UNITED FIRE GROUP INC

Previous wording

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, 2023. There have been no changes in our critical accounting policies from December 31, 2023.

Current wording

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, 2023, filed on February 29, 2024. There have been no changes in our critical accounting policies from December 31, 2023.

Previous wording

For the three-month period ended March 31, 2024, approximately 48.5 percent of our property and casualty premiums were written in Texas, California, Iowa, Louisiana and New Jersey.

Current wording

For the six-month period ended June 30, 2024, approximately 48.5 percent of our property and casualty premiums were written in Texas, California, Iowa, Louisiana and New Jersey.

Previous wording

For the three-month period ended March 31, 2024, net income was $13.5 million compared to net income of $0.7 million for the same period of 2023. The change was primarily due to higher underwriting income and higher investment income.

Current wording

For the three-month period ended June 30, 2024, net loss was $2.7 million compared to net loss of $56.4 million for the same period of 2023. For the six-month period ended June 30, 2024, net income was $10.8 million compared to a net loss of $55.7 million for the same period of 2023. These changes from the prior year are primarily due to higher underwriting income and higher investment income.

Previous wording

Net premiums earned increased 9.7 percent during the three-month period ended March 31, 2024, compared to the same period of 2023 due to growth in net premiums written in both prior and current quarters. For the three-month period ended March 31, 2024, the overall average increase in renewal premiums was 10.9 percent, with 1.7 percent from exposure increases and 9.0 percent from rate increases. Excluding the workers' compensation line of business, the overall average increase in renewal premiums was 12.2 percent, with 1.7 percent from exposures changes and 10.4 percent from rate increases.

Current wording

Net premiums earned increased 12.9 percent and 11.3 percent during the three- and six-month periods ended June 30, 2024, compared to the same periods of 2023, due to growth in net premiums written in both prior and current quarters. Commercial lines net premiums written, excluding surety and specialty, increased 13.2 percent supported by increased pricing. For the three-month period ended June 30, 2024, the overall average increase in renewal premiums was 12.3 percent, with 2.3 percent from exposure increases and 9.8 percent from rate increases. Excluding the workers' compensation line of business, the overall average increase in renewal premiums was 13.5 percent, with 2.2 percent from exposures changes and 11.0 percent from rate increases.

Previous wording

Net investment income was $16.3 million for the first quarter of 2024, an increase of $3.6 million compared to the first quarter of 2023. Income from our fixed income portfolio increased by $1.9 million as we invested at higher interest rates. In addition, income from cash and cash equivalents increased by $2.0 million which was a result of higher investment yields due to higher interest rates. The loss on other long-term investments improved by $0.8 million as the valuation of our investments in limited liability partnerships varies from period to period. Dividends on equity securities decreased by $0.9 million from the same period in 2023 due to a strategic reallocation of equity securities to fixed income assets over the past three quarters.

Current wording

Net investment income was $18.0 million for the second quarter of 2024, an increase of $6.7 million compared to the second quarter of 2023. Income from our fixed income portfolio increased by $2.5 million as we invested at higher interest rates. In addition, income from cash and cash equivalents increased by $1.8 million. Income on other long-term investments resulted in an additional $4.1 million as the valuation of our investments in limited liability partnerships varies from period to period. Investment expenses increased by $0.5 million. Dividends on equity securities decreased by $1.2 million due to a strategic reallocation of equity securities to fixed income assets over the past year. Net investment income for the six-month period ended June 30, 2024 was $34.4 million, an increase of $10.3 million compared to the same period of 2023. The change in value of our limited liability partnerships contributed $4.9 million, higher investment yields from our fixed income portfolio increased $4.4 million, interest received on cash and cash equivalent balances increased $3.8 million and was partially offset by $2.1 million decrease in dividends on equity securities and higher investment expenses of $0.7 million.

Previous wording

The Company recognized net investment losses of $1.2 million during the first quarter of 2024, compared to net investment losses of $1.7 million for the same period in 2023. The change in the three-month period ended March 31, 2024 as compared to the same period in 2023 was primarily due to the change in the fair value of our investments in equity securities.

Current wording

The Company recognized net investment losses of $1.2 million during the second quarter of 2024, compared to net investment gains of $1.1 million for the same period in 2023. The decrease of $2.3 million was due primarily to net gains on equity securities of $1.3 million in 2023 and an increase of $1.1 million of net losses on the sale of fixed maturity securities in 2024. The Company recognized net investment losses of $2.4 million and $0.6 million during the six-month periods ended June 30, 2024 and 2023, respectively. The increase of $1.8 million was primarily due to an increase of $3.6 million related to losses on the sale of fixed maturity securities offset by $1.3 million of gains on equity securities in 2024.

Previous wording

The property and casualty insurance business experienced $2.4 million of reserve strengthening in net reserves for prior accident years for the three-month period ended March 31, 2024, which is attributable to development on assumed catastrophe related reserves.

Current wording

The property and casualty insurance business experienced $0.4 million and $2.9 million of reserve strengthening in net reserves for prior accident years for the three- and six-month periods ended June 30, 2024. The unfavorable reserve development of $2.4 million in the first quarter of 2024 was driven by catastrophe losses within our assumed business. There was proactive strengthening in other liability lines of business due to continued uncertainty in future loss cost trends related to economic and social inflation, offset by favorable development in commercial automobile, workers compensation and fire and allied lines.

Previous wording

•Other liability lines- The net loss ratio deteriorated 9.7 percentage points in the three-month period ended March 31, 2024, as compared to the same period in 2023, driven by an increase in the underlying loss ratio and prior year reserve strengthening. The prior year strengthening is related to the continued uncertainty of increasing severity of losses and social inflation impacts most notably in construction defect. There is some offsetting benefit from ceded recoveries in umbrella lines. The current underlying loss ratio is consistent with results for the full year of 2023.

Current wording

•Other liability lines- The net loss ratio improved 48.5 and 20.0 percentage points in the three- and six-month periods ended June 30, 2024, as compared to the same periods in 2023, driven by a reduction in the level of prior year reserve strengthening. The prior year strengthening is primarily related to a revised recognition of the increased growth in the Excess Casualty portfolio and the continued uncertainty of increasing severity of losses and social inflation impacts.

Previous wording

•Commercial fire and allied lines - The net loss ratio improved 24.2 percentage points in the three-month period ended March 31, 2024, as compared to the same period in 2023, driven most notably by an improvement in the underlying loss ratio. Lower severity of losses coupled with increased pricing in excess of loss trend are drivers of this improvement.

Current wording

•Commercial fire and allied lines - The net loss ratio improved 22.3 and 23.2 percentage points in the three- and six-month periods ended June 30, 2024, as compared to the same periods in 2023, driven by favorable catastrophe losses in the current year and underlying loss ratio improvement driven by rate achievement in excess of trend and improving frequency and lower severity of losses.

Previous wording

•Commercial automobile - The net loss ratio deteriorated 0.9 percentage points in the three-month period ended March 31, 2024, as compared to the same period in 2023, primarily driven by an increase in catastrophe losses offset by modest improvement in the underlying loss ratio driven by increased pricing and continued improvement in claim count trends.

Current wording

•Commercial automobile - The net loss ratio improved 26.3 and 13.4 percentage points in the three- and six-month periods ended June 30, 2024, as compared to the same periods in 2023, primarily driven by favorable prior year development in the current year as compared to adverse development in 2023. The loss emergence seen in 2024 is driving favorable development as older accident years are maturing below expectation. The impact of increased pricing and continued improvement in claim count trends are also favorably impacting results.

Previous wording

•Workers' compensation - The net loss ratio improved 10.8 percentage points in the three-month period ended March 31, 2024, as compared to the same period in 2023, driven by favorable prior year development as frequency of losses continues to improve. Quarterly results can be volatile due to smaller volume, and the results reflected in the underlying loss ratio are reflective of an appropriate long-term view of performance.

Current wording

•Workers' compensation - The net loss ratio deteriorated 50.3 and 20.6 percentage points in the three- and six-month periods ended June 30, 2024, as compared to the same periods in 2023, driven by lower favorable prior year development in 2024 as compared to 2023. The frequency of losses continues to improve, driving favorable development. Favorable development in 2023 was primarily due to a large reserve take-down on one claim during the quarter ended June 30, 2023. Quarterly results can be volatile due to smaller volume.

Previous wording

•Surety - The net loss ratio deteriorated 13.7 percentage points in the three-month period ended March 31, 2024, as compared to the same period in 2023, which is reflective of the pressure experienced in this business in the last half of 2023. The surety market has experienced pressure from construction industry factors, such as increased material costs and limited contractor availability. Due to the nature of this business, quarterly results can be volatile over an otherwise very profitable longer time horizon.

Current wording

•Surety - The net loss ratio improved 75.7 and 14.3 percentage points in the three- and six-month periods ended June 30, 2024, as compared to the same periods in 2023, driven by a few large losses and associated reinstatement premium in the prior year. The surety market has experienced pressure from construction industry factors, such as increased material costs and limited contractor availability. Due to the nature of this business, quarterly results can be volatile over an otherwise very profitable longer time horizon.

Previous wording

•Assumed reinsurance- The net loss ratio improved 10.0 percentage points in the three-month period ended March 31, 2024, as compared to the same period in 2023, driven by improvements in the underlying loss ratio offset in part by prior year reserve development impact which was less favorable as compared to the same period in 2023.

Current wording

•Assumed reinsurance- The net loss ratio improved 14.2 and 11.7 percentage points in the three- and six-month periods ended June 30, 2024, as compared to the same periods in 2023, driven by favorable prior year reserve development in the current year and improvements in the underlying loss ratio.

Previous wording

Stockholders' equity increased to $736.8 million at March 31, 2024, from $733.7 million at December 31, 2023. The Company's book value per share was $29.13, which is an increase of $0.09 per share, or 0.3 percent, from December 31, 2023. The increase is primarily attributable to net income of $13.5 million, partially offset with net unrealized loss after tax of $6.7 million on fixed maturity securities, and shareholder dividends of $4.0 million during the first three months of 2024.

Current wording

Stockholders' equity decreased to $726.6 million at June 30, 2024, from $733.7 million at December 31, 2023. The Company's book value per share was $28.68, which is a decrease of $0.36 per share, or 1.2 percent, from December 31, 2023. The decrease is primarily attributable to net income of $10.8 million, offset by net unrealized loss after tax of $11.0 million on fixed maturity securities, and shareholder dividends of $8.1 million during the first six months of 2024.

Previous wording

Our invested assets totaled $1.7 billion at March 31, 2024, compared to $1.9 billion at December 31, 2023, a decrease of $156.7 million. The decrease in our investment portfolio at March 31, 2024 was largely offset by an increase in cash and cash equivalents. During the first quarter of 2024, we liquidated the remainder of our equity securities portfolio to complete the strategic reallocation of equity securities to fixed income assets. At March 31, 2024, fixed maturity securities made up 91.9 percent of the value of our investment portfolio. 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 and government agency bonds and tax-exempt U.S. municipal bonds. Our overall investment strategy is to stay fully invested (i.e., minimize cash balances). If additional cash is needed, we have the ability to take advances through the Federal Home Loan Bank of Des Moines ("FHLB Des Moines") facility. During the first quarter of 2024, the Company announced and entered into an investment management agreement with New England Asset Management ("NEAM") effective as of February 1, 2024, pursuant to which NEAM will provide investment management services.

Current wording

Our invested assets totaled $1.94 billion at June 30, 2024, compared to $1.89 billion at December 31, 2023, an increase of $49.4 million. During the first quarter of 2024, we liquidated the remainder of our equity securities portfolio to complete the strategic reallocation of equity securities to fixed income assets. At June 30, 2024, fixed maturity securities made up 92.8 percent of the value of our investment portfolio. 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 and government agency bonds and tax-exempt U.S. municipal bonds. Our overall investment strategy is to stay fully invested (i.e., minimize cash balances). If additional cash is needed, we have the ability to take advances through the Federal Home Loan Bank of Des Moines ("FHLB Des Moines") facility. During the first quarter of 2024, the Company announced and entered into an investment management agreement with New England Asset Management ("NEAM") effective as of February 1, 2024, pursuant to which NEAM will provide investment management services.

Previous wording

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 increased in the three-month period ended March 31, 2024, compared with the same period of 2023 primarily due to the higher yields in the fixed income portfolio, reinvestment in the fixed income portfolio, higher income on cash and cash equivalents, and an increase in the fair value of our investments in limited liability partnerships.

Current wording

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 increased in the three- and six-month periods ended June 30, 2024, compared with the same periods of 2023, primarily due to the higher yields in the fixed income portfolio, reinvestment in the fixed income portfolio, higher income on cash and cash equivalents, and an increase in the value of our investments in limited liability partnerships.

Previous wording

We hold certain investments in limited liability partnerships that are recorded on the equity method of accounting, with changes in the value of these investments recorded in investment income. In the three-month period ended March 31, 2024, the change in total value of our investments in limited liability partnerships resulted in investment loss of $0.2 million as compared to investment losses of $1.1 million in the same period of 2023.

Current wording

We hold certain investments in limited liability partnerships that are recorded on the equity method of accounting, with changes in the value of these investments recorded in investment income. In the three- and six-month periods ended June 30, 2024, the change in total value of our investments in limited liability partnerships resulted in investment gains of $0.6 million and $0.4 million as compared to investment losses of $3.5 million and $4.6 million in the same periods of 2023.

Previous wording

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.

Current wording

For mortgage loans, an allowance for credit 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.

Previous wording

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.

Current wording

To calculate the allowance for mortgage loan credit 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.

Previous wording

The following table displays a consolidated summary of cash sources and uses for the three-month periods ended March 31, 2024 and 2023:

Current wording

The following table displays a consolidated summary of cash sources and uses for the six-month periods ended June 30, 2024 and 2023:

Previous wording

Our cash flows were sufficient to meet our liquidity needs for the three-month periods ended March 31, 2024 and 2023 and we anticipate they will be sufficient to meet our future liquidity needs for at least the next 12 months. We also have the ability to draw on our credit facility if needed.

Current wording

Our cash flows were sufficient to meet our liquidity needs for the six-month periods ended June 30, 2024 and 2023 and we anticipate they will be sufficient to meet our future liquidity needs for at least the next 12 months. We also have the ability to draw on our credit facility if needed.

Previous wording

Net cash flows from operating activities had inflows of $36.2 million and outflows of $6.8 million for the three-month periods ended March 31, 2024 and 2023, respectively. In the three-month period ended March 31, 2024, the net operating cash inflows were driven by premium and investment inflows offsetting loss and expense outflows.

Current wording

Net cash flows from operating activities had inflows of $127.5 million and inflows of $37.9 million for the six-month periods ended June 30, 2024 and 2023, respectively. In the six-month period ended June 30, 2024, the net operating cash inflows were driven by premium and investment income offsetting loss and expense outflows.

Previous wording

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 strategy for our portfolio, see the "Investment Portfolio" section of this Item 2.

Current wording

Cash in excess of operating requirements is generally invested in fixed maturity securities. Fixed maturity securities provide regular interest payments and allow us to match the duration of our liabilities. For further discussion of our investments, including our philosophy and strategy for our portfolio, see the "Investment Portfolio" section of this Item 2.

Previous wording

In addition to investment income, possible sales of investments and proceeds from calls or maturities of fixed maturity securities can also provide liquidity. During the next five years, $569.9 million, or 35.9 percent, of our fixed maturity portfolio will mature.

Current wording

In addition to investment income, possible sales of investments and proceeds from calls or maturities of fixed maturity securities can also provide liquidity. During the next five years, $566.7 million, or 31.5 percent, of our fixed maturity portfolio will mature.

Previous wording

We invest funds required for short-term cash needs primarily in money market accounts, which are classified as cash equivalents. At March 31, 2024, our cash and cash equivalents included $38.1 million related to these money market accounts, compared to $20.3 million at December 31, 2023.

Current wording

We invest funds required for short-term cash needs primarily in money market accounts, which are classified as cash equivalents. At June 30, 2024, our cash and cash equivalents included $51.7 million related to these money market accounts, compared to $20.3 million at December 31, 2023.

Previous wording

Net cash flows provided by investing activities were $83.9 million for the three-month period ended March 31, 2024, compared to net cash flows used in investing activities of $32.5 million for the three-month period ended March 31, 2023. For the three-month periods ended March 31, 2024 and 2023, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $127.8 million and $31.3 million, respectively. Our cash outflows for investment purchases were $41.4 million for the three-month period ended March 31, 2024, compared to $61.2 million for the same period of 2023.

Current wording

Net cash flows used in investing activities were $134.6 million for the six-month period ended June 30, 2024, compared to net cash flows used in investing activities of $46.5 million for the six-month period ended June 30, 2023. For the six-month periods ended June 30, 2024 and 2023, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $307.2 million and $74.0 million, respectively. Our cash outflows for investment purchases were $436.0 million for the six-month period ended June 30, 2024, compared to $114.9 million for the same period of 2023.

Previous wording

Dividends paid to shareholders totaled $4.0 million in each of the three-month periods ended March 31, 2024 and 2023. Our practice has been to pay quarterly cash dividends, which we have paid every quarter since March 1968.

Current wording

Dividends paid to shareholders totaled $8.1 million and $8.1 million in each of the six-month periods ended June 30, 2024 and 2023. Our practice has been to pay quarterly cash dividends, which we have paid every quarter since March 1968.

Previous wording

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 of 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 March 31, 2024, UFG's sole direct insurance company subsidiary, UF&C, is able to make a maximum of $45.3 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.

Current wording

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 of 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, 2024, UFG's sole direct insurance company subsidiary, UF&C, is able to make a maximum of $44.8 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.

Previous wording

Pursuant to an agreement with our limited liability partnership investments, we are contractually committed through July 10, 2030, to make capital contributions upon the request of certain of the partnerships. Our remaining potential contractual obligation was $27.2 million at March 31, 2024. These partnerships are included in our other long term investments on the Consolidated Balance Sheets with a current fair value of $97.7 million, or 5.7 percent of our total invested assets, as of March 31, 2024.

Current wording

Pursuant to an agreement with our limited liability partnership investments, we are contractually committed through July 10, 2030, to make capital contributions upon the request of certain of the partnerships. Our remaining potential contractual obligation was $25.4 million at June 30, 2024. These partnerships are included in our other long term investments on the Consolidated Balance Sheets with a current fair value of $97.1 million, or 5.0 percent of our total invested assets, as of June 30, 2024.

Previous wording

Catastrophe losses is an operational measure which utilizes the designations of the Insurance Services Office ("ISO") and is reported with losses and loss settlement expense amounts net of reinsurance recoverables, unless specified otherwise. In addition to ISO catastrophes, we also include 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. Catastrophes are not predictable and are unique in terms of timing and financial impact. While management estimates catastrophe losses as incurred, due to the inherently unique nature of catastrophe losses, the impact in a reporting period is inclusive of catastrophes that occurred in the reporting period, as well as development on catastrophes that may have occurred in prior periods. The following table shows the breakdown of ISO and non-ISO catastrophes for the three-month periods ended March 31, 2024 and 2023.

Current wording

Catastrophe losses is an operational measure which utilizes the designations of the Insurance Services Office ("ISO") and is reported with losses and loss settlement expense amounts net of reinsurance recoverables, unless specified otherwise. In addition to ISO catastrophes, we also include 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. Catastrophes are not predictable and are unique in terms of timing and financial impact. While management estimates catastrophe losses as incurred, due to the inherently unique nature of catastrophe losses, the impact in a reporting period is inclusive of catastrophes that occurred in the reporting period, as well as development on catastrophes that may have occurred in prior periods. The following table shows the breakdown of ISO and non-ISO catastrophes for the three- and six-month periods ended June 30, 2024 and 2023.