AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of the property/casualty (P/C) subsidiaries of United Fire Group, Inc. (UFG) [NASDAQ: UFCS] (collectively known as United Fire & Casualty Group), which operate under an intercompany pooling agreement led by United Fire & Casualty Company. Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of UFG. The outlook of these Credit Ratings (ratings) is negative. All companies are headquartered in Cedar Rapids, IA. (See below for a detailed listing of the companies and ratings.)

The ratings reflect United Fire & Casualty Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

In maintaining the negative outlooks that were assigned in December 2020, AM Best recognizes the execution risk associated with the implementation of the enterprise-wide strategic plan intended to improve operational and financial performance given competitive market conditions, as well as ongoing exposure to catastrophe events that could potentially result in additional pressure on balance sheet fundamentals.

The ratings also reflect the group’s solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), diversified product offerings, long-standing agency relationships, solid regional franchise and the financial flexibility afforded by UFG. These positive rating factors are offset partially by the competitive market conditions and resulting adverse reserve development, particularly in its other liability line of business, specifically excess and surplus, umbrella and construction defect occurring during the third quarter of 2022. In addition, the group maintains exposure to potential catastrophe and weather-related losses. The Long-Term ICR of UFG recognizes the capital strength of its operating subsidiaries.

The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed with negative outlooks for United Fire & Casualty Company and its following P/C subsidiaries:

• Lafayette Insurance Company
• Addison Insurance Company
• United Fire & Indemnity Company
• United Fire Lloyds
• Mercer Insurance Company
• Financial Pacific Insurance Company
• Mercer Insurance Company of New Jersey, Inc.
• Franklin Insurance Company
• UFG Specialty Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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