John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

The Long Case For United Fire Group

United Fire Group (NASDAQ:UFCS) trades at a discount to its group, consistently rewards shareholders through dividends/stock buybacks, benefits from a favorable pricing environment and, most importantly, focuses on long-term profitability over short-term market share gains.

Company overview

UFCS (founded in 1946) sells property and casualty (P&C) and life insurance as well as annuities to individuals and businesses. P&C insurance accounted for ~90% of net premiums earned with ~90% of this amount generated from commercial lines. Life insurance accounted for ~10% of net premiums earned with ~73% of this amount generated from traditional life insurance products. UFCS generates all of its revenues from the U.S.

In March 2011 UFCS acquired Mercer Insurance Group for $191.5 million. As a result,...

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