||||||||||||||||||||||||
| Commercial lines | |||||||||||||||||||||||||||||||||||
| Other liability | $ | 222,657 | $ | 141,213 | 63.4 | % | $ | 182,257 | $ | 133,548 | 73.3 | % | |||||||||||||||||||||||
| Fire and allied lines | 129,483 | 62,120 | 48.0 | 128,942 | 65,063 | 50.5 | |||||||||||||||||||||||||||||
| Automobile | 155,359 | 96,947 | 62.4 | 133,502 | 82,825 | 62.0 | |||||||||||||||||||||||||||||
| Workers' compensation | 41,595 | 29,417 | 70.7 | 29,416 | 18,312 | 62.3 | |||||||||||||||||||||||||||||
Surety(2) | 31,392 | 13,086 | 41.7 | 31,195 | 9,950 | 31.9 | |||||||||||||||||||||||||||||
| Miscellaneous | 1,054 | 920 | 87.3 | 6,395 | 4,092 | 64.0 | |||||||||||||||||||||||||||||
| Total commercial lines | $ | 581,540 | $ | 343,703 | 59.1 | % | $ | 511,707 | $ | 313,790 | 61.3 | % | |||||||||||||||||||||||
| Personal lines | |||||||||||||||||||||||||||||||||||
| Fire and allied lines | $ | 11,620 | $ | 5,149 | 44.3 | % | $ | 4,665 | $ | 1,903 | 40.8 | % | |||||||||||||||||||||||
| Automobile | (1) | (534) | NM | 1,158 | 740 | 63.9 | |||||||||||||||||||||||||||||
| Miscellaneous | — | 7 | NM | 2 | (41) | NM | |||||||||||||||||||||||||||||
| Total personal lines | $ | 11,619 | $ | 4,622 | 39.8 | % | $ | 5,825 | $ | 2,602 | 44.7 | % | |||||||||||||||||||||||
Reinsurance assumed(1) | $ | 103,943 | $ | 72,074 | 69.3 | % | $ | 105,681 | $ | 67,036 | 63.4 | % | |||||||||||||||||||||||
| Total | $ | 697,102 | $ | 420,399 | 60.3 | % | $ | 623,213 | $ | 383,428 | 61.5 | % | |||||||||||||||||||||||
NM = Not meaningful
(1) Reinsurance assumed includes Lloyd's of London.
(2) Commercial lines "Surety" previously referred to as "Fidelity and surety."
Commercial Lines
The net loss ratio in our commercial lines of business was 59.5% for the three-month period ended June 30, 2026, compared to 61.9% for the same period in 2025. This result was driven by improvement in the underlying loss ratio and favorable catastrophe experience, partially offset by less favorable prior year reserve development in 2026 compared to 2025.
Commercial Other Liability
We write numerous types of risk that are exposed to liability losses in our direct and assumed books of business. This includes, but is not limited to, bodily injury, property damage, standard umbrella, excess liability, and product liability (including construction defect).
The net loss ratio improved 13.0 and 9.9 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. The result was driven by less unfavorable prior year reserve development and an improvement in the underlying loss ratio in 2026 compared to 2025.
Commercial Fire and Allied Lines
The net loss ratio improved 7.5 and 2.5 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. The result was driven by a lower catastrophe ratio and improvement in the underlying loss ratio, partially offset by less favorable prior year reserve development in 2026 compared to 2025.
Commercial Automobile
The net loss ratio deteriorated 7.6 and 0.4 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. The result was driven by less favorable prior year reserve development and a higher catastrophe ratio, partially offset by an improved underlying loss ratio in 2026 compared to 2025.
Workers' Compensation
The net loss ratio deteriorated 15.0 and 8.4 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. The result was driven by less favorable prior year reserve development in 2026 compared to 2025, partially offset by a favorable underlying loss ratio.
Surety
The net loss ratio deteriorated 3.0 and 9.8 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. When surety losses occur, our loss is determined by estimating the cost to complete the remaining work and to pay the contractor's unpaid bills, offset by contract funds due to the contractor, reinsurance, and the value of any collateral to which we may have access. The change in loss ratio was driven by adverse prior year reserve development in 2026 compared to favorable prior year reserve development in 2025. The net deterioration in 2026 was driven by ceded development on large losses from accident year 2023. This was partially offset by improvement in the underlying loss ratio in 2026 compared to 2025.
Reinsurance Assumed
The net loss ratio deteriorated 4.1 and 5.9 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. The result was driven overall by higher pricing ratios on several accounts, changes in mix within the assumed book, and adverse prior period development compared to 2025. This was partially offset by improvement in the catastrophe loss ratio in 2026 compared to 2025.
Underwriting Expenses
The following is a summary of underwriting expenses, including the underwriting expense ratio:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In thousands, except ratios) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | $ | 84,041 | $ | 74,413 | $ | 166,082 | $ | 151,767 | |||||||||||||||
| Other underwriting expenses | 41,158 | 35,307 | 78,725 | 74,893 | |||||||||||||||||||
| Underwriting expenses | $ | 125,199 | $ | 109,720 | $ | 244,807 | $ | 226,660 | |||||||||||||||
| Net earned premium | $ | 354,127 | $ | 314,802 | $ | 697,102 | $ | 623,213 | |||||||||||||||
Expense ratio(1) | 35.4 | % | 34.9 | % | 35.1 | % | 36.4 | % | |||||||||||||||
(1) Expense ratio is calculated by dividing non-deferred underwriting expenses and amortization of deferred policy acquisition costs by net earned premium. The expense ratio measures a company's operational efficiency in producing, underwriting and administering its insurance business.
The expense ratio increased 0.5 points and decreased 1.3 points in the three- and six-month periods ended June 30, 2026, respectively, as compared to the same periods in 2025. The increase in expense ratio in the second quarter of 2026 was partially driven by actions to reduce our real estate footprint and future expense ratio along with other normal variability. The decrease in the six-month period ended June 30, 2026 was driven by business growth and non-recurring expenses in the prior period associated with the final stages of development of a new policy administration system.
Interest Expenses
The following is a summary of interest expense:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In Thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Interest expense | $ | 3,186 | $ | 2,484 | $ | 6,369 | $ | 4,967 | |||||||||||||||
Our long term debt obligations include $50.0 million of private placement notes issued in December 2020 and $70.0 million and $30.0 million of senior unsecured notes issued in May 2024 and July 2025, respectively. Interest expense increased for the three- and six-month periods ended June 30, 2026 due to the issuance of the senior unsecured notes. Refer to Note 7 "Debt" in Part I, Item 1 for more information on our long term debt.
Income Taxes
The following is a summary of income tax expense (benefit), including the effective tax rate:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In thousands, except ratios) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Income (loss) before income taxes | $ | 41,944 | $ | 29,202 | $ | 79,956 | $ | 51,056 | |||||||||||||||
| Income tax expense (benefit) | 8,579 | 6,255 | 16,539 | 10,409 | |||||||||||||||||||
Effective tax rate(1) | 20.5 | % | 21.4 | % | 20.7 | % | 20.4 | % | |||||||||||||||
(1)The effective tax rate is calculated by dividing "Income tax expense (benefit)" by "Income (loss) before income taxes."
The Company's effective tax rate for the three- and six-month periods ended June 30, 2026 and 2025 is different than the federal statutory rate of 21 percent, due primarily to the net effect of tax-exempt municipal bond interest income and tax adjustments related to equity-based compensation.
Refer to Note 11 "Income Tax" in Part I, Item 1 for more information on the Company's income taxes.
Adjusted Operating Income (See "Non-GAAP Financial Measures")
The table below shows the adjustments made to reconcile Net income (loss) to Adjusted operating income (loss):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In Thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income (loss) | $ | 33,365 | $ | 22,947 | $ | 63,417 | $ | 40,647 | |||||||||||||||
| Less: Net investment gains (losses), after-tax | (338) | (792) | (539) | (1,387) | |||||||||||||||||||
| Adjusted operating income (loss) | $ | 33,703 | $ | 23,739 | $ | 63,956 | $ | 42,034 | |||||||||||||||
Adjusted operating income increased in the three-month period ended June 30, 2026, primarily due to an increase in net earned premium of $39.3 million, combined with the catastrophe loss ratio improvement of 2.8 points and an underlying loss ratio improvement of 0.4 points. This was partially offset by an increase in the underwriting expense ratio of 0.5 points and less favorable prior year reserve development. In addition, net investment income increased by $7.3 million, driven by portfolio growth and reinvestment at higher yields.
Adjusted operating income increased in the six-month period ended June 30, 2026, primarily due to an increase in net earned premium of $73.9 million, combined with the catastrophe loss ratio improvement of 2.1 points and the underwriting expense ratio improvement of 1.3 points. This was partially offset by less favorable prior year reserve development. In addition, net investment income increased by $10.8 million, driven by portfolio growth and reinvestment at higher yields.
INVESTMENTS
Investment Philosophy
The Company's assets are invested to preserve capital and maximize total return while maintaining an appropriate balance of risk. The risk-adjusted return on our portfolio is an important component of overall financial results, but quality and safety of principal is the highest priority of our investment program. We administer our investment portfolio based on investment guidelines approved by management and the Investment Committee of our Board of Directors that comply with applicable statutory regulations. The portfolio is structured to be compliant with state
insurance laws that prescribe the quality, concentration and type of investments that may be made by insurance companies.
We monitor our portfolio to appropriately manage risk, achieve portfolio objectives and maximize investment income as market conditions change. Our overall investment strategy is to stay fully invested (i.e., minimize cash balances). If additional cash is needed, we have the ability to take advances through the Federal Home Loan Bank of Des Moines ("FHLB Des Moines") facility. The Company entered into an investment management agreement with New England Asset Management ("NEAM") effective as of February 1, 2024, pursuant to which NEAM will provide investment management services.
Investment Portfolio
Our invested assets increased to $2.53 billion at June 30, 2026 from $2.46 billion at December 31, 2025. We utilize a conservative investment philosophy, investing in a diversified portfolio of high-quality, intermediate-term taxable corporate bonds, taxable U.S. government and government agency bonds and tax-exempt U.S. municipal bonds. The composition of our investment portfolio at June 30, 2026 is presented at carrying value in the following table:
| Carrying | Percent | ||||||||||
| (In thousands, except ratios) | Value | of Total | |||||||||
Fixed maturities, available-for-sale(1) | |||||||||||
| US Treasury and government agencies | $ | 93,506 | 3.7 | % | |||||||
| States, municipalities, and political subdivisions | 172,377 | 6.8 | |||||||||
| Corporate | 814,640 | 32.2 | |||||||||
| Residential mortgage-backed | 770,500 | 30.4 | |||||||||
| Commercial mortgage-backed | 170,300 | 6.7 | |||||||||
| Other asset-backed | 262,196 | 10.3 | |||||||||
| Total Fixed maturities, available for sale | 2,283,519 | 90.1 | |||||||||
| Mortgage loans | 30,522 | 1.2 | |||||||||
Other long-term investments(2) | 220,933 | 8.7 | |||||||||
| Total | $ | 2,534,974 | 100.0 | % | |||||||
(1) Available-for-sale securities with fixed maturities are carried at fair value.
(2) As a member of Lloyd's, the Company participates in the syndicate results which include the fair value of the investments. The fair value of Lloyd's syndicate investments included in "Other long-term investments" on the Consolidated Balance Sheets was $116.0 million at June 30, 2026. Also included in "Other long-term investments" is our interest in limited liability partnerships with a current fair value of $103.4 million at June 30, 2026.
Credit Quality
The following table shows the composition of fixed maturity securities by credit rating at June 30, 2026 and December 31, 2025. Information contained in the table is generally based upon the issued credit ratings provided by external rating agencies.
| (In thousands, except ratios) | June 30, 2026 | December 31, 2025 | |||||||||||||||||||||
| Rating | Carrying Value | % of Total | Carrying Value | % of Total | |||||||||||||||||||
| AAA | $ | 606,578 | 26.6 | % | $ | 574,379 | 26.0 | % | |||||||||||||||
| AA | 871,110 | 38.1 | 894,246 | 40.6 | |||||||||||||||||||
| A | 543,395 | 23.8 | 481,633 | 21.8 | |||||||||||||||||||
| Baa/BBB | 206,090 | 9.0 | 207,649 | 9.4 | |||||||||||||||||||
| Other/Not Rated | 56,346 | 2.5 | 47,443 | 2.2 | |||||||||||||||||||
| $ | 2,283,519 | 100.0 | % | $ | 2,205,350 | 100.0 | % | ||||||||||||||||
As of June 30, 2026 and December 31, 2025, we did not have direct exposure to investments in subprime mortgages or other credit enhancement vehicles.
Duration
Our investment portfolio is invested primarily in fixed maturity securities whose fair value is susceptible to market risk, specifically interest rate changes. Duration is a measurement used to quantify our inherent interest rate risk and analyze our ability to match our invested assets to our reserve liabilities. Invested assets and reserve liability accounts with similar durations will have an offsetting effect of any change in interest rates. The primary purpose for matching invested assets and reserve liabilities is liquidity, and with appropriate matching, our investments will mature when cash is needed, preventing the need to liquidate other assets prematurely. Mismatches in the duration of assets and liabilities can cause significant fluctuations in our results of operations.
We analyze potential changes in the value of our investment portfolio due to the market risk factors noted above within the overall context of asset and liability management. A technique we use in the management of our investment portfolio specifically related to interest rate risk is the calculation of duration. Our actuaries estimate the payout pattern of our reserve liabilities to determine their duration, which is the present value of the weighted average payments expressed in years. We then establish a target duration for our investment portfolio so that at any given time the estimated cash generated by the investment portfolio will closely match the estimated cash required for the payment of the related reserves. We structure the investment portfolio to meet the target duration to achieve the required cash flow, based on liquidity and market risk factors.
The weighted average effective duration of our portfolio of fixed maturity securities was 4.2 years at June 30, 2026 compared to 4.3 years at December 31, 2025. Refer to Note 2 "Investments" in Part I, Item 1 for more information on maturities.
Unrealized Investment Gains and Losses
As of June 30, 2026, net unrealized investment losses, after tax, totaled $43.7 million compared to net unrealized losses, after tax, of $25.3 million as of December 31, 2025. The net unrealized investment loss position deteriorated from December 31, 2025 due to the increase in bond market interest rates during the six-month period ended June 30, 2026.
Refer to Note 2 "Investments" in Part I, Item 1 for more information on net unrealized gains and losses.
Allowance for Credit Losses and Watch List
We prepare a watch list with securities identified to evaluate for the potential of credit loss. Factors used in preparing the watch list include fair values relative to amortized cost, ratings, negative ratings actions and other factors. Detailed analysis is performed for each security on the watch list to further assess the presence of credit impairment loss indicators and, where present, calculate an allowance for credit losses or direct write-down of a security’s amortized cost.
At June 30, 2026, our fixed maturity watch list included four fixed maturity securities in an unrealized loss position with an amortized cost of $12.1 million, no allowance for credit losses, unrealized losses of $0.6 million and a fair value of $11.5 million.
At June 30, 2026, our mortgage loan watch list included one commercial mortgage loan with a carrying value of $4.0 million. We have an allowance for future credit loss allowances of $0.3 million on our mortgage loan portfolio.
Refer to Note 2 "Investments" in Part I, Item 1 for more information on our investments.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity measures our ability to generate sufficient cash flows to meet our short-term and long-term cash obligations. Our cash inflows are primarily a result of the receipt of premiums, reinsurance recoveries, sales or maturities of investments, and investment income. Cash provided from these sources is used to fund the payment of losses and loss settlement expenses, the purchase of investments, operating expenses, dividends, and common stock repurchases. When considering our liquidity and cash flow, it is important to distinguish between the needs of our insurance subsidiaries and the needs of the holding company, United Fire Group, Inc. As a holding company with no operations of its own, United Fire Group, Inc. derives its cash primarily from its insurance subsidiaries.
The sources of liquidity of the holding company are principally comprised of dividends from subsidiaries, existing surplus notes, investment income on holding company assets and the ability to raise long-term public financing under an SEC-filed registration statement or private placement offering. These sources of liquidity and cash flow support the general corporate needs of the holding company, interest and debt service, and investment in core businesses.
We monitor our capital adequacy to support our business on a regular basis. The future capital requirements of our business will depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover losses. Our ability to underwrite is largely dependent upon the quality of our claims paying and financial strength ratings as evaluated by independent rating agencies. In particular, we require (1) sufficient capital to maintain our financial strength ratings, as issued by various rating agencies, at a level considered necessary by management to enable our insurance company subsidiaries to compete and (2) sufficient capital to enable our insurance company subsidiaries to meet the capital adequacy tests performed by regulatory agencies in the United States.
Cash outflows may be variable because of the uncertainty regarding settlement dates for losses. In addition, the timing and amount of individual catastrophe losses are inherently unpredictable and could increase our liquidity requirements. The timing and amount of reinsurance recoveries may be affected by reinsurer solvency and reinsurance coverage disputes.
The following table displays a consolidated summary of cash sources and uses for the six-month periods ended June 30, 2026 and 2025:
| Cash Flow Summary | Six months ended June 30, | ||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Cash provided by (used in) | |||||||||||
| Operating activities | $ | 90,875 | $ | 89,064 | |||||||
| Investing activities | (95,273) | (78,505) | |||||||||
| Financing activities | (12,489) | (9,359) | |||||||||
| Net change in cash and cash equivalents | $ | (16,887) | $ | 1,200 | |||||||
At June 30, 2026, our cash and cash equivalents included $24.1 million related to money market accounts, compared to $44.8 million at December 31, 2025.
Operating Activities
Net cash flows provided by operating activities were $90.9 million and $89.1 million for the six-month periods ended June 30, 2026 and 2025, respectively. The primary cash inflows from operating activities include insurance premiums and net investment income. The primary cash outflows from operating activities are comprised of payment of losses and loss settlement expenses, taxes and operating expenses. Our cash flows from operating activities were sufficient to meet our liquidity needs for the six-month periods ended June 30, 2026 and 2025.
Investing Activities
Cash in excess of operating requirements is generally invested in fixed maturity securities. Fixed maturity securities provide regular interest payments and allow us to match the duration of our liabilities. For further discussion of our investments, including our philosophy and strategy for our portfolio, see the "Investment Portfolio" section of this Item 2.
Sales of investments and proceeds from calls or maturities of fixed maturity securities can also provide liquidity. During the next five years, $478.0 million, or 20.4 percent, of our fixed maturity portfolio will mature.
Net cash flows used in investing activities were $95.3 million and $78.5 million for the six-month periods ended June 30, 2026 and 2025, respectively. For the six-month periods ended June 30, 2026 and 2025, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $307.4 million and $141.6 million, respectively. Our cash outflows for investment purchases were $401.8 million for the six-month period ended June 30, 2026, compared to $215.9 million for the same period of 2025.
Financing Activities
Net cash flows used in financing activities were $12.5 million and $9.4 million for the six-month periods ended June 30, 2026 and 2025, respectively. The net cash flows used in financing activities for the six-month periods ended June 30, 2026 and 2025 are primarily related to the payment of cash dividends of $10.3 million and $8.1 million, respectively.
Commitments for Capital Expenditures
Credit Facilities
UF&C is a member of FHLB Des Moines. Membership allows access to loans or advances pursuant to the terms of FHLB Des Moines' standard Advances, Pledge and Security Agreement (the "Advances Agreement"). As of June 30, 2026, there were no advances outstanding under the Advances Agreement. For further information regarding the agreement with FHLB Des Moines, see Note 7 "Debt" contained in Part I, Item 1.
Dividends
Dividends paid to shareholders totaled $10.3 million and $8.1 million in each of the six-month periods ended June 30, 2026 and 2025, respectively. Payments of any future dividends and the amounts of such dividends will depend upon factors such as net income, financial condition, capital requirements, and general business conditions. We will only pay dividends if declared by our Board of Directors out of legally available funds.
As a holding company with no independent operations of its own, UFG relies on dividends received from its insurance company subsidiaries in order to pay dividends to its common shareholders. Dividends payable by our insurance subsidiaries are governed by the laws in the states in which they are domiciled. In all cases, these state laws permit the payment of dividends only from earned surplus arising from business operations. For example, under Iowa law, the maximum dividend or distribution that may be paid within a 12-month period without prior approval of the Iowa Insurance Commissioner is generally restricted to the greater of 10 percent of statutory surplus as of the preceding December 31 less any dividends paid in the previous 12 months, or net income of the preceding calendar year on a statutory basis less any dividends paid in the previous 12 months, not greater than earned statutory surplus. Other states in which our insurance company subsidiaries are domiciled may impose similar restrictions on dividends and distributions. Based on these restrictions, at June 30, 2026, UFG's sole direct insurance company subsidiary, UF&C, is able to make a maximum of $67.8 million in dividend payments without prior regulatory approval. These restrictions are not expected to have a material impact in meeting our cash obligations.
Funding Commitments
Pursuant to agreements with our limited liability partnership investments, we are contractually committed through 2030 to make capital contributions upon request of the partnerships. The timing of these additional contributions is
unknown and based upon the timing of when investments and agreements are executed or signed compared to when the actual commitments are funded or closed. Our remaining potential contractual obligation was $11.0 million at June 30, 2026.
Stockholders' Equity
Stockholders' equity increased to $977.3 million at June 30, 2026, from $941.2 million at December 31, 2025. The Company's book value per share was $38.02, which is an increase of $1.14 per share, or 3.1 percent, from December 31, 2025. The increase is primarily attributable to net income of $63.4 million, partially offset by an increase in net unrealized losses, net of tax, of $18.4 million on fixed maturity securities and shareholder dividends of $10.4 million during the first six months of 2026.
Recently Issued Accounting Standards
Information specific to accounting standards we adopted for the six-month period ended June 30, 2026 or pending accounting standards we expect to adopt in the future is incorporated by reference from Note 1 "Summary of Significant Accounting Policies" contained in Part I, Item 1.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in our market risk components for the three-month period ended June 30, 2026. See the Quantitative and Qualitative Disclosures About Market Risk included in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025 for further information.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report, were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control Over Financial Reporting
Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal control over financial reporting to determine whether any changes occurred during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We believe our operational processes, internal controls over financial reporting and disclosures, and financial reporting systems are operating effectively in the present environment.
Based on our evaluation, there have been no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15 and 15d-15) that occurred during the fiscal quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of its business, the Company is a party to a variety of legal proceedings. While the final outcome of these legal proceedings cannot be predicted with certainty, management believes all of the proceedings pending as of June 30, 2026 to be ordinary and routine and does not expect these legal proceedings to have a material adverse effect on the Company's financial condition or results of operations.
ITEM 1A. RISK FACTORS
Our business is subject to a number of risks, including those identified in Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 26, 2026. These risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material effect on our business, results of operations, financial condition and/or liquidity. There have been no material changes to the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Under our share repurchase program, we may purchase UFG common stock on the open market or through privately negotiated transactions. The amount and timing of any purchases will be at our discretion and will depend upon a number of factors, including the share price, general economic and market conditions, and corporate and regulatory requirements. Our share repurchase program may be modified or discontinued at any time. The Board of Directors reauthorized the share repurchase program in May 2026, extended the program through August 2028, and increased the number of shares of common stock the Company is authorized to purchase under the share repurchase program to two million shares.
The Company did not repurchase any shares of our common stock during the three-month period ended June 30, 2026. At June 30, 2026, we remain authorized to purchase up to two million shares of our common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
Securities Trading Plans of Officers and Directors
UFG has an Insider Trading Policy applicable to all individuals, including officers and directors of UFG, who have access to nonpublic information about UFG which limits the periods during which officers and directors are allowed to trade in Company securities. UFG's Insider Trading Policy permits trading plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as "Rule 10b5-1 trading plans." Under UFG's Insider Trading Policy, enactment of a Rule 10b5-1 trading plan by an officer or director requires approval by UFG's Nominating & Governance Committee, the Chief Executive Officer, or the Chief Financial Officer. During the second quarter of 2026, none of UFG's directors or officers adopted or terminated Rule 10b5-1 trading plans and none of UFG's directors or officers adopted or terminated a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(c) of Regulation S-K).
ITEM 6. EXHIBITS
| Exhibit number | Exhibit description | Furnished herewith | Filed herewith | ||||||||||||||
| 10.1 | X | ||||||||||||||||
| 31.1 | X | ||||||||||||||||
| 31.2 | X | ||||||||||||||||
| 32.1 | X | ||||||||||||||||
| 32.2 | X | ||||||||||||||||
| 101.1 | The following financial information from United Fire Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 formatted in Inline eXtensible Business Reporting Language (Inline XBRL): (i) Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025; (ii) Consolidated Statements of Income (unaudited) for the three- and six-month periods ended June 30, 2026 and 2025; (iii) Consolidated Statements of Comprehensive Income (unaudited) for the three- and six-month periods ended June 30, 2026 and 2025; (iv) Consolidated Statement of Stockholders' Equity (unaudited) for the three- and six-month periods ended June 30, 2026 and 2025; (v) Consolidated Statements of Cash Flows (unaudited) for the six-month periods ended June 30, 2026 and 2025; and (vi) Notes to Unaudited Consolidated Financial Statements, tagged as a block of text. | X | |||||||||||||||
| 104.1 | X | ||||||||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| UNITED FIRE GROUP, INC. | ||||||||
| (Registrant) | ||||||||
| /s/ Kevin J. Leidwinger | /s/ Eric J. Martin | |||||||
| Kevin J. Leidwinger | Eric J. Martin | |||||||
| President, Chief Executive Officer, Director and Principal Executive Officer | Executive Vice President, Chief Financial Officer, and Principal Accounting Officer | |||||||
| August 4, 2026 | August 4, 2026 | |||||||
| (Date) | (Date) | |||||||
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kevin J. Leidwinger, certify that:
1.I have reviewed this quarterly report on Form 10-Q of United Fire Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the Consolidated Financial Statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | August 4, 2026 | |||||||
/s/ Kevin J. Leidwinger | ||||||||
| Kevin J. Leidwinger | ||||||||
| Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Eric J. Martin, certify that:
1.I have reviewed this quarterly report on Form 10-Q of United Fire Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the Consolidated Financial Statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | August 4, 2026 | |||||||
/s/ Eric J. Martin | ||||||||
| Eric J. Martin | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of United Fire Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin Leidwinger, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | August 4, 2026 | |||||||
/s/ Kevin J. Leidwinger | ||||||||
| Kevin J. Leidwinger | ||||||||
| Chief Executive Officer | ||||||||
A signed original of this written statement required by Section 906 has been provided to United Fire Group, Inc. and will be retained by United Fire Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of United Fire Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric J. Martin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | August 4, 2026 | |||||||
| /s/ Eric J. Martin | ||||||||
| Eric J. Martin | ||||||||
| Chief Financial Officer | ||||||||
A signed original of this written statement required by Section 906 has been provided to United Fire Group, Inc. and will be retained by United Fire Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.