Good day and welcome to the United Fire Group 2015 Fourth Quarter and Year End Financial Results Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference call over to Mr. Randy Patten, Director of SEC and Financial Reporting and Investor Relations. Mr. Patten, the floor is yours sir.

Thank you. 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 and slides are located under the Investor Relations tab. Our speakers today are Chief Executive Officer, Randy Ramlo; Michael Wilkins, our Chief Operating Officer; and Dawn Jaffray, Chief Financial Officer. 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 including 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’m pleased to present Mr. Randy Ramlo, Chief Executive Officer of United Fire Group.

Thanks Randy. Good morning everyone and welcome to UFG Insurance 2015 fourth quarter and year end conference call. It is my pleasure to report 2015 was a strong year for UFG. Our current and long term 2020 vision goals we first communicated in 2014 including increasing ROE and written premium providing best-in-class service and being a best place to work continue to take hold as shown both by our progress and profitable performance. For the 2015 year, operating income was $3.46 per share, net income was $3.53 per share and our GAAP combined ratio was 92%. This compares with operating income of $2.13 per share, net income of $2.32 per share and our GAAP combined ratio of 97.8% for 2014. We are reporting year-over-year improvement in operating earnings and net income of $1.33 per share and $1.21 per share respectively and 5.8 points of improvement on the combined ratio. For the full year of 2015, we reported a solid return on equity of 10.5% compared with 7.4% in 2014 in spite of reduced investment returns and lower level of earnings from our life segment. We closed 2015 with a book value of $34.94 per share up from $32.67 per share at the end of 2014. In the property and casualty segment, we benefited throughout the year from modest rate increases, a lower base of catastrophic events, favorable claims activity and favorable reserve development on our prior accident years. I'll let Mike address more specifics with respect to P&C market conditions and performance in a few moments. For the first time in UFG history, we reached a $1 billion in total revenue. Thanks to the hard work and dedication of our employees and agents, the continued execution of our strategic plan, and the loyalty of our customers. This milestone included a…

Thanks Randy and good morning, everyone. During the fourth quarter, competitive market conditions continued for both renewals and new business and are accelerating. We've seen some early stage aggressive rates quotes by competitors on larger new business accounts, or the differential to what UFG would deem reasonable is significant. Commercial lines renewal pricing has varied by region with average percentage increases in the low-single digits on most small and mid-market accounts. Larger accounts remain more competitive, with flat to small percentage decreases prevailing for best-in-class risks. Improved industry results in the property line has made it more challenging to obtain increases. We pushed and obtained higher level rate increases on the commercial auto line of business as a result of deteriorating loss experienced industry wide. We continue to increase pricing and/or non-renewal accounts with loss issues including the lowest performing accounts. Albeit diminishing, this is the 17th consecutive quarter of commercial lines pricing increases on our overall book of business. We continue to believe lost cost trends will remain at low levels and the margin between lost cost and rate increases will narrow. We currently believe lost cost trends are approximately 3% and premium growth should continue to outpace lost cost trends during 2016 as rate increases achieved over the past several quarters earn out. Personal lines renewal pricing has averaged percentage increases in the low to mid single digits. Premiums written from new business declined from the third quarter; however they increased compared to the fourth quarter of 2014. Our success ratio on quoted accounts remains unchanged and is at an acceptable level with the most success in accounts with premiums less than 25,000. Premium and policy retention have remained strong and holding at 85% and 83% respectively consistent with third quarter experience. The U.S. economy continues to experience…

Thanks Mike and good morning. Let me enforce on what Randy and Mike have already stated. 2015 was a good year for UFG with respect to financial performance. Our stockholders equity increased 7.5% to $879 million at December 31, 2015, from $817 million at December 31, 2014. Return on equity year-over-year as we reported this morning in our press release improved 3.1 percentage points. Further adjusting ROE to exclude the impact of unrealized gains, our adjusted ROE was 12.6% as compared to 8.9% in 2014. For the fourth quarter, we reported consolidated net income including net realized investment gains and losses of $30.9 million or $1.21 per share compared to $34.8 million or $1.38 per share for the fourth quarter 2014. For the full year, consolidated net income including net realized investment gains and losses was $89.1 million or $3.53 per share compared to $59.1 million or $2.32 per share in 2014. As Randy and Mike covered the discussion on premium and length of our losses, I'll provide more detail on the impact of loss development. Losses and loss settlement expenses increased by $13.8 million or 12.2% during the fourth quarter, compared to the fourth quarter of 2014 and $12.8 million or 2.4% for the full year. It has been historically consistent reserving practice for USG; we're conservative in setting initial reserves. As a result, we often have favorable reserve adjustments that vary from year-to-year across our book of business. Favorable reserve development for the fourth quarter was $16.3 million compared to $24.2 million in the fourth quarter of 2014. The impact on net income for the quarter in 2015 was $0.41 per share compared to $0.62 per share in 2014. For 2015, our quarterly favorable development impacts across our property and casualty segment mirrors the annual story, which I'll…

[Operator Instructions] The first question we have comes from Paul Newsome of Sandler O'Neill. Please go ahead.

Good morning. Congratulations on the quarter and the year, folks. Is it possible for you given what you have done with rate to date that the combined ratio could actually improve in 2016?

This is Randy, Paul. We are - it's possible. I guess everything is possible. If you recall, we first got rate increases I think in the fourth quarter of 2011. And so by virtue of us hitting rate increases though very minimal in the fourth quarter of 2015, those policyholders have had rate increases for quite a number of years. And it goes to say that possibly going forward we might still be able to continue with a little bit of rate increase. Mike mentioned that commercial auto, we are still able to get some rate increases, some areas of the country with the storm susceptible property, we were able to get some rate increases. Some smaller accounts we were able to get some and first on lines we were still able to get some rate increases. Rate increases on larger accounts will become very difficult. And so we had a pretty small overall rate increase in the fourth quarter even though it was positive. If our trends continue, we are probably going to move closer to flat. But even if we were to remain at this rate level for the rest of the year, we'd be very comfortable at - our combined ratio would still be very good at the end of 2016. Do you have anything to add Mike?

Yes. Paul, this is Mike. I think our expectation with the increases we received over the last four quarters would be that the earn premium as those increases earned through would roughly equal a lost contemplation. So from that perspective, maybe looking at our flat year, the wildcard of course is always the cat losses, what’s going to happen with cat losses in the year end. This past year, we had a pretty good cat year. So if we have another cat year like that, I think we could equal or improve our combined - cat's are higher obviously that could impact it the other way. I do think we’ve done a lot of things to try to improve our cat exposure, spread risk, better reinsurance with reinsurance being cheap, we add a little cover and changed some things there we think will be helpful. So we are optimistic again for 2016.

Fantastic. Congratulations again.

[Operator Instructions] At this time, we have no further questions. We will go ahead and conclude the question-and-answer session. I’d now like to turn the conference back over to Mr. Randy Patten for any closing remarks. Sir?

That concludes our conference call. As a reminder, the transcript of the 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.

And we thank you sir also for your time and for the rest of your management team. The conference call is now concluded. At this time, you may disconnect your lines. Thank you again, and have a great day everyone.