Cedar Rapids, Iowa-based United Fire & Casualty Company reported net income for the first quarter of 2009 was $3.3 million or 12 cents per diluted share, down from a net income of $20.1 million or 74 cents per diluted share for the same period a year ago.
The company had a combined ratio of 105.8 percent for the quarter.
Operating income was $5.5 million or 21 cents per share in the first quarter of 2009, compared with operating income of $20.9 million or 77 cents per share in the first quarter of 2008. Pretax catastrophe losses totaled $3 million in the first quarters of both 2009 and 2008.
The significant decline in earnings for the first quarter of 2009 is due primarily to the development of $11.9 million in Hurricane Katrina reserves resulting from claims litigation, the company said.
President and CEO Randy Ramlo explained that while first quarter results “were in line with last year from an operational standpoint, our earnings were significantly reduced by an increase in our loss reserves for litigation related to Hurricane Katrina.”
He added that the company continues “to settle lawsuits related to Hurricane Katrina; however, the legal environment in New Orleans has become increasingly challenging. To address the increasing uncertainty associated with the Louisiana courts, we increased our reserves for losses that occurred in prior years. We are reassessing our future business plans related to the state of Louisiana.”
Ramlo said the decline in property casualty net premiums was less than 4 percent. He noted the pricing environment has improved from where it was three months ago and that there are signs “that premium rates have bottomed out. But at this point, pricing is still not at the level we need it to be in order to achieve our profitability goals.”
United Fire & Casualty Company is a regional insurer that, along with its insurance subsidiaries, offers personal and commercial property and casualty insurance and life insurance. The company markets its products principally through its regional offices in Cedar Rapids, Iowa (company headquarters); Denver, Colo.; and Galveston, Texas.
Source: United Fire & Casualty Company, www.unitedfiregroup.com
Topics Trends Profit Loss Casualty
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