Good morning. My name is Christine and I will be your conference operator for today. At this time, I would like to welcome everyone to the United Fire Group 2014 Fourth Quarter and Year End Financial Results Conference Call. All participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. Thank you. I will now turn the call over to Anita Novak, Director of Investor Relations.

Good morning, everyone and thank you for joining this call. Earlier today, we issued a news release on our results. To find a copy of this document, please visit our website at www.unitedfiregroup.com. Press releases in slides are located under the Investor Relations tab. Our speakers today are Mike Wilkins, Executive Vice President and Chief Operating Officer and Kevin Helbing, Interim Principal Financial Officer, Assistant Vice President and Controller. Our President and Chief Executive Officer, Randy Ramlo is traveling today, but is expected to join the call when possible. Other members of our executive team are also available for the question-and-answer session that will follow our prepared remarks. Please note that our presentation today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and are not a guarantee of future performance. These forward-looking statements are based on management’s current expectations and we assume no obligation to update them. The actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings. Please also note that in our discussion today, we may use some non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are also available in our press release and SEC filings. At this time, I am pleased to present to Mr. Mike Wilkins, Executive Vice President and Chief Operating Officer of United Fire Group.

Thanks, Anita. Good morning, everyone and welcome to United Fire’s 2014 fourth quarter and year end conference call. Randy Ramlo is traveling today, but he has joined us via conference call and hopefully he will remain connected for the Q&A portion of the call. We are pleased to report operating income of $1.34 per share and GAAP combined ratio of 83.6% for the quarter. For the year, operating income was $2.13 per share, our GAAP combined ratio was 97.8%, our book value was $32.67 per share, and our return on equity was 7.4%. We continue to benefit from modest rate increases during fourth quarter as well as the lack of significant catastrophic events, favorable claims activity and favorable reserve development on prior accident year claims. Competitive market conditions during the quarter increased on renewals while persisting on new business. Commercial lines renewal pricing varied by region with average percentage increases in the mid single-digits on most small and mid-market accounts. Larger accounts remain more competitive with only small increases obtainable. This is the 13th consecutive quarter of commercial lines pricing increases. Personal auto renewal pricing increases during the quarter remained modest and in the low single-digits. The homeowners pricing experienced average percentage increases in the mid to high single-digits during the quarter. Overall, personal lines renewal pricing increased slightly during the fourth quarter. Written premium from new business remained strong up from the prior quarter as well as the same quarter a year ago. Our success ratio on quoted accounts increased slightly and remained strong. New business discretionary pricing was unchanged. We believe current rate increases are exceeding the lost cost trends and lost cost trends will remain low levels in 2015. However, we do expect the gap between lost cost and rate increases to shrink as 2015 progresses. Policy…

Thanks Mike. Consolidated net income, including net realized investment gains and losses, was $34.8 million or $1.38 per share for the quarter compared to $26.5 million or $1.04 per share last year. For the full year, consolidated net income, including net realized investment gains and losses, was $59.1 million or $2.32 per share compared to $76.1 million or $2.98 per share in 2013. Losses and loss settlement expenses increased by $4.2 million or 3.8% during the fourth quarter compared to the fourth quarter of 2013 and $77.4 million or 16.9% for the full year. As Mike mentioned earlier, 2014 losses and loss settlement expenses were unusually impacted by large losses, which is beginning to look like a trend. For the quarter, however, was more consistent with expectations in these lines of business. Nonetheless, management continues to aggressively pursue actions to mitigate future concerns. As Mike mentioned earlier, our emphasis is primarily on a regional basis, but does include some home office scrutiny as well. Pre-tax catastrophe losses for the quarter totaled $2.5 million or $0.06 per share after tax compared to $3 million or $0.08 per share after tax. Both losses added 1.2 percentage points on the combined ratio. For the year, catastrophe losses totaled $49.7 million or $1.27 per share after tax and added 6.5 percentage points on the combined ratio. Our expectation for catastrophe losses in any given year is 6 percentage points on the combined ratio. It’s important to note, however, that our book of business remains primarily in regions of the country that are susceptible to seasonal weather events such as winter and spring convector storms, which will likely result in volatility in our results from quarter-to-quarter. As a company, we don’t get too excited about volatility since our final analysis is based on annual results.…

Thank you. [Operator Instructions] Our first question comes from the line of Vincent DeAugustino with KBW. Please proceed with your question.

Good morning everyone.

Good morning.

Just to start, maybe a question for Kevin, just to your comments on the 2015 income statement impact, any sense of the ballpark drag from that pension side, either in terms of dollars or on the expense ratio?

It will be approximately $7 million addition on the expense ratio, $7 million.

Okay, great. And then…

Vincent, this is Mike, if I can just add to that. We don’t anticipate the expense ratio moving much in 2015. We have got other initiatives that we think will offset that increased expense. The disappointing thing to us is just we expect it to make good inroads into our expense ratio on 2015 and that will be more difficult now with the impact of the pension obligation.

Okay, makes sense there. So, I guess the other question would be here kind on the premium growth, so the volume here has just been kind of much better than I have been expecting here over the last couple of quarters. And so frankly, I am starting to wonder if I fail to fully appreciate some of your comments around just being a little bit more aggressive on new business growth plans embedded within your 2020 plan? And so I just wanted to touch on any specific targets that are in that 2020 plan and then the split between kind of exposure of new business and rate looking kind of further out to that 2020 mark?

Vincent, this is Mike again. I will start with some generalities and then if you want me to drill down, I can try to do that. We look at our growth carefully each quarter and make sure that we are comfortable with it. A lot of the growth as you know has been driven by rate increases, which we think is a very positive thing, but in addition to that, we have added the specialty unit which we have been talking a little bit about. Now, that added over 1 point of our growth this year. We also have had material reinsurance reductions over the last three years, which were ceding less premiums. So, that’s helpful on our growth. Now, the economy has improved. So, we are seeing better endorsement premium as people add exposures back and also a better audit premium. So, our new business growth is good and we feel good about that, but it’s not the primary driver of our overall growth.

Okay, but I guess just to make sure I am not missing anything there is no specific external target for growth?

We have some targets, but they are not anything we disclose.

Okay, alright. Fair enough. And then just on the reserve side, in the press release there was a mention of normal reallocation reserves following the comment on 2013 accident year IBNR releases. And so I was just kind of hoping you might be able to define kind of what the implication is for the reallocation process? I just want to make sure I understood that.

As you go forward in time, as you build out your current accident year, you shift your IBNR from the previous accident year into the new accident year and that’s what that comment reflected.

Okay, alright. Thank you for that. And just one last question maybe it’s probably best for Randy if he is connected or we can follow-up next quarter or maybe we get a release before then, but the question goes to just kind of getting an update on how the CFO search is going if you guys could comment on that or I would also understand if it is a bit too early?

No. Can you hear me, Vincent?

I can, thank you, loud and clear.

Okay, good. Yes, we had a very strong pool of interest. I think we had a total of 25 applicants initially. The search firm narrowed that group down to 12. Mike Wilkins and myself kind of picked the top 5 out of that group. And we have narrowed that tentatively right now to a group of 2. And then our plans are to have those two come back and do a more extensive interview with not only members of staff, but also with some of our Board of Directors. So, we had a very strong pool from the outside and internally and we are very excited.

Alright, thank you very much. Best of luck guys.

Thank you.

[Operator Instructions] Our next question comes from the line of Paul Newsome with Sandler O’Neill. Please proceed with your question.

Good morning and congratulations on the call. I want to ask about the cat load assumption, are you using about a 6% load for your pricing of your product?

Paul, yes, we are using a 6% budget number, assumption number estimated impact on an annual basis. I think our 10-year average has been 7, but we have done – we have combined the actual 10-year average with modeling results to come up with the 6. And we think our 10-year average is a little higher than we would anticipate going forward.

Are you assuming that the underlying level of catastrophe risk in general is a positive slope in other words that there is an increasing level of activity in general or it sounds like you are assuming the opposite?

Yes, I think we have spent a lot of effort trying to mitigate our exposure to cat losses. We have reduced exposure and concentrated areas, especially costal and our belief is that we have moved the needle in the right direction. Also with the Mercer acquisition, the business that we acquired in the two new locations, East Coast and West Coast is less susceptible to catastrophe losses than our Midwest business. So, we think that also should bring our average down.

Okay. Just a quick accounting question, did I hear right that you do not allocate IBNR reserves on an accident year basis?

We do. And as you move forward in time, that accident year allocation changes as you add the exposure for the current year.

But the individual IBNR buckets would just change on their own, right?

Correct.

Okay, that’s it. Thank you, guys. Appreciate it.

Thanks, Paul.

Thank you. It appears we have no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Thank you, Christine. This now concludes our conference call. As a reminder, a transcript of this call will be available on the company website at www.unitedfiregroup.com. On behalf of the management of United Fire Group, I wish all of you a pleasant day.

Thank you. Ladies and gentlemen, this concludes today’s program. You may disconnect your lines at this time.