AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of the property/casualty (P/C) subsidiaries of United Fire Group, Inc. (UFG) [NASDAQ: UFCS] (collectively known as United Fire & Casualty Group), which operate under an intercompany pooling agreement led by United Fire & Casualty Company. Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” (Good) of UFG as well as the Long-Term Issue Credit Rating of “bbb-” (Good) on UFG’s $70.0 million, 9% senior unsecured notes due 2039. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Cedar Rapids, IA. (See below for a detailed listing of the companies and ratings.)

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

The stable outlooks reflect AM Best’s expectation of stabilization in United Fire & Casualty Group’s operating performance and balance sheet strength fundamentals over the intermediate term given management’s strategic initiatives intended to improve operating performance, as well as the adequacy of reserve development over time.

The ratings also consider the group’s well-established position within core markets that provide a diversified range of product offerings in commercial lines. The group also benefits from its solid regional franchise, local market knowledge, and long-standing agency relationships. Despite these strengths, the group remains exposed to potential catastrophe and weather-related losses and will need to manage rate and underwriting risk carefully to improve operating performance. The Long-Term ICR of UFG recognizes the capital strength of its operating subsidiaries. Financial leverage and interest coverage at the holding company is supportive of the current ratings.

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

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

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

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

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