What is the board's threshold for a repurchase program given the 13.2% ROE versus the 15% target, and how do buybacks compare to the existing dividend?

Capital management priorities are: first, ensuring sufficient capital for growth; second, maintaining the 20 cent quarterly dividend; and third, considering the 2 million authorized shares for buyback. Buybacks are the third priority. “We do have 2 million shares authorized for a buyback. We'll always consider that going forward, but it'll be the third in the line of priorities there.”

Does the underlying combined ratio have the ability to go lower, beyond the commercial auto segment?

Management has a high degree of confidence in maintaining the underlying loss ratio due to strong new and renewal books, deep underwriting rigor, and enhanced actuarial and analytical capabilities to monitor pricing and portfolio performance nimbly. “So all that said, I think we have a high degree of confidence that we can maintain the underlying loss ratio.”

Will the current competitive environment allow UFG to continue to scale, or will there be a pause in top-line growth?

Management believes they can continue to grow by leveraging expanded expertise and capabilities, which broadens their opportunity pool. As long as underwriting discipline is maintained and exposures are priced appropriately, scale is possible even in a softening market. “So as long as we are sticking to our guns relative to underwriting discipline and we're pricing the exposures that are coming to us, we think scale is still possible throughout this market cycle.”

UFCS

United Fire Group (UFCS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 4, 2026

Source: earnings call transcript

Executive summary

United Fire Group Q2 FY26 — Exceptional Performance Driven by Underwriting and Investment Income

United Fire Group delivered an exceptional second quarter, marked by its best combined ratio in over 15 years and record net income, driven by disciplined underwriting and strong investment income. The company's strategic transformation efforts are yielding sustained improvements, positioning it for continued profitable growth despite moderating rate achievement and competitive pressures in certain lines. Management remains confident in its ability to navigate evolving market conditions and create long-term value.

Highlights

Achieved best second quarter combined ratio in more than 15 years, reflecting disciplined underwriting.
Delivered record net income and record net written premium in the quarter.
Investment income reached its highest quarterly level in over a decade, growing 33% YoY to $29 million.
Reported a 13.2% return on equity for the first six months of 2026, marking the best year-to-date financial performance in 20 years.
Q2 catastrophe loss ratio was 2.7%, 2.8 points below prior year and well below historical averages.

Concerns

Property rates remained under pressure during the quarter.
Experienced modest pressure in general liability rates.
Net written premium in specialty, excess, and surplus lines declined due to increased competition for larger accounts.
Average renewal rate change moderated to 2.9%, reflecting ongoing competitive market conditions.

Guidance & targets

Category	Target	Timeline	Confidence
Expense ratio improvement	0.5 to 1.0 point reduction medium materiality	per year	High
Full year catastrophe loss ratio estimate	5% medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Alternative Distribution Growth reflects the strong January 1 treaty and FAL renewal cycle, demonstrating the value of the diversified distribution platform. This business is well positioned to support prudent growth through varying market cycles. Net written premium growth: 13% YoY	—	13%	—	—

Risks & headwinds

Property rates under pressure Q2 FY26

under pressure

Mitigation:Disciplined risk selection and appropriate pricing.

Modest pressure in general liability rates Q2 FY26

modest pressure

Mitigation:Disciplined risk selection and appropriate pricing.

Increased competition in specialty, excess, and surplus lines Q2 FY26

Net written premium declined

Mitigation:Focus on moderate hazard opportunities and retaining well-performing, adequately priced accounts to support a balanced portfolio.

Moderating rate achievement in the market past several quarters

average renewal rate change was 2.9%

Mitigation:Portfolio actions, underwriting discipline, and established pricing and risk selection rigor enable selective pursuit of opportunities.

What to watch in Q3 FY26

Expense Ratio Improvement

next year

Current 35.4% (Q2 FY26)

Target 0.5 to 1.0 point reduction per year

Why it matters

Demonstrates efficiency gains from technology investments and operational actions, impacting profitability.

We expect future expense ratio improvements of a half point to a full point per year.

Find out whether UFCS delivers this. Inve re-checks your case every morning.

Q&A highlights

How much of the commercial auto loss ratio is related to social inflation and enhanced judgment costs, and what rate is needed to meet targets?

The auto portfolio is not heavily exposed to social inflation, as it primarily consists of middle market, construction, and small business, rather than heavy wheels or trucking. Management believes they are still achieving attractive rates despite some moderation.

“There's not a lot of social inflation in our auto risk profile. heavy wheels business or the trucking business so mostly associated with our middle market construction and small business portfolios which are you know on the smaller to mid-size of middle and construction so not a lot of impact from social inflation for us and we feel like we're still getting attractive rates.”

asked by Jason Weaver · answered by Julie Stephenson

2 min read 5 chapters

Detailed narrative

Strategic Transformation Success

United Fire Group's strategic actions, including deepening underwriting expertise, evolving capabilities, strengthening distribution partnerships, and improving investment performance, are driving sustained improvements. These efforts led to the best second-quarter combined ratio in over 15 years, record net income, and the highest investment income in over a decade.

The company's H1 2026 return on equity of 13.2% represents its best year-to-date financial performance in 20 years, highlighting progress in building a more profitable and resilient organization.

Underwriting Discipline and Portfolio Management

The company achieved a strong combined ratio through disciplined risk selection, appropriate pricing, and successful catastrophe management. Policies written from 2024 through Q2 2026 now constitute over 50% of the portfolio, performing well and meeting expectations. The renewal portfolio has been thoroughly pruned through current underwriting guidelines, giving management high confidence in the overall portfolio's quality and performance.

Robust Investment Performance

Net investment income grew 33% in the second quarter to $29 million, marking the highest quarterly level since 2016. The fixed maturity portfolio expanded approximately 16% over the past year, fueled by improved underwriting profitability. New money yields of 5.1% continue to exceed the overall portfolio average by approximately 50 basis points, capitalizing on the elevated interest rate environment.

Limited partnership investments also contributed positively, generating $2.3 million in the quarter with an 8.7% annualized yield over the past eight quarters.

Market Conditions and Growth Strategy

While the average renewal rate change moderated to 2.9% due to competitive conditions, particularly in property and general liability, strong double-digit rate increases were observed in Umbrella. Despite softening market conditions, UFG expects to continue growth by leveraging expanded capabilities and deepened expertise, which provides a wider pool of opportunities.

The company remains committed to underwriting discipline and pricing exposures appropriately to achieve scale throughout the current market cycle.

Reserve Adequacy and Catastrophe Management

Prior year reserve development was neutral overall in the second quarter, with actuarial reviews indicating generally favorable emergence. Favorable development in automobile, property, and workers' compensation was redeployed to maintain a conservative position in longer-tail liability lines, which are still viewed with caution.

The Q2 catastrophe loss ratio was 2.7%, significantly below historical averages, reflecting the positive impact of actions taken to improve the catastrophe risk profile. The half-year catastrophe result of 3.3% is trending favorably to the full-year estimate of 5%.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.