United Fire Group (NASDAQ:UFCS) executives highlighted a “record-setting” 2025 on the company’s fourth-quarter earnings call, pointing to a sharp improvement in underwriting profitability, higher investment income, and continued premium growth following a multi-year operational transformation.
Record 2025 results and multi-year transformation
CEO Kevin Leidwinger said UFG’s results reflect changes made over the past three years, including deeper underwriting expertise, enhanced actuarial insights, improved alignment with distribution partners, and technology investments intended to drive operational efficiency.
For the full year, net written premium grew 9% to more than $1.3 billion, aided by record new business production, strong retention in core commercial lines, and continued renewal premium increases. The annual combined ratio improved to 94.8%, with management citing improvement in the underlying loss ratio, catastrophe loss ratio, and expense ratio.
Leidwinger also emphasized reserve positioning, saying consistent execution of the company’s reserving philosophy allowed UFG to move “to a more conservative position” within its actuarial estimates. He said return on equity reached 13.7% in 2025, which he characterized as the company’s best in nearly two decades.
Dividend increase and capital priorities
Management announced a higher shareholder payout as the company’s profitability and capital position strengthened. Leidwinger said UFG’s board approved a 25% increase in the quarterly cash dividend to $0.20 per share from $0.16 per share.
CFO Eric Martin reiterated the company’s capital priorities as funding profitable growth first and returning excess capital to shareholders. Martin said the increased dividend will be paid March 10 to shareholders of record as of Feb. 24. He added that UFG’s existing authorization to repurchase up to 1 million shares remains in place, providing “ample flexibility” in how the company returns capital.
Underwriting: growth led by core commercial; loss ratio improvements
COO Julie Stephenson said premium growth was “strategically differentiated” across business units, with the strongest growth in core commercial lines, including small business, middle market, and construction. She said UFG generated record new business of $247 million in 2025—nearly double the level produced at the start of the company’s transformation.
Stephenson said the pricing environment became more competitive, particularly in property. Fourth-quarter rate increases moderated to 4.8%, she said, while casualty lines saw more modest competitive pressure. Umbrella was an exception, with Stephenson noting it returned to double-digit increases after recent rate actions.
On profitability, Stephenson said loss ratios are increasingly reflecting the composition of the portfolio built under updated underwriting practices. She reported:
- An underlying loss ratio of 55.4% in the fourth quarter and 56.3% for the full year, an improvement of 1.6 points year over year.
- Earned rate achievement, “stabilized severity trends,” and favorable frequency compared with company forecasts.
- Business written under the improved underwriting framework over the last three years now represents 43% of the portfolio.
Stephenson said prior-year reserve development was “overall neutral” in the fourth quarter and reiterated management’s intent to maintain a conservative reserve posture.
Catastrophe losses and reinsurance renewal
Stephenson said catastrophe losses were favorable relative to expectations. The fourth-quarter catastrophe loss ratio was 1.2%, and the full-year catastrophe loss ratio was 3.2%, which she said outperformed the company’s expectations. She noted that first-quarter wildfires accounted for one point of the full-year loss ratio.
She attributed improved catastrophe performance to underwriting and portfolio management actions, including improvements in property deductibles and exposure management. Stephenson said these actions are expected to support a modeled annual expected catastrophe loss ratio of below 5% in 2026.
On the Jan. 1 reinsurance renewals, Stephenson said UFG achieved “lower ceded margins, expanded coverage, and improved terms and conditions,” with exposure-adjusted rate decreases across major programs and double-digit decreases across natural catastrophe treaties. She said the company received a 10% exposure-adjusted rate decrease in its largest core multi-line treaty and implemented a modest retention increase, citing greater confidence in the portfolio and a stronger capital position. UFG also received a 10% exposure-adjusted rate decrease with expanded coverage in its surety program, she said.
Investment income, expenses, and key per-share metrics
Martin said net investment income continued to improve in the fourth quarter. He said UFG’s high-quality fixed income portfolio generated 17% more income than the prior-year quarter, and improved underwriting profitability allowed the company to grow its fixed maturity portfolio by approximately 10% during the quarter. Martin said new purchase yields were steady at about 5% and above the overall portfolio average.
He also noted the company’s limited partnership investments—about $100 million—generated a $2.4 million return in the quarter, which he described as an annualized return of approximately 10%.
On expenses, Martin said the fourth-quarter expense ratio was 35.7%, improving 1.4 points from the prior-year quarter. While acknowledging potential quarter-to-quarter variability, he said management expects a gradual reduction over time.
Fourth-quarter net income was $1.45 per diluted share, and non-GAAP adjusted operating income was $1.50 per diluted share, Martin said. Book value per common share increased to $36.88, while adjusted book value per share—excluding unrealized investment losses—was $37.87 at year-end.
During the Q&A, executives said they view market competition as increasing but “reasonably rational,” and emphasized ongoing underwriting discipline to support targeted returns. Stephenson also addressed weaker performance in “other liability,” attributing pressure largely to umbrella losses, adding that UFG has filed for rate increases and raised minimum premiums in umbrella while continuing to strengthen reserves. She said the company has not experienced “big nuclear verdicts” but is managing broader social inflation through pricing and reserving actions.
About United Fire Group (NASDAQ:UFCS)
United Fire Group, Inc (NASDAQ: UFCS) is an insurance holding company based in Cedar Rapids, Iowa, that specializes in property and casualty coverage for commercial and personal lines. The company underwrites business through three primary segments: commercial, personal and specialty insurance. Within the commercial segment, United Fire Group offers tailored policies for small- and medium-sized enterprises, including general liability, commercial property and workers’ compensation. Its personal lines cover homeowners, auto, farm and umbrella policies.
United Fire Group distributes its products primarily through a national network of independent insurance agents and brokers.
