Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
| DEBT | DEBT Long Term Debt December 2020 Private Placement On December 15, 2020, United Fire & Casualty Company ("UF&C") issued $50 million of notes due 2040 ("UF&C Notes") at par value. The UF&C notes are senior, unsecured unsubordinated obligations of UF&C and are fully and unconditionally guaranteed on an unsecured, unsubordinated basis by each of UF&C's subsidiaries. The UF&C Notes mature on December 15, 2040. The UF&C Notes may be redeemed by UF&C, in whole or in part, at par, at any time following the tenth (10th) anniversary of the issuance date, but subject to the payment restrictions, including the prior approval of the Iowa Insurance Commissioner. Interest payments will be paid quarterly on March 15, June 15, September 15 and December 15 of each year (each such date, an "Interest Payment Date"). The interest rate will equal the rate that corresponds to the A.M. Best Co. (or its successor's) financial strength rating for members of the UF&C Pooled Group as of the applicable Interest Payment Date, as set forth in the table below. For the six-month period ended June 30, 2025, interest expense totaled $1,719. Payment of interest is subject to approval by the Iowa Insurance Division.
May 2024 Private Placement On May 31, 2024, the Company issued $70,000 aggregate principal of its 9% senior unsecured notes due 2039 (the "UFG Notes") at par value. The UFG Notes mature on May 31, 2039. The UFG Notes may be redeemed by the Company, in whole or in part, at par, at any time following the tenth (10th) anniversary of the issuance date. Prior to the tenth (10th) anniversary, the UFG Notes may not be redeemed except for a change in control offer or upon an event of default. Interest payments will be paid quarterly on February 28, May 31, August 31 and November 30 of each year. Costs incurred in the issuance of debt of $3,050 were capitalized and will be amortized over the life of the non-cancellable period of the debt. The capitalization of such debt issuance costs are included as an offset to the "Long term debt" in the Consolidated Balance Sheets and the related amortization is included in "Interest expense" in the Consolidated Statements of Income. For the six-month period ended June 30, 2025, interest expense totaled $3,248. The Company is required to maintain an investment grade rating for each series of the UFG Notes from a rating agency. The UFG Notes also require and impose certain operating restrictions, financial restrictions, and financial covenants on the Company, including: •incurring or assuming additional indebtedness, including guarantees; •incurring or assuming liens; •engaging in mergers or consolidations; •conveying, transferring, leasing or disposing of assets; •making certain investments; •entering into transactions with affiliates; •declaring or making dividend payments or distributions or repurchasing capital stock or other equity interests; •changing the nature of our business materially; and •making changes in accounting treatment or reporting practices that affect the calculation of financial covenants, or changing our fiscal year. As of June 30, 2025, we were in compliance with all covenants. Credit Facilities In December 2023, UF&C became a member of the Federal Home Loan Bank of Des Moines ("FHLB Des Moines"). As part of the FHLB Des Moines application process and in connection with its membership in FHLB Des Moines, UF&C entered into FHLB Des Moines' standard Advances, Pledge and Security Agreement (the "Advances Agreement"). The Advances Agreement governs the terms and conditions under which UF&C may borrow and FHLB Des Moines may make loans or advances from time to time. The Advances Agreement requires UF&C to pledge certain collateral, including the capital stock in FHLB Des Moines owned by UF&C and such other assets (including mortgage-related securities, loans, and stock in UF&C) as agreed by UF&C and FHLB Des Moines in connection with any such loans or advances. Membership in FHLB Des Moines provides UF&C with access to FHLB Des Moines' product line of financial services, including funding agreements, general asset/liability management, and collateralized advances that can be used for liquidity management. As a member, UF&C has an aggregate borrowing capacity of up to 20.0 percent of total assets of UF&C. As of June 30, 2025, UF&C has FHLB Des Moines borrowing capacity up to $499.6 million if an immediate liquidity need would arise. UF&C had no outstanding balance as of June 30, 2025 and December 31, 2024 related to these lines of credit.
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