A.M. Best Co. has assigned an issuer credit rating (ICR) of "bbb"
to the newly formed holding company, United Fire Group, Inc. (UFG,
Inc.) (Cedar Rapids, IA) [NASDAQ: UFCS]. The assigned outlook is
This rating action follows the February 2, 2012 reorganization of United
Fire & Casualty Group (United Fire) (Cedar Rapids, IA),
whereby UFG, Inc. replaced United Fire & Casualty Company as
the ultimate publicly traded parent of United Fire and its members,
allowing the group to operate under a more traditional holding company
The ICR of UFG, Inc. reflects the use of typical notching from the
current ICR of United Fire. UFG, Inc. maintains modest financial
leverage, and A.M. Best anticipates interest coverage ratios to fall
within its guidelines for its assigned ICR.
The financial strength rating of A (Excellent) and ICRs of "a" of United
Fire and its members are unaffected by this transaction. The outlook for
these ratings is negative.
Factors that may lead to negative rating actions for UFG, Inc. include
further deterioration in underwriting and operating performance as well
as a decrease in risk-adjusted capitalization to a level that would no
longer support the ratings of United Fire.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: "A.M.
Best's Ratings &the Treatment of Debt"; "Equity Credit for Hybrid
Securities"; "Rating Members of Insurance Groups"; and "Risk Management
and the Rating Process for Insurance Companies." Best's Credit Rating
Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
A.M. Best Company
Michael Russo, 908-439-2200, ext. 5372
Lagomarsino, CFA, 908-439-2200, ext. 5810
Morrow, 908-439-2200, ext. 5378
Senior Manager, Public
Peavy, 908-439-2200, ext. 5644
Assistant Vice President,