UNITED FIRE GROUP INC

Previous wording

For the three-month period ended March 31, 2025, approximately 49.1 percent of our property and casualty premiums were written in Texas, California, Iowa, Missouri, and New Jersey.

Current wording

For the six-month period ended June 30, 2025, approximately 48.2 percent of our property and casualty premiums were written in Texas, California, Iowa, Missouri, and New Jersey.

Previous wording

The following table includes the consolidated results of our operations for the three-month periods ended March 31, 2025 and 2024, with more detailed components and discussion in the sections that follow. Discussions of the components of net income are presented on a pre-tax basis, unless otherwise noted.

Current wording

The following table includes the consolidated results of our operations for the three- and six-month periods ended June 30, 2025 and 2024, with more detailed components and discussion in the sections that follow. Discussions of the components of net income are presented on a pre-tax basis, unless otherwise noted.

Previous wording

Net written premium is the amount charged for insurance policy contracts issued and recognized on an annualized basis at the effective date of the policy. Net written premium is frequently used by industry analysts and other recognized reporting sources to facilitate comparisons of the performance of insurance companies. Management believes net written premium is a meaningful measure for evaluating insurance company sales performance and geographical expansion efforts. Net written premium for an insurance company consists of direct written premium and assumed premiums, less ceded premiums. The following shows our written premium for the three-month periods ended March 31, 2025 and 2024.

Current wording

Net written premium is the amount charged for insurance policy contracts issued and recognized on an annualized basis at the effective date of the policy. Net written premium is frequently used by industry analysts and other recognized reporting sources to facilitate comparisons of the performance of insurance companies. Management believes net written premium is a meaningful measure for evaluating insurance company sales performance and geographical expansion efforts. Net written premium for an insurance company consists of direct written premium and assumed premiums, less ceded premiums. The following shows our written premium for the three- and six-month periods ended June 30, 2025 and 2024.

Previous wording

Net earned premium are calculated on a pro-rata basis over the terms of the respective policies. Unearned premium reserves are established for the portion of written premium applicable to the unexpired terms of the insurance policies in force. The difference between net earned premium and net written premium is the change in unearned premium and the change in prepaid reinsurance premiums. Direct earned premium are recognized ratably over the life of a policy and differ from direct written premium, which are recognized on the effective date of the policy. The following shows our earned premium for the three-month periods ended March 31, 2025 and 2024.

Current wording

Net earned premium is calculated on a pro-rata basis over the terms of the respective policies. Unearned premium reserves are established for the portion of written premium applicable to the unexpired terms of the insurance policies in force. The difference between net earned premium and net written premium is the change in unearned premium and the change in prepaid reinsurance premiums. Direct earned premium is recognized ratably over the life of a policy and differs from direct written premium, which is recognized on the effective date of the policy. The following shows our earned premium for the three- and six-month periods ended June 30, 2025 and 2024.

Previous wording

Direct premiums are the total policy premiums, net of cancellations, associated with policies issued and underwritten by our property and casualty insurance business. Direct premiums increased $40.7 million in the three-month period ended March 31, 2025 as compared to the same period in 2024 primarily due to growth in our core commercial lines resulting from substantial new business production, rate renewal increases, and stable retention.

Current wording

Direct premiums are the total policy premiums, net of cancellations, associated with policies issued and underwritten by the Company. Direct premiums increased $39.9 million and $80.6 million in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024 primarily due to growth in our core commercial lines resulting from substantial new business production and increased retention.

Previous wording

Assumed premiums are the total premiums associated with the insurance risk transferred to us by other insurance and reinsurance companies pursuant to reinsurance contracts. Assumed premiums increased $3.3 million in the three-month period ended March 31, 2025 as compared to the same period in 2024 due to the net addition of new reinsurance programs and cedant growth.

Current wording

Assumed premiums are the total premiums associated with the insurance risk transferred to us by other insurance and reinsurance companies pursuant to reinsurance contracts. Assumed premiums decreased $3.5 million and $0.3 million in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024 due to targeted management actions of exiting certain reinsurance programs.

Previous wording

Ceded premiums is the portion of direct premiums that we cede to our reinsurers under our reinsurance contracts. The ratio of ceded premiums to direct premiums increased for the three-month period ended March 31, 2025 as compared to the same period in 2024 due to ceded reinsurance premium adjustments. Ceded premiums increased $16.4 million in 2025 due to growth in the subject premium base.

Current wording

Ceded premiums are the portion of direct premiums that we cede to our reinsurers under our reinsurance contracts. Ceded premiums increased $9.1 million and $25.5 million in the three- and six-month periods ended June 30, 2025, respectively, compared to the same periods in 2024 due primarily to growth in the subject premium base and ceded reinsurance premium adjustments.

Previous wording

Net investment income was $23.5 million for the first quarter of 2025, an increase of $7.1 million compared to the same period in 2024. Income from our fixed income portfolio increased by $6.0 million due to portfolio management actions taken during the year ended December 31, 2024 and investing at higher interest rates. Income on other long-term investments increased $2.0 million driven by better returns in the first quarter of 2025. Dividends on equity securities decreased $0.3 million due to the strategic re-allocation from equity securities to fixed maturities in 2024, as described above. Other investment income decreased $0.3 million driven by interest on cash and cash equivalents.

Current wording

Net investment income was $21.7 million for the second quarter of 2025, an increase of $3.6 million compared to the same period in 2024. The increase was primarily from our fixed income portfolio increase of $5.4 million due to portfolio management actions taken during the year ended December 31, 2024 and investing at higher interest rates, offset by lower income on cash and cash equivalents and other long-term investments.

Previous wording

Net investment losses were $0.8 million for the three months ended March 31, 2025 as compared to net investment losses of $1.2 million for the three-month period ended March 31, 2024. The primary reason for the change relates to portfolio management actions during the year ended December 31, 2024, as described above.

Current wording

Net investment losses were $1.0 million and $1.8 million for the three- and six-month periods ended June 30, 2025, respectively, as compared to net investment losses of $1.2 million and $2.4 million for the same periods in 2024. The primary reason for the change relates to portfolio management actions taken during the year ended December 31, 2024, as described above, and an increase in the allowance for credit losses related to mortgage loans.

Previous wording

The following shows losses and loss settlement expenses for the three-month periods ended March 31, 2025 and 2024:

Current wording

The following is a summary of losses and loss settlement expenses for the three- and six-month periods ended June 30, 2025 and 2024:

Previous wording

For the three-month period ended March 31, 2025, our loss and loss settlement expenses were $10.1 million, or 5.6%, higher than the same period in 2024 and our net loss ratio improved 2.5 points. This was driven by improvement in the underlying loss ratio, no prior year development, and a catastrophe ratio below the five-year historical average. The underlying loss ratio improvement was driven by rate achievement and continued favorable frequency in most major lines.

Current wording

For the three-month period ended June 30, 2025, our loss and loss settlement expenses were $7.6 million, or 3.8%, lower than the same period in 2024, and our net loss ratio improved 8.6 points compared to the same period in 2024. This was driven by improvement in the underlying loss ratio, $5.0 million of non-catastrophe prior year improvement, and a catastrophe ratio below the five-year historical average. The underlying loss ratio improvement was driven by rate achievement and continued favorable frequency in most major lines.

Previous wording

The Company experienced neutral reserve development, excluding catastrophe losses, for prior accident years for the three-month period ended March 31, 2025. For non-catastrophe losses, favorable development in fire and allied lines and surety was offset by adverse development in commercial other liability. Favorable development in fire and allied lines of $7.7 million ($4.7 million in commercial and $3.0 million in personal) is driven by favorable emergence in recent accident years. Adverse development in commercial other liability reflects the Company's continued response to increased loss settlements resulting from the impact of economic and social inflation, including increased litigation activity.

Current wording

The Company experienced favorable reserve development of $5.0 million and $5.1 million, excluding catastrophe losses, for prior accident years during the three- and six-month periods ended June 30, 2025, respectively, driven by reactions to better than expected loss adjustment expense payments. Adverse development in commercial other liability reflects the Company's continued response to increased loss settlements resulting from the impact of economic and social inflation, including increased litigation activity. This was offset by improvement in several other core commercial lines. Favorable development in fire and allied lines is driven by favorable emergence in recent accident years.

Previous wording

In the three-month period ended March 31, 2025, our pre-tax catastrophe losses were $15.4 million, an increase of $2.6 million compared to the same period in 2024. In 2025, our catastrophe losses included seven events. Catastrophe losses in the three-month period ended March 31, 2025 added 5.0 percentage points to the combined ratio, which is below our five-year historical average. The California wildfires represented 2.6 points of the overall impact for the quarter.

Current wording

In the three- and six-month periods ended June 30, 2025, our pre-tax catastrophe losses were $17.4 million and $32.8 million, respectively, a decrease of $14.7 million and $12.1 million, respectively, compared to the same periods in 2024. Our catastrophe losses included 20 new events in the second quarter of 2025. Catastrophe losses in the three- and six-month periods ended June 30, 2025 added 5.5 and 5.3 points to the combined ratio, respectively, which is below our five-year historical average.

Previous wording

DAC is amortized over the period the related premiums are earned. Amortization increased for the three-month period ended March 31, 2025, primarily reflecting an increase in deferred underwriting costs associated with the growth of the business.

Current wording

DAC is amortized over the period the related premiums are earned. Amortization increased for the three- and six-month periods ended June 30, 2025, primarily reflecting an increase in deferred underwriting costs aligned with our continued premium expansion.

Previous wording

The following tables displays our net loss ratio for the three-month period ended March 31, 2025:

Current wording

The following tables display our net loss ratio for the three- and six-month periods ended June 30, 2025:

Previous wording

The net loss ratio in our commercial lines of business was 60.7% for the first quarter of 2025 compared to 66.3% for the first quarter 2024. This result was driven by improvement in the underlying loss ratio.

Current wording

The net loss ratio in our commercial lines of business was 61.9% for the second quarter of 2025, compared to 72.4% for the second quarter of 2024. This result was driven by improvement in the underlying loss ratio, favorable catastrophe experience, and favorable reserve development.

Previous wording

The net loss ratio improved 5.8 percentage points in the three-month period ended March 31, 2025 as compared to the same period in 2024. This was driven by stronger favorable prior year development in 2025 compared to 2024.

Current wording

The net loss ratio improved 12.2 and 9.1 points in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024. For both the three- and six-month periods, the result was driven by stronger favorable prior year development in 2025 compared to 2024, coupled with a favorable catastrophe result.

Previous wording

The net loss ratio improved 9.5 percentage points in the three-month period ended March 31, 2025 as compared to the same period in 2024. This was driven in part by consistent pricing increases throughout 2024 and continued favorable frequency trends associated with more restrictive underwriting guidelines and exposure appetite.

Current wording

The net loss ratio improved 19.7 and 14.5 points in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024. This was driven in part by consistent pricing increases throughout 2024 and continued favorable frequency trends associated with more restrictive underwriting guidelines and exposure appetite.

Previous wording

The net loss ratio deteriorated 18.9 percentage points in the three-month period ended March 31, 2025 as compared to the same period in 2024. There was less favorable prior year development in 2025 (-6%) compared to 2024 (-16%). The remainder of the change was driven by the underlying loss ratio. Small volume in this line creates additional volatility in quarterly loss ratios.

Current wording

The net loss ratio improved 6.1 and deteriorated 5.8 points in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024. The three-month improvement was driven by prior period favorable development in 2025. The six-month improvement also resulted from favorable development in 2025 in excess of 2024, but that improvement was more than offset by a higher underlying loss ratio. Small volume in this line creates additional volatility in quarterly loss ratios.

Previous wording

The net loss ratio deteriorated 3.9 percentage points in the three-month period ended March 31, 2025 as compared to the same period in 2024. When surety losses occur, our loss is determined by estimating the cost to complete the remaining work and to pay the contractor's unpaid bills, offset by contract funds due to the contractor, reinsurance, and the value of any collateral to which we may have access. The change in loss ratio was driven by less favorable prior year development in 2025.

Current wording

The net loss ratio improved 11.5 and 3.4 points in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024. When surety losses occur, our loss is determined by estimating the cost to complete the remaining work and to pay the contractor's unpaid bills, offset by contract funds due to the contractor, reinsurance, and the value of any collateral to which we may have access. The change in loss ratio was driven by an improved underlying loss ratio for both the three- and six-month periods. For the six-month period, the result was partially offset by less favorable prior year development in 2025 compared to 2024.

Previous wording

The net loss ratio improved 14.8 percentage points in the three-month period ended March 31, 2025 compared to 2024, driven by prior year improvement in proportional assumed reinsurance for homeowners multi-peril coverage included in personal fire and allied lines. This was partially offset by catastrophe losses related to the California wildfires.

Current wording

The net loss ratio improved 7.3 and 19.9 points in the three- and six-month periods ended June 30, 2025, respectively, compared to 2024. For both the three- and six-month periods, the result was driven by prior year improvement in proportional assumed reinsurance for homeowners multi-peril coverage included in personal fire and allied lines. For the six-month period, the result was partially offset by catastrophe losses related to the California wildfires.

Previous wording

(1) Expense ratio is calculated by dividing non-deferred underwriting expenses and amortization of deferred policy acquisition costs by net earned premium. The expense ratio measures a company's operational efficiency in producing, underwriting and administering its insurance

Current wording

(1) Expense ratio is calculated by dividing non-deferred underwriting expenses and amortization of deferred policy acquisition costs by net earned premium. The expense ratio measures a company's operational efficiency in producing, underwriting and administering its insurance business.

Previous wording

The increase in expense ratio of 3.0 points in the three-month period ended March 31, 2025 as compared to the same period in 2024 was mainly driven by non-recurring expenses associated with the final stages of development of a new policy administrative system.

Current wording

The expense ratio decreased 0.6 points and increased 1.2 points in the three- and six-month periods ended June 30, 2025, respectively, as compared to the same periods in 2024. The decrease in the second quarter of 2025, compared to the same period in 2024, was mainly driven by scale benefits of growth. The increase in the six-month period ended June 30, 2025, compared to the same period in 2024, was driven by non-recurring expenses associated with the final stages of development of a new policy administrative system in the first quarter and scale benefits of growth.

Previous wording

The consolidated effective tax rate was 19.0 percent and 17.1 percent for the three-month periods ended March 31, 2025 and 2024, respectively. Our effective tax rate for three-month periods ended March 31, 2025 and 2024 is different than the federal statutory rate of 21 percent, due principally to the net effect of tax-exempt municipal bond interest income.

Current wording

The consolidated effective tax rate was 21.4 percent and 20.4 percent for the three- and six-month periods ended June 30, 2025, respectively. Our effective tax rate for the three- and six-month periods ended June 30, 2025 is different than the federal statutory rate of 21 percent, due primarily to the net effect of tax-exempt municipal bond interest income, state income taxes and interest on a federal tax refund.

Previous wording

The increase in adjusted operating income reported in the first quarter of 2025 was primarily due to an increase in net earned premium of $27.6 million combined with a decrease in the underlying loss ratio of 2.9 points to 56.5%, an increase in the catastrophe loss ratio of 0.4 points to 5.0%, and neutral prior year reserve development, excluding catastrophe losses. In addition, net investment income increased by $7.1 million, partially offset by net investment losses due to management actions within the Company's fixed maturity portfolio to reinvest at higher rates. The underwriting expense ratio increased 3.0 points to 37.9% primarily due to non-recurring expenses related to the final stages of development of a new policy administrative system.

Current wording

Adjusted operating income increased in the second quarter of 2025, primarily due to an increase in net earned premium of $27.2 million combined with the underlying loss ratio improvement of 1.3 points to 57.6%, catastrophe loss ratio improvement of 5.7 points to 5.5% and favorable prior year reserve development, excluding catastrophe losses, of 1.6 points. In addition, net investment income increased by $3.6 million, driven by portfolio repositioning in 2024. The underwriting expense ratio improved 0.6 points to 34.9%.

Previous wording

Our invested assets totaled $2.2 billion at March 31, 2025, compared to $2.1 billion at December 31, 2024, an increase of $72 million. We utilize 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. The composition of our investment portfolio at March 31, 2025 is presented at carrying value in the following table:

Current wording

Our invested assets totaled $2.2 billion at June 30, 2025, compared to $2.1 billion at December 31, 2024, an increase of $107 million. We utilize 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. The composition of our investment portfolio at June 30, 2025 is presented at carrying value in the following table:

Previous wording

(2) As a member of Lloyd's, the Company participates in the Syndicate results which include the fair value of the investments. Starting in the fourth quarter of 2024, these investments are included in other long-term investments. The fair value of Lloyd's syndicate investments included in other long-term investments was $92.0 million as of March 31, 2025.

Current wording

(2) As a member of Lloyd's, the Company participates in the Syndicate results which include the fair value of the investments. Starting in the fourth quarter of 2024, these investments are included in other long-term investments. The fair value of Lloyd's syndicate investments included in other long-term investments was $108.1 million as of June 30, 2025.

Previous wording

The weighted average effective duration of our portfolio of fixed maturity securities was 4.11 years at March 31, 2025 compared to 4.22 years at December 31, 2024. Refer to Note 2 "Investments" in Part I, Item 1 for more information on maturities.

Current wording

The weighted average effective duration of our portfolio of fixed maturity securities was 4.12 years at June 30, 2025 compared to 4.22 years at December 31, 2024. Refer to Note 2 "Investments" in Part I, Item 1 for more information on maturities.

Previous wording

As of March 31, 2025, net unrealized investment losses, after tax, totaled $51.7 million compared to net unrealized losses, after tax, of $72.2 million as of December 31, 2024. The net unrealized investment loss position improved from year end due to the slight decrease in bond market interest rates during first quarter.

Current wording

As of June 30, 2025, net unrealized investment losses, after tax, totaled $44.7 million compared to net unrealized losses, after tax, of $72.2 million as of December 31, 2024. The net unrealized investment loss position improved from December 31, 2024 due to the decrease in bond market interest rates during the second quarter of 2025.

Previous wording

At March 31, 2025, our watch list included six fixed maturity securities in an unrealized loss position with an amortized cost of $15.2 million, no allowance for credit losses, unrealized losses of $0.9 million and a fair value of $14.3 million.

Current wording

At June 30, 2025, our fixed maturity watch list included five fixed maturity securities in an unrealized loss position with an amortized cost of $13.2 million, no allowance for credit losses, unrealized losses of $0.7 million and a fair value of $12.5 million.

Previous wording

The following table displays a consolidated summary of cash sources and uses for the three-month periods ended March 31, 2025 and 2024:

Current wording

The following table displays a consolidated summary of cash sources and uses for the six-month periods ended June 30, 2025 and 2024:

Previous wording

Our cash flows were sufficient to meet our liquidity needs for the three-month periods ended March 31, 2025 and 2024 and we anticipate they will be sufficient to meet our future liquidity needs. 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, 2025 and 2024 and we anticipate they will be sufficient to meet our future liquidity needs. We also have the ability to draw on our credit facility if needed.

Previous wording

At March 31, 2025, our cash and cash equivalents included $36.0 million related to money market accounts, compared to $23.1 million at December 31, 2024.

Current wording

At June 30, 2025, our cash and cash equivalents included $39.1 million related to money market accounts, compared to $23.1 million at December 31, 2024.

Previous wording

Net cash flows provided by operating activities were $35.7 million and $36.2 million for the three-month periods ended March 31, 2025 and 2024, respectively. In the three-month period ended March 31, 2025, the net operating cash inflows were driven by premium and investment income offsetting loss and expense outflows.

Current wording

Net cash flows provided by operating activities were $89.1 million and $127.5 million for the six-month periods ended June 30, 2025 and 2024, respectively. For the six-month period ended June 30, 2025, the net operating cash inflows were driven by premium and investment income offsetting loss and expense outflows.

Previous wording

Sales of investments and proceeds from calls or maturities of fixed maturity securities can also provide liquidity. During the next five years, $459.6 million, or 23.8 percent, of our fixed maturity portfolio will mature.

Current wording

Sales of investments and proceeds from calls or maturities of fixed maturity securities can also provide liquidity. During the next five years, $473.7 million, or 24.3 percent, of our fixed maturity portfolio will mature.

Previous wording

Net cash flows used in investing activities were $48.2 million for the three-month period ended March 31, 2025, compared to net cash flows provided by investing activities of $83.9 million for the three-month period ended March 31, 2024. For the three-month periods ended March 31, 2025 and 2024, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $77.3 million and $127.8 million, respectively. Our cash outflows for investment purchases were $122.9 million for the three-month period ended March 31, 2025, compared to $41.4 million for the same period of 2024.

Current wording

Net cash flows used in investing activities were $78.5 million for the six-month period ended June 30, 2025, compared to net cash flows used in investing activities of $134.6 million for the six-month period ended June 30, 2024. For the six-month periods ended June 30, 2025 and 2024, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $141.6 million and $307.2 million, respectively. Our cash outflows for investment purchases were $215.9 million for the six-month period ended June 30, 2025, compared to $436.0 million for the same period of 2024.

Previous wording

In December 2023, UF&C became a member of FHLB Des Moines. Membership allows access to loans or advances pursuant to the terms of FHLB Des Moines' standard Advances, Pledge and Security Agreement (the "Advances Agreement"). As of March 31, 2025, there were no advances outstanding under the Advances Agreement. For further information regarding the agreement with FHLB Des Moines, see Note 8 "Debt" contained in Part I, Item 1.

Current wording

In December 2023, UF&C became a member of FHLB Des Moines. Membership allows access to loans or advances pursuant to the terms of FHLB Des Moines' standard Advances, Pledge and Security Agreement (the "Advances

Previous wording

Dividends paid to shareholders totaled $4.1 million and $4.0 million in each of the three-month periods ended March 31, 2025 and 2024, respectively. Our practice has been to pay quarterly cash dividends, which we have paid every quarter since March 1968. Payments of any future dividends and the amounts of such dividends will depend upon factors such as net income, financial condition, capital requirements, and general business conditions. We will only pay dividends if declared by our Board of Directors out of legally available funds.

Current wording

Dividends paid to shareholders totaled $8.1 million in each of the six-month periods ended June 30, 2025 and 2024. Our practice has been to pay quarterly cash dividends, which we have paid every quarter since March 1968. Payments of any future dividends and the amounts of such dividends will depend upon factors such as net income, financial condition, capital requirements, and general business conditions. We will only pay dividends if declared by our Board of Directors out of legally available funds.

Previous wording

As a holding company with no independent operations of its own, UFG relies on dividends received from its insurance company subsidiaries in order to pay dividends to its common shareholders. Dividends payable by our insurance subsidiaries are governed by the laws in the states in which they are 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 less any dividends paid in the previous 12 months, or net income of the preceding calendar year on a statutory basis less any dividends paid in the previous 12 months, 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, 2025, UFG's sole direct insurance company subsidiary, UF&C, is able to make a maximum of $51.9 million in dividend payments without prior regulatory approval. These restrictions are not expected to have a material impact in meeting the cash obligations of UFG.

Current wording

As a holding company with no independent operations of its own, UFG relies on dividends received from its insurance company subsidiaries in order to pay dividends to its common shareholders. Dividends payable by our insurance subsidiaries are governed by the laws in the states in which they are 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 less any dividends paid in the previous 12 months, or net income of the preceding calendar year on a statutory basis less any dividends paid in the previous 12 months, 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, 2025, UFG's sole direct insurance company subsidiary, UF&C, is able to make a maximum of $53 million in dividend payments without prior regulatory approval. These restrictions are not expected to have a material impact in meeting the cash obligations of UFG.

Previous wording

Pursuant to agreements with our limited liability partnership investments, we are contractually committed through 2030 to make capital contributions upon request of the partnerships. The timing of these additional contributions is unknown and based upon the timing of when investments and agreements are executed or signed compared to when the actual commitments are funded or closed. Our remaining potential contractual obligation was $22.0 million at March 31, 2025.

Current wording

Pursuant to agreements with our limited liability partnership investments, we are contractually committed through 2030 to make capital contributions upon request of the partnerships. The timing of these additional contributions is unknown and based upon the timing of when investments and agreements are executed or signed compared to when the actual commitments are funded or closed. Our remaining potential contractual obligation was $21.1 million at June 30, 2025.