Companies: 10,793     total market cap: $134.284 T
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United Fire Group
UFCS
#6065
Rank
$0.95 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$37.58
Share price
2.43%
Change (1 day)
28.57%
Change (1 year)
๐Ÿฆ Insurance
Categories
  1. United Fire Group
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2022 Q2

United Fire Group - 10-Q quarterly report FY2022 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-34257
ufcs-20220630_g1.gif
________________________
 UNITED FIRE GROUP INC.
(Exact name of registrant as specified in its charter)
Iowa 45-2302834
(State of incorporation) (I.R.S. Employer Identification No.)
118 Second Avenue SE
Cedar RapidsIowa
52401
(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 classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueUFCSThe NASDAQ Global Select Market
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
☒
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 August 1, 2022, 25,188,257 shares of common stock were outstanding.















United Fire Group, Inc.
Index to Quarterly Report on Form 10-Q
June 30, 2022
 Page
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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 (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, 2021 and in our other filings with the Securities and Exchange Commission ("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:
◦Our ability to effectively underwrite and adequately price insured risks;
◦Risks related to our investment portfolio that could negatively affect our profitability;
◦General economic conditions, the impact of inflation and changes in governmental regulations and monetary policy;
◦Geographic concentration risk in our property and casualty insurance business;
◦The properties we insure are exposed to various natural perils that can give rise to significant claims costs;
◦Changing weather patterns and climate change add to the unpredictability, frequency and severity of catastrophe losses and may adversely affect our results of operations, liquidity and financial condition;
◦Lowering of one or more of the financial strength ratings of our operating subsidiaries or our issuer credit ratings and the adverse impact such action may have on our premium writings, policy retention, profitability and liquidity;
◦We may be unable to attract, retain or effectively manage the succession of key personnel;
◦The risk of not being able 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;
◦The potential disruption of our operations and reputation due to unauthorized data access, cyber-attacks or cyber-terrorism and other security breaches;
◦The impact of the COVID-19 pandemic, and the emergence of variant strains, on our business, financial conditions, results of operations, and liquidity;
◦The adequacy of our reserves for property and casualty insurance losses and loss settlement expenses;
◦Competitive, legal, regulatory or tax changes that affect the distribution cost or demand for our products through our independent agent/agency distribution network; and
◦Governmental actions, policies and regulations, including, but not limited to, domestic health care reform, financial services regulatory reform, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and other federal stimulus relief legislation, corporate governance, new laws or regulations or court decisions interpreting existing laws and regulations or policy provisions; changes in laws, regulations and stock exchange requirements relating to corporate governance and the cost of compliance.
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
1














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
United Fire Group, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Data)June 30,
2022		 December 31,
2021
 (unaudited)  
ASSETS   
Investments:   
Fixed maturities   
Available-for-sale, at fair value (amortized cost $1,667,548 in 2022 and $1,656,797 in 2021)
$1,597,284  $1,719,790 
Equity securities at fair value (cost $75,964 in 2022 and $84,605 in 2021)
163,241 213,401 
Mortgage loans46,953  47,201 
Less: allowance for mortgage loan losses66  71 
Mortgage loans, net46,887 47,130 
Other long-term investments81,146  84,090 
Short-term investments 275  275 
Total investments1,888,833  2,064,686 
Cash and cash equivalents91,934  132,104 
Accrued investment income14,079  13,396 
Premiums receivable (net of allowance for doubtful accounts of $808 in 2022 and $781 in 2021)
373,006  316,771 
Deferred policy acquisition costs104,090  91,446 
Property and equipment (primarily land and buildings, at cost, less accumulated depreciation of $60,842 in 2022 and $60,142 in 2021)
134,886  137,702 
Reinsurance receivables and recoverables (net of allowance for credit losses of $76 in 2022 and $102 in 2021)
135,527  127,815 
Prepaid reinsurance premiums10,623  9,328 
Intangible assets5,679 6,034 
Deferred tax asset9,384 — 
Income taxes receivable33,648 32,378 
Other assets83,505  81,061 
TOTAL ASSETS$2,885,194  $3,012,721 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Liabilities   
Losses and loss settlement expenses$1,459,828  $1,514,265 
Unearned premiums477,613  439,733 
Accrued expenses and other liabilities116,850  102,849 
Long term debt50,000 50,000 
Deferred tax liability—  26,753 
TOTAL LIABILITIES$2,104,291  $2,133,600 
Stockholders’ Equity   
Common stock, $0.001 par value; authorized 75,000,000 shares; 25,186,648 and 25,082,104 shares issued and outstanding in 2022 and 2021, respectively
$25  $25 
Additional paid-in capital206,165  203,375 
Retained earnings631,481  621,384 
Accumulated other comprehensive income, net of tax(56,768) 54,337 
TOTAL STOCKHOLDERS’ EQUITY$780,903  $879,121 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,885,194  $3,012,721 
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
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United Fire Group, Inc.
Consolidated Statements of Income and Comprehensive Income (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(In Thousands, Except Share Data)2022 202120222021
Revenues   
Net premiums earned$231,262  $224,703 $465,490 $483,928 
Investment income, net of investment expenses9,180  13,795 20,456 30,876 
Net investment gains (losses) (includes reclassifications for net unrealized investment gains (losses) on available-for-sale securities of $(716) and $(398) in 2022 and $141 and $(666) in 2021; previously included in accumulated other comprehensive income (loss))
(20,932)6,004 (21,397)30,512 
Other income (loss)26  (90)1 (169)
Total revenues$219,536  $244,412 $464,550 $545,147 
Benefits, Losses and Expenses  
Losses and loss settlement expenses$151,508  $152,139 $281,884 $358,537 
Amortization of deferred policy acquisition costs52,538  46,007 103,009 99,272 
Other underwriting expenses (includes reclassifications for employee benefit costs of $900 and $1,800 in 2022 and $1,645 and $3,312 in 2021; previously included in accumulated other comprehensive income (loss))
28,754  28,400 57,398 46,768 
Interest expense797 1,594 1,594 1,594 
Total benefits, losses and expenses$233,597  $228,140 $443,885 $506,171 
Income (loss) before income taxes$(14,061) $16,272 $20,665 $38,976 
Federal income tax expense (benefit) (includes reclassifications of $339 and $461 in 2022 and $316 and $835 in 2021; previously included in accumulated other comprehensive income (loss))
(3,604) 2,522 2,773 6,524 
Net Income (loss)$(10,457)$13,750 $17,892 $32,452 
Other comprehensive income (loss)
Change in net unrealized appreciation on investments$(50,691) $9,496 $(133,656) $(21,001)
Change in liability for underfunded employee benefit plans(4,591)(3,765)(9,183)2,740 
Other comprehensive income (loss), before tax and reclassification adjustments$(55,282) $5,731 $(142,839) $(18,261)
Income tax effect11,609  (1,202)29,997  3,835 
Other comprehensive income (loss), after tax, before reclassification adjustments$(43,673) $4,529 $(112,842) $(14,426)
Reclassification adjustment for net investment losses included in income$716  $(141)$398  $666 
Reclassification adjustment for employee benefit costs included in expense900  1,645 1,800  3,312 
Total reclassification adjustments, before tax$1,616 $1,504 $2,198 $3,978 
Income tax effect(339)(316)(461)(835)
Total reclassification adjustments, after tax$1,277 $1,188 $1,737 $3,143 
Comprehensive income (loss)$(52,853) $19,467 $(93,213) $21,169 
Diluted weighted average common shares outstanding25,148,143  25,416,868 25,410,649 25,394,728 
Earnings per common share:
Basic$(0.42)$0.55 $0.71 $1.29 
Diluted (0.42)0.54 0.70 1.28 
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
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United Fire Group, Inc.
Consolidated Statement of Stockholders’ Equity (Unaudited)

Common Stock
(In Thousands, Except Share Data)Shares outstandingCommon stockAdditional paid-in capitalRetaining EarningsAccumulated other comprehensive incomeTotal
 
Balance, January 1, 202225,082,104 $25 $203,375 $621,384 $54,337 $879,121 
Net income— — — 28,349 — 28,349 
Stock based compensation37,140 — 631 — — 631 
Dividends on common stock ($0.15 per share)
— — — (3,767)— (3,767)
Change in net unrealized investment appreciation (depreciation)(1)
— — — — (65,793)(65,793)
Change in liability for underfunded employee benefit plans(2)
— — — — (2,916)(2,916)
Balance, March 31, 202225,119,244 $25 $204,006 $645,966 $(14,372)$835,625 
Net income (loss)— $— $— $(10,457)$— $(10,457)
Stock based compensation67,404 — 2,159 — — 2,159 
Dividends on common stock ($0.16 per share)
— — — (4,028)— (4,028)
Change in net unrealized investment appreciation (depreciation)(1)
— — — — (39,480)(39,480)
Change in liability for underfunded employee benefit plans(2)
— — — — (2,916)(2,916)
Balance, June 30, 202225,186,648 $25 $206,165 $631,481 $(56,768)$780,903 
(1)The change in net unrealized appreciation (depreciation) is net of reclassification adjustments and income taxes.
(2)The change in liability for underfunded employee benefit plans is net of reclassification adjustments and income taxes.
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Common Stock
(In Thousands, Except Share Data)Shares outstandingCommon stockAdditional paid-in capitalRetaining EarningsAccumulated other comprehensive incomeTotal
 
Balance, January 1, 202125,055,479 $25 $202,359 $555,854 $66,911 $825,149 
Net income— — — 18,702 — 18,702 
Shares repurchased(207)— (7)— — (7)
Stock based compensation64,583 — 522 — — 522 
Dividends on common stock $0.15 per share)
— — — (3,767)— (3,767)
Change in net unrealized investment appreciation (depreciation)(1)
— — — — (23,456)(23,456)
Change in liability for underfunded employee benefit plans(2)
— — — — 6,456 6,456 
Balance, March 31, 202125,119,855 $25 $202,874 $570,789 $49,911 $823,599 
Net income— $— $— $13,750 $— $13,750 
Shares repurchased(31,027)— (1,000)— — (1,000)
Stock based compensation28,512 — 1,181 — — 1,181 
Dividends on common stock $0.15 per share)
— — — (3,772)— (3,772)
Change in net unrealized investment appreciation(1)
— — — — 7,391 7,391 
Change in liability for underfunded employee benefit plans(2)
— — — — (1,674)(1,674)
Balance, June 30, 202125,117,340 $25 $203,055 $580,767 $55,628 $839,475 
(1)The change in net unrealized appreciation (depreciation) is net of reclassification adjustments and income taxes.
(2)The change in liability for underfunded employee benefit plans is net of reclassification adjustments and income taxes.
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.


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United Fire Group, Inc.
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
(In Thousands)2022 2021
Cash Flows From Operating Activities   
Net income$17,892  $32,452 
Adjustments to reconcile net income to net cash provided by (used in) operating activities 
Net accretion of bond premium5,101  7,203 
Depreciation and amortization3,411  3,175 
Stock-based compensation expense1,762  2,115 
Net investment (gains) losses21,397  (30,512)
Net cash flows from equity and trading investments29,161  40,983 
Deferred income tax expense (benefit)(6,602) 2,582 
Changes in: 
Accrued investment income(683) 789 
Premiums receivable(56,235) (16,975)
Deferred policy acquisition costs(12,644) (9,192)
Reinsurance receivables(7,712) 35,755 
Prepaid reinsurance premiums(1,295) 614 
Income taxes receivable(1,270) 3,926 
Other assets(2,444) (10,372)
Losses and loss settlement expenses(54,437) (9,678)
Unearned premiums37,880  9,326 
Accrued expenses and other liabilities6,808  (19,077)
Other, net4,036  (8,284)
Cash from operating activities(33,766)2,378 
Net cash provided by (used in) operating activities$(15,874) $34,830 
Cash Flows From Investing Activities   
Proceeds from sale of available-for-sale investments$65,010  $116,664 
Proceeds from call and maturity of available-for-sale investments104,349  153,567 
Proceeds from sale of other investments2,382  2,214 
Purchase of investments in mortgage loans(103) — 
Purchase of investments available-for-sale(186,520)(255,489)
Purchase of other investments(3,344) (4,663)
Net purchases and sales of property and equipment697  (7,594)
Net cash provided by (used in) investing activities$(17,529)$4,699 
Cash Flows From Financing Activities   
Issuance of common stock$1,028 $(412)
Repurchase of common stock— (1,007)
Payment of cash dividends(7,795)(7,539)
Net cash used in financing activities$(6,767)$(8,958)
Net Change in Cash and Cash Equivalents$(40,170) $30,571 
Cash and Cash Equivalents at Beginning of Period132,104 87,948 
Cash and Cash Equivalents at End of Period$91,934 $118,519 
The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.
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UNITED FIRE GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share amounts or as otherwise noted)

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
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 unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting 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, 2021, including certain 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; deferred policy acquisition costs; reinsurance receivables and recoverables; loss settlement expenses; and pension and post-retirement benefit obligations.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Management believes the accompanying unaudited 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 unaudited Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021.
Segment Information

Our property and casualty insurance business is reported as one business segment. The property and casualty insurance business profit or loss is consistent with consolidated reporting as disclosed on the Consolidated Statements of Income and Comprehensive Income. We analyze the property and casualty insurance business results based on profitability (i.e., loss ratios), expenses and return on equity. The Company's property and casualty insurance business was determined using a management approach to make decisions on operating matters, including allocating resources, assessing performance, determining which products to market and sell, determining distribution networks with insurance agents and monitoring the regulatory environment. The property and casualty insurance business products have similar economic characteristics and use a similar marketing and distribution strategy with our independent agents. We will continue to evaluate our operations on the basis of both statutory accounting principles prescribed or permitted by our states of domicile and GAAP.


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Lloyd's Syndicates
On January 1, 2021, the Company became a member of Lloyd's of London ("Lloyd's"). As a member of Lloyd's, the Company is required to maintain capital at Lloyd's, referred to as Funds at Lloyd's ("FAL"), to support underwriting of property and casualty and reinsurance business by Syndicate 1492, Syndicate 1729, Syndicate 1969, Syndicate 1971, Syndicate 4747, Syndicate 2988 and Syndicate 1699. At June 30, 2022, the Company's FAL investments were comprised of cash of $21,338 on deposit with Lloyd's in order to satisfy these FAL requirements.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, cash on deposit and held at Lloyd's and non-negotiable certificates of deposit with original maturities of three months or less.
Deferred Policy Acquisition Costs ("DAC")

Certain costs associated with underwriting new business (primarily commissions, premium taxes and variable underwriting and policy issue expenses associated with successful acquisition efforts) are deferred. The following table is a summary of the components of DAC, including the related amortization recognized for the six-month period ended June 30, 2022.
Total
Recorded asset at beginning of period$91,446 
Underwriting costs deferred115,653 
Amortization of deferred policy acquisition costs(103,009)
Recorded asset at June 30, 2022
$104,090 

Property and casualty insurance policy acquisition costs deferred are amortized as premium revenue is recognized. The method followed in computing DAC limits the amount of such deferred costs to their estimated realizable value. This takes into account the premium to be earned, losses and loss settlement expenses expected to be incurred and certain other costs expected to be incurred as the premium is earned.
Other Intangible Assets
Our other intangible assets, which consist primarily of agency relationships, trade names, state insurance licenses, and software, are being amortized using the straight-line method over periods ranging from two years to 15 years, with the exception of state insurance licenses, which are indefinite-lived and not amortized.
Long Term Debt
The Company executed a private placement debt transaction on December 15, 2020 between United Fire & Casualty Company ("UF&C"), and Federated Mutual Insurance Company, a mutual insurance company domiciled in Minnesota ("Federated Mutual"), and Federated Life Insurance Company, an insurance company domiciled in Minnesota ("Federated Life” and, together with Federated Mutual, the "Note Purchasers").

UF&C sold an aggregate principal amount of $50,000 of notes due 2040 to the Note Purchasers. One note with a principal amount of $35,000 was issued to Federated Mutual and one note with a principal amount of $15,000 was issued to Federated Life subject to the terms of their respective notes. The notes are presented as a long term debt liability in the Consolidated Balance Sheets and as a financing activity in the Consolidated Statement of Cash Flows.

Interest payments under the surplus notes are paid quarterly on March 15, June 15, September 15 and December 15 of each year (each such date, an "Interest Payment Date"). The interest rate will equal the rate that corresponds to the A.M. Best Co. (or its successor’s) financial strength rating for members of the United Fire & Casualty Pooled Group as of the applicable Interest Payment Date. For the six-month period ended June 30, 2022, interest totaled $1,594
9














and is included in accrued expenses and other liabilities in the Consolidated Balance Sheets and as Interest expense in the Consolidated Statements of Income and Comprehensive Income. Payment of interest is subject to approval by the Iowa Insurance Division.

Income Taxes
Deferred tax assets and liabilities are established based on differences between the financial statement bases of assets and liabilities and the tax bases of those same assets and liabilities, using the currently enacted statutory tax rates. Deferred income tax expense is measured by the year-to-year change in the net deferred tax asset or liability, except for certain changes in deferred tax amounts that affect stockholders' equity and do not impact federal income tax expense.
We reported consolidated federal income tax expense of $2,773 for the six-month period ended June 30, 2022 compared to an income tax expense of $6,524 during the same period of 2021. Our effective tax rate for 2022 and 2021 is different than the federal statutory rate of 21 percent, due principally to the net effect of tax-exempt municipal bond interest income.
The Company performs a quarterly review of its tax positions and makes a determination of whether it is more likely than not that the tax position will be sustained upon examination. If, based on this review, it appears not more likely than not that the positions will be sustained, the Company will calculate any unrecognized tax benefits and, if necessary, calculate and accrue any related interest and penalties. We did not recognize any liability for unrecognized tax benefits at June 30, 2022 or December 31, 2021. In addition, we have not accrued for interest and penalties related to unrecognized tax benefits. However, if interest and penalties would need to be accrued related to unrecognized tax benefits, such amounts would be recognized as a component of federal income tax expense.
For the six-month periods ended June 30, 2022 and 2021, we made payments for income taxes totaling $21,525 and $29, respectively. For the six-month period ended June 30, 2022, we received a federal tax refund of $10,789. We did not receive a tax refund during the six-month period ended June 30, 2021.
We file a consolidated federal income tax return. We also file income tax returns in various state jurisdictions. We are no longer subject to federal or state income tax examination for years before 2018. We are under federal income tax examination for the years 2018 through 2020.

Leases

The Company determines if a contract contains a lease at inception of the contract. The Company's inventory of leases consists of operating leases which are recorded as a lease obligation liability disclosed in the "Accrued expenses and other liabilities" line on the Consolidated Balance Sheets and as a lease right-of-use asset disclosed in the "Other assets" line on the Consolidated Balance Sheets. The Company's operating leases consist of office space, vehicles, computer equipment and office equipment. The lease right-of-use asset represents the Company's right to use each underlying asset for the lease term and the lease obligation liability represents the Company's obligation over the lease term. The Company's lease obligation is recorded at the present value of the lease payments based on the term of the applied lease. Short-term leases of 12 months or less are recorded on the Consolidated Balance Sheets and lease payments are recognized on the Consolidated Statements of Income and Comprehensive Income. For more information on leases refer to Note 10 "Leases."
Variable Interest Entities
The Company and certain related parties are equity investors in one investment which the Company determined is a variable interest entity ("VIE") as a result of participation in the risks and rewards of the VIE based on the objectives and strategies of the VIE. The VIE is a limited liability company that primarily invests in commercial real estate. The Company and certain related parties are not the primary beneficiary largely due to their inability to influence management or direct the activities that most significantly impact the VIE's economic performance. Based on these facts and circumstances, the Company has a variable interest in the VIE, but has not consolidated the VIE's financial results as it is not the primary beneficiary. The Company's investment is reported in other long-term
10














investments in the Consolidated Balance Sheets and accounted for under the equity method of accounting. The fair value of the VIE at June 30, 2022 was $2,514 and there are no future funding commitments.
Credit Losses
The Company recognizes credit losses for our available-for-sale fixed-maturity portfolio, reinsurance receivables, mortgage loans and premium receivables by setting up allowances which are remeasured each reporting period and recorded in the Consolidated Statements of Income and Comprehensive Income.
For our available-for-sale fixed-maturity portfolio an allowance for credit losses is recorded net of available-for-sale fixed maturities in the Consolidated Balance Sheets and a corresponding credit loss recognized as a realized loss or gain in the Consolidated Statements of Income and Comprehensive Income. The Company determines if an allowance for credit losses is recorded based on a number of factors including the current economic conditions, management's expectations of future economic conditions and performance indicators, such as market value vs. amortized cost, investment spreads widening or contracting, rating actions, payment and default history. For more information on credit losses and the allowance for credit losses for available-for-sale fixed-maturity portfolio, see Note 2 "Summary of Investments."
An allowance for mortgage loan losses is established based on historical loss information of the collective pool of the Company's commercial mortgage loan investments which have similar risk characteristics. To calculate the allowance for mortgage loan losses, the Company starts with historical loan experience to predict the future expected losses and then layers on a market-linked adjustment. On a quarterly basis, quantitative credit risk metrics, including for example, cash-flows, rent rolls and financial statements are reviewed for each loan to determine if it is performing in line with its expectations. This allowance is presented as a separate line in the Consolidated Balance Sheets beneath the asset value as well as presented net and recorded through "Net investment gains (losses)" in the Consolidated Statements of Income and Comprehensive Income. For more information on credit losses and the allowance for credit losses for our investment in mortgage loans see Note 3 "Fair Value of Financial Instruments."
For reinsurance receivables, the Company's model estimates expected credit loss by multiplying the exposure at default by both the probability of default and loss given default ("LGD"). The LGD is estimated by the rating of the reinsurer, historical relationship with UFG, existence of letters of credit and known regulation the Company may be held accountable for. The ultimate LGD percentage is estimated after considering Moody’s experience with unsecured year 1 bond recovery rates from 1983-2017. The allowance calculated as of June 30, 2022 is recorded through the line "Reinsurance receivables and recoverables" in the Consolidated Balance Sheets and through the line "Other underwriting expenses" in the Consolidated Statements of Income and Other Comprehensive Income. As of June 30, 2022, the Company had a credit loss allowance for reinsurance receivables of $76.
Rollforward of credit loss allowance for reinsurance receivables:
As of
June 30, 2022
Beginning balance, January 1, 2022$102 
Recoveries of amounts previously written off, if any(26)
Ending balance of the allowance for reinsurance receivables, June 30, 2022
$76 

With respect to premiums receivable, the Company utilizes an aging method to estimate credit losses. An allowance for doubtful accounts is based on a periodic evaluation of the aging and collectability of amounts due from agents and policyholders. "Premiums receivable" are presented in the Consolidated Balance Sheets net of an estimated allowance for doubtful accounts and recorded through "Other underwriting expenses" in the Consolidated Statements of Income and Comprehensive Income.




11














Subsequent Events

In the preparation of the accompanying financial statements, the Company has evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date on which the financial statements were issued for potential recognition or disclosure in the Company's financial statements.
Recently Issued Accounting Standards
Accounting Standards Adopted in 2021
Defined Benefit Plans - Disclosures
In August 2018, the FASB issued new guidance which modifies the disclosure requirements for employers that sponsor defined benefit pension and postretirement plans. The new guidance removes the requirement for disclosing the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit costs in the next year and the sensitivity of postretirement health plans to one-percentage-point changes in medical trend rates. The new guidance is effective for annual periods beginning after December 15, 2020. The Company adopted the new guidance as of January 1, 2021. The new guidance modified disclosures, but did not have an impact on the Company's financial position and results of operations.
Income Taxes
In December 2019, the FASB issued new guidance which simplifies the accounting for income taxes by removing certain exceptions to income tax accounting. The amendments also improve consistent application of and simplify GAAP for other areas of income tax accounting. The new guidance clarifies and amends existing guidance, including removing certain requirements that an entity evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, and requiring an entity to reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The new guidance is effective for annual periods beginning after December 15, 2020. The Company adopted the new guidance as of January 1, 2021. The new guidance did not have an impact on the Company’s financial position and results of operations.


NOTE 2. SUMMARY OF INVESTMENTS
Fair Value of Investments
A reconciliation of the amortized cost to fair value of investments in available-for-sale fixed maturity, presented on a consolidated basis, as of June 30, 2022 and December 31, 2021, is provided below:
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June 30, 2022
Type of InvestmentCost or Amortized Cost Gross Unrealized Appreciation Gross Unrealized Depreciation Fair ValueAllowance for Credit LossesCarrying Value
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury$15,579 $— $743 $14,836 $— $14,836 
U.S. government agency85,037 207 4,944 80,300 — 80,300 
States, municipalities and political subdivisions
General obligations:
Midwest65,197 384 217 65,364 — 65,364 
Northeast20,334 74 66 20,342 — 20,342 
South68,357 213 677 67,893 — 67,893 
West97,024 511 458 97,077 — 97,077 
Special revenue:
Midwest111,499 443 630 111,312 — 111,312 
Northeast55,555 185 943 54,797 — 54,797 
South196,818 745 2,908 194,655 — 194,655 
West117,664 646 1,899 116,411 — 116,411 
Foreign bonds31,266 1 3,024 28,243 — 28,243 
Public utilities128,241 109 8,922 119,428 — 119,428 
Corporate bonds
Energy41,525 15 2,281 39,259 — 39,259 
Industrials57,014 8 4,442 52,580 — 52,580 
Consumer goods and services83,197 32 7,622 75,607 — 75,607 
Health care28,280 — 4,203 24,077 — 24,077 
Technology, media and telecommunications69,290 101 5,618 63,773 — 63,773 
Financial services129,567 453 5,696 124,324 — 124,324 
Mortgage-backed securities21,910 2 1,953 19,959 — 19,959 
Collateralized mortgage obligations
Government national mortgage association97,468 35 7,454 90,049 — 90,049 
Federal home loan mortgage corporation97,634 — 7,428 90,206 — 90,206 
Federal national mortgage association45,140 155 2,874 42,421 — 42,421 
Asset-backed securities3,952 512 93 4,371 — 4,371 
Total Available-for-Sale Fixed Maturities$1,667,548 $4,831 $75,095 $1,597,284 $— $1,597,284 


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December 31, 2021
Type of InvestmentCost or Amortized Cost Gross Unrealized Appreciation Gross Unrealized DepreciationFair ValueAllowance for Credit LossesCarrying Value
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury$42,425 $216 $718 $41,923 $— $41,923 
U.S. government agency60,074 2,155 562 61,667 — 61,667 
States, municipalities and political subdivisions
General obligations:
Midwest71,863 2,483 — 74,346 — 74,346 
Northeast22,061 701 — 22,762 — 22,762 
South90,171 3,873 — 94,044 — 94,044 
West93,968 5,110 — 99,078 — 99,078 
Special revenue:
Midwest114,997 7,292 — 122,289 — 122,289 
Northeast55,811 3,921 — 59,732 — 59,732 
South201,383 14,365 78 215,670 — 215,670 
West126,521 8,128 — 134,649 — 134,649 
Foreign bonds30,314 789 197 30,906 — 30,906 
Public utilities104,008 3,966 481 107,493 — 107,493 
Corporate bonds
Energy31,011 1,751 81 32,681 — 32,681 
Industrials55,014 2,319 162 57,171 — 57,171 
Consumer goods and services71,543 1,912 611 72,844 — 72,844 
Health care27,351 539 461 27,429 — 27,429 
Technology, media and telecommunications55,405 2,958 866 57,497 — 57,497 
Financial services98,352 4,394 131 102,615 — 102,615 
Mortgage-backed securities25,075 167 229 25,013 — 25,013 
Collateralized mortgage obligations
Government national mortgage association109,968 2,322 1,772 110,518 — 110,518 
Federal home loan mortgage corporation120,911 736 1,658 119,989 — 119,989 
Federal national mortgage association48,246 945 642 48,549 — 48,549 
Asset-backed securities325 600 — 925 — 925 
Total Available-for-Sale Fixed Maturities$1,656,797 $71,642 $8,649 $1,719,790 $— $1,719,790 



14














Maturities
The amortized cost and fair value of available-for-sale fixed maturity securities at June 30, 2022, by contractual maturity, are shown in the following tables. 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.
Maturities
Available-For-Sale
June 30, 2022Amortized Cost Fair Value
Due in one year or less$52,679  $52,763 
Due after one year through five years446,499  442,023 
Due after five years through 10 years505,017  478,279 
Due after 10 years397,249  377,213 
Asset-backed securities3,952 4,371 
Mortgage-backed securities21,910  19,959 
Collateralized mortgage obligations240,242  222,676 
 $1,667,548  $1,597,284 
Net Investment Gains and Losses
Net investment gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net investment gains (losses) is as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022 202120222021
Net investment gains (losses):   
Fixed maturities:
Available-for-sale$(1,632)$136 $(1,299)$(501)
Allowance for credit losses— 5 — (165)
Equity securities
Change in the fair value(18,335)1,245 (19,324)21,827 
Sales(1,881)4,618 (1,675)9,351 
Mortgage loans allowance for credit losses— — 5 — 
Other long-term investments(22) — (42)— 
Real estate938 — 938 — 
Total net investment gains (losses)$(20,932) $6,004 $(21,397)$30,512 

The proceeds and gross realized gains on the sale of available-for-sale fixed maturity securities are as follows:
 Three Months Ended June 30,Six Months Ended June 30,
2022 202120222021
Proceeds from sales$65,010  $16,982 $65,010 $116,664 
Gross realized gains114  152 447 153 
Gross realized losses1,747  17 1,747 655 

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Funding Commitment

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through July 10, 2030 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $19,796 at June 30, 2022.

In addition, the Company invested $25,000 in December 2019 in a limited liability partnership investment fund which is subject to a three-year lockup with a 60 day minimum notice, with four possible repurchase dates per year, after the three-year lockup period has concluded. The fair value of the investment at June 30, 2022 was $24,834 and there are no remaining capital contributions with this investment.
Unrealized Appreciation
A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:
 Six Months Ended June 30,
2022 2021
Change in net unrealized investment appreciation   
Available-for-sale fixed maturities$(133,257)$(20,335)
Income tax effect27,983 4,270 
Total change in net unrealized investment appreciation, net of tax$(105,274) $(16,065)
Credit Risk
An allowance for credit losses is recorded based on a number of factors including the current economic conditions, management's expectations of future economic conditions and performance indicators, such as market value vs. amortized cost, investment spreads widening or contracting, rating actions, payment and default history. At June 30, 2022, the Company did not have an allowance for credit losses for available-for-sale fixed maturity securities.














16














The following tables summarize our fixed maturity securities that were in an unrealized loss position reported on a consolidated basis at June 30, 2022 and December 31, 2021. The securities are presented by the length of time they have been continuously in an unrealized loss position. 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.
June 30, 2022Less than 12 months12 months or longerTotal
Type of InvestmentNumber
of Issues		Fair
Value		Gross Unrealized
Depreciation		Number
of Issues		Fair
Value		Gross Unrealized DepreciationFair
Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury5 $7,557 $168 4 $7,279 $575 $14,836 $743 
U.S. government agency17 55,985 2,582 2 10,110 2,362 66,095 4,944 
States, municipalities and political subdivisions
General obligations
Midwest8 19,825 217 — — — 19,825 217 
Northeast2 6,021 66 — — — 6,021 66 
South18 37,889 677 — — — 37,889 677 
West11 32,924 458 — — — 32,924 458 
Special revenue
Midwest24 48,534 630 — — — 48,534 630 
Northeast14 37,923 943 — — — 37,923 943 
South44 99,360 2,539 1 902 369 100,262 2,908 
West26 68,625 1,899 — — — 68,625 1,899 
Foreign bonds11 24,657 2,606 1 1,584 418 26,241 3,024 
Public utilities48 112,236 8,657 1 1,734 265 113,970 8,922 
Corporate bonds
Energy16 35,237 2,281 — — — 35,237 2,281 
Industrials20 44,581 4,442 — — — 44,581 4,442 
Consumer goods and services24 56,668 5,223 3 7,946 2,399 64,614 7,622 
Health care10 24,077 4,203 — — — 24,077 4,203 
Technology, media and telecommunications21 45,293 2,862 3 6,146 2,756 51,439 5,618 
Financial services39 100,592 5,696 — — — 100,592 5,696 
Mortgage-backed securities39 8,696 695 4 10,773 1,258 19,469 1,953 
Collateralized mortgage obligations
Federal home loan mortgage corporation28 49,737 4,325 14 40,471 3,103 90,208 7,428 
Federal national mortgage association16 35,968 2,553 3 4,033 321 40,001 2,874 
Government national mortgage association36 82,222 6,914 3 5,047 540 87,269 7,454 
Asset-backed securities1 3,529 93 — — — 3,529 93 
Total Available-for-Sale Fixed Maturities478 $1,038,136 $60,729 39 $96,025 $14,366 $1,134,161 $75,095 


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The unrealized losses on our investments in available-for-sale fixed maturities were the result of interest rate movements. 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.
December 31, 2021Less than 12 months12 months or longerTotal
Type of InvestmentNumber
of Issues		Fair
Value		Gross Unrealized DepreciationNumber
of Issues		Fair
Value		Gross Unrealized DepreciationFair
Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury6 $32,166 $630 1 $2,837 $88 $35,003 $718 
U.S. government agency3 15,023 562 — — — 15,023 562 
States, municipalities and political subdivisions
South1 1,195 78 — — — 1,195 78 
Foreign bonds4 10,731 147 1 1,952 50 12,683 197 
Public utilities9 24,238 481 — — — 24,238 481 
Corporate bonds
Energy1 5,881 81 — — — 5,881 81 
Industrials4 8,902 162 — — — 8,902 162 
Consumer goods and services10 26,367 611 — — — 26,367 611 
Health care3 20,550 461 — — — 20,550 461 
Technology, media and telecommunications4 11,204 739 1 1,906 127 13,110 866 
Financial services5 13,320 131 — — — 13,320 131 
Mortgage-backed securities12 13,740 229 — — — 13,740 229 
Collateralized mortgage obligations
Federal home loan mortgage corporation11 48,256 1,752 1 1,032 20 49,288 1,772 
Federal national mortgage association18 50,701 698 7 30,847 960 81,548 1,658 
Government national mortgage association6 21,806 521 4 5,297 121 27,103 642 
Total Available-for-Sale Fixed Maturities97 $304,080 $7,283 15 $43,871 $1,366 $347,951 $8,649 
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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). 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.
Financial instruments recorded at fair value are categorized in the fair value hierarchy as follows:
•Level 1: Valuations are based on unadjusted quoted prices in active markets for identical financial instruments that we have the ability to access.
•Level 2: Valuations are based on quoted prices for similar financial instruments, other than quoted prices included in Level 1, 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.
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.
To determine the fair value of the majority of our investments, we utilize prices obtained from independent, nationally recognized pricing services. When the pricing services cannot provide a determination of fair value for a specific security, we obtain non-binding price quotes from broker-dealers with whom we have had several years' experience and who have demonstrated knowledge of the subject security.
In order to determine the proper classification in the fair value hierarchy, we obtain and evaluate the vendors' pricing procedures and inputs used to price the security, which include unadjusted quoted market prices for identical securities, such as a New York Stock Exchange closing price, and quoted prices for identical securities in markets that are not active. For fixed maturity securities, an evaluation of interest rates and yield curves observable at commonly quoted intervals, volatility, prepayment speeds, credit risks and default rates may also be performed. We have determined that these processes and inputs result in fair values and classifications consistent with the applicable accounting guidance on fair value measurements.
When possible, we use quoted market prices to determine the fair value of fixed maturities, equity securities, trading securities and short-term investments. When quoted market prices do not exist, we base estimates of fair value on market information obtained from independent pricing services and brokers or on valuation techniques 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. Our valuation techniques are discussed in more detail throughout this section.
The mortgage loan portfolio consists entirely of commercial mortgage loans. 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.
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Our other long-term investments consist primarily of our interests in limited liability partnerships that are recorded on the equity method of accounting. The fair value of the partnerships is obtained from the fund managers, which is based on the fair value of the underlying investments held in the partnerships. 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.
For cash and cash equivalents and accrued investment income, carrying value is a reasonable estimate of fair value due to the short-term nature of these financial instruments.

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 Company's Executive Retirement Plan. The COLI policies invest in mutual funds, which are priced daily by independent sources. As of June 30, 2022, the cash surrender value of the COLI policies was $10,069 which is equal to the fair value measured using Level 2 inputs, based on the underlying assets of the COLI policies, and is included in other assets in the Consolidated Balance Sheets.

Our long-term debt is not carried in the Consolidated Balance Sheet at 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 flows analysis.

A summary of the carrying value and estimated fair value of our financial instruments at June 30, 2022 and December 31, 2021 is as follows:
 June 30, 2022December 31, 2021
Fair ValueCarrying ValueFair ValueCarrying Value
Assets    
Investments    
Fixed maturities:
Available-for-sale securities$1,597,284 $1,597,284 $1,719,790 $1,719,785 
Equity securities163,241 163,241 213,401 213,401 
Mortgage loans44,728 46,887 48,815 47,130 
Other long-term investments81,146 81,146 84,090 84,090 
Short-term investments275 275 275 275 
Cash and cash equivalents91,934 91,934 132,104 132,104 
Corporate-owned life insurance10,069 10,069 10,755 10,755 
Liabilities
Long Term Debt37,995 50,000 46,047 50,000 















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The following tables present the categorization for our financial instruments measured at fair value on a recurring basis. The table includes financial instruments at June 30, 2022 and December 31, 2021:

June 30, 2022Fair Value Measurements
DescriptionTotalLevel 1Level 2Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury$14,836 $— $14,836 $— 
U.S. government agency80,300 — 80,300 — 
States, municipalities and political subdivisions
General obligations
Midwest65,364 — 65,364 — 
Northeast20,342 — 20,342 — 
South67,893 — 67,893 — 
West97,077 — 97,077 — 
Special revenue
Midwest111,312 — 111,312 — 
Northeast54,797 — 54,797 — 
South194,655 — 194,655 — 
West116,411 — 116,411 — 
Foreign bonds28,243 — 28,243 — 
Public utilities119,428 — 119,428 — 
Corporate bonds
Energy39,259 — 39,259 — 
Industrials52,580 — 52,580 — 
Consumer goods and services75,607 — 75,607 — 
Health care24,077 — 24,077 — 
Technology, media and telecommunications63,773 — 63,773 — 
Financial services124,324 — 124,174 150 
Mortgage-backed securities19,959 — 19,959 — 
Collateralized mortgage obligations
Government national mortgage association90,049 — 90,049 — 
Federal home loan mortgage corporation90,206 — 90,206 — 
Federal national mortgage association42,421 — 42,421 — 
Asset-backed securities4,371 — 3,529 842 
Total Available-for-Sale Fixed Maturities$1,597,284 $— $1,596,292 $992 
EQUITY SECURITIES
Common stocks
Public utilities$15,346 $15,346 $— $— 
Energy18,144 18,144 — — 
Industrials23,523 23,523 — — 
Consumer goods and services40,526 40,526 — — 
Health care8,220 8,220 — — 
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Technology, media and telecommunications30,416 30,416 — — 
Financial services27,066 27,066 — — 
Total Equity Securities$163,241 $163,241 $— $— 
Short-Term Investments$275 $275 $— $— 
Money Market Accounts$41,536 $41,536 $— $— 
Corporate-Owned Life Insurance$10,069 $— $10,069 $— 
Total Assets Measured at Fair Value$1,812,405 $205,052 $1,606,361 $992 



December 31, 2021Fair Value Measurements
DescriptionTotalLevel 1Level 2Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury$41,923 $— $41,923 $— 
U.S. government agency61,667 — 61,667 — 
States, municipalities and political subdivisions
General obligations
Midwest74,346 — 74,346 — 
Northeast22,762 — 22,762 — 
South94,044 — 94,044 — 
West99,078 — 99,078 — 
Special revenue
Midwest122,289 — 122,289 — 
Northeast59,732 — 59,732 — 
South215,670 — 215,670 — 
West134,649 — 134,649 — 
Foreign bonds30,906 — 30,906 — 
Public utilities107,493 — 107,493 — 
Corporate bonds
Energy32,681 — 32,681 — 
Industrials57,171 — 57,171 — 
Consumer goods and services72,844 — 72,844 — 
Health care27,429 — 27,429 — 
Technology, media and telecommunications57,497 — 57,497 — 
Financial services102,615 — 102,465 150 
Mortgage-backed securities25,013 — 25,013 — 
Collateralized mortgage obligations
Government national mortgage association110,518 — 110,518 — 
Federal home loan mortgage corporation119,989 — 119,989 — 
Federal national mortgage association48,549 — 48,549 — 
Asset-backed securities925 — — 925 
Total Available-for-Sale Fixed Maturities$1,719,790 $— $1,718,715 $1,075 
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EQUITY SECURITIES
Common stocks
Public utilities$17,940 $17,940 $— $— 
Energy13,593 13,593 — — 
Industrials31,400 31,400 — — 
Consumer goods and services56,233 56,233 — — 
Health care13,845 13,845 — — 
Technology, media and telecommunications33,973 33,973 — — 
Financial services45,822 45,822 — — 
Nonredeemable preferred stocks595 — — 595 
Total Equity Securities$213,401 $212,806 $— $595 
Short-Term Investments$275 $275 $— $— 
Money Market Accounts$43,351 $43,351 $— $— 
Corporate-Owned Life Insurance$10,755 $— $10,755 $— 
Total Assets Measured at Fair Value$1,987,572 $256,432 $1,729,470 $1,670 
The fair value of securities that are 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 and submit them primarily to a third-party valuation service provider. Any of these securities not valued by this service provider are submitted to another third-party valuation service provider. Both service providers use a market approach to find pricing of similar financial instruments. The market inputs our service providers normally seek to value our securities include the following, listed in approximate order of priority: 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 these 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.
At least annually, we review the methodologies and assumptions used by our valuation service providers and verify that they are reasonable and representative of the fair value of the underlying securities held in the investment portfolio. We validate the prices obtained from independent pricing services and brokers prior to their use for reporting purposes by evaluating their reasonableness on a monthly basis. In addition, on a quarterly basis, we also test all securities in the portfolio and independently corroborate the valuations obtained from our third-party valuation service providers. Quarterly, we also perform deep dive analyses of the pricing method used by our third-party valuation service provider by selecting a random sample of securities by asset class and reviewing methodologies. In our opinion, the pricing obtained at June 30, 2022 and December 31, 2021 was reasonable.
For the three- and six-month periods ended June 30, 2022, the change in our available-for-sale securities categorized as Level 1 and Level 2 is the result of investment purchases that were made using funds held in our money market accounts, disposals and the change in unrealized gains on both fixed maturities and equity securities.
Securities categorized as Level 3 include holdings in certain private placement fixed maturity and equity securities for which an active market does not currently exist. The fair value of our Level 3 private placement securities is determined by management relying on pricing received from our independent pricing services and brokers consistent with the process to estimate fair value for Level 2 securities. However, securities are categorized as Level 3 if these
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quotes cannot be corroborated by other market observable data due to the unobservable nature of the brokers’ valuation processes.
The following table provides a quantitative information about our Level 3 securities at June 30, 2022:
Quantitative Information about Level 3 Fair Value Measurements
Fair Value atValuation Technique(s)Unobservable inputsRange of weighted average significant unobservable inputs
June 30, 2022
Corporate bonds - financial services$150 Fair value equals costNANA
Fixed Maturities asset-backed securities842 Discounted cash flowProbability of default
4% - 6%
The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended June 30, 2022:

Corporate bonds Asset-backed securitiesEquitiesTotal
Beginning Balance - 04/01/2022$150 $889 $— $1,039 
Net unrealized gains (losses)(1)
— (47)— (47)
Ending Balance - 06/30/2022$150  $842 $— $992 
(1) Net unrealized gains (losses) are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the six-month period ended June 30, 2022:

Corporate bondsAsset-backed securitiesEquitiesTotal
Beginning Balance - 01/01/2022$150 $925 $595 $1,670 
Realized gains (losses)— — (595)(595)
Net unrealized gains (losses)(1)
— (83)— (83)
Ending Balance - 06/30/2022$150 $842 $— $992 
(1) Net unrealized gains (losses) are recorded as a component of comprehensive income.

Commercial Mortgage Loans
The following tables present the carrying value of our commercial mortgage loans and additional information at June 30, 2022 and December 31, 2021:
Commercial Mortgage Loans
June 30, 2022December 31, 2021
Loan-to-valueCarrying ValueCarrying Value
Less than 65%$29,698 $29,924 
65%-75%17,255 17,277 
Total amortized cost$46,953 $47,201 
Allowance for mortgage loan losses(66)(71)
Mortgage loans, net$46,887 $47,130 
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Mortgage Loans by Region
June 30, 2022December 31, 2021
Carrying ValuePercent of TotalCarrying ValuePercent of Total
East North Central$3,245 6.9 %$3,245 6.9 %
Southern Atlantic9,488 20.2 9,578 20.3 
East South Central7,907 16.9 8,028 17.0 
New England6,588 14.0 6,588 14.0 
Middle Atlantic14,667 31.3 14,789 31.3 
Mountain2,227 4.7 2,227 4.7 
West North Central2,831 6.0 2,746 5.8 
Total mortgage loans at amortized cost$46,953 100.0 %$47,201 100.0 %
Mortgage Loans by Property Type
June 30, 2022December 31, 2021
Carrying ValuePercent of TotalCarrying ValuePercent of Total
Commercial   
Multifamily$16,998 36.2 %$16,986 36.0 %
Office11,421 24.4 11,571 24.5 
Industrial
10,090 21.5 10,124 21.5 
Retail
2,227 4.7 2,227 4.7 
Mixed use/Other
6,217 13.2 6,293 13.3 
Total mortgage loans at amortized cost$46,953 100.0 %$47,201 100.0 %
Amortized Cost Basis by Year of Origination and Credit Quality Indicator
2022202020192018Total
Commercial mortgage loans:
Risk Rating:
1-2 internal grade$103 $5,434 $8,285 $18,094 $31,916 
3-4 internal grade— — 8,449 6,588 15,037 
5 internal grade— — — — — 
6 internal grade— — — — — 
7 internal grade— — — — — 
Total commercial mortgage loans$103 $5,434 $16,734 $24,682 $46,953 
Current-period write-offs— — — — — 
Current-period recoveries— — — — — 
Current-period net write-offs$— $— $— $— $— 

Commercial mortgage loans carrying value excludes accrued interest of $165. As of June 30, 2022, all loan receivables were current, with no delinquencies. The commercial mortgage loans originate with an initial loan-to-value ratio to provide sufficient collateral to absorb losses should a loan be required to foreclose. 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 contractual principal and interest set forth in the contractual terms of the loan. An internal grade is assigned to each mortgage
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loan, with a grade of 1 being the highest and least likely for an impairment and the lowest rating of 7 being the most likely for an impairment. An allowance for mortgage loan losses is established on each loan recognizing a loss for amounts which we believe will not be collected according to the contractual terms of the respective loan agreement. As of June 30, 2022, the Company had an allowance for mortgage loan losses of $66, summarized in the following rollforward:
Rollforward of allowance for mortgage loan losses:
As of
June 30, 2022
Beginning balance, January 1, 2022$71 
Current-period provision for expected credit losses(5)
Ending balance of the allowance for mortgage loan losses, June 30, 2022
$66 

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 primarily covers liability for damage to property of, or injury to, a person or entity other than the insured. 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 incurred but not reported, 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 work 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 take action 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.

On a quarterly basis, UFG's internal actuary performs a detailed actuarial review of IBNR reserves. This review includes a comparison of results from the most recent analysis of reserves completed by both our internal and external actuaries. Senior management meets with our internal actuary to review, on a regular and quarterly basis, the adequacy of carried reserves based on results from this actuarial analysis. 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. 

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The following table provides an analysis of changes in our property and casualty losses and loss settlement expense reserves at June 30, 2022 and December 31, 2021 (net of reinsurance amounts):
  
June 30, 2022December 31, 2021
Gross liability for losses and loss settlement expenses
at beginning of year		$1,514,265 $1,578,131 
Ceded losses and loss settlement expenses(112,900)(131,843)
Net liability for losses and loss settlement expenses
at beginning of year		$1,401,365 $1,446,288 
Losses and loss settlement expenses incurred
for claims occurring during
   Current year$297,239 $701,064 
   Prior years(15,355)(48,909)
Total incurred$281,884 $652,155 
Losses and loss settlement expense payments
for claims occurring during
   Current year$82,671 $277,115 
   Prior years260,063 419,963 
Total paid$342,734 $697,078 
Net liability for losses and loss settlement expenses
at end of year		$1,340,515 $1,401,365 
Ceded loss and loss settlement expenses119,314 112,900 
Gross liability for losses and loss settlement expenses
at end of period		$1,459,828 $1,514,265 

There are a multitude of factors that can impact loss reserve development. Those factors include, but are not limited to: historical data, the potential impact of various loss reserve development factors and trends including historical loss experience, legislative enactments, judicial decisions, legal developments in imposition of damages, experience with alternative dispute resolution, results of our medical bill review process, the potential impact of salvage and subrogation and changes and trends in general economic conditions, including the effects of inflation. All of these factors influence our estimates of required reserves and for long tail lines these factors can change over the course of the settlement of the claim. However, there is no precise method for evaluating the specific monetary impact of any individual factor on the development of reserves.
Generally, we base reserves for each claim on the estimated ultimate exposure for that claim. 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, for which settlements and verdicts can vary widely. Our reserving philosophy may result in favorable reserve development in future years that will decrease losses and loss settlement expenses for prior year claims in the year of adjustment. We realize that this philosophy, coupled with what we believe to be aggressive and successful claims management and loss settlement practices, has resulted in year-to-year redundancies in reserves. We believe our approach produces recorded reserves that are reasonably consistent as to their relative position within a range of reasonable reserves from year-to-year. However, conditions and trends that have affected the reserve development for a given year do change. Therefore, such development cannot be used to project future reserve redundancies or deficiencies.
We are not aware of any significant contingent liabilities related to environmental issues. 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.


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Reserve Development

The significant driver of the favorable reserve development in the six-month period ended June 30, 2022 was the favorable claims experience for the commercial automobile line of business and the commercial other liability business. This favorable development was partially offset by unfavorable development for the commercial fire and allied line of business. The favorable development for commercial automobile was driven by the favorable claims experience especially for accident years 2020 and 2019. The favorable development for commercial other liability was primarily due to favorable claims experience in accident years 2012 and prior in the legacy book of product liability. The unfavorable development for commercial fire and allied was driven by claim payments on commercial multiple peril claims in accident year 2021 for many of which the cause of loss was wind or hail.
The significant drivers of the favorable reserve development for the full year of 2021 were the commercial automobile line of business along with a favorable contribution from the workers' compensation line of business. This favorable development was partially offset by unfavorable development from the commercial other liability line of business. Favorable development for both the commercial automobile line of business and the workers' compensation line of business was from both loss and loss adjustment expense ("LAE"). Reserve reductions for unpaid loss and LAE were more than sufficient to offset payments. The commercial other liability line of business was adversely affected by reserve strengthening for reported claims and reserve strengthening for incurred but unreported claims. The commercial other liability line of business reserve strengthening resulted in unfavorable development because paid loss exceeded the reduction in unpaid claim reserves but favorable development for LAE partially offset the unfavorable loss development.


NOTE 5. EMPLOYEE BENEFITS

Net Periodic Benefit Cost

The components of the net periodic benefit cost for our pension and postretirement benefit plans are as follows:
Pension PlanPostretirement Benefit Plan
Three Months Ended June 30,2022202120222021
Net periodic benefit cost
Service cost$1,120 $3,020 $— $— 
Interest cost1,933 1,728 1 1 
Expected return on plan assets(4,723)(4,202)— — 
Amortization of prior service credit(820)(809)(3,771)(3,765)
Amortization of net loss194 999 706 705 
Special event plan closure— — — — 
Net periodic benefit cost$(2,296)$736 $(3,064)$(3,059)
Pension PlanPostretirement Benefit Plan
Six Months Ended June 30,2022202120222021
Net periodic benefit cost
Service cost$2,240 $6,040 $— $148 
Interest cost3,865 3,456 1 70 
Expected return on plan assets(9,445)(8,404)— — 
Amortization of prior service credit(1,640)(1,618)(7,543)(6,962)
Amortization of net loss388 1,998 1,412 1,197 
Special event plan closure— — — (20,177)
Net periodic benefit cost$(4,591)$1,472 $(6,129)$(25,724)
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A portion of the service cost component of net periodic pension and postretirement benefit costs is capitalized and amortized as part of deferred acquisition costs and is included in the line "Amortization of deferred policy acquisition costs" in the Consolidated Statements of Income and Comprehensive Income. The portion not related to the compensation and the other components of net periodic pension and postretirement benefit costs is included in the income statement line titled "other underwriting expenses."
In January 2021, the Company decided to change the post-retirement benefit plan to a voluntary plan funded exclusively by participants, commencing at the start of 2023. The impact of this decision is reflected in the table above, with a one-time adjustment presented in the line "Special event plan closure" and an additional adjustment in the line "Amortization of prior service credit" recorded in first quarter of 2021. There will be continuing amortization of prior service credits through the end of 2022 related to these plan changes.

Employer Contributions

We previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 that we planned to contribute $4,000 to the pension plan in 2022. For the six-month period ended June 30, 2022, we contributed $2,000 to the pension plan.

NOTE 6. STOCK-BASED COMPENSATION

Non-Qualified Employee Stock Award Plan
The United Fire Group, Inc. 2008 Stock Plan (the "2008 Stock Plan") authorized the issuance of restricted and unrestricted stock awards, restricted stock units, stock appreciation rights, incentive stock options, and non-qualified stock options for up to 1,900,000 shares of UFG common stock to employees. In May 2014, the Registrant's shareholders approved an additional 1,500,000 shares of UFG common stock issuable at any time and from time to time pursuant to the 2008 Stock Plan, among other amendments, and renamed such plan as the United Fire Group, Inc. Stock Plan. In May 2021, the Registrant's shareholders approved an additional 650,000 shares of UFG common stock issuable at any time and from time to time pursuant to the Stock Plan, and among other amendments, renamed such plan as the United Fire Group, Inc. 2021 Stock and Incentive Plan (as amended, the "Stock Plan"). At June 30, 2022, there were 1,281,082 authorized shares remaining available for future issuance. The Stock Plan is administered by the Board of Directors, which determines those employees who will receive awards, when awards will be granted, and the terms and conditions of the awards. The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Stock Plan. Pursuant to the Stock Plan, the Board of Directors may, at its sole discretion, grant awards to our employees, who are in positions of substantial responsibility with UFG.
Options granted pursuant to the Stock Plan are granted to buy shares of UFG's common stock at the market value of the stock on the date of grant. Options granted prior to March 2017 vest and are exercisable in installments of 20.0 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. Options granted after March 2017 vest and are exercisable in installments of 33.3 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. To the extent not exercised, vested option awards accumulate and are exercisable by the awardee, in whole or in part, in any subsequent year included in the option period, but not later than 10 years from the grant date. Restricted and unrestricted stock awards granted pursuant to the Stock Plan are granted at the market value of UFG's common stock on the date of the grant. Restricted stock units fully vest after three years or five years from the date of grant, unless accelerated upon the approval of the Board of Directors, at which time UFG common stock will be issued to the awardee.
The activity in the Stock Plan is displayed in the following table:
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Authorized Shares Available for Future Award GrantsSix Months Ended June 30, 2022 
From Inception to June 30, 2022
Beginning balance1,317,819  1,900,000 
Additional shares authorized— 2,150,000 
Number of awards granted(132,116) (3,582,872)
Number of awards forfeited or expired95,379  813,954 
Ending balance1,281,082  1,281,082 
Number of option awards exercised45,141  1,527,114 
Number of unrestricted stock awards granted— 10,090 
Number of restricted stock awards vested32,313  250,174 

Non-Qualified Non-Employee Director Stock Plan
The United Fire Group, Inc. Non-Employee Director Stock Plan (formerly known as the 2005 Non-Qualified Non- Employee Director Stock Option and Restricted Stock Plan) (the "Director Stock Plan") authorizes the issuance of restricted stock awards and non-qualified stock options to purchase shares of UFG's common stock to non-employee directors. On May 20, 2020, the Company’s shareholders approved amendments to the Director Stock Plan, previously approved by the Company’s Board of Directors, to (i) increase the number of shares available for future awards under the Director Stock Plan from 300,000 to 450,000, (ii) extend the expiration date of the Director Stock Plan from December 31, 2020 to December 31, 2029, (iii) allow for the grant of awards of restricted stock units, and (iv) rename the Director Stock Plan as the "United Fire Group, Inc. Non-Employee Director Stock Plan." At June 30, 2022, the Company had 121,492 authorized shares available for future issuance.
The Board of Directors has the authority to determine which non-employee directors receive awards, when restricted stock, restricted stock units and options shall be granted, the option price, the option expiration date, the date of grant, the vesting schedule of options or whether the options shall be immediately vested, the terms and conditions of options, restricted stock and restricted stock units (other than those terms and conditions set forth in the plan) and the number of shares of common stock to be issued pursuant to an option, restricted stock or restricted stock unit agreements (subject to limits set forth in the Director Stock Plan). The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Director Stock Plan.
The activity in the Director Stock Plan is displayed in the following table:
Authorized Shares Available for Future Award GrantsSix Months Ended June 30, 2022 
From Inception to June 30, 2022
Beginning balance144,352  300,000 
Additional authorization— 150,000 
Number of awards granted(22,860) (355,238)
Number of awards forfeited or expired—  26,730 
Ending balance121,492  121,492 
Number of option awards exercised8,580  150,581 
Number of restricted stock awards vested18,510 117,001 

Stock-Based Compensation Expense

For the three-month periods ended June 30, 2022 and 2021, we recognized stock-based compensation expense of $783 and $1,106, respectively. For the six-month periods ended June 30, 2022 and 2021, we recognized stock-based compensation expense of $1,762 and $2,114, respectively.

As of June 30, 2022, we had $5,677 in stock-based compensation expense that has yet to be recognized through our results of operations. We expect this compensation to be recognized over the remainder of 2022 and subsequent
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years according to the table below, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.
2022$1,821 
20232,575 
20241,130 
2025151 
2026— 
Total$5,677 
NOTE 7. EARNINGS PER COMMON SHARE
Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share gives effect to all dilutive common shares outstanding during the reporting period. The dilutive shares we consider in our diluted earnings per share calculation relate to our outstanding stock options, restricted stock awards and restricted stock unit awards.
We determine the dilutive effect of our outstanding stock options using the "treasury stock" method. Under this method, we assume the exercise of all of the outstanding stock options whose exercise price is less than the weighted-average market value of our common stock during the reporting period. This method also assumes that the proceeds from the hypothetical stock option exercises are used to repurchase shares of our common stock at the weighted-average market value of the stock during the reporting period. The net of the assumed stock options exercised and assumed common shares repurchased represents the number of dilutive common shares, which we add to the denominator of the earnings per share calculation.
The components of basic and diluted earnings per share were as follows for the three- and six-month periods ended June 30, 2022 and 2021:
 Three Months Ended June 30,
(In Thousands, Except Share Data)20222021
BasicDilutedBasicDiluted
Net income (loss)$(10,457)$(10,457)$13,750 $13,750 
Weighted-average common shares outstanding25,148,143 25,148,143 25,109,048 25,109,048 
Add dilutive effect of restricted stock unit awards— — — 219,700 
Add dilutive effect of stock options— — — 88,120 
Weighted-average common shares outstanding25,148,143 25,148,143 25,109,048 25,416,868 
Earnings (loss) per common share$(0.42)$(0.42)$0.55 $0.54 
Awards excluded from diluted earnings per share calculation(1)
— 392,062 — 515,984 
(1)Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.
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 Six Months Ended June 30,
(In Thousands, Except Share Data)20222021
BasicDilutedBasicDiluted
Net income$17,892 $17,892 $32,452 $32,452 
Weighted-average common shares outstanding25,124,644 25,124,644 25,097,545 25,097,545 
Add dilutive effect of restricted stock unit awards— 245,944 — 219,700 
Add dilutive effect of stock options— 40,061 — 77,483 
Weighted-average common shares outstanding25,124,644 25,410,649 25,097,545 25,394,728 
Earnings per common share$0.71 $0.70 $1.29 $1.28 
Awards excluded from diluted earnings per share calculation(1)
— 733,940 — 515,984 

NOTE 8. DEBT

Long Term Debt

The Company executed a private placement debt transaction on December 15, 2020 between UF&C, and Federated Mutual and Federated Life.

UF&C sold an aggregate principal amount of $50,000 of notes due 2040 to the Note Purchasers. One note with a principal amount of $35,000 was issued to Federated Mutual and one note with a principal amount of $15,000 was issued to Federated Life subject to the terms of their respective notes.

Interest payments under the surplus notes will be paid quarterly on March 15, June 15, September 15 and December 15 of each year (each such date, an "Interest Payment Date"). The interest rate will equal the rate that corresponds to the A.M. Best Co. (or its successor’s) financial strength rating for members of the United Fire & Casualty Pooled Group as of the applicable Interest Payment Date, as set forth in the table below. For the six-month period ended June 30, 2022, interest expense totaled $1,594. Payment of interest is subject to approval by the Iowa Insurance Division.

A.M. Best Co. Financial Strength RatingApplicable Interest Rate
A+5.875%
A6.375%
A-6.875%
B++ (or lower)7.375%

Credit Facilities

On March 31, 2020, UF&C, a wholly owned subsidiary of the Company, entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association ("Wells Fargo"), as administrative agent (the "Administrative Agent"), issuing lender, swing-line lender and lender, and the other lenders from time to time party thereto (collectively with Wells Fargo, the "Lenders"), providing for a $50,000 revolving credit facility, which includes a $20,000 letter of credit sub-facility and a $5,000 swing-line loan for working capital and other general corporate purposes. The Credit Agreement is provided by the Lenders on an unsecured basis, and UF&C has the option to increase the Credit Agreement by $100,000 if agreed to by the Lenders providing such incremental facility.

The Credit Agreement includes customary events of default, including default in payments of principals, default in payment of other indebtedness, change of control and voluntary and involuntary insolvency proceedings, the occurrence of which would allow the Lenders to accelerate payment of all amounts outstanding thereunder and terminate any further commitments to lend.
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The entry into the Credit Agreement was completed as part of the Company’s regular course of financial planning and was not initiated as a result of market conditions resulting from the COVID-19 pandemic.
There was no outstanding balance on the Credit Agreement at June 30, 2022 and 2021, respectively. For the six-month periods ended June 30, 2022 and 2021, we did not incur any interest expense related to the credit facility. We were in compliance with all covenants under the Credit Agreement at June 30, 2022.

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the three-month period ended June 30, 2022:
Liability for
Net unrealizedunderfunded
appreciationemployee
on investments
benefit costs(1)
Total
Balance as of March 31, 2022
(16,024)1,652 $(14,372)
Change in accumulated other comprehensive income (loss) before reclassifications(40,046)(3,627)(43,673)
Reclassification adjustments from accumulated other comprehensive income (loss)565 712 1,277 
Balance as of June 30, 2022
$(55,505)$(1,263)$(56,768)
(1) The preparation of financial statements in conformity with GAAP requires us to make various estimates and assumptions that affect the reporting of net periodic benefit cost, plan assets and plan obligations for each plan at the date of the financial statements. Actual results could differ from these estimates. One significant estimate relates to the calculation of the benefit obligation for each plan. We annually establish the discount rate, which is an estimate of the interest rate at which these benefits could be effectively settled, that is used to determine the present value of the respective plan's benefit obligations as of December 31.


The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the six-month period ended June 30, 2022:

Liability for
Net unrealizedunderfunded
appreciationemployee
on investments
benefit costs(1)
Total
Balance as of January 1, 2022
49,769 4,568 $54,337 
Change in accumulated other comprehensive income before reclassifications(105,588)(7,254)(112,842)
Reclassification adjustments from accumulated other comprehensive income (loss)314 1,423 1,737 
Balance as of June 30, 2022
$(55,505)$(1,263)$(56,768)
(1) The preparation of financial statements in conformity with GAAP requires us to make various estimates and assumptions that affect the reporting of net periodic benefit cost, plan assets and plan obligations for each plan at the date of the financial statements. Actual results could differ from these estimates. One significant estimate relates to the calculation of the benefit obligation for each plan. We annually establish the discount rate, which is an estimate of the interest rate at which these benefits could be effectively settled, that is used to determine the present value of the respective plan's benefit obligations as of December 31.

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NOTE 10. LEASES

The Company has operating leases consisting of office space, vehicle leases, computer equipment, and office equipment. Lease terms and options vary in the Company's operating leases dependent upon the underlying leased asset. We exclude options to extend or terminate a lease from our recognition as part of our right-of-use assets and lease liabilities until those options are known and/or executed, as we typically do not exercise options to purchase the underlying leased asset. As of June 30, 2022, we have leases with remaining terms of one year to seven 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.
The components of our operating leases were as follows for the three- and six-month periods ended June 30, 2022 and 2021:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Components of lease expense:
Operating lease expense$2,191 $1,767 $4,368 $3,549 
Less sublease income53 53 107 107 
Net lease expense2,138 1,714 4,261 3,442 
Cash flows information related to leases:
Operating cash outflow from operating leases2,157 1,731 4,300 3,478 




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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."

CRITICAL ACCOUNTING POLICIES
Critical accounting policies are defined as those that are representative of significant judgments and uncertainties and that potentially 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, 2021. There have been no changes in our critical accounting policies from December 31, 2021.

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, 2021. 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

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 offices. Our property and casualty insurance company subsidiaries are licensed in 50 states plus the District of Columbia and are represented by approximately 1,000 independent agencies.
Our primary sources of revenue are premiums and investment income. Major categories of expenses from our operations include losses and loss settlement expenses, underwriting and other operating expenses.
Reportable Segments

Our property and casualty insurance business operates and reports as one business segment. For more information, refer to Part I, Item 1, Note 1. "Nature of Operations and Basis of Presentation."
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Lloyd's Syndicates
As of January 1, 2021, the Company became a member of Lloyd's of London ("Lloyd's"). As a member of Lloyd's, the Company is required to maintain capital at Lloyd's, referred to as Funds at Lloyd's ("FAL"), to support underwriting of property and casualty and reinsurance business by Syndicate 1492, Syndicate 1729, Syndicate 1969, Syndicate 1971, Syndicate 4747, Syndicate 2988 and Syndicate 1699. At June 30, 2022, the Company's FAL investments were comprised of cash of $21.3 million on deposit with Lloyd's in order to satisfy these FAL requirements.
Personal Lines Business

In May 2020, the Company entered into a renewal rights agreement for our personal lines business, providing our independent insurance agents with the opportunity to transfer their personal lines policies to Nationwide Mutual Insurance Company ("Nationwide") beginning in the third quarter of 2020. Nationwide has been offering replacement policies to most of our personal lines policyholders at the time of renewal. The transfer of policies is substantially complete, with New Jersey being the only state where the Company has personal lines policies in force as of June 30, 2022. These policies will lapse over the next three years.

Pooling Arrangement

All of our property and casualty insurance subsidiaries are members of an intercompany reinsurance pooling arrangement. The Company's pooling arrangement permits 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.

Geographic Concentration

For the six-month period ended June 30, 2022, approximately 44.7 percent of our property and casualty premiums were written in Texas, California, Iowa, Missouri, and New Jersey.
Profit Factors
Our profitability is influenced by many factors, including price, competition, economic conditions, investment returns, interest rates, catastrophic events and other natural disasters, man-made disasters, state regulations, court decisions, and changes in the law. To manage these risks and uncertainties, we seek to achieve consistent profitability through strong agency relationships, exceptional customer service, fair and prompt claims handling, disciplined underwriting, superior loss control services, prudent management of our investments, appropriate matching of assets and liabilities, effective use of ceded reinsurance and effective and efficient use of technology.

COVID-19

The spread of the COVID-19 virus, beginning in mid-March 2020, caused significant financial market volatility, economic uncertainty and interruptions to normal business activities. The COVID-19 pandemic has had a profound impact on day-to-day life, financial markets and the economy in the United States. The Company, in response to the challenges presented by the COVID-19 pandemic, activated its pre-existing business continuity plans to respond to a pandemic in mid-March 2020. With the exception of our essential services employees, UFG dispatched its staff to work remotely for the safety, health and well-being of our employees. We have been and continue to be fully operational during the pandemic. In the second half of 2021, we gave employees the option to work fully remote, a hybrid schedule or return to the workplace 100 percent of the time depending on the position and with manager approval. Our employees who are working in the office are following recommended health and safety policies. We continue to evaluate our plan and will make any necessary adjustments in light of the emergence of variant strains and current case counts where our offices are located. We have implemented and will continue to implement any safety measures necessary for the safety and health of our employees.

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The implementation of our business continuity plans did not have a material effect on our internal control environment. We believe our operational processes, internal controls over financial reporting and disclosures, and financial reporting systems are operating effectively in the present environment.
Nearly all of the policies we have issued contain contract language that specifically excludes business interruption coverage for losses due to viruses such as the COVID-19 pandemic, but we continue to carefully scrutinize each claim and intend to afford coverage when appropriate. At this time, we expect the effect of the COVID-19 pandemic on claims currently under our coverages to be manageable, based on the information presently available. However, the effects of the COVID-19 pandemic, including the emergence of variant strains, continue to evolve and we cannot predict the extent to which our business, results of operations, financial condition or liquidity will ultimately be impacted. Additionally, if established written contract policy exclusions of business interruption coverage for losses attributable to the COVID-19 pandemic are voided or changed through legislation, regulations or interpretations by the courts, such changes have the potential to materially increase claims, losses and legal expenses which could impact our business, financial condition, results of operations and liquidity.

As of June 30, 2022, we intend to keep all assets currently leased and honor the terms of the contracts. Also, we have four lease contracts where we are the lessor which we evaluated for impairment. As of June 30, 2022, all payments on these contracts had been received and we fully expect to receive all future payments on time. In the event that we receive any lease-related relief provided to mitigate the economic effects of the COVID-19 pandemic, we elect not to evaluate whether or not the relief represents a lease modification.
The Company's investment philosophy, objectives, approach and program have not changed as a result of the COVID-19 pandemic.
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FINANCIAL HIGHLIGHTS
 Three Months Ended June 30,Six Months Ended June 30,
(In Thousands, Except Ratios)2022 2021 %20222021%
Revenues     
Net premiums earned$231,262  $224,703  2.9 %$465,490 $483,928 (3.8)%
Investment income, net of investment expenses9,180  13,795  (33.5)20,456 30,876 (33.7)
Net investment gains (losses)(20,932) 6,004  NM(21,397)30,512 (170.1)
Other income (loss)26  (90) (128.9)1 (169)(100.6)
Total revenues$219,536  $244,412  (10.2)%$464,550 $545,147 (14.8)%
     
Benefits, Losses and Expenses    
Losses and loss settlement expenses$151,508  $152,139  (0.4)%$281,884 $358,537 (21.4)%
Amortization of deferred policy acquisition costs52,538  46,007  14.2 103,009 99,272 3.8 
Other underwriting expenses28,754  28,400  1.2 57,398 46,768 22.7 
Interest expense797 1,594 (50.0)1,594 1,594 — 
Total benefits, losses and expenses$233,597  $228,140  2.4 %$443,885 $506,171 (12.3)%
Income (loss) before income taxes$(14,061) $16,272  (186.4)%$20,665 $38,976 (47.0)
Federal income tax expense (benefit)(3,604) 2,522  (242.9)2,773 6,524 (57.5)
Net income (loss)$(10,457) $13,750  (176.1)$17,892 $32,452 (44.9)%
GAAP Ratios:   
Net loss ratio (without catastrophes)53.4 % 58.1 %(8.1)%53.3 %63.6 %(16.2)%
Catastrophes - effect on net loss ratio12.1  9.6 26.0 7.3 10.5 (30.5)
Net loss ratio(1)
65.5 % 67.7 %(3.2)%60.6 %74.1 %(18.2)%
Expense ratio(2)
35.2  33.1 6.3 34.4 30.2 13.9 
Combined ratio(3)
100.7 % 100.8 %(0.1)%95.0 %104.3 %(8.9)%
(1) The net loss ratio is calculated by dividing the sum of losses and loss settlement expenses by net premiums earned. We use the net loss ratio as a measure of the overall underwriting profitability of the insurance business we write and to assess the adequacy of our pricing. Our net loss ratio is meaningful in evaluating our financial results as reported in our unaudited Consolidated Financial Statements.
(2) The expense ratio is calculated by dividing other underwriting expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company's operational efficiency in producing, underwriting and administering its insurance business.
(3) The combined ratio is a commonly used financial measure of property and casualty underwriting performance. A combined ratio below 100.0 percent generally indicates a profitable book of business. The combined ratio is the sum of the net loss ratio and the underwriting expense ratio.
NM = Not meaningful

The following is a summary of our financial performance for the three- and six-month periods ended June 30, 2022:

RESULTS OF OPERATIONS

For the three-month period ended June 30, 2022, net loss was $10.5 million compared to a net income of $13.8 million for the same period of 2021. The change was primarily due to a decrease in the fair value of our investments in equity securities and a decrease in investment income partially offset by an increase in net premiums earned.

For the six-month period ended June 30, 2022, net income was $17.9 million compared to a net income of $32.5 million for the same period of 2021. The change was primarily due to a decrease in the fair value of our investments in equity securities, a decrease in net premiums earned and a decrease in investment income partially offset by a decrease in losses and loss settlement expenses.
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Net premiums earned increased 2.9 percent and decreased 3.8 percent during the three- and six-month periods ended June 30, 2022 compared to the same periods of 2021. Profitable growth is our primary consideration when putting new business on the books. Beginning in second quarter of 2022, we started to see some positive signs of growth after two years of focusing on improving profitability through non-renewal of underperforming accounts in our commercial auto line of business and our exit of the personal lines business.

Net investment income was $9.2 million for the second quarter of 2022 as compared to $13.8 million for the same period in 2021. Year-to-date, net investment income was $20.5 million compared to net investment income of $30.9 million for the same period in 2021. The decrease in net investment income in the three- and six-month periods ended June 30, 2022 was primarily due to the change in the fair value of our investments in limited liability partnerships. The valuation of these investments in limited liability partnerships varies from period to period due to the current equity market conditions, specifically related to financial institutions.

The Company recognized net investment losses of $20.9 million during the second quarter of 2022, compared to net investment gains of $6.0 million for the same period in 2021. Year to date, the Company recognized net investment losses of $21.4 million during the six-month period ended June 30, 2022, compared to net investment gains of $30.5 million for the same period in 2021. The change in the three- and six-month periods ended June 30, 2022 as compared to the same period in 2021 was primarily due to the change in the fair value of our investments in equity securities.

Losses and loss settlement expenses decreased by 0.4 percentage points and 21.4 percentage points during the three- and six-month periods ended June 30, 2022, respectively, compared to the same period in 2021. The year-to-date change was primarily driven by lower catastrophe losses and a decrease in frequency and severity of claims.

The GAAP combined ratio decreased by 0.1 percentage point to 100.7 percent for the second quarter of 2022, compared to 100.8 percent in the same period in 2021. For the six-month period ended June 30, 2022, the GAAP combined ratio decreased 9.3 percentage points to 95.0 percent compared to 104.3 percent for the six-month period ended June 30, 2021. The decrease in the combined ratio during the three- and six-month periods ended June 30, 2022 as compared to the same periods in 2021 was driven by a decrease in the net loss ratio.

The GAAP net loss ratio decreased 2.2 percentage points during the second quarter of 2022 as compared to the same period in 2021. Year-to-date, the GAAP net loss ratio decreased 13.5 percentage points to 60.6 percent compared to 74.1 percent for the six-month period ended June 30, 2021. The year-to-date change was primarily driven by lower catastrophe losses and a decrease in the frequency and severity of claims.

Pre-tax catastrophe losses in the second quarter of 2022 added 12.1 percentage points to the combined ratio in second quarter of 2022, which is 1.0 percentage point above our 10-year historical average for the second quarter. This compares to 9.6 percentage points added to the combined ratio in the second quarter of 2021. During the second quarter of 2022, the higher than average catastrophe losses were driven by 18 smaller catastrophic events which collectively resulted in above average catastrophe losses. Year-to-date, catastrophe losses totaled $34.2 million ($1.06 per diluted share) compared to $50.9 million ($1.58 per diluted share) for the same period in 2021, which included losses from winter storm Uri, which was a full retention loss, with losses in excess of our stated reinsurance retention of $20.0 million.

The underwriting expense ratio for the second quarter of 2022 was 35.2 percent compared to 33.1 percent for the second quarter of 2021. The increase is primarily driven by an increase in technology and employee expenses. Year-to-date, the underwriting expense ratio was 34.4 percent compared to 30.2 percent in the same period in 2021. The increase in the expense ratio during the first half of 2022 was primarily due to the one-time benefit recognized in first quarter of 2021 from the change in the design of our employee post-retirement health benefit plan.

For a detailed discussion of our investment results, refer to the "Investment Portfolio" section below.



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Reserve Development

For many liability claims, significant periods of time, ranging up to several years, and for certain construction defect claims, more than a decade, may elapse between the occurrence of the loss, the reporting of the loss to us and the settlement or other disposition of the claim. As a result, loss experience in the more recent accident years for the long-tail liability coverages has limited statistical credibility in our reserving process because a relatively small proportion of losses in these accident years are reported claims and an even smaller proportion are paid losses. In addition, long-tail liability claims are more susceptible to litigation and can be significantly affected by changing contract interpretations and the legal environment. Consequently, the estimation of loss reserves for long-tail coverages is more complex and subject to a higher degree of variability. Reserves for these long-tail coverages represent a significant portion of our overall carried reserves.

When establishing reserves and monitoring reserve adequacy, we analyze historical data and consider the potential impact of various loss development factors and trends, including historical loss experience, legislative enactments, judicial decisions, legal developments in imposition of damages, experience with alternative dispute resolution, results of our medical bill review process, the potential impact of salvage and subrogation, and changes and trends in general economic conditions, including the effects of inflation. All of these factors influence our estimates of required reserves and, for long-tail lines these factors can change over the course of the settlement of the claim. However, there is no precise method for evaluating the specific dollar impact of any individual factor on the development of reserves.

Our reserving philosophy is to reserve claims to their ultimate expected loss amount as soon as practicable after information about a claim becomes available. This approach tends to produce, on average, cautiously pessimistic case reserves, which we expect to result in some level of favorable development over the course of settlement.

2022 Development

The property and casualty insurance business experienced $8.6 million and $15.4 million of favorable development in our net reserves for prior accident years for the three- and six-month periods ended June 30, 2022, respectively. For the six-month period ended June 30, 2022 the overall favorable development was primarily driven by the changes in two lines of business: commercial automobile line of business and commercial other liability line of business, each with $16.5 million and $ 9.4 million, respectively, in net ultimate loss & LAE estimates. The favorable reserve development was partially offset by $10.6 of net unfavorable reserve development for all other lines of business including commercial fire and allied line of business with an $8.7 million increase and workers compensation with a $2.4 million increase.

2021 Development

The property and casualty insurance business experienced $1.8 million and $15.0 million of favorable development in our net reserves for prior accident years for the three- and six-month periods ended June 30, 2021, respectively. For the six-month period ended June 30, 2021 the majority of favorable development was from the commercial automobile line of business with $10.4 million favorable development, followed by the workers' compensation line of business with $6.1 million favorable development. These were partially offset by unfavorable development from the commercial liability line of business with $10.0 million. All other lines of insurance, in total, contributed $8.5 million of favorable development.

Development amounts can vary significantly from quarter-to-quarter and year-to-year depending on a number of factors, including the number of claims settled and the settlement terms, and are subject to reallocation between accident years and lines of business. At June 30, 2022, our total reserves were within our actuarial estimates.
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The following tables display our net premiums earned, net losses and loss settlement expenses and net loss ratio by line of business:
Three Months Ended June 30,20222021
  Net Losses  Net Losses 
  and Loss  and Loss 
 NetSettlementNetNetSettlementNet
(In Thousands, Except Ratios)PremiumsExpensesLossPremiumsExpensesLoss
UnauditedEarnedIncurredRatioEarnedIncurredRatio
Commercial lines      
Other liability$74,523 $37,320 50.1 %$74,654 $44,723 59.9 %
Fire and allied lines53,350 51,304 96.2 58,277 42,203 72.4 
Automobile52,756 42,595 80.7 63,270 42,396 67.0 
Workers' compensation13,737 13,155 95.8 15,575 14,556 93.5 
Fidelity and surety8,824 1,750 19.8 7,137 1,012 14.2 
Miscellaneous271 (18)(6.6)335 16 4.8 
Total commercial lines$203,461 $146,106 71.8 %$219,248 $144,906 66.1 %
   
Personal lines  
Fire and allied lines$648 $(242)(37.3)$4,340 $6,409 147.7 %
Automobile— (415)NM2,295 2,261 98.5 
Miscellaneous15 (72)NM110 (1,450)NM
Total personal lines$663 $(729)(110.0)$6,745 $7,220 107.0 %
Reinsurance assumed$27,138 $6,131 22.6 $(1,290)$13 NM
Total$231,262 $151,508 65.5 %$224,703 $152,139 67.7 %
NM = Not meaningful
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Six Months Ended June 30,20222021
  Net Losses  Net Losses 
  and Loss  and Loss 
 NetSettlementNetNetSettlementNet
(In Thousands, Except Ratios)PremiumsExpensesLossPremiumsExpensesLoss
UnauditedEarnedIncurredRatioEarnedIncurredRatio
Commercial lines      
Other liability$145,092 $74,121 51.1 %$150,013 $86,870 57.9 %
Fire and allied lines112,098 96,540 86.1 116,609 105,177 90.2 
Automobile105,988 74,928 70.7 129,247 109,598 84.8 
Workers' compensation28,346 18,233 64.3 32,077 22,336 69.6 
Fidelity and surety16,944 2,125 12.5 14,497 2,091 14.4 
Miscellaneous550 144 26.2 684 (2)(0.3)
Total commercial lines$409,018 $266,091 65.1 %$443,127 $326,070 73.6 %
   
Personal lines  
Fire and allied lines$1,598 $949 59.4 %$10,561 $11,018 104.3 %
Automobile1 (1,144)NM6,335 5,561 87.8 
Miscellaneous32 (90)(281.3)287 (1,360)NM
Total personal lines$1,631 $(285)(17.5)$17,183 $15,219 88.6 
Reinsurance assumed$54,841 $16,078 29.3 $23,618 $17,248 73.0 
Total$465,490 $281,884 60.6 %$483,928 $358,537 74.1 %
NM = Not meaningful

Below are explanations regarding significant changes in the net loss ratios by line of business:
•Commercial fire and allied lines - The net loss ratio deteriorated 23.8 percentage points and improved 4.1 percentage points, respectively, in the three- and six-month periods ended June 30, 2022 as compared to the same periods in 2021. The change in both periods is attributable to the change in catastrophe losses. Pre-tax catastrophe losses in the second quarter of 2022 added 12.1 percentage points to the combined ratio in second quarter of 2022, which is 1.0 percentage point above our 10-year historical average for second quarter catastrophe losses of 11.1 percentage points added to the combined ratio. This compares to 9.6 percentage points added to the combined ratio in the second quarter of 2021. During the second quarter of 2022, the higher than average catastrophe losses was driven by 18 smaller catastrophic events which collectively resulted in above average catastrophe losses. Year-to-date, catastrophe losses totaled $34.2 million ($1.06 per diluted share) compared to $50.9 million ($1.58 per diluted share) for the same period in 2021, which included losses from winter storm Uri, which was a full retention loss, with losses in excess of our stated reinsurance retention of $20.0 million.

•Commercial automobile - The net loss ratio deteriorated 13.7 percentage points and improved 14.1 percentage points, respectively, in the three- and six-month periods ended June 30, 2022 as compared to the same periods in 2021. The deterioration in the second quarter of 2022 was primarily due to changes in IBNR reserves. There were net releases of IBNR in both second quarter 2021 and 2022 due to a decrease in frequency and severity of claims. However, the release in second quarter 2021 was significantly larger than second quarter 2022. Year-to-date, the improvement is attributable to a decrease in severity of commercial auto losses, which is the direct result of our strategic plan to increase the quality of our commercial auto book of business through non renewing underperforming accounts and rate increases.

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•Reinsurance assumed - The net loss ratio improved 43.7 percentage points in the six-month period ended June 30, 2022 as compared to the same period of 2021. The improvement is attributable to favorable loss experience and attractive reinsurance rates.

Financial Condition

Stockholders' equity decreased to $780.9 million at June 30, 2022, from $879.1 million at December 31, 2021. The Company's book value per share was $31.00, which is a decrease of $4.05 per share, or 11.6 percent, from December 31, 2021. The decrease is primarily attributable to the $105.3 million decrease in the net unrealized value from our fixed maturity securities, net of tax, and shareholder dividends of $7.8 million, partially offset by net income of $17.9 million during the first six months of 2022.

Investment Portfolio

Our invested assets totaled $1.9 billion at June 30, 2022, compared to $2.1 billion at December 31, 2021, a decrease of $175.9 million. At June 30, 2022, fixed maturity securities and equity securities made up 84.6 percent and 8.6 percent of the value of our investment portfolio, respectively. Because the primary purpose of our investment portfolio is to fund future claims payments, we use a conservative investment philosophy, investing in a diversified portfolio of high-quality, intermediate-term taxable corporate bonds, taxable U.S. government bonds and tax-exempt U.S. municipal bonds.

Composition
We develop our investment strategies based on a number of factors, including estimated duration of reserve liabilities, short- and long-term liquidity needs, projected tax status, general economic conditions, expected rates of inflation, regulatory requirements, interest rates and credit quality of assets. 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 composition of our investment portfolio at June 30, 2022 is presented at carrying value in the following table:
 Property & Casualty Insurance
   Percent
(In Thousands, Except Ratios)  of Total
Fixed maturities (1)
 
Available-for-sale$1,597,284 84.6 %
Equity securities163,241  8.6 
Mortgage loans46,887  2.5 
Other long-term investments81,146  4.3 
Short-term investments275  — 
Total$1,888,833  100.0 %
(1) Available-for-sale securities fixed maturities are carried at fair value.

As of June 30, 2022 and December 31, 2021, we did not have direct exposure to investments in subprime mortgages or other credit enhancement vehicles.



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Credit Quality

The table below shows the composition of fixed maturity securities held in our available-for-sale and trading security portfolios, by credit rating at June 30, 2022 and December 31, 2021. Information contained in the table is generally based upon the issued credit ratings provided by Moody's, unless the rating is unavailable, in which case we obtain credit ratings from Standard & Poor's.
(In Thousands, Except Ratios)June 30, 2022 December 31, 2021
RatingCarrying Value % of Total Carrying Value % of Total
AAA$566,340  35.4 % $670,222  39.0 %
AA518,875  32.5  586,426  34.1 
A234,627  14.7  209,076  12.2 
Baa/BBB263,066  16.5  241,547  14.0 
Other/Not Rated14,376  0.9  12,519  0.7 
 $1,597,284  100.0 % $1,719,790  100.0 %

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 we use to quantify our inherent interest rate risk and analyze our ability to match our invested assets to our reserve liabilities. If our invested assets and reserve liabilities have similar durations, then any change in interest rates will have an equal effect on these accounts. The primary purpose for matching invested assets and reserve liabilities is liquidity. 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.
Investment Results
We invest the premiums received from our policyholders in order to generate investment income, which is an important component of our revenues and profitability. The amount of investment income that we are able to generate is affected by many factors, some of which are beyond our control. Some of these factors are volatility in the financial markets, economic growth, inflation, interest rates, world political conditions, terrorist attacks or threats of terrorism, adverse events affecting other companies in our industry or the industries in which we invest and other unpredictable national or world events. Our net investment income decreased in the three- and six-month periods ended June 30, 2022, compared with the same period of 2021 primarily due to the change in the fair value of our investments in limited liability partnerships.
We hold certain investments in limited liability partnerships that are recorded on the equity method of accounting, with changes in value of these investments recorded in investment income. In the three- and six-month periods ended June 30, 2022, the change in value of our investments in limited liability partnerships resulted in an investment loss of $3.9 million and $4.1 million as compared to investment income of $2.5 million and $9.5 million in the same periods of 2021.
We had net investment losses of $20.9 million and $21.4 million during the three- and six-month periods ended June 30, 2022, as compared to net investment gains of $6.0 million and $30.5 million in the same periods of 2021. The change in the three- and six-month periods ended June 30, 2022 as compared to the same periods in 2021 was primarily due to the change in the fair value of our equity securities investments.
We regularly monitor the difference between our cost basis and the estimated fair value of our investments. For our available-for-sale fixed-maturity portfolio an allowance for credit losses is recorded net of available-for-sale fixed maturities in the Consolidated Balance Sheets and a corresponding credit loss recognized as a realized loss or gain in the Consolidated Statements of Income and Comprehensive Income. The Company determines if an allowance for credit losses is recorded based on a number of factors including the current economic conditions, management's expectations of future economic conditions and performance indicators, such as market value vs. amortized cost, investment spreads widening or contracting, rating actions, payment and default history.
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Non-credit related changes in unrealized gains and losses on available-for-sale fixed maturity securities are recognized as a component of other comprehensive income, impact stockholders' equity and book value per share, but do not affect net income. We believe that any unrealized losses on our available-for-sale securities at June 30, 2022 are temporary based upon our current analysis of the issuers of the securities that we hold and current market conditions. 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.
For mortgage loans, an allowance for losses is established based on historical loss information of the collective pool of the Company's commercial mortgage loan investments that have similar risk characteristics. This allowance is presented as a separate line in the Consolidated Balance Sheets with an offset to "Net investment gains (losses)" in the Consolidated Statements of Income and Comprehensive Income.
To calculate the allowance for mortgage loan losses, the Company starts with historical loan experience to predict the future expected losses and then layers on a market-linked adjustment. An example of a market linked adjustment is the change in commercial market price appreciation or change in gross domestic product, with every point of fall leading to an increase in loss reserve. Local market economics are also considered. On a quarterly basis, quantitative credit risk metrics, including for example, cash-flows, rent rolls and financial statements are reviewed for each loan to determine if it is performing in line with its expectations.

LIQUIDITY AND CAPITAL RESOURCES
Liquidity measures our ability to generate sufficient cash flows to meet our short- 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, pension plan contributions, and in recent years, common stock repurchases.
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.
Historically, we have generated substantial cash inflows from operations. It is our policy to invest the cash generated from operations in securities with maturities that, in the aggregate, correlate to the anticipated timing of payments for losses and loss settlement expenses. The majority of our assets are invested in available-for-sale fixed maturity securities.




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The following table displays a consolidated summary of cash sources and uses for the six-month periods ended June 30, 2022 and 2021:
Cash Flow SummarySix Months Ended June 30,
(In Thousands)2022 2021
Cash provided by (used in)   
Operating activities$(15,874) $34,830 
Investing activities(17,529) 4,699 
Financing activities(6,767) (8,958)
Net change in cash and cash equivalents$(40,170) $30,571 
Our cash flows were sufficient to meet our liquidity needs for the six-month periods ended June 30, 2022 and 2021 and we anticipate they will be sufficient to meet our future liquidity needs for at least the next twelve months. We also have the ability to draw on our credit facility if needed.
Operating Activities

Net cash flows from operating activities had outflows of $15.9 million and inflows of $34.8 million for the six-month periods ended June 30, 2022 and 2021, respectively. In the six-month period ended June 30, 2022, the net operating cash outflows were driven by the expansion of our assumed reinsurance business and the acceleration of timing of payments related to the settlement of claims.
Investing Activities
Cash in excess of operating requirements is generally invested in fixed maturity securities and equity securities. Fixed maturity securities provide regular interest payments and allow us to match the duration of our liabilities. Equity securities provide dividend income, potential dividend income growth and potential appreciation. For further discussion of our investments, including our philosophy and our strategy for our portfolio, see the "Investment Portfolio" section of this Item 2.
In addition to investment income, possible sales of investments and proceeds from calls or maturities of fixed maturity securities also can provide liquidity. During the next five years, $500.9 million, or 31.4 percent, of our fixed maturity portfolio will mature.
We invest funds required for short-term cash needs primarily in money market accounts, which are classified as cash equivalents. At June 30, 2022, our cash and cash equivalents included $41.5 million related to these money market accounts, compared to $43.4 million at December 31, 2021.
Net cash flows used by investing activities were $17.5 million outflow for the six-month period ended June 30, 2022, compared to net cash flows provided by investing activities of $4.7 million inflow for the six-month period ended June 30, 2021. For the six-month periods ended June 30, 2022 and 2021, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $171.7 million and $272.4 million, respectively.
Our cash outflows for investment purchases were $190.0 million for the six-month period ended June 30, 2022, compared to $260.2 million for the same period of 2021.
Financing Activities
Net cash flows used in financing activities was $6.8 million for the six-month period ended June 30, 2022 which decreased $2.2 million compared to $9.0 million used in the six-month period ended June 30, 2021.


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Credit Facilities

On March 31, 2020, United Fire & Casualty Company, as borrower ("Borrower"), wholly owned subsidiary of United Fire Group, Inc. entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association ("Wells Fargo"), as administrative agent, issuing lender, swing line lender and lender, and the other lenders from time to time party thereto (collectively with Wells Fargo, the "Lenders"), providing for a $50 million revolving credit facility, which includes a $20 million letter of credit sub-facility and a $5 million swing line loan for working capital and other general corporate purposes. The Credit Agreement is provided on an unsecured basis, and the Borrower has the option to increase the Credit Agreement by $100 million if agreed to by the Lenders providing such incremental facility. As of June 30, 2022 and 2021, there were no balances outstanding under the Credit Agreement. For the six-month period ended June 30, 2022 and 2021, we did not incur any interest expense related to the credit facility. For further discussion of the Credit Agreement, refer to Part I, Item 1, Note 8 "Debt."
Dividends
Dividends paid to shareholders totaled $7.8 million and $7.5 million in the six-month periods ended June 30, 2022 and 2021, respectively. Our practice has been to pay quarterly cash dividends, which we have paid every quarter since March 1968.
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, we rely on dividends received from our insurance company subsidiaries in order to pay dividends to our common shareholders. Dividends payable by our insurance subsidiaries are governed by the laws in the states in which they are domiciled, and if applicable, commercially 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, or net income of the preceding calendar year on a statutory basis, 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, 2022, UFG's sole direct insurance company subsidiary, United Fire & Casualty Company, is able to make a maximum of $68.4 million in dividend payments without prior regulatory approval. We do not believe that these restrictions have a material impact in meeting the cash obligations of UFG.
Stockholders' Equity
Stockholders' equity decreased to $780.9 million at June 30, 2022, from $879.1 million at December 31, 2021. The Company's book value per share was $31.00, which is a decrease of $4.05 per share, or 11.6 percent, from December 31, 2021. The decrease is primarily attributable to the $105.3 million decrease in the net unrealized value from our fixed maturity securities, net of tax, stockholders' dividends of $7.8 million, partially offset by net income of $17.9 million during the first six months of 2022.

Funding Commitments

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through July 10, 2030, to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $19.8 million at June 30, 2022.

In addition, the Company invested $25.0 million in December 2019 in a limited liability partnership investment fund that is subject to a three year lockup with a 60 day minimum notice, with 4 possible repurchase dates per year after the three-year lockup period has concluded. The fair value of the investment at June 30, 2022 was $24.8 million and there are no remaining capital contribution obligations with this investment.

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MEASUREMENT OF RESULTS
Management evaluates our operations by monitoring key measures of growth and profitability. The following section provides further explanation of the key measures management uses to evaluate our results.

Catastrophe losses is a commonly used financial measure that uses the designations of the Insurance Services Office ("ISO") and are reported with losses and loss settlement expense amounts net of reinsurance recoverables, unless specified otherwise. According to the ISO, a catastrophe loss is defined as a single unpredictable incident or series of closely related incidents that result in $25.0 million or more in U.S. industry-wide direct insured losses to property and that affect a significant number of insureds and insurers ("ISO catastrophe"). In addition to ISO catastrophes, we also include as catastrophes those events ("non-ISO catastrophes"), 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. Management, at times, may determine for comparison purposes that it is more meaningful to exclude extraordinary catastrophe losses and resulting litigation. The frequency and severity of catastrophe losses we experience in any year affect our results of operations and financial position. In analyzing the underwriting performance of our property and casualty insurance business, we evaluate performance both including and excluding catastrophe losses. Portions of our catastrophe losses may be recoverable under our catastrophe reinsurance agreements. We include a discussion of the impact of catastrophes because we believe it is meaningful for investors to understand the variability in our periodic earnings.
 Three Months Ended June 30,Six Months Ended June 30,
(In Thousands)2022 202120222021
ISO catastrophes$26,459 $21,082 $34,364 $48,171 
Non-ISO catastrophes (1)
1,529 531 (199)2,688 
Total catastrophes$27,988 $21,613 $34,165 $50,859 
(1) This number includes international assumed losses.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk arising from potential losses in our investment portfolio due to adverse changes in interest rates and market prices. However, we have the ability to hold fixed maturity investments to maturity. Our investment guidelines define the overall framework for managing our market and other investment risks, including accountability and controls. In addition, each of our subsidiaries has specific investment policies that delineate the investment limits and strategies that are appropriate given each entity's liquidity, surplus, product, and regulatory requirements. We respond to market risk by managing the character of investment purchases.

It is our philosophy that we do not utilize financial hedges or derivative financial instruments to manage risks, nor do we enter into any swap, forward or option contracts, but attempt to mitigate our exposure through active portfolio management. In addition, we place the majority of our investments in high-quality, liquid securities and limit the amount of credit exposure to any one issuer. At June 30, 2022, we did not have direct exposure to investments in sub-prime mortgages or other credit-enhancement exposures.

Our primary market risks are exposure to changes in interest rates and equity prices, and we have limited exposure to foreign currency exchange rates.

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. Based on this evaluation, no such change in our internal control over financial reporting occurred during the fiscal quarter to which this report relates. We believe our operational processes, internal controls over financial reporting and disclosures, and financial reporting systems are operating effectively in the present environment.

50














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, 2022 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, 2021 filed with the SEC on February 25, 2022. 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Under our share repurchase program, first announced in August 2007, we may purchase UFG common stock from time to time 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.

The following table provides information with respect to purchases of shares of common stock made by or on our behalf or by any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three-month period ended June 30, 2022:
   Total Number of SharesMaximum Number of
 Total Purchased as a Part ofShares that may yet be
 Number ofAverage PricePublicly AnnouncedPurchased Under the
PeriodShares PurchasedPaid per SharePlans or Programs
Plans or Programs(1)
4/1/2022 - 4/30/2022— $— — 1,719,326 
5/1/2022 - 5/31/2022— — — 1,719,326 
6/1/2022 - 6/30/2022— — — 1,719,326 
Total— $— — 1,719,326 
(1) Our share repurchase program was originally announced in August 2007. In August 2016, our Board of Directors authorized the repurchase of up to an additional 1,500,000 shares of common stock through the end of August 2018. This is in addition to the 1,528,886 shares of common stock remaining under its previous authorizations. In August 2018, our Board of Directors extended our share repurchase program through the end of August 2020. In August 2020, our Board of Directors extended our share repurchase program through the end of August 2022. As of June 30, 2022, we remained authorized to repurchase 1,719,326 shares of common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.


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ITEM 5. OTHER INFORMATION

None.
52
Table of Contents














ITEM 6. EXHIBIT INDEX
Exhibit numberExhibit descriptionFurnished herewithFiled herewith
10.1*
Retirement Agreement between United Fire Group, Inc. and Randy Ramlo dated July 6, 2022 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K/A filed on July 12, 2022).
10.2*
Executive Employment Offer Letter, dated July 6, 2022, between the United Fire Group, Inc. and Kevin J. Leidwinger (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on July 7, 2022).
31.1X
31.2X
32.1X
32.2X
101.1
The following financial information from United Fire Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in Inline eXtensible Business Reporting Language (Inline XBRL): (i) Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021; (ii) Consolidated Statements of Income and Comprehensive Income (unaudited) for the three- and six-months ended June 30, 2022 and 2021 (iii) Consolidated Statement of Stockholders’ Equity (unaudited) for the three- and six-months ended June 30, 2022 and 2021; (iv) Consolidated Statements of Cash Flows (unaudited) for the six-months ended June 30, 2022 and 2021; and (v) Notes to Unaudited Consolidated Financial Statements, tagged as a block of text.

X
104.1X
*Indicates a management contract or compensatory plan or arrangement.
53
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITED FIRE GROUP, INC.  
(Registrant)
   
/s/ Randy A. Ramlo /s/ Eric J. Martin
Randy A. RamloEric J. Martin
President, Chief Executive Officer, Director and Principal Executive Officer Senior Vice President, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer
 
   
August 4, 2022 August 4, 2022
(Date)(Date)
 

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