UNITED FIRE GROUP INC

Previous wording

Originally 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 companies. Our property and casualty insurance company subsidiaries are licensed in 50 states and the District of Columbia and are represented by approximately 1,000 independent agencies.

Current wording

Originally 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 companies. Our property and casualty insurance company subsidiaries are licensed in all 50 states and the District of Columbia and are represented by approximately 1,000 independent agencies.

Previous wording

We review and report our results using lines of business. The following table shows the principal types of property and casualty insurance policies we write and issue, and which lines of business they are reported in:

Current wording

We review and report our results using lines of business. The following table shows the principal types of property and casualty insurance policies we write and issue, and in which lines of business they are reported:

Previous 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.

Current wording

For the nine-month period ended September 30, 2024, approximately 47 percent of our property and casualty premiums were written in Texas, California, Iowa, Missouri, and Louisiana.

Previous wording

(3) 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.

Current wording

(3) Combined ratio is a commonly used financial measure of property and casualty underwriting performance. A combined ratio below 100 percent generally indicates a profitable book of business. The combined ratio is the sum of the net loss ratio and the underwriting expense ratio.

Previous 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.

Current wording

For the three-month period ended September 30, 2024, net income was $19.7 million compared to net income of $6.4 million for the same period of 2023. For the nine-month period ended September 30, 2024, net income was $30.5 million compared to a net loss of $49.3 million for the same period of 2023. These changes from the prior year are primarily due to continued premium growth and improved underwriting and investment income.

Previous 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.

Current wording

Net premiums earned increased 15.7 percent and 12.8 percent during the three- and nine-month periods ended September 30, 2024, compared to the same periods of 2023, led by continued growth in our core commercial and assumed reinsurance business units. For the three-month period ended September 30, 2024, the overall average increase in renewal premiums was 12.4 percent, with 1.1 percent from exposure increases and 11.2 percent from rate increases. Excluding the workers' compensation line of business, the overall average increase in renewal premiums was 13.4 percent, with 1.1 percent from exposure changes and 12.2 percent from rate increases.

Previous 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.

Current wording

Net investment income was $24.5 million for the third quarter of 2024, an increase of $8.0 million compared to the third quarter of 2023. Income from our fixed income portfolio increased by $4.2 million due to portfolio management actions and investing at higher interest rates. Income on other long-term investments resulted in an additional $4.3 million as the valuation of our investments in limited liability partnerships varies from period to period. Net investment income for the nine-month period ended September 30, 2024 was $58.8 million, an increase of $18.3 million compared to the same period of 2023. The change in value of our limited liability partnerships contributed $9.3 million, higher investment yields from our fixed income portfolio increased $8.6 million, interest received on cash and cash equivalent balances increased $3.7 million and was partially offset by a $2.7 million decrease in dividends on equity securities and higher investment expenses of $1.3 million.

Previous 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.

Current wording

The Company recognized net investment losses of $1.7 million during the third quarter of 2024, compared to net investment losses of $2.0 million for the same period in 2023. The decrease of $0.3 million was due primarily to net losses on equity securities of $1.9 million in 2023 as compared to an increase of $1.7 million of net losses on the sale of fixed maturity securities in 2024. The Company recognized net investment losses of $4.1 million and $2.6 million during the nine-month periods ended September 30, 2024 and 2023, respectively. The increase of $1.5 million was primarily due to an increase of $5.3 million related to losses on the sale of fixed maturity securities offset by an increase of $3.2 million of gains on equity securities in 2024. For a detailed discussion of our investment results, refer to the "Investment Portfolio" section below.

Previous wording

In July 2024, the Company identified rating errors related to umbrella and general liability products that resulted in an overcharge to certain policyholders. Corrective actions are currently underway, and we are voluntarily notifying and cooperating with state insurance regulators to determine the appropriate extent of refunds to impacted policyholders. For more information on this item, refer to Note 1 "Nature of Operations and Basis of Presentation" under "Subsequent Events" subheading in the Notes to the Consolidated Financial Statements.

Current wording

In July 2024, the Company identified rating errors related to umbrella and general liability products that resulted in an overcharge to certain policyholders. Corrective actions have been implemented and the Company has reached a resolution with the Iowa Insurance Division resulting in no further action and no financial impact to the Company. Our estimated liability may change as additional information becomes available and as we continue to work with regulators in other states to achieve resolution. For more information on this item, refer to Note 1 "Nature of Operations and Basis of Presentation" under "Contingent Liability" subheading in the Notes to the Consolidated Financial Statements.

Previous wording

Losses and loss settlement expenses decreased by 19.7 percent and 10.4 percent during the three- and six-month periods ended June 30, 2024, compared to the same periods of 2023. The decreases are primarily driven by neutral prior year reserve development in the current period compared to the unfavorable prior year reserve development in the prior period. The prior year was also impacted by elevated surety losses, which did not repeat in the current year.

Current wording

Losses and loss settlement expenses increased by 8.3 percent and decreased 5.0 percent during the three- and nine-month periods ended September 30, 2024, respectively, compared to the same periods of 2023. The increase for the three-month period ended September 30, 2024 is due to continued growth in our core commercial and assumed reinsurance business units. The decrease for the nine-month period ended September 30, 2024 is primarily driven by neutral prior year reserve development in the current period compared to the unfavorable prior year reserve development in the prior period. The prior year was also impacted by elevated surety losses, which did not repeat in the current year.

Previous wording

The GAAP combined ratio improved by 27.4 percentage points to 105.6 percent for the second quarter of 2024, compared to 133.0 percent for the same period in 2023. The improvement was driven by a decrease in the underlying loss ratio of 5.7 percentage points, prior period reserve improvement of 20.8 percentage points, catastrophe loss ratio improvement of 1.8 percentage points, slightly offset by the underwriting expense ratio deterioration of 0.9 percentage points. The GAAP combined ratio improved by 16.0 percentage points to 102.2 percent for six-month period ended June 30, 2024, compared to the same period in 2023. The improvement was driven by a decrease in the underlying loss ratio of 5.0 percentage points, prior period reserve improvement of 10.4 percentage points, catastrophe loss ratio improvement of 0.9 points, slightly offset with an increase in the underwriting expense ratio of 0.3 points. Each of these are explained in more detail below.

Current wording

The GAAP combined ratio improved by 3.8 points to 98.2 percent for the third quarter of 2024, compared to 102.0 percent for the same period in 2023. The improvement was driven by a decrease in the underlying loss ratio of 2.6 points, prior period reserve improvement of 0.2 points, catastrophe loss ratio improvement of 1.5 points, slightly offset by the underwriting expense ratio deterioration of 0.5 points. The GAAP combined ratio improved by 11.8 points to 100.9 percent for nine-month period ended September 30, 2024, compared to the same period in 2023. The improvement was driven by a decrease in the underlying loss ratio of 4.2 points, prior period reserve improvement of 7.0 points, catastrophe loss ratio improvement of 1.1 points, slightly offset with an increase in the underwriting expense ratio of 0.5 points.

Previous wording

Pre-tax catastrophe losses in the second quarter of 2024 added 11.2 percentage points to the GAAP combined ratio compared to 13.0 percentage points added to the GAAP combined ratio in the second quarter of 2023 and added 7.9 percentage points to the loss ratio for the six-month period ended June 30, 2024 as compared to 8.8 percentage points during the same time period in 2023. The catastrophe loss ratio was below both our five-year and ten-year historical averages for the second quarter of 2024.

Current wording

Pre-tax catastrophe losses in the third quarter of 2024 added 4.4 points to the GAAP combined ratio compared to 5.9 points added to the GAAP combined ratio in the third quarter of 2023 and added 6.7 points to the GAAP combined ratio for the nine-month period ended September 30, 2024 as compared to 7.8 points during the same time period in 2023. The catastrophe loss ratio was below both our five-year and 10-year historical averages for the third quarter of 2024.

Previous wording

The underwriting expense ratio for the second quarter of 2024 was 35.5 percent compared to 34.6 percent for the second quarter of 2023, a deterioration of 0.9 percentage points due to investments in underwriting talent and technology offset by premium growth. The underwriting expense ratio for the six-month period ended June 30, 2024 was 35.2 percent compared to 34.9 percent for the same time period for 2023.

Current wording

The underwriting expense ratio for the third quarter of 2024 was 35.9 percent compared to 35.4 percent for the third quarter of 2023 as a result of stronger business performance during the current quarter and increased technology costs as we invest for continued growth. The underwriting expense ratio for the nine-month period ended September 30, 2024 was 35.5 percent compared to 35.0 percent for the same time period for 2023.

Previous wording

The property and casualty insurance business experienced $50.7 million and $54.8 million of reserve strengthening in net reserves for prior accident years for the three- and six-month periods ended June 30, 2023. During the first six months of 2023, the Company made additional advancements to its reserve review processes and analyses, including increased segmentation on unique exposures, which resulted in deeper insights and understanding of loss experience and significant movements in reserve development across a range of commercial liability lines of business. The significant driver of the reserve strengthening in the six-month period ended June 30, 2023 was an increase in long-tailed other liability reserves primarily due to increased loss cost trends related to economic and social inflation. The commercial automobile line of business also experienced reserve strengthening in reaction to continuing loss trends in post-2020 accident years. These increases were offset by favorable development in workers' compensation and fire and allied lines.

Current wording

The property and casualty insurance business experienced $4.4 million and $59.2 million of reserve strengthening in net reserves for prior accident years for the three- and nine-month periods ended September 30, 2023, respectively. During 2023, the Company made additional advancements to its reserve review processes and analyses, including increased segmentation on unique exposures, which resulted in deeper insights and understanding of loss experience and significant movements in reserve development across a range of commercial liability lines of business. The significant driver of the reserve strengthening was an increase in long-tailed other liability reserves primarily due to increased loss cost trends related to economic and social inflation. The commercial automobile line of business also experienced reserve strengthening in reaction to continuing loss trends in post-2020 accident years. These increases were partially offset by favorable development in workers' compensation and fire and allied lines.

Previous 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.

Current wording

•Commercial fire and allied lines - The net loss ratio improved 29.8 and 25.4 points in the three- and nine-month periods ended September 30, 2024, respectively, 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

•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.

Current wording

•Commercial automobile - The net loss ratio improved 50.1 and 26.4 points in the three- and nine-month periods ended September 30, 2024, respectively, 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 and improvement in the underlying loss ratio driven by rate achievement in excess of trend and improving frequency.

Previous 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.

Current wording

Stockholders' equity increased to $785.8 million at September 30, 2024, from $733.7 million at December 31, 2023. The Company's book value per share was $31.01, which is an increase of $1.97 per share, or 6.8 percent, from December 31, 2023. The increase is primarily attributable to net income of $30.5 million and reduction in net unrealized losses of $31.2 million on fixed maturity securities, slightly offset with shareholder dividends of $12.2 million during the first nine months of 2024.

Previous 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.

Current wording

Our invested assets totaled $2.0 billion at September 30, 2024, compared to $1.9 billion at December 31, 2023, an increase of $109 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 September 30, 2024, fixed maturity securities made up 92.9 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.

Previous wording

The table below shows the composition of fixed maturity securities held in our available-for-sale security portfolios by credit rating at June 30, 2024 and December 31, 2023. 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.

Current wording

The table below shows the composition of fixed maturity securities held in our available-for-sale security portfolios by credit rating at September 30, 2024 and December 31, 2023. Information contained in the table is generally based upon the issued credit ratings provided by external rating agencies.

Previous wording

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.

Current wording

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. 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.

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- 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.

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 nine-month periods ended September 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 interest rates on short term money market and short term investments, 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- 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.

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 nine-month periods ended September 30, 2024, the change in total value of our investments in limited liability partnerships resulted in investment gains of $5.4 million and $5.8 million, respectively, as compared to investment gains of $1.1 million and investment losses of $3.5 million in the same periods of 2023.

Previous wording

We had net investment losses of $1.2 million and $2.4 million during the three- and six-month periods ended June 30, 2024, as compared to net investment gains of $1.1 million and net investment losses of $0.6 million during the same periods of 2023.

Current wording

We had net investment losses of $1.7 million and $4.1 million during the three- and nine-month periods ended September 30, 2024, respectively, as compared to net investment losses of $2.0 million and $2.6 million during the same periods of 2023. The losses in 2024 are driven by an investment strategy execution to increase fixed maturity yield, while the 2023 losses were driven by equity security losses.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Our cash flows were sufficient to meet our liquidity needs for the nine-month periods ended September 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 $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.

Current wording

Net cash flows from operating activities had inflows of $184.0 million and inflows of $149.5 million for the nine-month periods ended September 30, 2024 and 2023, respectively. In the nine-month period ended September 30, 2024, the net operating cash inflows were driven by premium and investment income offsetting loss and expense outflows.

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, $566.7 million, or 31.5 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, $491.2 million, or 26.5 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 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.

Current wording

We invest funds required for short-term cash needs primarily in money market accounts, which are classified as cash equivalents. At September 30, 2024, our cash and cash equivalents included $105.9 million related to these money market accounts, compared to $20.3 million at December 31, 2023. The increase in money market funds is primarily due to the timing of investment sales and purchases, which resulted in a temporary increase before reinvestment into other securities.

Previous 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.

Current wording

Net cash flows used in investing activities were $143.1 million for the nine-month period ended September 30, 2024, compared to net cash flows used in investing activities of $164.7 million for the nine-month period ended September 30, 2023. For the nine-month periods ended September 30, 2024 and 2023, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $541.2 million and $98.6 million, respectively. Our cash outflows for investment purchases were $675.4 million for the nine-month period ended September 30, 2024, compared to $255.3 million for the same period of 2023.

Previous wording

Net cash flows provided by financing activities were $58.5 million for the six-month period ended June 30, 2024, compared to compared to $8.3 million used in the six-month period ended June 30, 2023. This increase of $66.8 million was the result of our successful completion of $70 million private placement offering of senior unsecured notes completed in the second quarter of 2024.

Current wording

Net cash flows provided by financing activities were $54.4 million for the nine-month period ended September 30, 2024, compared to $12.3 million used in the nine-month period ended September 30, 2023. This increase of $66.8 million was the result of our successful completion of $70 million private placement offering of senior unsecured notes completed in the second quarter of 2024.

Previous 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.

Current wording

Dividends paid to shareholders totaled $12.2 million and $12.1 million in each of the nine-month periods ended September 30, 2024 and 2023, respectively. 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 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.

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 September 30, 2024, UFG's sole direct insurance company subsidiary, UF&C, is able to make a maximum of $42.1 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 $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.

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 $24.4 million at September 30, 2024. These partnerships are included in our other long term investments on the Consolidated Balance Sheets with a current fair value of $100.2 million, or 5.0 percent of our total invested assets, as of September 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- and six-month periods ended June 30, 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 nine-month periods ended September 30, 2024 and 2023.