10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended June 30, 2014

Commission File Number 001-34257

_____________________________

UNITED FIRE GROUP, INC.

(Exact name of registrant as specified in its charter)

____________________________

Iowa	45-2302834
(State of Incorporation)	(IRS Employer Identification No.)

118 Second Avenue, S.E., Cedar Rapids, Iowa 52401

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (319) 399-5700

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES R NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES R NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer R Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO R

As of August 1, 2014, 25,212,125 shares of common stock were outstanding.

United Fire Group, Inc.

Index to Quarterly Report on Form 10-Q

June 30, 2014

	Page
Forward-Looking Information	1
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013	3
Consolidated Statements of Income and Comprehensive Income (unaudited) for the three- and six-month periods ended June 30, 2014 and 2013	4
Consolidated Statement of Stockholders’ Equity (unaudited) for the six-month period ended June 30, 2014	5
Consolidated Statements of Cash Flows (unaudited) for the six-month periods ended June 30, 2014 and 2013	6
Notes to Unaudited Consolidated Financial Statements	7
Review Report of Independent Registered Public Accounting Firm	31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures about Market Risk	48
Item 4. Controls and Procedures	48
Part II. Other Information
Item 1. Legal Proceedings	49
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3. Defaults Upon Senior Securities	49
Item 4. Mine Safety Disclosures	49
Item 5. Other Information	49
Item 6. Exhibits	50
Signatures	51

FORWARD-LOOKING INFORMATION

This report may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for forward-looking statements. The forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results to differ from those expected and/or projected. Such forward-looking statements are based on current expectations, estimates, forecasts and projections about United Fire Group, Inc. (the "Company", "we", "us", or "our"), the industry in which we operate, and beliefs and assumptions made by management. Words such as "expect(s)," "anticipate(s)," "intend(s)," "plan(s)," "believe(s)," "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will continue," "might," "hope," "can" and other words and terms of similar meaning or expression in connection with a discussion of future operations, financial performance or financial condition, are intended to identify forward-looking statements. See Part I, Item 1A "Risk Factors" in our 2013 Annual Report on Form 10-K and Part II, Item 1A "Risk Factors" of this report for more information concerning factors that could cause actual results to differ materially from those in the forward-looking statements.

Risks and uncertainties that may affect the actual financial condition and results of the Company include but are not limited to the following:

• The frequency and severity of claims, including those related to catastrophe losses and the impact those claims have on our loss reserve adequacy;

• The adequacy of our reserves for property and casualty insurance losses and loss settlement expenses and our life insurance reserve for future policy benefits;

• Geographic concentration risk in both property and casualty insurance and life insurance segments;

• Unauthorized data access, cyber-attacks and other security breaches;

• Occurrence of catastrophic events, occurrence of significant severe weather conditions, climate change, acts of terrorism, acts of war and pandemics;

• Developments in the domestic and global financial markets and other-than-temporary impairment losses that could affect our investment portfolio;

• Our ability to effectively underwrite and adequately price insured risks;

• The calculation and recovery of deferred policy acquisition costs ("DAC");

• The valuation of pension and other postretirement benefit obligations;

• Our relationship with our agencies and agents;

• Our relationship with and financial strength of our reinsurers;

• Our exposure to international catastrophes through our assumed reinsurance program;

• Lowering of one or more of the financial strength ratings of our operating subsidiaries or our issuer credit ratings and the adverse impact such action may have on our premium writings, policy retention, profitability and liquidity;

• Changes in general economic conditions, interest rates, industry trends, increase in competition and significant industry developments;

• Competitive, legal, regulatory or tax changes that affect the distribution cost or demand for our products;

• Litigation or regulatory actions that could require us to pay significant damages or change the way we do business;

• Governmental actions, policies and regulations, including, but not limited to, domestic health care reform, financial services regulatory reform, corporate governance, new laws or regulations or court decisions interpreting existing laws and regulations or policy provisions; and

• NASDAQ policies or regulations relating to corporate governance and the cost to comply.

These are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report or as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the Securities and

1

Exchange Commission ("SEC"), we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

United Fire Group, Inc. Consolidated Balance Sheets
(In Thousands, Except Share Data)	June 30, 2014		December 31, 2013
	(unaudited)
ASSETS
Investments
Fixed maturities
Held-to-maturity, at amortized cost (fair value $640 in 2014 and $669 in 2013)	$	630	$	656
Available-for-sale, at fair value (amortized cost $2,749,458 in 2014 and $2,733,557 in 2013)	2,824,018		2,751,256
Trading securities, at fair value (amortized cost $15,467 in 2014 and $8,049 in 2013)	18,305		9,940
Equity securities
Available-for-sale, at fair value (cost $71,685 in 2014 and $70,957 in 2013)	239,244		229,368
Trading securities, at fair value (cost $2,740 in 2014 and $2,367 in 2013)	3,206		2,487
Mortgage loans	4,313		4,423
Policy loans	6,200		6,261
Other long-term investments	48,707		44,946
Short-term investments	475		800
	3,145,098		3,050,137
Cash and cash equivalents	90,276		92,193
Accrued investment income	27,159		27,923
Premiums receivable (net of allowance for doubtful accounts of $993 in 2014 and $896 in 2013)	268,094		218,635
Deferred policy acquisition costs	143,314		150,092
Property and equipment (primarily land and buildings, at cost, less accumulated depreciation of $39,109 in 2014 and $36,972 in 2013)	48,001		47,218
Reinsurance receivables and recoverables	81,314		87,451
Prepaid reinsurance premiums	3,770		3,160
Income taxes receivable	3,891		1,786
Goodwill and intangible assets	26,662		27,047
Other assets	14,331		15,030
TOTAL ASSETS	$	3,851,910	$	3,720,672
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Future policy benefits and losses, claims and loss settlement expenses
Property and casualty insurance	$	981,927	$	960,651
Life insurance	1,470,647		1,472,132
Unearned premiums	395,146		340,464
Accrued expenses and other liabilities	140,058		142,677
Deferred income taxes	37,866		21,915
TOTAL LIABILITIES	$	3,025,644	$	2,937,839
Stockholders’ Equity
Common stock, $0.001 par value; authorized 75,000,000 shares; 25,240,105 and 25,360,893 shares issued and outstanding in 2014 and 2013, respectively	$	25	$	25
Additional paid-in capital	208,366		211,574
Retained earnings	498,470		484,084
Accumulated other comprehensive income, net of tax	119,405		87,150
TOTAL STOCKHOLDERS’ EQUITY	$	826,266	$	782,833
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,851,910	$	3,720,672

The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

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United Fire Group, Inc.

Consolidated Statements of Income and Comprehensive Income (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In Thousands, Except Share Data)	2014			2013			2014			2013
Revenues
Net premiums earned	$	201,827		$	186,367		$	395,168		$	363,184
Investment income, net of investment expenses	27,603			29,019			54,365			55,483
Net realized investment gains (includes reclassifications for net unrealized investment gains on available-for-sale securities of $1,606 and $3,088 in 2014; and $4,417 and $5,653 in 2013; previously included in accumulated other comprehensive income (loss))	2,708			4,151			4,902			6,060
Other income	535			182			1,142			297
Total revenues	$	232,673		$	219,719		$	455,577		$	425,024
Benefits, Losses and Expenses
Losses and loss settlement expenses	$	142,716		$	120,435		$	267,953		$	217,905
Increase in liability for future policy benefits	8,077			9,869			15,898			18,105
Amortization of deferred policy acquisition costs	40,196			36,708			79,730			74,789
Other underwriting expenses (includes reclassifications for employee benefit costs of $768 and $1,536 in 2014; and $1,243 and $2,485 in 2013; previously included in accumulated other comprehensive income (loss))	20,776			23,308			47,204			45,656
Interest on policyholders’ accounts	7,852			9,081			15,839			18,401
Total benefits, losses and expenses	$	219,617		$	199,401		$	426,624		$	374,856
Income before income taxes	$	13,056		$	20,318		$	28,953		$	50,168
Federal income tax expense (includes reclassifications of $293 and $543 in 2014; and $1,111 and $1,109 in 2013; previously included in accumulated other comprehensive income (loss))	2,371			4,822			4,937			12,279
Net income	$	10,685		$	15,496		$	24,016		$	37,889
Other comprehensive income (loss)
Change in net unrealized appreciation on investments	$	27,108		$	(51,782	)	$	51,177		$	(37,294	)
Change in liability for underfunded employee benefit plans	—			—			—			—
Other comprehensive income (loss), before tax and reclassification adjustments	$	27,108		$	(51,782	)	$	51,177		$	(37,294	)
Income tax effect	(9,488		)	18,115			(17,913		)	13,045
Other comprehensive income (loss), after tax, before reclassification adjustments	$	17,620		$	(33,667	)	$	33,264		$	(24,249	)
Reclassification adjustment for net realized investment gains included in income	$	(1,606	)	$	(4,417	)	$	(3,088	)	$	(5,653	)
Reclassification adjustment for employee benefit costs included in expense	768			1,243			1,536			2,485
Total reclassification adjustments, before tax	$	(838	)	$	(3,174	)	$	(1,552	)	$	(3,168	)
Income tax effect	293			1,111			$	543		$	1,109
Total reclassification adjustments, after tax	$	(545	)	$	(2,063	)	$	(1,009	)	$	(2,059	)
Comprehensive income (loss)	$	27,760		$	(20,234	)	$	56,271		$	11,581
Weighted average common shares outstanding	25,330,066			25,297,718			25,351,056			25,271,752
Basic earnings per common share	$	0.42		$	0.61		$	0.95		$	1.50
Diluted earnings per common share	0.42			0.61			0.94			1.49

The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

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United Fire Group, Inc.

Consolidated Statement of Stockholders’ Equity (Unaudited)

(In Thousands, Except Share Data)	Six Months Ended June 30, 2014
Common stock
Balance, beginning of year	$	25
Shares repurchased (201,516 shares)	—
Shares issued for stock-based awards (69,050 shares)	—
Balance, end of period	$	25
Additional paid-in capital
Balance, beginning of year	$	211,574
Compensation expense and related tax benefit for stock-based award grants	902
Shares repurchased	(5,567		)
Shares issued for stock-based awards	1,457
Balance, end of period	$	208,366
Retained earnings
Balance, beginning of year	$	484,084
Net income	24,016
Dividends on common stock ($0.38 per share)	(9,630		)
Balance, end of period	$	498,470
Accumulated other comprehensive income, net of tax
Balance, beginning of year	$	87,150
Change in net unrealized investment appreciation(1)	31,257
Change in liability for underfunded employee benefit plans(2)	998
Balance, end of period	$	119,405
Summary of changes
Balance, beginning of year	$	782,833
Net income	24,016
All other changes in stockholders’ equity accounts	19,417
Balance, end of period	$	826,266

(1) The change in net unrealized appreciation is net of reclassification adjustments and income taxes.

(2) The change in liability for underfunded employee benefit plans is net of reclassification adjustments and income taxes.

The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

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United Fire Group, Inc.

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
(In Thousands)	2014			2013
Cash Flows From Operating Activities
Net income	$	24,016		$	37,889
Adjustments to reconcile net income to net cash provided by operating activities
Net accretion of bond premium	7,601			7,989
Depreciation and amortization	3,757			2,930
Stock-based compensation expense	944			818
Net realized investment gains	(4,902		)	(6,060		)
Net cash flows from trading investments	(7,481		)	1,285
Deferred income tax benefit	(1,346		)	(2,096		)
Changes in:
Accrued investment income	764			994
Premiums receivable	(49,459		)	(49,357		)
Deferred policy acquisition costs	(11,143		)	(3,288		)
Reinsurance receivables	6,137			9,625
Prepaid reinsurance premiums	(610		)	(573		)
Income taxes receivable	(2,105		)	16,536
Other assets	699			1,182
Future policy benefits and losses, claims and loss settlement expenses	37,769			10,716
Unearned premiums	54,682			42,827
Accrued expenses and other liabilities	(1,083		)	(2,465		)
Income taxes payable	—			1,567
Deferred income taxes	(72		)	2,720
Other, net	(2,975		)	(2,834		)
Total adjustments	$	31,177		$	32,516
Net cash provided by operating activities	$	55,193		$	70,405
Cash Flows From Investing Activities
Proceeds from sale of available-for-sale investments	$	10		$	5,971
Proceeds from call and maturity of held-to-maturity investments	26			180
Proceeds from call and maturity of available-for-sale investments	249,251			238,639
Proceeds from short-term and other investments	1,648			1,882
Purchase of available-for-sale investments	(270,194		)	(295,586		)
Purchase of short-term and other investments	(1,938		)	(2,575		)
Net purchases and sales of property and equipment	(4,154		)	(2,659		)
Net cash used in investing activities	$	(25,351	)	$	(54,148	)
Cash Flows From Financing Activities
Policyholders’ account balances
Deposits to investment and universal life contracts	$	96,119		$	52,086
Withdrawals from investment and universal life contracts	(114,096		)	(87,827		)
Payment of cash dividends	(9,630		)	(8,342		)
Repurchase of common stock	(5,567		)	(99		)
Issuance of common stock	1,457			1,465
Tax impact from issuance of common stock	(42		)	(217		)
Net cash used in financing activities	$	(31,759	)	$	(42,934	)
Net Change in Cash and Cash Equivalents	$	(1,917	)	$	(26,677	)
Cash and Cash Equivalents at Beginning of Period	92,193			107,466
Cash and Cash Equivalents at End of Period	$	90,276		$	80,789

The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

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UNITED FIRE GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, unless otherwise noted)

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Nature of Business

United Fire Group, Inc. ("United Fire", the "Registrant", the "Company", "we", "us", or "our") and its consolidated subsidiaries and affiliates are engaged in the business of writing property and casualty insurance and life insurance and selling annuities through a network of independent agencies. We report our operations in two business segments: property and casualty insurance and life insurance. Our insurance company subsidiaries are licensed as a property and casualty insurer in 43 states and the District of Columbia, and as a life insurer in 37 states.

Basis of Presentation

The unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X promulgated by the SEC. Certain financial information that is included in our Annual Report on Form 10-K, including certain financial statement footnote disclosures, are not required by the rules and regulations of the SEC for interim financial reporting and have been condensed or omitted.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statement categories that are most dependent on management estimates and assumptions include: investments; deferred policy acquisition costs; reinsurance receivables and recoverables (for net realizable value); future policy benefits and losses, claims and loss settlement expenses; and pension and postretirement benefit obligations.

In the preparation of the accompanying unaudited Consolidated Financial Statements, we have evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date on which the financial statements were issued for potential recognition or disclosure.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Management of United Fire believes the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. All significant intercompany transactions have been eliminated in consolidation. The results reported for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013. The review report of Ernst & Young LLP as of June 30, 2014 and for the three- and six-month periods ended June 30, 2014 and 2013 accompanies the unaudited Consolidated Financial Statements included in Part I, Item 1 "Financial Statements."

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and non-negotiable certificates of deposit with original maturities of three months or less.

For the six-month periods ended June 30, 2014 and 2013, we made payments for income taxes totaling $9,115 and $2,512, respectively. We received tax refunds of $615 and $8,744, respectively, during the six-month periods ended June 30, 2014 and 2013.

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For the six-month periods ended June 30, 2014 and 2013, we made no interest payments (excluding interest credited to policyholders’ accounts).

Deferred Policy Acquisition Costs ("DAC")

Certain costs associated with underwriting new business (primarily commissions, premium taxes and variable underwriting and policy issue expenses associated with successful acquisition efforts) are deferred. The following table is a summary of the components of DAC, including the related amortization recognized for the six-month period ended June 30, 2014.

	Property & Casualty Insurance			Life Insurance			Total
Recorded asset at beginning of period	$	67,663		$	82,429		$	150,092
Underwriting costs deferred	87,193			3,680			90,873
Amortization of deferred policy acquisition costs	(76,378		)	(3,352		)	(79,730		)
Ending unamortized deferred policy acquisition costs	$	78,478		$	82,757		$	161,235
Change in "shadow" deferred policy acquisition costs	—			(17,921		)	(17,921		)
Recorded asset at end of period	$	78,478		$	64,836		$	143,314

Property and casualty insurance policy acquisition costs deferred are amortized as premium revenue is recognized. The method followed in computing DAC limits the amount of such deferred costs to their estimated realizable value. This takes into account the premium to be earned, losses and loss settlement expenses expected to be incurred and certain other costs expected to be incurred as the premium is earned.

For traditional life insurance policies, DAC is amortized to income over the premium-paying period in proportion to the ratio of the expected annual premium revenue to the expected total premium revenue. Expected premium revenue and gross profits are based on the same mortality and withdrawal assumptions used in determining future policy benefits. These assumptions are not revised after policy issuance unless the recorded DAC asset is deemed to be unrecoverable from future expected profits.

For non-traditional life insurance policies, DAC is amortized over the anticipated terms in proportion to the ratio of the expected annual gross profits to the total expected gross profits. Changes in the amount or timing of expected gross profits result in adjustments to the cumulative amortization of these costs. The effect on amortization of DAC for revisions to estimated gross profits is reported in earnings in the period the estimated gross profits are revised.

The effect on DAC that results from the assumed realization of unrealized gains (losses) on investments allocated to non-traditional life insurance business is recognized with an offset, or "shadow" DAC, to net unrealized investment appreciation as of the balance sheet date. The "shadow" DAC adjustment decreased the DAC asset by $14,514 at June 30, 2014 and increased the DAC asset by $3,407 at December 31, 2013.

Income Taxes

Deferred tax assets and liabilities are established based on differences between the financial statement bases of assets and liabilities and the tax bases of those same assets and liabilities, using the currently enacted statutory tax rates. Deferred income tax expense is measured by the year-to-year change in the net deferred tax asset or liability, except for certain changes in deferred tax amounts that affect stockholders' equity and do not impact federal income tax expense.

We reported a federal income tax expense of $4,937 and $12,279 for the six-month periods ended June 30, 2014 and 2013, respectively. Our effective tax rate is different than the federal statutory rate of 35.0 percent due principally to the effect of tax-exempt municipal bond interest income and non-taxable dividend income.

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We did not recognize any liability for unrecognized tax benefits at June 30, 2014 or December 31, 2013. In addition, we have not accrued for interest and penalties related to unrecognized tax benefits. However, if interest and penalties would need to be accrued related to unrecognized tax benefits, such amounts would be recognized as a component of federal income tax expense.

We file a consolidated federal income tax return. We also file income tax returns in various state jurisdictions. We are no longer subject to federal or state income tax examination for years before 2009. The Internal Revenue Service is conducting a routine examination of our income tax return for the 2011 tax year.

Recently Issued Accounting Standards

Adopted Accounting Standards in 2014

Unrecognized tax benefit

In July 2013, the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance was effective for annual and interim periods beginning after December 15, 2013. The Company currently does not have any liability for unrecognized tax benefits. The Company adopted the new guidance effective January 1, 2014. The adoption of the new guidance had no impact on the Company's financial position or results of operations.

Pending Adoption of Accounting Standards

Share Based Payments

In June 2014, the FASB issued new guidance on the accounting for share based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The new guidance requires a performance target that affects vesting and that could be achieved after the service period, be treated as a performance condition. The guidance is effective for interim and annual periods beginning after December 15, 2015. The amendments can be applied prospectively or retrospectively and early adoption is permitted. The Company will adopt the guidance on January 1, 2016 and is currently evaluating the impact on the Company's financial position and results of operations.

Revenue Recognition

In May 2014, the FASB issued comprehensive new guidance on revenue recognition which supersedes nearly all existing revenue recognition guidance under GAAP. The new guidance requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a five-step model that requires companies to exercise judgment when considering the terms of the contract(s) and all relevant facts and circumstances. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The Company will adopt the guidance on January 1, 2017 and is currently evaluating the impact on the Company's financial position and results of operations. Management does not expect insurance contracts to be in the scope of this new guidance.

Discontinued Operations

In April 2014, the FASB issued new guidance on reporting discontinued operations and disclosures of disposals of components of an entity. The new guidance raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It is effective for annual periods beginning after December 15, 2014. Early adoption is permitted but only for disposals that have not been reported in financial statements previously issued. The Company will adopt the guidance on January 1, 2015 and is currently evaluating the impact on the Company's financial position and results of operations.

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NOTE 2. SUMMARY OF INVESTMENTS

Fair Value of Investments

A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities as of June 30, 2014 and December 31, 2013, is as follows:

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June 30, 2014
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities:
Bonds
States, municipalities and political subdivisions	$	249	$	2	$	—	$	251
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	181		8		—		189
Total Held-to-Maturity Fixed Maturities	$	630	$	10	$	—	$	640
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,468	$	298	$	63	$	30,703
U.S. government agency	360,249		3,018		6,586		356,681
States, municipalities and political subdivisions	705,556		33,895		2,683		736,768
Foreign bonds	143,172		7,054		1		150,225
Public utilities	212,385		8,114		155		220,344
Corporate bonds
Energy	149,380		5,593		373		154,600
Industrials	216,342		7,888		429		223,801
Consumer goods and services	159,084		5,455		213		164,326
Health care	78,429		3,679		148		81,960
Technology, media and telecommunications	128,124		4,485		785		131,824
Financial services	223,412		10,199		68		233,543
Mortgage-backed securities	19,654		610		76		20,188
Collateralized mortgage obligations	320,180		3,559		8,003		315,736
Asset-backed securities	3,023		296		—		3,319
Total Available-for-Sale Fixed Maturities	$	2,749,458	$	94,143	$	19,583	$	2,824,018
Equity securities:
Common stocks
Public utilities	$	7,231	$	11,435	$	—	$	18,666
Energy	5,094		11,391		—		16,485
Industrials	13,286		33,378		40		46,624
Consumer goods and services	10,287		11,492		2		21,777
Health care	7,920		18,846		—		26,766
Technology, media and telecommunications	6,205		7,779		61		13,923
Financial services	16,678		73,260		54		89,884
Nonredeemable preferred stocks	4,984		140		5		5,119
Total Available-for-Sale Equity Securities	$	71,685	$	167,721	$	162	$	239,244
Total Available-for-Sale Securities	$	2,821,143	$	261,864	$	19,745	$	3,063,262

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December 31, 2013
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities:
Bonds
States, municipalities and political subdivisions	$	250	$	4	$	—	$	254
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	206		9		—		215
Total Held-to-Maturity Fixed Maturities	$	656	$	13	$	—	$	669
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,612	$	423	$	140	$	33,895
U.S. government agency	287,988		258		18,663		269,583
States, municipalities and political subdivisions	690,461		34,151		10,705		713,907
Foreign bonds	167,390		5,863		397		172,856
Public utilities	213,479		6,873		1,776		218,576
Corporate bonds
Energy	157,620		4,398		1,008		161,010
Industrials	234,221		5,626		2,819		237,028
Consumer goods and services	165,565		3,770		1,421		167,914
Health care	91,008		3,138		1,200		92,946
Technology, media and telecommunications	121,746		2,541		3,321		120,966
Financial services	234,739		7,735		723		241,751
Mortgage-backed securities	22,034		323		291		22,066
Collateralized mortgage obligations	309,975		1,707		16,919		294,763
Asset-backed securities	3,719		276		—		3,995
Total Available-for-Sale Fixed Maturities	$	2,733,557	$	77,082	$	59,383	$	2,751,256
Equity securities:
Common stocks
Public utilities	$	7,231	$	9,068	$	27	$	16,272
Energy	5,094		9,269		—		14,363
Industrials	13,308		32,823		32		46,099
Consumer goods and services	10,363		10,895		—		21,258
Health care	7,920		17,078		—		24,998
Technology, media and telecommunications	6,204		7,183		83		13,304
Financial services	15,853		72,537		128		88,262
Nonredeemable preferred stocks	4,984		5		177		4,812
Total Available-for-Sale Equity Securities	$	70,957	$	158,858	$	447	$	229,368
Total Available-for-Sale Securities	$	2,804,514	$	235,940	$	59,830	$	2,980,624

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Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at June 30, 2014, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.

	Held-To-Maturity				Available-For-Sale				Trading
June 30, 2014	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	135	$	136	$	234,849	$	238,774	$	1,701	$	1,699
Due after one year through five years	314		315		886,016		934,018		7,416		8,715
Due after five years through 10 years	—		—		818,255		845,767		1,139		1,563
Due after 10 years	—		—		467,481		466,216		5,211		6,328
Asset-backed securities	—		—		3,023		3,319		—		—
Mortgage-backed securities	181		189		19,654		20,188		—		—
Collateralized mortgage obligations	—		—		320,180		315,736		—		—
	$	630	$	640	$	2,749,458	$	2,824,018	$	15,467	$	18,305

Net Realized Investment Gains and Losses

Net realized gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net realized investment gains is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
Net realized investment gains
Fixed maturities:
Available-for-sale	$	705	$	1,185		1,352		1,905
Trading securities
Change in fair value	648		(130		)	948		430
Sales	285		298			520		298
Equity securities:
Available-for-sale	901		3,232			1,736		3,748
Trading securities
Change in fair value	169		(132		)	346		(19		)
Sales	—		38			—		38
Other long-term investments	—		(340		)	—		(340		)
Total net realized investment gains	$	2,708	$	4,151		$	4,902	$	6,060

The proceeds and gross realized gains on the sale of available-for-sale securities are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds from sales	$	10	$	3,161	$	10	$	5,971
Gross realized gains	—		96		—		238
Gross realized losses	56		—		56		—

There were no sales of held-to-maturity securities during the three- and six-month periods ended June 30, 2014 and 2013.

13

Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains. Our portfolio of trading securities had a fair value of $21,511 and $12,427 at June 30, 2014 and December 31, 2013, respectively.

Unrealized Appreciation

A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:

	Six Months Ended June 30,
	2014			2013
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	56,861		$	(91,636	)
Available-for-sale equity securities	9,148			19,467
Deferred policy acquisition costs	(17,921		)	29,223
Income tax effect	(16,831		)	15,023
Total change in net unrealized investment appreciation, net of tax	$	31,257		$	(27,923	)

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment ("OTTI") charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.

The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position at June 30, 2014 and December 31, 2013. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at June 30, 2014, if future events or information cause us to determine that a decline in fair value is other-than-temporary.

We have evaluated the near-term prospects of the issuers of our fixed maturity securities in relation to the severity and duration of the unrealized loss, and unless otherwise noted, these losses do not warrant the recognition of an OTTI charge at June 30, 2014. We believe the unrealized depreciation in value of other securities in our fixed maturity portfolio is primarily attributable to changes in market interest rates and not the credit quality of the issuer. We have no intent to sell and it is more likely than not that we will not be required to sell these securities until the fair value recovers to at least equal to our cost basis or the securities mature.

We have evaluated the near-term prospects of the issuers of our equity securities in relation to the severity and duration of the unrealized loss, and unless otherwise noted, these losses do not warrant the recognition of an OTTI charge at June 30, 2014. Our largest unrealized loss greater than 12 months on an individual equity security at June 30, 2014 was $54. We have no intention to sell any of these securities prior to a recovery in value, but will continue to monitor the fair value reported for these securities as part of our overall process to evaluate investments for OTTI recognition.

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June 30, 2014	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	2	$	1,326	$	4	6	$	6,125	$	59	$	7,451	$	63
U.S. government agency	11	28,268		188		46	131,825		6,398		160,093		6,586
States, municipalities and political subdivisions	22	23,311		108		101	90,012		2,575		113,323		2,683
Foreign bonds	1	3,285		1		—	—		—		3,285		1
Public utilities	2	252		3		10	19,883		152		20,135		155
Corporate bonds
Energy	—	—		—		5	10,266		373		10,266		373
Industrials	—	—		—		4	14,088		429		14,088		429
Consumer goods and services	2	4,274		28		8	15,497		185		19,771		213
Health care	2	7,214		9		3	7,194		139		14,408		148
Technology, media and telecommunications	2	4,591		25		7	27,169		760		31,760		785
Financial services	2	2,264		8		2	6,137		60		8,401		68
Mortgage-backed securities	3	47		1		5	5,868		75		5,915		76
Collateralized mortgage obligations	21	43,158		489		72	144,536		7,514		187,694		8,003
Total Available-for-Sale Fixed Maturities	70	$	117,990	$	864	269	$	478,600	$	18,719	$	596,590	$	19,583
Equity securities:
Common stocks
Industrials	—	$	—	$	—	2	$	73	$	40	$	73	$	40
Consumer goods and services	1	15		2		—	—		—		15		2
Technology, media and telecommunications	—	—		—		6	229		61		229		61
Financial services	—	—		—		3	223		54		223		54
Nonredeemable preferred stocks	—	—		—		1	702		5		702		5
Total Available-for-Sale Equity Securities	1	$	15	$	2	12	$	1,227	$	160	$	1,242	$	162
Total Available-for-Sale Securities	71	$	118,005	$	866	281	$	479,827	$	18,879	$	597,832	$	19,745

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December 31, 2013	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	10	$	9,196	$	140	—	$	—	$	—	$	9,196	$	140
U.S. government agency	101	256,203		18,019		2	4,356		644		260,559		18,663
States, municipalities and political subdivisions	136	97,950		7,423		29	29,670		3,282		127,620		10,705
Foreign bonds	10	20,832		397		—	—		—		20,832		397
Public utilities	31	61,582		1,776		—	—		—		61,582		1,776
Corporate bonds
Energy	9	23,735		1,008		—	—		—		23,735		1,008
Industrials	34	77,788		2,819		—	—		—		77,788		2,819
Consumer goods and services	31	58,833		1,276		6	3,218		145		62,051		1,421
Health care	10	25,888		942		2	4,427		258		30,315		1,200
Technology, media and telecommunications	18	58,105		2,147		2	7,468		1,174		65,573		3,321
Financial services	7	15,191		720		1	1,525		3		16,716		723
Mortgage-backed securities	16	4,476		177		6	3,113		114		7,589		291
Collateralized mortgage obligations	111	208,855		11,062		23	55,184		5,857		264,039		16,919
Total Available-for-Sale Fixed Maturities	524	$	918,634	$	47,906	71	$	108,961	$	11,477	$	1,027,595	$	59,383
Equity securities:
Common stocks
Public utilities	—	$	—	$	—	3	$	281	$	27	$	281	$	27
Industrials	1	1		1		2	81		31		82		32
Technology, media and telecommunications	—	—		—		6	206		83		206		83
Financial services	—	—		—		4	215		128		215		128
Nonredeemable preferred stocks	3	3,493		116		2	1,170		61		4,663		177
Total Available-for-Sale Equity Securities	4	$	3,494	$	117	17	$	1,953	$	330	$	5,447	$	447
Total Available-for-Sale Securities	528	$	922,128	$	48,023	88	$	110,914	$	11,807	$	1,033,042	$	59,830

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NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS

We estimate the fair value of our financial instruments based on relevant market information or by discounting estimated future cash flows at estimated current market discount rates appropriate to the specific asset or liability.

When possible, we use quoted market prices to determine the fair value of fixed maturities, equity securities, trading securities and short-term investments. When quoted market prices do not exist, we base estimates of fair value on market prices obtained from independent pricing services and brokers or on valuation techniques that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management’s own assumptions about the assumptions a market participant would use in pricing the financial instrument. Our valuation techniques are discussed in more detail later in this section.

The fair value of our mortgage loans is determined by modeling performed by us based on the stated principal and coupon payments provided for in the loan agreements. These cash flows are then discounted using an appropriate risk-adjusted discount rate to determine the security's fair value, which is a Level 3 fair value measurement.

The fair value of our policy loans is equivalent to carrying value, which is a reasonable estimate of fair value. We do not make policy loans for amounts in excess of the cash surrender value of the related policy. In all instances, the policy loans are fully collateralized by the related liability for future policy benefits for traditional insurance policies or by the policyholders' account balance for non-traditional policies.

Our other long-term investments consist primarily of our interests in limited liability partnerships that are recorded on the equity method of accounting. The fair value of the partnerships is obtained from the fund managers, which is based on the fair value of the underlying investments held in the partnerships. In management's opinion, these values represent a reasonable estimate of fair value. We have not adjusted the net asset value provided by the fund managers.

For cash and cash equivalents and accrued investment income, carrying value is a reasonable estimate of fair value due to the short-term nature of these financial instruments.

Policy reserves are developed and recorded for deferred annuities, which is an interest-sensitive product, and income annuities. The fair value of the reserve liability for these annuity products is based upon an estimate of the discounted pretax cash flows that are forecast for the underlying business, which is a Level 3 fair value measurement. We base the discount rate on the current U.S. Treasury spot yield curve, which is then risk-adjusted for nonperformance risk and, for interest-sensitive business, market risk factors. The risk-adjusted discount rate is developed using interest rates that are available in the market and representative of the risks applicable to the underlying business.

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A summary of the carrying value and estimated fair value of our financial instruments at June 30, 2014 and December 31, 2013 is as follows:

	June 30, 2014				December 31, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Held-to-maturity securities	$	640	$	630	$	669	$	656
Available-for-sale securities	2,824,018		2,824,018		2,751,256		2,751,256
Trading securities	18,305		18,305		9,940		9,940
Equity securities:
Available-for-sale securities	239,244		239,244		229,368		229,368
Trading securities	3,206		3,206		2,487		2,487
Mortgage loans	4,724		4,313		4,724		4,423
Policy loans	6,200		6,200		6,261		6,261
Other long-term investments	48,707		48,707		44,946		44,946
Short-term investments	475		475		800		800
Cash and cash equivalents	90,276		90,276		92,193		92,193
Corporate-owned life insurance	578		578		—		—
Liabilities
Policy reserves
Annuity (accumulations) (1)	$	949,519	$	908,765	$	941,636	$	925,832
Annuity (benefit payments)	147,594		96,661		140,276		94,805

(1) Annuity accumulations represent deferred annuity contracts that are currently earning interest.

Current accounting guidance on fair value measurements includes the application of a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Our financial instruments that are recorded at fair value are categorized into a three-level hierarchy, which is based upon the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (i.e., Level 1) and the lowest priority to unobservable inputs (i.e., Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the financial instrument.

Financial instruments recorded at fair value are categorized in the fair value hierarchy as follows:

• Level 1: Valuations are based on unadjusted quoted prices in active markets for identical financial instruments that we have the ability to access.

• Level 2: Valuations are based on quoted prices for similar financial instruments, other than quoted prices included in Level 1, in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument.

• Level 3: Valuations are based on pricing or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management’s own assumptions about the assumptions a market participant would use in pricing the financial instrument.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.

To determine the fair value of the majority of our investments, we utilize prices obtained from independent, nationally recognized pricing services. We obtain one price for each security. When the pricing services cannot provide a determination of fair value for a specific security, we obtain non-binding price quotes from broker-dealers

18

with whom we have had several years experience and who have demonstrated knowledge of the subject security. We request and utilize one broker quote per security.

We validate the prices obtained from independent pricing services and brokers prior to their use for reporting purposes by evaluating their reasonableness on a monthly basis. Our validation process includes a review for unusual fluctuations. In our opinion, the pricing obtained at June 30, 2014 and December 31, 2013 was reasonable.

In order to determine the proper classification in the fair value hierarchy for each security where the price is obtained from an independent pricing service, we obtain and evaluate the vendors' pricing procedures and inputs used to price the security, which include unadjusted quoted market prices for identical securities, such as a New York Stock Exchange closing price, and quoted prices for identical securities in markets that are not active. For fixed maturity securities, an evaluation of interest rates and yield curves observable at commonly quoted intervals, volatility, prepayment speeds, credit risks and default rates may also be performed. We have determined that these processes and inputs result in fair values and classifications consistent with the applicable accounting guidance on fair value measurements.

We review our fair value hierarchy categorizations on a quarterly basis at which time the classification of certain financial instruments may change if the input observations have changed.

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis in our Consolidated Balance Sheets at June 30, 2014 and December 31, 2013:

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June 30, 2014			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,703	$	—	$	30,703	$	—
U.S. government agency	356,681		—		356,681		—
States, municipalities and political subdivisions	736,768		—		736,158		610
Foreign bonds	150,225		—		150,225		—
Public utilities	220,344		—		220,344		—
Corporate bonds
Energy	154,600		—		154,600		—
Industrials	223,801		—		223,801		—
Consumer goods and services	164,326		—		162,937		1,389
Health care	81,960		—		81,960		—
Technology, media and telecommunications	131,824		—		131,824		—
Financial services	233,543		—		222,005		11,538
Mortgage-backed securities	20,188		—		20,188		—
Collateralized mortgage obligations	315,736		—		315,736		—
Asset-backed securities	3,319		—		1,477		1,842
Total Available-for-Sale Fixed Maturities	$	2,824,018	$	—	$	2,808,639	$	15,379
Equity securities:
Common stocks
Public utilities	$	18,666	$	18,666	$	—	$	—
Energy	16,485		16,485		—		—
Industrials	46,624		46,619		5		—
Consumer goods and services	21,777		21,777		—		—
Health care	26,766		26,766		—		—
Technology, media and telecommunications	13,923		13,923		—		—
Financial services	89,884		85,945		67		3,872
Nonredeemable preferred stocks	5,119		553		4,566		—
Total Available-for-Sale Equity Securities	$	239,244	$	230,734	$	4,638	$	3,872
Total Available-for-Sale Securities	$	3,063,262	$	230,734	$	2,813,277	$	19,251
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,252	$	—	$	1,252	$	—
Corporate bonds
Industrials	2,128		—		2,128		—
Consumer goods and services	1,099		—		1,099		—

20

Health care	2,517		—		2,517		—
Technology, media and telecommunications	3,004		—		3,004		—
Financial services	4,214		—		4,214		—
Redeemable preferred stocks	4,091		4,091		—		—
Equity securities:
Energy	659		659		—		—
Consumer goods and services	32		32		—		—
Health care	389		389		—		—
Technology, media and telecommunications	364		364		—		—
Nonredeemable preferred stocks	1,762		1,762		—		—
Total Trading Securities	$	21,511	$	7,297	$	14,214	$	—
Short-Term Investments	$	475	$	475	$	—	$	—
Money Market Accounts	$	30,120	$	30,120	$	—	$	—
Corporate-Owned Life Insurance	$	578	$	—	$	578	$	—
Total Assets Measured at Fair Value	$	3,115,946	$	268,626	$	2,828,069	$	19,251

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December 31, 2013			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,895	$	—	$	33,895	$	—
U.S. government agency	269,583		—		269,583		—
States, municipalities and political subdivisions	713,907		—		713,209		698
Foreign bonds	172,856		—		172,856		—
Public utilities	218,576		—		218,576		—
Corporate bonds
Energy	161,010		—		161,010		—
Industrials	237,028		—		237,028		—
Consumer goods and services	167,914		—		166,460		1,454
Health care	92,946		—		92,946		—
Technology, media and telecommunications	120,966		—		120,966		—
Financial services	241,751		—		229,725		12,026
Mortgage-backed securities	22,066		—		22,066		—
Collateralized mortgage obligations	294,763		—		294,763		—
Asset-backed securities	3,995		—		1,966		2,029
Total Available-for-Sale Fixed Maturities	$	2,751,256	$	—	$	2,735,049	$	16,207
Equity securities:
Common stocks
Public utilities	$	16,272	$	16,272	$	—	$	—
Energy	14,363		14,363		—		—
Industrials	46,099		46,083		16		—
Consumer goods and services	21,258		21,258		—		—
Health care	24,998		24,998		—		—
Technology, media and telecommunications	13,304		13,304		—		—
Financial services	88,262		84,419		62		3,781
Nonredeemable preferred stocks	4,812		1,714		3,098		—
Total Available-for-Sale Equity Securities	$	229,368	$	222,411	$	3,176	$	3,781
Total Available-for-Sale Securities	$	2,980,624	$	222,411	$	2,738,225	$	19,988
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,253	$	—	$	1,253	$	—
Corporate bonds
Industrials	1,122		—		1,122		—
Consumer goods and services	106		—		106		—
Health care	1,154		—		1,154		—
Technology, media and telecommunications	2,054		—		2,054		—

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Financial services	1,866		—		1,866		—
Redeemable preferred stocks	2,385		2,385		—		—
Equity securities:
Energy	563		563		—		—
Consumer goods and services	39		39		—		—
Health care	332		332		—		—
Nonredeemable preferred stocks	1,553		1,553		—		—
Total Trading Securities	$	12,427	$	4,872	$	7,555	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	37,811	$	37,811	$	—	$	—
Total Assets Measured at Fair Value	$	3,031,662	$	265,894	$	2,745,780	$	19,988

The fair value of securities that are categorized as Level 1 is based on quoted market prices that are readily and regularly available.

The fair value of securities that are categorized as Level 2 is determined by management after reviewing market prices obtained from independent pricing services and brokers. Such estimated fair values do not necessarily represent the values for which these securities could have been sold at the reporting date. Our independent pricing services and brokers obtain prices from reputable pricing vendors in the marketplace. They continually monitor and review the external pricing sources, while actively participating to resolve any pricing issues that may arise.

For the three- and six-month periods ended June 30, 2014, the change in our available-for-sale securities categorized as Level 1 and Level 2 is the result of investment purchases that were made using funds held in our money market accounts, disposals and the change in unrealized gains on both fixed maturities and equity securities. During the three- and six-month periods ended June 30, 2014, there was one nonredeemable preferred stock security with a fair value of $1,228 transfered between Level 1 and Level 2 because the security was delisted and is no longer actively traded on a major exchange.

Securities categorized as Level 3 include holdings in certain private placement fixed maturity and equity securities for which an active market does not currently exist.

The fair value of our Level 3 private placement securities is determined by management relying on pricing received from our independent pricing services and brokers consistent with the process to estimate fair value for Level 2 securities. If pricing cannot be obtained from these sources, which occurs on a limited basis, management will perform a cash flow analysis, using an appropriate risk-adjusted discount rate, on the underlying security to estimate fair value.

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended June 30, 2014:

	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at March 31, 2014	$	698		$	13,122		$	1,913		$	3,891		$	19,624
Realized losses (1)	—			—			—			(56		)	(56		)
Unrealized gains (losses)(1)	(18		)	9			45			48			84
Disposals	(70		)	(204		)	(116		)	(11		)	(401		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

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The following table provides a summary of the changes in fair value of our Level 3 securities for the six-month period ended June 30, 2014:

	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at January 1, 2014	$	698		$	13,480		$	2,029		$	3,781		$	19,988
Realized losses (1)	—			—			—			(56		)	(56		)
Unrealized gains (losses) (1)	(18		)	(53		)	40			48			17
Purchases	—			—			—			99			99
Disposals	(70		)	(500		)	(227		)	—			(797		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

The fixed maturities reported as disposals relate to the receipt of principal on calls or sinking fund bonds, in accordance with the indentures.

Corporate-Owned Life Insurance

The Company formed a rabbi trust in 2014 to fund obligations under the United Fire & Casualty Company Non-qualified Deferred Compensation Plan and United Fire Group Supplemental Executive Retirement and Deferral Plan ("Plan"). Within the rabbi trust, corporate-owned life insurance (“COLI”) policies are utilized as an investment vehicle and source of funding for the Company's Plan. As of June 30, 2014, the cash surrender value of the COLI was $578, which is equal to the fair value measured using Level 2 inputs, based on the underlying assets of the COLI policy, and included in other assets in the Consolidated Balance Sheets. The COLI policy invests in mutual funds, which are priced daily by independent sources.

NOTE 4. EMPLOYEE BENEFITS

Net Periodic Benefit Cost

The components of the net periodic benefit cost for our pension and postretirement benefit plans are as follows:

	Pension Plan						Postretirement Benefit Plan
Three Months Ended June 30,	2014			2013			2014		2013
Net periodic benefit cost
Service cost	$	1,303		$	1,868		$	924	$	752
Interest cost	1,468			1,326			586		423
Expected return on plan assets	(1,739		)	(1,550		)	—		—
Amortization of net loss	544			1,105			224		138
Net periodic benefit cost	$	1,576		$	2,749		$	1,734	$	1,313

	Pension Plan						Postretirement Benefit Plan
Six Months Ended June 30,	2014			2013			2014		2013
Net periodic benefit cost
Service cost	$	2,606		$	3,150		$	1,848	$	1,505
Interest cost	2,936			2,587			1,172		847
Expected return on plan assets	(3,478		)	(2,886		)	—		—
Amortization of net loss	1,088			2,211			448		274
Net periodic benefit cost	$	3,152		$	5,062		$	3,468	$	2,626

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Employer Contributions

We previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 that we expected to contribute $6,260 to the pension plan in 2014. For the six-month period ended June 30, 2014, we contributed $3,315 to the pension plan. We anticipate that the total contribution in 2014 will not vary significantly from our expected contribution.

NOTE 5. STOCK-BASED COMPENSATION

Non-qualified Employee Stock Award Plan

The United Fire Group, Inc. Stock Plan (the "Stock Plan") authorized the issuance of restricted and unrestricted stock or stock unit awards, stock appreciation rights, incentive stock options, and non-qualified stock options for up to 1,900,000 shares of United Fire common stock to our employees. In May 2014, the Registrant's shareholders approved an additional 1,500,000 shares of United Fire common stock issuable at any time and from time to time pursuant to the Stock Plan, as amended. At June 30, 2014, there are 1,544,701 authorized shares remaining available for future issuance. The Stock Plan is administered by the Board of Directors, which determines those employees who will receive awards, when awards will be granted, and the terms and conditions of the awards. The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Stock Plan. Pursuant to the Stock Plan, the Board of Directors may, at its sole discretion, grant awards to our employees who are in positions of substantial responsibility with United Fire.

Options granted pursuant to the Stock Plan are granted to buy shares of United Fire's common stock at the market value of the stock on the date of grant. Unless the Board of Directors authorizes the acceleration of vesting, all outstanding option awards vest and are exercisable in installments of 20.0 percent of the number of shares covered by the option award each year from the grant date. To the extent not exercised, vested option awards accumulate and are exercisable by the awardee, in whole or in part, in any subsequent year included in the option period, but not later than 10 years from the grant date. Restricted and unrestricted stock awards granted pursuant to the Stock Plan are granted at the market value of our common stock on the date of the grant. Restricted stock or stock unit awards fully vest after five years from the date of issuance, unless accelerated upon the approval of the Board of Directors, at which time United Fire common stock will be issued to the awardee.

The activity in the Stock Plan is displayed in the following table:

Authorized Shares Available for Future Award Grants	Six Months Ended June 30, 2014		From Inception to June 30, 2014
Beginning balance	353,649		1,900,000
Additional shares authorized	1,500,000		1,500,000
Number of awards granted	(313,948	)	(1,996,444	)
Number of awards forfeited or expired	5,000		141,145
Ending balance	1,544,701		1,544,701
Number of option awards exercised	46,231		427,999
Number of unrestricted stock awards granted	660		5,215
Number of restricted stock awards vested	—		18,576

Non-qualified Non-employee Director Stock Option and Restricted Stock Plan

The United Fire and Casualty Company 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan (the "Director Plan") authorizes the issuance of restricted stock awards and non-qualified stock options to purchase shares of United Fire’s common stock to non-employee directors. At June 30, 2014, we had 87,194 authorized shares available for future issuance under the Director Plan.

The Board of Directors has the authority to determine which non-employee directors receive awards, when options and restricted stock shall be granted, the option price, the option expiration date, the date of grant, the vesting

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schedule of options or whether the options shall be immediately vested, the terms and conditions of options and restricted stock (other than those terms and conditions set forth in the plan) and the number of shares of common stock to be issued pursuant to an option agreement or restricted stock agreement (subject to limits set forth in the plan). The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Director Plan.

The activity in the Director Plan is displayed in the following table:

Authorized Shares Available for Future Award Grants	Six Months Ended June 30, 2014		From Inception to June 30, 2014
Beginning balance	103,912		300,000
Number of awards granted	(16,718	)	(218,809	)
Number of awards forfeited or expired	—		6,003
Ending balance	87,194		87,194
Number of option awards exercised	1,519		4,675
Number of restricted stock awards vested	5,040		11,442

Stock-Based Compensation Expense

For the three-month periods ended June 30, 2014 and 2013, we recognized stock-based compensation expense of $507 and $407, respectively. For the six-month periods ended June 30, 2014 and 2013, we recognized stock-based compensation expense of $944 and $818, respectively. Stock-based compensation expense is recognized over the vesting period of the stock options.

As of June 30, 2014, we had $6,372 in stock-based compensation expense that has yet to be recognized through our results of operations. We expect this compensation to be recognized over the remainder of 2014 and subsequent years according to the following table, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.

2014	$	1,000
2015	1,864
2016	1,439
2017	1,200
2018	779
2019	90
Total	$	6,372

NOTE 6. SEGMENT INFORMATION

We have two reportable business segments in our operations: property and casualty insurance and life insurance. The property and casualty insurance segment has seven domestic locations from which it conducts its business. The life insurance segment operates from our home office. Because all of our insurance is sold domestically, we have no revenues from foreign operations.

We evaluate the two segments on the basis of both statutory accounting principles prescribed or permitted by our states of domicile and GAAP. We analyze results based on profitability (i.e., loss ratios), expenses, and return on equity. The basis we use to determine and analyze segments and to measure segment profit or loss have not changed from that reported in our Annual Report on Form 10-K for the year ended December 31, 2013.

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We have reconciled the following table for the three-month periods ended June 30, 2014 and 2013 to the amounts reported in our unaudited Consolidated Financial Statements to adjust for intersegment eliminations.

	Property and Casualty Insurance		Life Insurance			Total
Three Months Ended June 30, 2014
Net premiums earned	$	187,832	$	14,127		$	201,959
Investment income, net of investment expenses	11,831		15,765			27,596
Net realized investment gains	2,337		371			2,708
Other income	314		221			535
Total reportable segment	$	202,314	$	30,484		$	232,798
Intersegment eliminations	7		(132		)	(125		)
Total revenues	$	202,321	$	30,352		$	232,673
Net income	$	9,540	$	1,145		$	10,685
Assets	$	2,100,863	$	1,751,047		$	3,851,910
Invested assets	$	1,519,110	$	1,625,988		$	3,145,098
Three Months Ended June 30, 2013
Net premiums earned	$	170,527	$	15,963		$	186,490
Investment income, net of investment expenses	12,279		16,731			29,010
Net realized investment gains	3,560		591			4,151
Other income	72		110			182
Total reportable segment	$	186,438	$	33,395		$	219,833
Intersegment eliminations	9		(123		)	(114		)
Total revenues	$	186,447	$	33,272		$	219,719
Net income	$	13,195	$	2,301		$	15,496
Assets	$	1,951,033	$	1,749,716		$	3,700,749
Invested assets	$	1,379,947	$	1,643,356		$	3,023,303

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We have reconciled the following table for the six-month periods ended June 30, 2014 and 2013 to the amounts reported in our unaudited Consolidated Financial Statements to adjust for intersegment eliminations.

	Property and Casualty Insurance		Life Insurance			Total
Six Months Ended June 30, 2014
Net premiums earned	$	367,326	$	28,107		$	395,433
Investment income, net of investment expenses	22,944		31,364			54,308
Net realized investment gains	3,704		1,198			4,902
Other income	794		348			1,142
Total reportable segment	$	394,768	$	61,017		$	455,785
Intersegment eliminations	57		(265		)	(208		)
Total revenues	$	394,825	$	60,752		$	455,577
Net income	$	21,351	$	2,665		$	24,016
Assets	$	2,100,863	$	1,751,047		$	3,851,910
Invested assets	$	1,519,110	$	1,625,988		$	3,145,098
Six Months Ended June 30, 2013
Net premiums earned	$	333,228	$	30,202		$	363,430
Investment income, net of investment expenses	22,700		32,710			55,410
Net realized investment gains	4,589		1,471			6,060
Other income	84		213			297
Total reportable segment	$	360,601	$	64,596		$	425,197
Intersegment eliminations	73		(246		)	(173		)
Total revenues	$	360,674	$	64,350		$	425,024
Net income	$	33,924	$	3,965		$	37,889
Assets	$	1,951,033	$	1,749,716		$	3,700,749
Invested assets	$	1,379,947	$	1,643,356		$	3,023,303

NOTE 7. EARNINGS PER COMMON SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share gives effect to all dilutive common shares outstanding during the reporting period. The dilutive shares we consider in our diluted earnings per share calculation relate to our outstanding stock options and restricted stock awards.

We determine the dilutive effect of our outstanding stock options using the "treasury stock" method. Under this method, we assume the exercise of all of the outstanding stock options whose exercise price is less than the weighted-average market value of our common stock during the reporting period. This method also assumes that the proceeds from the hypothetical stock option exercises are used to repurchase shares of our common stock at the weighted-average market value of the stock during the reporting period. The net of the assumed stock options exercised and assumed common shares repurchased represents the number of dilutive common shares, which we add to the denominator of the earnings per share calculation.

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The components of basic and diluted earnings per share were as follows for the three-month periods ended June 30, 2014 and 2013:

	Three Months Ended June 30,
(In Thousands Except Share Data)	2014				2013
	Basic		Diluted		Basic		Diluted
Net income	$	10,685	$	10,685	$	15,496	$	15,496
Weighted-average common shares outstanding	25,330,066		25,330,066		25,297,718		25,297,718
Add dilutive effect of restricted stock awards	—		114,313		—		59,849
Add dilutive effect of stock options	—		112,248		—		114,735
Weighted-average common shares	25,330,066		25,556,627		25,297,718		25,472,302
Earnings per common share	$	0.42	$	0.42	$	0.61	$	0.61
Awards excluded from diluted earnings per share calculation(1)	—		904,580		—		647,726

(1) Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

The components of basic and diluted earnings per share were as follows for the six-month periods ended June 30, 2014 and 2013:

	Six Months Ended June 30,
(In Thousands Except Share Data)	2014				2013
	Basic		Diluted		Basic		Diluted
Net income	$	24,016	$	24,016	$	37,889	$	37,889
Weighted-average common shares outstanding	25,351,056		25,351,056		25,271,752		25,271,752
Add dilutive effect of restricted stock awards	—		114,313		—		59,849
Add dilutive effect of stock options	—		125,889		—		82,791
Weighted-average common shares	25,351,056		25,591,258		25,271,752		25,414,392
Earnings per common share	$	0.95	$	0.94	$	1.50	$	1.49
Awards excluded from diluted earnings per share calculation(1)	—		904,580		—		663,326

(1) Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

NOTE 8. CREDIT FACILITY

In December 2011, United Fire entered into a credit agreement with a syndicate of financial institutions as lenders. KeyBank National Association is the administrative agent, lead arranger, sole book runner, swingline lender, and letter of credit issuer, and Bankers Trust Company is the syndication agent. The four-year credit agreement provides for a $100,000 unsecured revolving credit facility that includes a $20,000 letter of credit subfacility and a swing line subfacility of up to $5,000.

On June 4, 2013, United Fire & Casualty Company, United Fire Group, Inc. and the syndicated lenders entered into an Assignment, Joinder, Assumption, and Release Agreement (the "Joinder Agreement") transferring the obligations under the credit agreement from United Fire & Casualty Company to United Fire Group, Inc. Effective with the execution of the Joinder Agreement, United Fire & Casualty Company was released from any further obligations under the credit agreement.

During the term of this credit agreement, we have the right to increase the total credit facility from $100,000 up to $125,000 if no event of default has occurred and is continuing and certain other conditions are satisfied. The credit facility is available for general corporate purposes, including working capital, acquisitions and liquidity purposes. Any principal outstanding under the credit facility is due in full at maturity, on December 22, 2015. The interest rate is based on our monthly choice of either a base rate or the London Interbank Offered Rate ("LIBOR") plus, in each

29

case, a calculated margin amount. A commitment fee on each lender's unused commitment under the credit facility is also payable quarterly.

The credit agreement contains customary representations, covenants and events of default, including certain covenants that limit or restrict our ability to engage in certain activities. Subject to certain exceptions, these activities include restricting our ability to sell or transfer assets or enter into a merger or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into leaseback transactions, or incur certain indebtedness. The credit agreement contains certain financial covenants including covenants that require us to maintain a minimum consolidated net worth, a debt to capitalization ratio and minimum shareholders' equity.

There was no outstanding balance on the credit facility at June 30, 2014 and 2013. For the six-month periods ended June 30, 2014 and 2013, we did not incur any interest expense related to this credit facility. We were in compliance with all covenants for the credit agreement at June 30, 2014.

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the three-month period ended June 30, 2014:

				Liability for
	Net unrealized			underfunded
	appreciation			employee
	on investments			benefit costs			Total
Balance as of March 31, 2014	$	131,282		$	(28,952	)	$	102,330
Change in accumulated other comprehensive income before reclassifications	17,620			—			17,620
Reclassification adjustments from accumulated other comprehensive income	(1,044		)	499			(545		)
Balance as of June 30, 2014	$	147,858		$	(28,453	)	$	119,405

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the six-month period ended June 30, 2014:

				Liability for
	Net unrealized			underfunded
	appreciation			employee
	on investments			benefit costs			Total
Balance as of January 1, 2014	$	116,601		$	(29,451	)	$	87,150
Change in accumulated other comprehensive income before reclassifications	33,264			—			33,264
Reclassification adjustments from accumulated other comprehensive income	(2,007		)	998			(1,009		)
Balance as of June 30, 2014	$	147,858		$	(28,453	)	$	119,405

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Review Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

United Fire Group, Inc.

We have reviewed the consolidated balance sheet of United Fire Group, Inc. (the "Company") as of June 30, 2014, and the related consolidated statements of income and comprehensive income for the three-month and six-month periods ended June 30, 2014 and 2013, the consolidated statements of cash flows for the six-month periods ended June 30, 2014 and 2013, and the consolidated statement of stockholders' equity for the six-month period ended June 30, 2014. These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of United Fire Group, Inc. as of December 31, 2013, and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated March 5, 2014. In our opinion, the accompanying consolidated balance sheet of United Fire Group, Inc. as of December 31, 2013 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP  

Ernst & Young LLP 

Des Moines, Iowa

August 5, 2014

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Part I, Item 1 "Financial Statements."

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are defined as those that are representative of significant judgments and uncertainties and that potentially may result in materially different results under different assumptions and conditions. We base our discussion and analysis of our results of operations and financial condition on the amounts reported in our Consolidated Financial Statements, which we have prepared in accordance with GAAP. As we prepare these Consolidated Financial Statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Our critical accounting policies are more fully described in our Management's Discussion and Analysis of Financial Condition and Results of Operations presented in our Annual Report on Form 10-K for the year ended December 31, 2013. There have been no changes in our critical accounting policies from December 31, 2013.

INTRODUCTION

The purpose of this Management's Discussion and Analysis is to provide an understanding of our results of operations and consolidated financial position. Our Management's Discussion and Analysis should be read in conjunction with our consolidated financial statements and related notes, including those in our Annual Report on Form 10-K for the year ended December 31, 2013. When we provide information on a statutory basis, we label it as such, otherwise, all other data is presented in accordance with GAAP.

OUR BUSINESS

Founded in 1946 as United Fire & Casualty Company, United Fire Group, Inc. ("United Fire", the "Registrant", the "Company", "we", "us", or "our") and its consolidated insurance subsidiaries provide insurance protection for individuals and businesses through several regional offices. Our property and casualty insurance company subsidiaries are licensed in 43states plus the District of Columbia and are represented by approximately 1,200 independent agencies. Our life insurance subsidiary is licensed in 37 states and is represented by approximately 1,000 independent agencies.

Segments

We operate two business segments, each with a wide range of products:

• property and casualty insurance, which includes commercial lines insurance, personal lines insurance, surety bonds and assumed reinsurance; and

• life insurance, which includes deferred and immediate annuities, universal life products and traditional life (primarily single premium whole life) insurance products.

We manage these business segments separately, as they generally do not share the same customer base, and each has different products, pricing, and expense structures.

For the six-month period ended June 30, 2014, property and casualty insurance business accounted for approximately 93.0 percent of our net premiums earned, of which 90.7 percent was generated from commercial

32

lines. Life insurance business accounted for approximately 7.0 percent of our net premiums earned, of which 65.3 percent was generated from traditional life insurance products.

Pooling Arrangement

All of our property and casualty insurance subsidiaries, with the exception of Texas General Indemnity Company, which is in runoff, are members of an intercompany reinsurance pooling arrangement. Pooling arrangements permit the participating companies to rely on the capacity of the entire pool's capital and surplus, rather than being limited to policy exposures of a size commensurate with each participant’s own surplus level.

Geographic Concentration

For the six-month period ended June 30, 2014, approximately 48.4 percent of our property and casualty premiums were written in Texas, Iowa, California, New Jersey, and Missouri; approximately 66.0 percent of our life insurance premiums were written in Iowa, Wisconsin, Illinois, Nebraska, and Minnesota.

Segment Revenue and Expense

We evaluate segment profit or loss based upon operating and investment results. Segment profit or loss described in the following sections of this Management's Discussion and Analysis is reported on a pre-tax basis. Additional segment information is presented in Part I, Item 1, Note 6 "Segment Information" to the unaudited Consolidated Financial Statements.

Our primary sources of revenue are premiums and investment income. Major categories of expenses include losses and loss settlement expenses, future policy benefits, underwriting and other operating expenses and interest on policyholders' accounts.

Profit Factors

Our profitability is influenced by many factors, including price, competition, economic conditions, investment returns, interest rates, catastrophic events and other natural disasters, man-made disasters, state regulations, court decisions, and changes in the law. To manage these risks and uncertainties, we seek to achieve consistent profitability through strong agency relationships, exceptional customer service, fair and prompt claims handling, disciplined underwriting, superior loss control services, prudent management of our investments, appropriate matching of assets and liabilities, effective use of ceded reinsurance and effective and efficient use of technology.

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CONSOLIDATED FINANCIAL HIGHLIGHTS

	Three Months Ended June 30,						Six Months Ended June 30,
(In Thousands)	2014		2013		%		2014		2013		%
Revenues
Net premiums earned	$	201,827	$	186,367	8.3	%	$	395,168	$	363,184	8.8	%
Investment income, net of investment expenses	27,603		29,019		(4.9	)	54,365		55,483		(2.0	)
Net realized investment gains	2,708		4,151		(34.8	)	4,902		6,060		(19.1	)
Other income	535		182		194.0		1,142		297		284.5
Total revenues	$	232,673	$	219,719	5.9	%	$	455,577	$	425,024	7.2	%
Benefits, Losses and Expenses
Losses and loss settlement expenses	$	142,716	$	120,435	18.5	%	$	267,953	$	217,905	23.0	%
Increase in liability for future policy benefits	8,077		9,869		(18.2	)	15,898		18,105		(12.2	)
Amortization of deferred policy acquisition costs	40,196		36,708		9.5		79,730		74,789		6.6
Other underwriting expenses	20,776		23,308		(10.9	)	47,204		45,656		3.4
Interest on policyholders' accounts	7,852		9,081		(13.5	)	15,839		18,401		(13.9	)
Total benefits, losses and expenses	$	219,617	$	199,401	10.1	%	$	426,624	$	374,856	13.8	%
Income before income taxes	$	13,056	$	20,318	(35.7	)%	$	28,953	$	50,168	(42.3	)%
Federal income tax expense	2,371		4,822		(50.8	)	4,937		12,279		(59.8	)%
Net income	$	10,685	$	15,496	(31.0	)%	$	24,016	$	37,889	(36.6	)%

NM=Not meaningful

The following is a summary of our financial performance for the three- and six-month periods ended June 30, 2014:

Consolidated Results of Operations

For the three-month period ended June 30, 2014, net income was $10.7 million compared to $15.5 million for the same period of 2013, driven primarily by an increase in losses and loss settlement expenses, which was partially offset by growth in property and casualty premium revenue. Consolidated net premiums earned increased to $201.8 million compared to $186.4 million for the same period of 2013. This increase represents organic growth and is the result of a combination of rate increases across most commercial and personal lines and, to a lessor extent, new business writings.

Losses and loss settlement expenses increased by $22.3 million during the three-month period ended June 30, 2014 compared to the same period of 2013. The increase is primarily attributable to an increase in catastrophe loss experience from convective spring storms in regions of the U.S. where we conduct much of our business and a decrease in favorable reserve development. Pre-tax catastrophe losses totaled $20.6 million compared to $14.2 million in the same period of 2013.

For the six-month period ended June 30, 2014, net income was $24.0 million compared to $37.9 million for the same period of 2013, driven primarily by an increase in losses and loss settlement expenses, which was partially offset by growth in property and casualty premium revenue. Consolidated net premiums earned increased to $395.2 million compared to $363.2 million for the same period of 2013. This increase represents organic growth and is the result of

34

a combination of rate increases across most commercial and personal lines and, to a lessor extent, new business writings.

Losses and loss settlement expenses increased by $50.0 million during the six-month period ended June 30, 2014 compared to the same period of 2013. The increase is primarily attributable to an increase in catastrophe loss experience from convective spring storms in regions of the U.S. where we conduct much of our business, losses from a single large claim (a large explosion in a suburban townhome community), an increase in our annual aggregate reinsurance deductible, a decrease in favorable reserve development and an increase in the frequency of claims associated with the harsh winter weather experienced in the U.S. in the first quarter of 2014. Pre-tax catastrophe losses totaled $23.9 million compared to $18.7 million in the same period of 2013.

Consolidated Financial Condition

At June 30, 2014, the book value per share of our common stock was $32.74. We repurchased 201,516 shares of our common stock at a total cost of $5.6 million and an average share price of $27.63 in the six-month period ended June 30, 2014. Under our share repurchase program, which is scheduled to expire on August 31, 2014, we are authorized to repurchase an additional 868,601 shares of our common stock.

Net unrealized investment gains totaled $147.9 million as of June 30, 2014, an increase of $31.3 million, net of tax, or 26.8 percent, since December 31, 2013. The increase in net unrealized investment gains resulted from an increase in the fair value of the fixed maturity investment portfolio due to lower interest rates and also, to a lesser extent, an increase in the fair value of our equity investment portfolio.

Our stockholders' equity increased to $826.3 million at June 30, 2014, from $782.8 million at December 31, 2013. The increase was primarily attributable to net income of $24.0 million and an increase in net unrealized investment gains of $31.3 million, net of tax, partially offset by shareholder dividends of $9.6 million.

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RESULTS OF OPERATIONS

Property and Casualty Insurance Segment Results

	Three Months Ended June 30,						Six Months Ended June 30,
(In Thousands Except Ratios)	2014			2013			2014			2013
Net premiums written	$	222,061		$	198,363		$	421,390		$	375,482
Net premiums earned	$	187,832		$	170,527		$	367,326		$	333,228
Losses and loss settlement expenses	(135,493		)	(115,528		)	(254,149		)	(207,621		)
Amortization of deferred policy acquisition costs	(38,502		)	(34,993		)	(76,378		)	(71,349		)
Other underwriting expenses	(17,104		)	(19,220		)	(39,364		)	(37,635		)
Underwriting gain (loss)	$	(3,267	)	$	786		$	(2,565	)	$	16,623
Investment income, net of investment expenses	11,838			12,288			23,001			22,773
Net realized investment gains	2,337			3,560			3,704			4,589
Other income	315			72			795			84
Income before income taxes	$	11,223		$	16,706		$	24,935		$	44,069
GAAP Ratios:
Net loss ratio (without catastrophes)	61.1		%	59.4		%	62.7		%	56.7		%
Catastrophes - effect on net loss ratio	11.0			8.3			6.5			5.6
Net loss ratio (1)	72.1		%	67.7		%	69.2		%	62.3		%
Expense ratio (2)	29.6			31.8			31.5			32.7
Combined ratio (3)	101.7		%	99.5		%	100.7		%	95.0		%

(1) The GAAP net loss ratio is calculated by dividing the sum of losses and loss settlement expenses by net premiums earned. We use the net loss ratio as a measure of the overall underwriting profitability of the insurance business we write and to assess the adequacy of our pricing. Our net loss ratio is meaningful in evaluating our financial results as reported in our unaudited Consolidated Financial Statements.

(2) The GAAP expense ratio is calculated by dividing nondeferred underwriting expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company's operational efficiency in producing, underwriting and administering its insurance business.

(3) The GAAP combined ratio is a commonly used financial measure of property and casualty underwriting performance. A combined ratio below 100.0 percent generally indicates a profitable book of business. The combined ratio is the sum of the GAAP net loss ratio and the GAAP underwriting expense ratio.

For the three- and six-month periods ended June 30, 2014, our property and casualty segment reported income before taxes of $11.2 million and $24.9 million, respectively, or a decrease of $5.5 million and $19.1 million, respectively, compared to the same periods of 2013. The decrease in the three- and six-month periods ended June 30, 2014 is primarily due to an increase in losses and loss settlement expenses partially offset by an increase in net premiums earned.

Net premiums earned increased 10.1 percent to $187.8 million in the three-month period ended June 30, 2014, compared to $170.5 million in the same period of 2013. In the six-month period ended June 30, 2014, net premiums earned also increased 10.2 percent to $367.3 million as compared to $333.2 million in the same period of 2013. This increase represents organic growth and is the result of a combination of rate increases across most commercial and personal lines and, to a lessor extent, new business writings.

The GAAP combined ratio increased 2.2 percentage points to 101.7 percent for the three-month period ended June 30, 2014, compared to 99.5 percent for the same period of 2013. For the six-month period ended June 30, 2014, the GAAP combined ratio was 100.7 percent, compared to 95.0 percent for the same period of 2013. The increase in the GAAP combined ratio in the three- and six-month periods ended June 30, 2014, as compared to the same periods of 2013, is primarily attributable to an increase in catastrophe loss experience from convective spring storms in regions of the U.S. where we conduct much of our business and a decrease in favorable reserve development.

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The net loss ratio, a component of the combined ratio, increased by 4.4 percentage points to 72.1 percentage points in the three-month period ended June 30, 2014, as compared to the same period of 2013. The increase is primarily attributable to convective spring storms in regions of the U.S. where we conduct much of our business and a decrease in favorable reserve development.

For the six-month period ended June 30, 2014, the net loss ratio increased by 6.9 percentage points to 69.2 percentage points as compared to the same period of 2013. The increase is primarily attributable to an increase in catastrophe loss experience from convective spring storms in regions of the U.S. where we conduct much of our business, losses from a single large claim (a large explosion in a suburban townhome community), an increase in our annual aggregate reinsurance deductible, a decrease in favorable reserve development and an increase in the frequency of claims associated with the harsh winter weather experienced in the U.S. in the first quarter of 2014. Pre-tax catastrophe losses totaled $20.6 million and $23.9 million for the three- and six-month periods ended June 30, 2014, respectively, as compared to $14.2 million and $18.7 million, respectively, in the same periods of 2013.

The expense ratio, a component of the combined ratio, of 29.6 percentage points for the quarter ended June 30, 2014 improved by 2.2 percentage points as compared with the same period of 2013. Second quarter underwriting expenses benefited from additional acquisition expenses being deferred due to improved loss experience and continued premium growth.

For the six-month period ended June 30, 2014, the expense ratio of 31.5 percentage points for the quarter ended June 30, 2014 improved by 1.2 percentage point as compared with the same period of 2013. In 2014, the expense ratio will be impacted by a dual rent obligation associated with the relocation of our Galveston, Texas branch facility and an increase in premium taxes and assessments due to premium growth in specific lines of business. Our expectation is a gradual return to a more favorable expense ratio consistent with our history as we continue to reap the benefit of economies of scale and the ultimate completion of the Mercer Insurance integration.

For a detailed discussion of our consolidated investment results, refer to the "Investment Portfolio" section of this item.

Reserve Development

For many liability claims, significant periods of time, ranging up to several years and for certain construction defect claims more than a decade, may elapse between the occurrence of the loss, the reporting of the loss to us and the settlement or other disposition of the claim. As a result, loss experience in the more recent accident years for the long-tail liability coverages has limited statistical credibility in our reserving process because a relatively small proportion of losses in these accident years are reported claims and an even smaller proportion are paid losses. In addition, long-tail liability claims are more susceptible to litigation and can be significantly affected by changing contract interpretations and the legal environment. Consequently, the estimation of loss reserves for long-tail coverages is more complex and subject to a higher degree of variability. Reserves for these long-tail coverages represent a significant portion of our overall carried reserves.

When establishing reserves and monitoring reserve adequacy, we analyze historical data and consider the potential impact of various loss development factors and trends including historical loss experience, legislative enactments, judicial decisions, legal developments in imposition of damages, experience with alternative dispute resolution, results of our medical bill review process and trends in general economic conditions, including the effects of inflation. All of these factors influence our estimates of required reserves and for long-tail lines these factors can change over the course of the settlement of the claim. However there is no precise method for evaluating the specific dollar impact of any individual factor on the development of reserves.

Our reserving philosophy is to reserve claims to their ultimate expected loss amount as soon as practicable after information about a claim becomes available. Historically, this approach has tended to produce, on average, some level of favorable development over the course of settlement.

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2014 Development

The property and casualty insurance segment experienced $11.3 million and $25.8 million of favorable development in our net reserves for prior accident years for the three- and six-month periods ended June 30, 2014, respectively. The significant driver of the favorable reserve development in 2014 was our long-tail liability of commercial business including other liability, workers' compensation and auto liability, which have contributed $9.6 million and$12.7 million, respectively, of the three- and six-month reserve development totals. Commercial auto liability, with $7.6 million of favorable year-to-date reserve development, continues to benefit from loss control and re-underwriting initiatives over the past several years. Also contributing to the favorable development during the six-month period ended June 30, 2014, only to a lesser extent than the long-tail liability lines and commercial auto liability, were workers' compensation and auto physical damage lines which combined for $8.1 million of favorable year-to-date development. Development from all other lines combined provided a partial offset to the favorable development noted above, though no single line of business contributed a significant portion of the total additional development.

2013 Development

The property and casualty insurance segment experienced $16.4 million and $40.5 million of favorable development in our net reserves for prior accident years for the three- and six-month periods ended June 30, 2013, respectively. The favorable development in 2013 was primarily related to our long-tail lines of commercial business including other liability, workers' compensation and auto liability. The favorable development is generally caused by changes in loss development patterns due to many factors discussed previously. Specifically, we observed a continuation of a trend, started in 2011, reducing the overall number of reported new construction defect claims and lower than expected emergence on known claims. In addition, in 2009 management began an initiative to control legal defense costs. As these costs are a significant component of the carried reserves for the other liability line, management believes this initiative is also contributing to the favorable development trends.

Development amounts can vary significantly from quarter-to-quarter and year-to-year depending on a number of factors, including the number of claims settled and the settlement terms, and are subject to reallocation between accident years and lines of business. During second quarter, the decrease in favorable reserve development is attributable to the timing of paid claims; however, year-to-date the decline in favorable reserve development also reflects adverse development of large claims from prior accident years, primarily relevant to fourth quarter 2013 large losses that further developed in first quarter 2014. At June 30, 2014, our total reserves remained relatively flat compared to December 31, 2013 and within our actuarial estimates.

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The following tables display our net premiums earned, net losses and loss settlement expenses and net loss ratio by line of business:

Three Months Ended June 30,	2014							2013
			Net Losses							Net Losses
			and Loss							and Loss
	Net		Settlement			Net		Net		Settlement			Net
(In Thousands)	Premiums		Expenses			Loss		Premiums		Expenses			Loss
Unaudited	Earned		Incurred			Ratio		Earned		Incurred			Ratio
Commercial lines
Other liability	$	55,891	$	24,192		43.3	%	$	49,175	$	28,618		58.2	%
Fire and allied lines	44,467		42,840			96.3		39,416		26,093			66.2
Automobile	40,391		29,353			72.7		36,025		28,777			79.9
Workers' compensation	20,996		16,129			76.8		20,159		14,477			71.8
Fidelity and surety	4,099		1,308			31.9		4,048		(974		)	(24.1	)
Miscellaneous	683		(1		)	(0.1	)	517		45			8.7
Total commercial lines	$	166,527	$	113,821		68.3	%	$	149,340	$	97,036		65.0	%
Personal lines
Fire and allied lines	$	11,070	$	13,530		122.2	%	$	10,689	$	10,765		100.7	%
Automobile	5,791		6,672			115.2		5,515		4,367			79.2
Miscellaneous	247		(17		)	(6.9	)	235		667			NM
Total personal lines	$	17,108	$	20,185		118.0	%	$	16,439	$	15,799		96.1	%
Reinsurance assumed	$	4,197	$	1,487		35.4	%	$	4,748	$	2,693		56.7	%
Total	$	187,832	$	135,493		72.1	%	$	170,527	$	115,528		67.7	%

NM=Not meaningful

Six Months Ended June 30,	2014						2013
			Net Losses						Net Losses
			and Loss						and Loss
	Net		Settlement		Net		Net		Settlement			Net
(In Thousands)	Premiums		Expenses		Loss		Premiums		Expenses			Loss
Unaudited	Earned		Incurred		Ratio		Earned		Incurred			Ratio
Commercial lines
Other liability	$	109,044	$	54,862	50.3	%	$	94,504	$	49,315		52.2	%
Fire and allied lines	87,354		77,498		88.7		80,390		44,694			55.6
Automobile	78,841		51,601		65.4		70,983		54,950			77.4
Workers' compensation	42,026		34,338		81.7		39,267		30,840			78.5
Fidelity and surety	8,559		995		11.6		8,807		(680		)	(7.7	)
Miscellaneous	1,347		10		0.7		562		659			117.3
Total commercial lines	$	327,171	$	219,304	67.0	%	$	294,513	$	179,778		61.0	%
Personal lines
Fire and allied lines	$	22,102	$	20,385	92.2	%	$	21,125	$	16,966		80.3	%
Automobile	11,472		10,966		95.6		10,861		7,562			69.6
Miscellaneous	491		88		17.9		288		901			NM
Total personal lines	$	34,065	$	31,439	92.3	%	$	32,274	$	25,429		78.8	%
Reinsurance assumed	$	6,090	$	3,406	55.9	%	$	6,441	$	2,414		37.5	%
Total	$	367,326	$	254,149	69.2	%	$	333,228	$	207,621		62.3	%

NM=Not meaningful

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• Commercial other liability - The net loss ratio improved 14.9 percentage points and 1.9 percentage points in the three- and six-month periods ended June 30, 2014, respectively, compared to the same periods of 2013. In the second quarter of 2013, there was an increase in large claims, which increased overall average claim severity in the prior year.

• Commercial fire and allied lines - The net loss ratio deteriorated 30.1 percentage points and 33.1 percentage points in the three- and six-month periods ended June 30, 2014, respectively, compared to the same periods of 2013. The change is primarily attributable to losses from a single large claim (a large explosion in a suburban townhome community), an increase in our annual aggregate reinsurance deductible, an increase in the frequency of claims associated with the harsh winter weather experienced in the U.S. in the first quarter of 2014, an increase in catastrophes from spring storms experienced in regions of the U.S. in the second quarter of 2014 where we conduct much of our business and an increase in severity in commercial fire losses.

• Commercial automobile - The net loss ratio improved 7.2 percentage points and 12.0 percentage points in the three- and six-month periods ended June 30, 2014, respectively, compared to the same periods of 2013. The change was primarily due to favorable results from loss control and re-underwriting initiatives over the past several months that focused on under-performing accounts and agents.

• Personal fire and allied lines- The net loss ratio deteriorated 21.5 percentage points and 11.9 percentage points in the three- and six-month periods ended June 30, 2014, respectively, compared to the same periods of 2013. The change was primarily due to an increase in catastrophe loss experience from spring storms in the U.S. in the second quarter of 2014.

• Personal automobile - The net loss ratio deteriorated 36.0 percentage points and 26.0 percentage points in the three- and six-month periods ended June 30, 2014, respectively, compared to the same periods of 2013. The change was primarily due to increased claim frequency and severity due to the harsh winter weather experienced in the U.S. in the first quarter of 2014 and due to an increase in catastrophe loss experience from spring storms in regions of the U.S. in the second quarter of 2014 where we conduct much of our business.

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Life Insurance Segment Results

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2014		2013		2014		2013
Revenues
Net premiums earned	$	13,995	$	15,840	$	27,842	$	29,956
Investment income, net of investment expenses	15,765		16,731		31,364		32,710
Net realized investment gains	371		591		1,198		1,471
Other income	220		110		347		213
Total revenues	$	30,351	$	33,272	$	60,751	$	64,350
Benefits, Losses and Expenses
Losses and loss settlement expenses	$	7,223	$	4,907	$	13,804	$	10,284
Increase in liability for future policy benefits	8,077		9,869		15,898		18,105
Amortization of deferred policy acquisition costs	1,694		1,715		3,352		3,440
Other underwriting expenses	3,672		4,088		7,840		8,021
Interest on policyholders' accounts	7,852		9,081		15,839		18,401
Total benefits, losses and expenses	$	28,518	$	29,660	$	56,733	$	58,251
Income before income taxes	$	1,833	$	3,612	$	4,018	$	6,099

Income before income taxes decreased $1.8 million and $2.1 million in the three- and six-month periods ended June 30, 2014, respectively, as compared to the same periods of 2013. The decline in net income is due to a decrease in net investment income and net premiums earned and an increase in losses and loss settlement expenses. The segment also experienced a decrease in interest on policyholders' accounts, which is due to a decline in the amount of expense associated with the payment of interest to policyholders on annuity accounts, and to a lesser extent universal life policies.

Net premiums earned decreased 11.6 percent to $14.0 million for the three-month period ended June 30, 2014, compared to $15.8 million in the same period of 2013. In the six-month period ended June 30, 2014, net premiums earned decreased 7.1 percent to $27.8 million, compared to $30.0 million in the same period of 2013. The decrease in net premiums earned was primarily due to a decrease in sales of single premium whole life policies, as we have chosen to maintain price diligence to achieve adequate rate spreads.

Net investment income decreased 5.8 percent to $15.8 million for the three-month period ended June 30, 2014, compared to $16.7 million for the same period of 2013. In the six-month period ended June 30, 2014, investment income decreased 4.1 percent to $31.4 million compared to $32.7 million in the same period of 2013. The decrease is primarily due to the decrease in the reinvestment interest rates from the continued low interest rate environment.

Losses and loss settlement expenses increased $2.3 million for the three-month period ended June 30, 2014 compared to the same period of 2013 due to an increase in benefits paid. Fluctuation in timing of death benefits occur from quarter to quarter and year to year.

The increase in the liability for future policy benefits improved in the three- and six-month periods ended June 30, 2014 compared to the same periods of 2013, due to net withdrawals of annuity products and the decline in sales of our single premium whole life product.

Deferred annuity deposits increased 154.8 percent and 178.8 percent for the three- and six-month periods ended June 30, 2014, compared with the same periods of 2013. Guaranteed interest rates have periodically increased over the

41

course of the last year resulting in more favorable retention of maturing deferred annuity deposits as opposed to lapse of policies due to maturity, as well as increased deposits due to additional annuity sales.

Net cash outflow related to our annuity business was $15.7 million and $26.8 million in the three- and six-month periods ended June 30, 2014, respectively, compared to a net cash outflow of $20.2 million and $46.1 million in the same periods of 2013. We attribute this to the activity described above.

For a detailed discussion of our consolidated investment results, refer to the "Investment Portfolio" section of this item.

Investment Portfolio

Our invested assets totaled $3,145.1 million at June 30, 2014, compared to $3,050.1 million at December 31, 2013, an increase of $95.0 million. At June 30, 2014, fixed maturity securities and equity securities made up 90.4 percent and 7.7 percent of the value of our investment portfolio, respectively. Because the primary purpose of our investment portfolio is to fund future claims payments, we use a conservative investment philosophy, investing in a diversified portfolio of high-quality, intermediate-term taxable corporate bonds, taxable U.S. government bonds and tax-exempt U.S. municipal bonds. Our overall investment strategy is to keep our cash on hand low in the current interest rate environment. If additional cash is needed, we can borrow funds available under our revolving credit facility.

Composition

We develop our investment strategies based on a number of factors, including estimated duration of reserve liabilities, short- and long-term liquidity needs, projected tax status, general economic conditions, expected rates of inflation, regulatory requirements, interest rates and credit quality of assets. We administer our investment portfolio based on investment guidelines approved by management and the investment committee of our Board of Directors that comply with applicable statutory regulations.

The composition of our investment portfolio at June 30, 2014 is presented at carrying value in the following table:

	Property & Casualty Insurance Segment				Life Insurance Segment				Total
			Percent				Percent				Percent
(In Thousands)			of Total				of Total				of Total
Fixed maturities (1)
Held-to-maturity	$	315	—	%	$	315	—	%	$	630	—	%
Available-for-sale	1,250,310		82.4		1,573,708		96.8		2,824,018		89.8
Trading securities	18,305		1.2		—		—		18,305		0.6
Equity securities
Available-for-sale	210,970		13.9		28,274		1.7		239,244		7.6
Trading securities	3,206		0.2		—		—		3,206		0.1
Mortgage loans	—		—		4,313		0.3		4,313		0.1
Policy loans	—		—		6,200		0.4		6,200		0.2
Other long-term investments	35,529		2.3		13,178		0.8		48,707		1.6
Short-term investments	475		—		—		—		475		—
Total	$	1,519,110	100.0	%	$	1,625,988	100.0	%	$	3,145,098	100.0	%

(1) Available-for-sale securities and trading fixed maturities are carried at fair value. Held-to-maturity fixed maturities are carried at amortized cost.

At June 30, 2014, we classified $2,824.0 million, or 99.3 percent, of our fixed maturities portfolio as available-for-sale, compared to $2,751.3 million, or 99.6 percent, at December 31, 2013. We classify our remaining fixed maturities as held-to-maturity or trading. We record held-to-maturity securities at amortized cost. We record available-for-sale securities at fair value, with any changes in fair value recognized in accumulated other comprehensive income. We record trading securities, primarily convertible redeemable preferred debt securities, at fair value, with any changes in fair value recognized in earnings.

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As of June 30, 2014 and December 31, 2013, we did not have direct exposure to investments in subprime mortgages or other credit enhancement vehicles.

Credit Quality

The following table shows the composition of fixed maturity securities held in our available-for-sale, held-to-maturity and trading security portfolios, by credit rating at June 30, 2014 and December 31, 2013. Information contained in the table is generally based upon the issue credit ratings provided by Moody's, unless the rating is unavailable, in which case we obtain it from Standard & Poor's.

(In Thousands)	June 30, 2014				December 31, 2013
Rating	Carrying Value		% of Total		Carrying Value		% of Total
AAA	$	882,755	31.1	%	$	761,017	27.6	%
AA	588,848		20.7		537,527		19.5
A	575,681		20.2		564,396		20.4
Baa/BBB	729,768		25.7		830,735		30.1
Other/Not Rated	65,901		2.3		68,177		2.5
	$	2,842,953	100.0	%	$	2,761,852	100.0	%

Duration

Our investment portfolio is invested primarily in fixed maturity securities whose fair value is susceptible to market risk, specifically interest rate changes. Duration is a measurement used to quantify our inherent interest rate risk and analyze our ability to match our invested assets to our reserve liabilities. If our invested assets and reserve liabilities have similar durations, then any change in interest rates will have an equal effect on these accounts. The primary purpose for matching invested assets and reserve liabilities is liquidity. With appropriate matching, our investments will mature when cash is needed, preventing the need to liquidate other assets prematurely. Mismatches in the duration of assets and liabilities can cause significant fluctuations in our results of operations.

Group

The weighted average effective duration of our portfolio of fixed maturity securities at June 30, 2014 is 4.7 years compared to 5.0 years at December 31, 2013.

Property and Casualty Insurance Segment

The weighted average effective duration of our portfolio of fixed maturity securities at June 30, 2014 is 4.6 years compared to 4.9 years at December 31, 2013.

Life Insurance Segment

The weighted average effective duration of our portfolio of fixed maturity securities at June 30, 2014 is 4.8 years compared to 5.0 years at December 31, 2013.

Investment Results

We invest the premiums received from our policyholders and annuitants in order to generate investment income, which is an important component of our revenues and profitability. The amount of investment income that we are able to generate is affected by many factors, some of which are beyond our control. Some of these factors are volatility in the financial markets, economic growth, inflation, interest rates, world political conditions, terrorist attacks or threats of terrorism, adverse events affecting other companies in our industry or the industries in which we invest and other unpredictable national or world events. Our net investment income decreased by 4.9 percent and 2.0 percent in the three- and six-month periods ended June 30, 2014, respectively, compared with the same periods of 2013. The decrease in net investment income is primarily due to the impact of continuing declining investment

43

yields on our fixed securities portfolio. We are maintaining our investment philosophy of purchasing fixed income investments rated investment grade or better.

Our net realized investment gains were $2.7 million and $4.9 million, respectively, during the three- and six-month periods ended June 30, 2014, as compared with $4.2 million and $6.1 million, respectively, in the same periods of 2013.

We hold certain investments in limited liability partnerships that are recorded on the equity method of accounting, with changes in the value of these investments recorded in investment income. In the three- and six-month periods ended June 30, 2014, the increase in value of investments in limited liability partnerships contributed $1.9 million and $3.0 million, respectively, to investment income as compared to $2.5 million and $2.5 million in the same periods of 2013.

We regularly monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.

Changes in unrealized gains and losses on available-for-sale securities do not affect net income and earnings per share but do impact comprehensive income, stockholders' equity and book value per share. We believe that any unrealized losses on our available-for-sale securities at June 30, 2014 are temporary based upon our current analysis of the issuers of the securities that we hold and current market events. It is possible that we could recognize impairment charges in future periods on securities that we own at June 30, 2014 if future events and information cause us to determine that a decline in value is other-than-temporary. However, we endeavor to invest in high quality assets to provide protection from future credit quality issues and corresponding other-than-temporary impairment write-downs.  

LIQUIDITY AND CAPITAL RESOURCES

Liquidity measures our ability to generate sufficient cash flows to meet our short- and long-term cash obligations. Our cash inflows are primarily a result of the receipt of premiums, annuity deposits, reinsurance recoveries, sales or maturities of investments, and investment income. Cash provided from these sources is used to fund the payment of losses and loss settlement expenses, policyholder benefits under life insurance contracts, annuity withdrawals, the purchase of investments, operating expenses, dividends, pension plan contributions, and in recent years, common stock repurchases.

We monitor our capital adequacy to support our business on a regular basis. The future capital requirements of our business will depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover losses. Our ability to underwrite is largely dependent upon the quality of our claims paying and financial strength ratings as evaluated by independent rating agencies. In particular, we require (1) sufficient capital to maintain our financial strength ratings, as issued by various rating agencies, at a level considered necessary by management to enable our insurance company subsidiaries to compete and (2) sufficient capital to enable our insurance company subsidiaries to meet the capital adequacy tests performed by regulatory agencies in the U.S.

Cash outflows may be variable because of the uncertainty regarding settlement dates for losses. In addition, the timing and amount of individual catastrophe losses are inherently unpredictable and could increase our liquidity requirements. The timing and amount of reinsurance recoveries may be affected by reinsurer solvency and reinsurance coverage disputes.

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Historically, we have generated substantial cash inflows from operations. It is our policy to invest the cash generated from operations in securities with maturities that, in the aggregate, correlate to the anticipated timing of payments for losses and loss settlement expenses and future policyholder benefits of the underlying insurance policies, and annuity withdrawals. The majority of our assets are invested in available-for-sale fixed maturity securities.

The following table displays a summary of cash sources and uses in 2014 and 2013.

Cash Flow Summary	Six Months Ended June 30,
(In Thousands)	2014			2013
Cash provided by (used in)
Operating activities	$	55,193		$	70,405
Investing activities	(25,351		)	(54,148		)
Financing activities	(31,759		)	(42,934		)
Net decrease in cash and cash equivalents	$	(1,917	)	$	(26,677	)

Operating Activities

Net cash flows provided by operating activities totaled $55.2 million and $70.4 million for the six-month periods ended June 30, 2014 and 2013, respectively. Operating cash flows in the six-month period ended June 30, 2014 reflect a higher level of property and casualty loss payments, slightly offset by a lower level of net withdrawals of annuity products. Our cash flows from operations were sufficient to meet our liquidity needs for the six-month periods ended June 30, 2014 and 2013.

Investing Activities

Cash in excess of operating requirements is generally invested in fixed maturity securities and equity securities. Fixed maturities provide regular interest payments and allow us to match the duration of our liabilities. Equity securities provide dividend income, potential dividend income growth and potential appreciation. For further discussion of our investments, including our philosophy and our strategy for our portfolio, see the "Investment Portfolio" section of this item.

In addition to investment income, possible sales of investments and proceeds from calls or maturities of fixed maturity securities also can provide liquidity. During the next five years, $1.1 billion, or 37.6 percent, of our fixed maturity portfolio will mature.

We invest funds required for short-term cash needs primarily in money market accounts, which are classified as cash equivalents. At June 30, 2014, our cash and cash equivalents included $30.1 million related to these money market accounts, compared to $37.8 million at December 31, 2013.

Net cash flows used in investing activities totaled $25.4 million and $54.1 million for the six-month periods ended June 30, 2014 and 2013, respectively. For the six-month period ended June 30, 2014, we had cash inflows from scheduled and unscheduled investment maturities, redemptions, prepayments, and sales of investments of $250.9 million, compared to $246.7 million for the same period of 2013.

Our cash outflows for investment purchaseswere $272.1 million for the six-month period ended June 30, 2014, compared to $298.2 million for the same period of 2013. In 2014, we continued to purchase a higher level of fixed maturity securities, which are more profitable than other categories of investments when market interest rates are low.

Financing Activities

Net cash flows used in financing activities were $31.8 million for the six-month period ended June 30, 2014 compared to net cash flows used in financing activities of $42.9 million for the six-month period ended June 30, 2013. The decrease reflects a lower level of net annuity withdrawals in the six-month period ended June 30, 2014, compared to the same period of 2013.

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Credit Facilities

In December 2011, United Fire entered into a credit agreement with a syndicate of financial institutions as lenders, KeyBank National Association as administrative agent, lead arranger, sole book runner, swingline lender, and letter of credit issuer, and Bankers Trust Company as syndication agent.

On June 4, 2013, United Fire & Casualty Company, United Fire Group, Inc. and the syndicated lenders entered into an Assignment, Joinder, Assumption, and Release Agreement (the "Joinder Agreement") transferring the obligations under the credit agreement from United Fire & Casualty Company to United Fire Group, Inc. Effective with the execution of the Joinder Agreement, United Fire & Casualty Company was released from any further obligations under the credit agreement. As of June 30, 2014, there were no balances outstanding under this credit agreement. For further discussion of our credit agreement, refer to Part I, Item 1, Note 8 "Credit Facility" to the unaudited Consolidated Financial Statements.

Dividends

Dividends paid to shareholders totaled $9.6 million and $8.3 million in the six-month periods ended June 30, 2014 and 2013, respectively. Our practice has been to pay quarterly cash dividends, which we have paid every quarter since March 1968.

Payments of any future dividends and the amounts of such dividends, however, will depend upon factors such as net income, financial condition, capital requirements, and general business conditions. We will only pay dividends if declared by our Board of Directors out of legally available funds.

As a holding company with no independent operations of its own, United Fire Group, Inc. relies on dividends received from its insurance company subsidiaries in order to pay dividends to its common shareholders. Dividends payable by our insurance subsidiaries are governed by the laws in the states in which they are domiciled. In all cases, these state laws permit the payment of dividends only from earned surplus arising from business operations. For example, under Iowa law, the maximum dividend or distribution that may be paid within a 12-month period without prior approval of the Iowa Insurance Commissioner is generally restricted to the greater of 10 percent of statutory surplus as of the preceding December 31, or net income of the preceding calendar year on a statutory basis, not greater than earned statutory surplus. Other states in which our insurance company subsidiaries are domiciled may impose similar restrictions on dividends and distributions. Based on these restrictions, at June 30, 2014, United Fire Group Inc.'s sole direct insurance company subsidiary, United Fire & Casualty Company, is able to make a maximum of $41.2 million in dividend payments without prior regulatory approval. These restrictions will not have a material impact in meeting our cash obligations.

Stockholders' Equity

Stockholders' equity increased 5.5 percent to $826.3 million at June 30, 2014, from $782.8 million at December 31, 2013. The increase was primarily attributable to net income of $24.0 million and an increase in net unrealized investment gains of $31.3 million, net of tax, during the first half of 2014, partially offset by shareholder dividends of $9.6 million. At June 30, 2014, the book value per share of our common stock was $32.74compared to $30.87 at December 31, 2013.

MEASUREMENT OF RESULTS

Our consolidated financial statements are prepared on the basis of GAAP. We also prepare financial statements for each of our insurance company subsidiaries based on statutory accounting principles and file them with insurance regulatory authorities in the states where they do business.

Management evaluates our operations by monitoring key measures of growth and profitability. We believe that disclosure of certain non-GAAP financial measures enhances investor understanding of our financial performance. The following section provides further explanation of the key measures management uses to evaluate our results.

Catastrophe losses is a commonly used non-GAAP financial measure that uses the designations of the Insurance Services Office (ISO) and are reported with loss and loss settlement expense amounts net of reinsurance recoverables, unless specified otherwise. According to the ISO, a catastrophe loss is defined as a single unpredictable incident or series of closely related incidents that result in $25.0 million or more in U.S. industry-wide direct insured losses to property and that affect a significant number of insureds and insurers ("ISO catastrophe"). In addition to ISO catastrophes, we also include as catastrophes those events ("non-ISO catastrophes"), which may

46

include U.S. or international losses that we believe are, or will be, material to our operations, either in amount or in number of claims made. Management, at times, may determine for comparison purposes that it is more meaningful to exclude extraordinary catastrophe losses and resulting litigation. The frequency and severity of catastrophic losses we experience in any year affect our results of operations and financial position. In analyzing the underwriting performance of our property and casualty insurance segment, we evaluate performance both including and excluding catastrophe losses. Portions of our catastrophe losses may be recoverable under our catastrophe reinsurance agreements. We include a discussion of the impact of catastrophes because we believe it is meaningful for investors to understand the variability in our periodic earnings.

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2014		2013		2014		2013
ISO catastrophes	$	20,603	$	13,982	$	23,878	$	18,493
Non-ISO catastrophes (1)	—		239		—		239
Total catastrophes	$	20,603	$	14,221	$	23,878	$	18,732

(1) This number includes international assumed losses.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk arising from potential losses in our investment portfolio due to adverse changes in interest rates and market prices. However, we have the ability to hold fixed maturity investments to maturity. Our investment guidelines define the overall framework for managing our market and other investment risks including accountability and controls. In addition, each of our subsidiaries has specific investment policies that delineate the investment limits and strategies that are appropriate given each entity's liquidity, surplus, product, and regulatory requirements. We respond to market risk by managing the character of investment purchases.

It is our philosophy that we do not utilize financial hedges or derivative financial instruments to manage risks, nor do we enter into any swap, forward or option contracts, but attempt to mitigate our exposure through active portfolio management. In addition, we place the majority of our investments in high-quality, liquid securities and limit the amount of credit exposure to any one issuer. At June 30, 2014, we did not have direct exposure to investments in sub-prime mortgages or other credit-enhancement exposures.

While our primary market risk exposure is to changes in interest rates, we do have limited exposure to changes in equity prices and limited exposure to foreign currency exchange rates.

There have been no material changes in our market risk or market risk factors from what we reported in our Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report, were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal control over financial reporting to determine whether any changes occurred during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on this evaluation, no such change in our internal control over financial reporting occurred during the fiscal quarter to which this report relates.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We consider all of our litigation pending as of June 30, 2014 to be ordinary, routine, and incidental to our business.

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks, including those identified in Part I, Item 1A "Risk Factors" in our 2013 Annual Report on Form 10-K filed with the SEC on March 5, 2014, that could have a material effect on our business, results of operations, financial condition, and/or liquidity and that could cause our operating results to vary significantly from period to period. The risks described in the above mentioned report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material effect on our business, results of operations, financial condition and/or liquidity.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Under our share repurchase program, first announced in August 2007, we may purchase United Fire common stock from time to time on the open market or through privately negotiated transactions. The amount and timing of any purchases will be at our discretion and will depend upon a number of factors, including the share price, general economic and market conditions, and corporate and regulatory requirements.

We are authorized to purchase 868,601 shares of common stock at June 30, 2014. Unless extended by our Board of Directors, our share repurchase program is scheduled to end in August 2014.

The following table provides information with respect to purchases of shares of common stock made by or on our behalf or by any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three-month period ended June 30, 2014.

				Total Number of Shares	Maximum Number of
	Total			Purchased as a Part of	Shares that may yet be
	Number of	Average Price		Publicly Announced	Purchased Under the
Period	Shares Purchased	Paid per Share		Plans or Programs	Plans or Programs
4/1/2014 - 4/30/2014	—	$	—	—	1,070,117
5/1/2014 - 5/31/2014	137,405	27.61		137,405	932,712
6/1/2014 - 6/30/2014	64,111	27.65		64,111	868,601
Total	201,516	$	27.63	201,516

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit number	Exhibit description	Filed herewith
10.1	United Fire Group, Inc. Executive Nonqualified Excess Plan, dated as of May 21, 2014, previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on May 22, 2014, and incorporated herein by reference
10.2	United Fire & Casualty Company Executive Nonqualified Excess Plan Adoption Agreement, effective as of May 22, 2014, previously filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on May 22, 2014, and incorporated herein by reference
10.3	United Fire & Casualty Company Rabbi Directed Trust Agreement, effective as of May 22, 2014, previously filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Commission on May 22, 2014, and incorporated herein by reference
10.4	United Fire Group, Inc. Template Change in Control Severance Agreement, dated as of May 21, 2014, previously filed as Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed with the Commission on May 22, 2014, and incorporated herein by reference
10.5	Amendment Number One to United Fire & Casualty Company Nonqualified Deferred Compensation Plan, dated as of May 22, 2014, previously filed as Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed with the Commission on May 22, 2014, and incorporated herein by reference
10.6	United Fire Group, Inc. Stock Plan, amended as of February 21, 2014 (amending and restating the United Fire & Casualty Company 2008 Stock Plan), previously filed as Appendix A to Registrant's Form DEF 14A filed with the Commission on April 8, 2014, and incorporated herein by reference
10.7	Form of Non-Qualified Employee Stock Option Agreement under the United Fire Group, Inc. Stock Plan	X
10.8	Form of Stock Award Agreement under the United Fire Group, Inc. Stock Plan.	X
11	Statement Re Computation of Per Share Earnings. All information required by Exhibit 11 is presented within Note 7 of the Notes to Unaudited Consolidated Financial Statements, in accordance with the FASB guidance on Earnings per Share.	X
31.1	Certification of Randy A. Ramlo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Dianne M. Lyons pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Randy A. Ramlo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
32.2	Certification of Dianne M. Lyons pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101.1	The following financial information from United Fire Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 formatted in XBRL: (i) Consolidated Balance Sheets at June 30, 2014 (unaudited) and December 31, 2013; (ii) Consolidated Statements of Income and Comprehensive Income (unaudited) for the three and six months ended June 30, 2014 and 2013; (iii) Consolidated Statement of Stockholders’ Equity (unaudited) for the six months ended June 30, 2014; (iv) Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2014 and 2013; and (v) Notes to Unaudited Consolidated Financial Statements, tagged as a block of text.	X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITED FIRE GROUP, INC.
(Registrant)
/s/ Randy A. Ramlo	/s/ Dianne M. Lyons
Randy A. Ramlo	Dianne M. Lyons
President, Chief Executive Officer,	Senior Vice President, Chief Financial Officer and
Director and Principal Executive Officer	Principal Accounting Officer
August 5, 2014	August 5, 2014
(Date)	(Date)

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EX-10.7

EXHIBIT 10.7

NON-QUALIFIED STOCK OPTION AGREEMENTFOR THE PURCHASE OF STOCK UNDER THEUNITED FIRE GROUP, INC. 2008 STOCK PLAN

Grant Number [xxx]

1. Grant of Option. United Fire Group, Inc. (hereinafter the “Company”), in the exercise of its sole discretion pursuant to the United Fire Group, Inc. 2008 Stock Plan (the “Plan) does on [ Date ] (the “Grant Date”) hereby grant to [ Name ] (the “Optionee”) the option to purchase [ Number of shares ] shares of the common stock of the Company for a price of [ $Price ] per share upon the terms and subject to the conditions hereinafter contained. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Plan. This agreement is not intended to be an incentive stock option agreement as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

2. Vesting Schedule.

a. Subject to the terms of this Award Agreement and the Plan and provided that the Awardee remains continuously employed throughout the vesting periods set out below, the right to exercise this option shall vest as follows:

Vesting Date	Annual Percentage of Vesting
[ Time period ] from the Grant Date	[ % ]
[ Time period ] from the Grant Date	[ % ]
[ Time period ] from the Grant Date	[ % ]
[ Time period ] from the Grant Date	[ % ]
[ Time period ] from the Grant Date	[ % ]

b. THIS OPTION WILL BE AFFECTED, WITH REGARD TO BOTH VESTING SCHEDULE AND TERMINATION, BY LEAVES OF ABSENCE, CHANGES IN THE NUMBER OF HOURS WORKED, PARTIAL DISABILITY, AND OTHER CHANGES IN THE OPTIONEE’S EMPLOYMENT STATUS AS PROVIDED IN THE COMPANY’S CURRENT POLICIES IN SUCH MATTERS. THESE POLICIES MAY CHANGE FROM TIME TO TIME WITHOUT NOTICE IN THE COMPANY’S SOLE DISCRETION, AND THE OPTIONEE’S RIGHTS WILL BE GOVERNED BY THE POLICIES IN EFFECT AT THE TIME OF ANY EMPLOYMENT STATUS CHANGE. CONTACT HUMAN RESOURCES FOR A COPY OF THE MOST CURRENT POLICY STATEMENT AT ANY POINT IN TIME.

3. Expiration Date. This option shall expire ten (10) years from the Grant Date.

4. Termination of Optionee’s Status as an Employee. Upon termination of the Optionee’s Continuous Status as an Employee (as such term is defined in the Plan), the Optionee may exercise this option to the extent exercisable on the date of termination. Such exercise must occur within [ Number ] months after the date of such termination (but in no event later than the date of expiration of the term of this option as set forth in Section 3 above). To the extent that the Optionee does not exercise this option within the time specified in this Section 4, this option shall terminate.

5. Disability of Optionee. Notwithstanding the provisions of Section 4 above, upon termination of the Optionee’s Continuous Status as an Employee as a result of total and permanent disability (as such term is defined in the Plan), the Optionee may exercise this option, but only to the extent of the right to exercise that would have

accrued had the Optionee remained in Continuous Status as an Employee for a period of [ Number ] months after the date on which the Optionee ceased working as a result of the total and permanent disability. If the Optionee’s disability originally required him or her to take a short-term disability leave that was later converted into long-term disability, then for the purposes of the preceding sentence the date on which Optionee ceased working shall be deemed to be the date of commencement of the short-term disability leave. Such exercise must occur within [ Number ] months from the date on which the Optionee ceased working as a result of the total and permanent disability (but in no event later than the date of expiration of the term of this option as set forth in Section 3 above). To the extent that the Optionee does not exercise this option within the time specified in this Section 5, this option shall terminate.

6. Retirement of Optionee. Notwithstanding the provisions of Section 4 above, upon termination of the Optionee's Continuous Status as an Employee as a result of total and permanent disability, the Optionee may exercise this option, but only to the extent of the right to exercise that would have accrued had the Optionee remained in Continuous Status as an Employee for a period of [ Number ] months after the date on which the Optionee ceased working as an Employee. Such exercise must occur within [ Number ] months from the date on which the Optionee ceased working as an employee (but in no event later than the date of expiration of the term of this option as set forth in Section 3 above). To the extent that the Optionee does not exercise this option within the time specified in this Section 6, this option shall terminate.

7. Death of Optionee. Notwithstanding the provisions of Section 4 above, upon the death of the Optionee:

a. If the Optionee is, at the time of death, an employee of the Company, this option may be exercised, at any time within [ Number ] months following the date of death (but in no event later than the date of expiration of the term of this option as set forth in Section 3 above), by the Optionee’s estate or by a person who acquired the right to exercise this option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had Optionee continued living and remained in Continuous Status as an Employee for [ Number ] months after the date of death; or

b. If, at the time of death, this option has not yet expired but Optionee’s Continuous Status as an Employee terminated prior to the date of death, this option may be exercised, at any time within [ Number ] months following the date of death (but in no event later than the date of expiration of the term of this option as set forth in Section 3 above), by the Optionee’s estate or by a person who acquired the right to exercise this option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of termination.

c. To the extent that this option is not exercised by an authorized representative of Optionee within the time specified in this Section 7, this option shall terminate.

8. Value of Unvested Options. In consideration of the grant of this option, the Optionee agrees that upon and following termination of the Optionee’s Continuous Status as an Employee for any reason, and regardless of whether Optionee is terminated with or without cause, notice, or pre-termination procedure or whether Optionee asserts or prevails on a claim that Optionee’s employment was terminable only for cause or only with notice or pre-termination procedure, any unvested portion of this option shall be deemed to have a value of zero dollars ($0.00).

9. Exercise of Option.

a. The Optionee shall indicate the intention to exercise this option by notifying the Company electronically, telephonically, or in writing of the intention to do so, indicating the number of shares the Optionee intends to purchase. Payment sufficient to cover the aggregate option exercise price and any federal, state, and local taxes required to be withheld by the Company must accompany the notice of exercise, in one of the three acceptable forms listed in the first sentence of Section 9(b) below.

b. Payment of the option exercise price may be made by cash, by check, or by instructing a broker to promptly deliver to the Company the amount of sale proceeds necessary to pay the aggregate exercise price, all in

accordance with Section 11(c) of the Plan. If the Optionee is an officer of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”), the Optionee may in addition be allowed to pay all or part of the exercise price with shares of the Company’s common stock which, as of the exercise date, the officer has owned for six (6) months or more. Shares used by officers to pay the exercise price shall be valued at their fair market value on the exercise date.

c. Prior to the issuance of shares upon exercise of this option, the Optionee shall pay any federal, state, and local income and employment tax withholding obligations applicable to such exercise. If the Optionee is an officer of the Company within the meaning of Section 16 of the Exchange Act, the Optionee may elect to pay such withholding tax obligations by having the Company withhold shares of the Company’s common stock having a value equal to the amount required to be withheld. Such an election shall be made in accordance with Section 11(d) of the Plan.

d. This option may not be exercised for a fraction of a share or for fewer than the lesser of ten Shares or the amount of shares subject to this option.

e. An exercise of this option shall be deemed to have occurred upon the satisfaction of the requirements of subsections (a), (b), and (c) of this Section 8. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the shares of stock evidencing the shares as to which this option was exercised, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to such shares, notwithstanding the exercise of this option. The Company shall issue (or cause to be issued) such shares of stock (in either book entry or certificate form) promptly upon exercise of this option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock shares are issued, except as provided in Section 14 of the Plan.

10. Non-Transferability of Option. This option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

11. No Employment Right. The Optionee acknowledges that neither the fact of this option grant nor any provision of this Option Agreement or the Plan or the policies adopted pursuant to the Plan shall confer upon the Optionee any right with respect to continuation of employment with the Company or to employment that is not terminable at will. The Optionee further acknowledges and agrees that the Optionee’s employment with the Company is not for any minimum or fixed period, is subject to the mutual consent of the Optionee and the Company, and may be terminated by either the Optionee or the Company at any time, for any reason or no reason, with or without cause or notice or any kind of pre- or post-termination warning, discipline or procedure.

12. No Right to Damages. The Optionee acknowledges and agrees that, regardless of whether the Optionee is terminated with or without cause, notice or pre-termination procedure or whether the Optionee asserts or prevails on a claim that the Optionee’s employment was terminable only for cause or only with notice or pre-termination procedure, the Optionee has no right to, and will not bring any legal claim or action for, any damages for (a) having to exercise any vested portion of this option within any period after termination as specified in Section 4 or (b) cancellation of any unvested, or vested but unexercised, portion of this option.

13. Acknowledgment. By the Optionee’s acceptance below, the Optionee acknowledges that the Optionee has received and has read, understood, and accepted all the terms, conditions, and restrictions of this Agreement, the Plan, and the current policies referenced in paragraph 2(b) of this Agreement. The Optionee understands and agrees that this option is subject to all the terms, conditions, and restrictions stated in this Agreement and in the other documents referenced in the preceding sentence, as the latter may be amended from time to time in the Company’s sole discretion.

14. Board Approval. This option has been granted pursuant to the Plan and accordingly is subject to approval by an authorized committee of the Board of Directors. If this option has not already been approved, the Company agrees to submit this grant for approval as soon as practical. If such approval is not obtained, this award is null and void.

15. Governing Law. This option shall be governed by the laws of the state of Iowa.

Executed at Cedar Rapids, Iowa on the day and year first written above.

United Fire Group, Inc.

BY

Name/Title ,

Optionee’s Acceptance:

I have read and fully understood this Option Agreement and, as referenced in Section 15 above, I accept and agree to be bound by all of the terms, conditions and restrictions contained in this Option Agreement and the other documents referenced in it.

Optionee

Date:

Print Name:

EX-10.8

EXHIBIT 10.8

STOCK AWARD AGREEMENTUNDER THE UNITED FIRE GROUP, INC.

STOCK PLAN

Award Number

1.Award of Stock Awards.  United Fire Group, Inc. (hereinafter the “Company”), in the exercise of its sole discretion pursuant to the United Fire Group, Inc. 2008 Stock Plan (the “Plan”), does on (the “Award Date”) hereby award to (the “Awardee”) Stock Awards (“SAs”) upon the terms and subject to the conditions hereinafter contained. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Plan. SAs represent the Company’s unfunded and unsecured promise to issue Shares at a future date, subject to the terms of this Award Agreement and the Plan. The Awardee has no rights under the SAs other than the rights of a general unsecured creditor of the Company.

2.Vesting Schedule and Conversion of SAs.

a.Subject to the terms of this Award Agreement and the Plan and provided that the Awardee remains in Continuous Status as an Employee throughout the five year period beginning with the Award Date, the SAs shall vest and be converted into an equivalent number of Shares that will be distributed to the Awardee (provided that fractional SAs shall be converted into Shares as set out in Section 8(c) of this Award Agreement) 100% on the date that is five (5) years from the Award Date.

b.THE AWARDEE’S RIGHTS IN THE SAS SHALL BE AFFECTED, WITH REGARD TO BOTH VESTING SCHEDULE AND TERMINATION, BY LEAVES OF ABSENCE, CHANGES IN THE NUMBER OF HOURS WORKED, PARTIAL DISABILITY, AND OTHER CHANGES IN AWARDEE’S EMPLOYMENT STATUS AS PROVIDED IN THE COMPANY’S CURRENT POLICIES IN SUCH MATTERS. THESE POLICIES MAY CHANGE FROM TIME TO TIME WITHOUT NOTICE IN THE COMPANY’S SOLE DISCRETION, AND AWARDEE’S RIGHTS WILL BE GOVERNED BY THE POLICIES IN EFFECT AT THE TIME OF ANY EMPLOYMENT STATUS CHANGE. CONTACT HUMAN RESOURCES FOR A COPY OF THE MOST CURRENT POLICY STATEMENT AT ANY POINT IN TIME.

3.Termination. Unless terminated earlier under Section 4, 5, or 6 below, the Awardee’s rights under this Award Agreement with respect to the SAs issued under this Award Agreement shall terminate at the time such SAs are converted into Shares.

4.Termination of the Awardee’s Status as an Employee. Except as otherwise specified in Section 5 and 6 below, upon termination of the Awardee’s Continuous Status as an Employee (as such term is defined in Section 2(h) of the Plan), the Awardee’s rights under this Award Agreement in any unvested SAs shall terminate. For the avoidance of doubt, the Awardee’s Continuous Status as an Employee terminates at the time the Awardee’s actual employer ceases to be the Company or a Subsidiary of the Company, as that term is defined in Section 2(v) of the Plan, and as further described in Section 10(g) of this Award Agreement.

5.Disability of the Awardee. Notwithstanding the provisions of Section 4 above, upon termination of the Awardee’s Continuous Status as an Employee as a result of total and permanent disability (as such term is defined in Section 12(c) of the Plan), the vesting date for the SAs, set out in Section 2(a), above, shall accelerate by twelve (12) months as of such date of termination. If the Awardee’s disability originally required the Awardee to take a short-term disability leave that was later converted into long-term disability, then for the purposes of the preceding sentence, the date on which the Awardee ceased performing services shall be deemed to be the date of commencement of the short-term disability leave. The Awardee’s rights in any unvested SAs that remain unvested after the application of this Section 5 shall terminate at the time the Awardee ceases to be in Continuous Status as an Employee.

{01643690.DOCX}

6.Death of Awardee. Notwithstanding the provisions of Section 4 above, upon the death of the Awardee:

a.    If the Awardee is, at the time of death, in Continuous Status as an Employee, the vesting date for the SAs, set out in Section 2(a) above, shall accelerate by twelve (12) months as of the date of death; and

b.    The Awardee’s rights in any unvested SAs that remain after the application of Section 6(a) shall terminate at the time of the Awardee’s death.

7.Value of Unvested SAs. In consideration of the award of these SAs, the Awardee agrees that upon and following termination of the Awardee’s Continuous Status as an Employee for any reason (whether or not in breach of applicable laws) and regardless of whether the Awardee is terminated with or without cause, notice, or pre-termination procedure or whether the Awardee asserts or prevails on a claim that the Awardee’s employment was terminable only for cause or only with notice or pre-termination procedure, any unvested SAs under this Award Agreement shall be deemed to have a value of zero dollars ($0.00).

8.Conversion of SAs to Shares; Responsibility for Taxes.

a.    Provided the Awardee has satisfied the requirements of Section 8(b) below, on the vesting of any SAs, such vested SAs shall be converted into an equivalent number of Shares that will be distributed to the Awardee or, in the event of the Awardee’s death, to the Awardee’s legal representative, as soon as practicable. The distribution to the Awardee, or in the case of the Awardee’s death, to the Awardee’s legal representative, of Shares in respect of the vested SAs shall be evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means as determined by the Company. If ownership or issuance of Shares is not feasible due to applicable exchange controls, securities regulations, tax laws, or other provisions of applicable law, as determined by the Company in its sole discretion, the Awardee, or in the event of the Awardee’s death, the Awardee’s legal representative, shall receive cash proceeds in an amount equal to the value of the Shares otherwise distributable to the Awardee, net of the satisfaction of the requirements of Section 8(b) below.

b.    Regardless of any action the Company or the Awardee’s actual employer takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax or other tax-related withholding (“Tax Related Items”), the Awardee acknowledges that the ultimate liability for all Tax Related Items legally due by the Awardee is and remains the Awardee’s responsibility and that the Company and/or the Awardee’s actual employer (i) make no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the SAs, including the grant of the SAs, the vesting of SAs, the conversion of the SAs into Shares or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends, and (ii) do not commit to structure the terms of the grant or any aspect of the SAs to reduce or eliminate the Awardee’s liability for Tax Related Items.

Prior to the issuance of Shares upon vesting of SAs or the receipt of an equivalent cash payment as provided in Section 8(a) above, Awardee shall pay, or make adequate arrangements satisfactory to the Company or to the Awardee’s actual employer (in their sole discretion) to satisfy all withholding obligations of the Company and/or the Awardee’s actual employer. In this regard, Awardee authorizes the Company or the Awardee’s actual employer to withhold all applicable Tax Related Items legally payable by Awardee from Awardee’s wages or other cash compensation payable to Awardee by the Company or the Awardee’s actual employer. Alternatively, or in addition, if permissible under applicable law, the Company or the Awardee’s actual employer may, in their sole discretion, (i) sell or arrange for the sale of Shares to be issued on the vesting of SAs to satisfy the withholding obligation, and/or (ii) withhold in Shares, provided that the Company and the Awardee’s actual employer shall withhold only the amount of shares necessary to satisfy the minimum withholding amount. The Awardee shall pay to the Company or to the Awardee’s actual employer any amount of Tax Related Items that the Company or the Awardee’s actual employer may be required to withhold as a result of Awardee’s receipt of SAs, the vesting of SAs, or the conversion

2

{01643690.DOCX}

of vested SAs to Shares that cannot be satisfied by the means previously described. Except where applicable legal or regulatory provisions prohibit, the standard process for the payment of the Awardee’s Tax Related Items shall be for the Company or the Awardee’s actual employer to withhold in Shares only to the amount of shares necessary to satisfy the minimum withholding amount. The Company may refuse to deliver Shares to Awardee if Awardee fails to comply with Awardee’s obligation in connection with the Tax Related Items as described herein.

c.    In lieu of issuing fractional Shares, on the vesting of a fraction of a SA, the Company shall round the shares to the nearest whole share and any such share which represents a fraction of a SA will be included in a subsequent vest date.

d.    Until the distribution to Awardee of the Shares in respect to the vested SAs is evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means, the Awardee shall have no right to vote or receive dividends or any other rights as a shareholder with respect to such Shares, notwithstanding the vesting of SAs. The Company shall cause such distribution to Awardee to occur promptly upon the vesting of SAs. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Awardee is recorded as the owner of the Shares, except as provided in Section 14 of the Plan.

e.    By accepting the Award of SAs evidenced by this Award Agreement, the Awardee agrees not to sell any of the Shares received on account of vested SAs at a time when applicable laws or Company policies prohibit a sale. This restriction shall apply so long as Awardee is an Employee of the Company or a Subsidiary of the Company.

9.Non-Transferability of SAs. The Awardee’s right in the SAs awarded under this Award Agreement and any interest therein may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the distribution of the Shares in respect of such SAs. SAs shall not be subject to execution, attachment, or other process.

10.Acknowledgment of Nature of Plan and SAs. In accepting the Award, the Awardee acknowledges that:

a.    The Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan;

b.    The Award of SAs is voluntary and occasional and does not create any contractual or other right to receive future awards of SAs or benefits in lieu of SAs even if SAs have been awarded repeatedly in the past;

c.    All decisions with respect to future awards, if any, will be at the sole discretion of the Company;

d.    The Awardee’s participation in the Plan is voluntary;

e.    The future value of the underlying Shares is unknown and cannot be predicted with certainty;

f.    If Awardee receives Shares, the value of such Shares acquired on vesting of SAs may increase or decrease in value;

g.    Notwithstanding any terms or conditions of the Plan to the contrary and consistent with Section 4, above, upon involuntary termination of the Awardee’s employment (whether or not in breach of applicable laws), (1) the Awardee’s right to receive SAs and vest under the Plan, if any, will terminate effective as of

3

{01643690.DOCX}

the date that the Awardee is no longer actively employed and will not be extended by any notice period mandated under applicable law, (2) the Awardee’s right to receive Shares pursuant to the SAs after termination of employment, if any, will be measured by the date of termination of Awardee’s active employment and will not be extended by any notice period mandated under applicable law, and (3) the Committee shall have the exclusive discretion to determine when the Awardee is no longer actively employed for purposes of the award of SAs; and

h.    The Awardee acknowledges and agrees that, regardless of whether the Awardee is terminated with or without cause, notice, or pre-termination procedure or whether the Awardee asserts or prevails on a claim that Awardee’s employment was terminable only for cause or only with notice or pre-termination procedure, the Awardee has no right to, and will not bring any legal claim or action for, (1) any damages for any portion of the SAs that have been vested and converted into Shares, or (2) termination of any unvested SAs under this Award Agreement.

11.No Employment Right. The Awardee acknowledges that neither the fact of this Award of SAs nor any provision of this Award Agreement or the Plan or the policies adopted pursuant to the Plan shall confer upon the Awardee any right with respect to employment or continuation of current employment with the Company or with the Awardee’s actual employer, or to employment that is not terminable at will. The Awardee further acknowledges and agrees that neither the Plan nor this Award of SAs makes the Awardee’s employment with the Company or the Awardee’s actual employer for any minimum or fixed period, and that such employment is subject to the mutual consent of the Awardee and the Company or the Awardee’s actual employer, and may be terminated by either the Awardee or the Company or the Awardee’s actual employer at any time, for any reason or no reason, with or without cause or notice or any kind of pre- or post-termination warning, discipline, or procedure.

12.Administration. The authority to manage and control the operation and administration of this Award Agreement shall be vested in the Board and the Committee (as such terms are defined in Sections 2(d) and 2(f) of the Plan), and the Board and the Committee shall have all powers and discretion with respect to this Award Agreement as it has with respect to the Plan. Any interpretation of the Award Agreement by the Board or the Committee and any decision made by the Board or the Committee with respect to the Award Agreement shall be final and binding on all parties.

13.Plan Governs. Notwithstanding anything in this Award Agreement to the contrary, the terms of this Award Agreement shall be subject to the terms of the Plan, and this Award Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Board or the Committee from time to time pursuant to the Plan.

14.Notices. Any written notices provided for in this Award Agreement that are sent by mail shall be deemed received three business days after mailing, but not later than the date of actual receipt. Notices shall be directed, if to the Awardee, at the Awardee’s address indicated by the Company’s records and, if to the Company, at the Company’s principal executive office.

15.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to SAs awarded under the Plan or future SAs that may be awarded under the Plan by electronic means or request the Awardee’s consent to participate in the Plan by electronic means. The Awardee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

16.Acknowledgment. By the Awardee’s acceptance as evidenced below, the Awardee acknowledges that the Awardee has received and has read, understood, and accepted all the terms, conditions, and restrictions of this Award Agreement, the Plan, and the current policies referenced in Section 2(b) of this Award Agreement. The Awardee understands and agrees that this Award Agreement is subject to all the terms, conditions, and restrictions stated in this Award Agreement and in the other documents referenced in the preceding sentence, as the latter may be amended from time to time in the Company’s sole discretion. The Awardee further acknowledges that the Awardee

4

{01643690.DOCX}

must accept this Award Agreement in the manner prescribed by the Company no later than the earlier of the first anniversary of Award Date or the first vesting date specified in Section 2 of this Award Agreement.

17.Board Approval. These SAs have been awarded pursuant to the Plan and accordingly this Award of SAs is subject to approval by an authorized committee of the Board of Directors. If this Award of SAs has not already been approved, the Company agrees to submit this Award for approval as soon as practical. If such approval is not obtained, this award is null and void.

18.Governing Law. This Award Agreement shall be governed by the laws of the State of Iowa, without regard to Iowa laws that might cause other law to govern under applicable principles of conflicts of law.

19.Severability. If one or more of the provisions of this Award Agreement shall be held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and the invalid, illegal, or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions that could be deemed null and void shall first be construed, interpreted, or revised retroactively to permit this Award Agreement to be construed so as to foster the intent of this Award Agreement and the Plan.

20.Complete Award Agreement and Amendment. This Award Agreement and the Plan constitute the entire agreement between the Awardee and the Company regarding these SAs. Any prior agreements, commitments or negotiations concerning these SAs are superseded. This Award Agreement may be amended only by written agreement of the Awardee and the Company, without consent of any other person. The Awardee agrees not to rely on any oral information regarding this Award of SAs or any written materials not identified in this Section 20.

Executed at Cedar Rapids, Iowa the day and year first above written.

United Fire Group, Inc.

,

AWARDEE’S ACCEPTANCE:

I have read and fully understood this Award Agreement and, as referenced in Section 16 above, I accept and agree to be bound by all of the terms, conditions, and restrictions contained in this Award Agreement and the other documents referenced in it.

	Awardee
Date:
	Print Name:

5

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Randy A. Ramlo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Fire Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the Consolidated Financial Statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 5, 2014
		/s/ Randy A. Ramlo
		Randy A. Ramlo
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dianne M. Lyons, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Fire Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the Consolidated Financial Statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 5, 2014
		/s/ Dianne M. Lyons
		Dianne M. Lyons
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of United Fire Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Randy A. Ramlo, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 5, 2014
		/s/ Randy A. Ramlo
		Randy A. Ramlo
		Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to United Fire Group, Inc. and will be retained by United Fire Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of United Fire Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dianne M. Lyons, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 5, 2014
		/s/ Dianne M. Lyons
		Dianne M. Lyons
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to United Fire Group, Inc. and will be retained by United Fire Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Employee Benefits (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Pension Plan [Member]
Net periodic benefit cost
Service cost	$ 1,303	$ 1,868	$ 2,606	$ 3,150
Interest cost	1,468	1,326	2,936	2,587
Expected return on plan assets	(1,739)	(1,550)	(3,478)	(2,886)
Amortization of net loss	544	1,105	1,088	2,211
Net periodic benefit cost	1,576	2,749	3,152	5,062
Estimated 2014 pension plan contribution, disclosed in prior year 10K					6,260
Contribution by employer			3,315
Postretirement Benefit Plan [Member]
Net periodic benefit cost
Service cost	924	752	1,848	1,505
Interest cost	586	423	1,172	847
Expected return on plan assets	0	0	0	0
Amortization of net loss	224	138	448	274
Net periodic benefit cost	$ 1,734	$ 1,313	$ 3,468	$ 2,626

XML

Summary of Investments (Investments in Unrealized Loss Position) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014 issue	Dec. 31, 2013 issue
Available-for-sale
Less than 12 months, Number of Issues	71	528
Less than 12 months, Fair Value	$ 118,005	$ 922,128
Less than 12 months, Gross Unrealized Depreciation	866	48,023
12 months or longer, Number of Issues	281	88
12 months or longer, Fair Value	479,827	110,914
12 months or longer, Gross Unrealized Depreciation	18,879	11,807
Total, Fair Value	597,832	1,033,042
Total, Gross Unrealized Depreciation	19,745	59,830
Fixed Maturities [Member]
Available-for-sale
Less than 12 months, Number of Issues	70	524
Less than 12 months, Fair Value	117,990	918,634
Less than 12 months, Gross Unrealized Depreciation	864	47,906
12 months or longer, Number of Issues	269	71
12 months or longer, Fair Value	478,600	108,961
12 months or longer, Gross Unrealized Depreciation	18,719	11,477
Total, Fair Value	596,590	1,027,595
Total, Gross Unrealized Depreciation	19,583	59,383
U.S. Treasury [Member]
Available-for-sale
Less than 12 months, Number of Issues	2	10
Less than 12 months, Fair Value	1,326	9,196
Less than 12 months, Gross Unrealized Depreciation	4	140
12 months or longer, Number of Issues	6	0
12 months or longer, Fair Value	6,125	0
12 months or longer, Gross Unrealized Depreciation	59	0
Total, Fair Value	7,451	9,196
Total, Gross Unrealized Depreciation	63	140
U.S. Government Agency [Member]
Available-for-sale
Less than 12 months, Number of Issues	11	101
Less than 12 months, Fair Value	28,268	256,203
Less than 12 months, Gross Unrealized Depreciation	188	18,019
12 months or longer, Number of Issues	46	2
12 months or longer, Fair Value	131,825	4,356
12 months or longer, Gross Unrealized Depreciation	6,398	644
Total, Fair Value	160,093	260,559
Total, Gross Unrealized Depreciation	6,586	18,663
States, Municipalities and Political Subdivisions [Member]
Available-for-sale
Less than 12 months, Number of Issues	22	136
Less than 12 months, Fair Value	23,311	97,950
Less than 12 months, Gross Unrealized Depreciation	108	7,423
12 months or longer, Number of Issues	101	29
12 months or longer, Fair Value	90,012	29,670
12 months or longer, Gross Unrealized Depreciation	2,575	3,282
Total, Fair Value	113,323	127,620
Total, Gross Unrealized Depreciation	2,683	10,705
Foreign Bonds [Member]
Available-for-sale
Less than 12 months, Number of Issues	1	10
Less than 12 months, Fair Value	3,285	20,832
Less than 12 months, Gross Unrealized Depreciation	1	397
12 months or longer, Number of Issues	0	0
12 months or longer, Fair Value	0	0
12 months or longer, Gross Unrealized Depreciation	0	0
Total, Fair Value	3,285	20,832
Total, Gross Unrealized Depreciation	1	397
Public Utilities [Member]
Available-for-sale
Less than 12 months, Number of Issues	2	31
Less than 12 months, Fair Value	252	61,582
Less than 12 months, Gross Unrealized Depreciation	3	1,776
12 months or longer, Number of Issues	10	0
12 months or longer, Fair Value	19,883	0
12 months or longer, Gross Unrealized Depreciation	152	0
Total, Fair Value	20,135	61,582
Total, Gross Unrealized Depreciation	155	1,776
Corporate Bonds [Member] | Energy [Member]
Available-for-sale
Less than 12 months, Number of Issues	0	9
Less than 12 months, Fair Value	0	23,735
Less than 12 months, Gross Unrealized Depreciation	0	1,008
12 months or longer, Number of Issues	5	0
12 months or longer, Fair Value	10,266	0
12 months or longer, Gross Unrealized Depreciation	373	0
Total, Fair Value	10,266	23,735
Total, Gross Unrealized Depreciation	373	1,008
Corporate Bonds [Member] | Industrials [Member]
Available-for-sale
Less than 12 months, Number of Issues	0	34
Less than 12 months, Fair Value	0	77,788
Less than 12 months, Gross Unrealized Depreciation	0	2,819
12 months or longer, Number of Issues	4	0
12 months or longer, Fair Value	14,088	0
12 months or longer, Gross Unrealized Depreciation	429	0
Total, Fair Value	14,088	77,788
Total, Gross Unrealized Depreciation	429	2,819
Corporate Bonds [Member] | Consumer Goods and Services [Member]
Available-for-sale
Less than 12 months, Number of Issues	2	31
Less than 12 months, Fair Value	4,274	58,833
Less than 12 months, Gross Unrealized Depreciation	28	1,276
12 months or longer, Number of Issues	8	6
12 months or longer, Fair Value	15,497	3,218
12 months or longer, Gross Unrealized Depreciation	185	145
Total, Fair Value	19,771	62,051
Total, Gross Unrealized Depreciation	213	1,421
Corporate Bonds [Member] | Health Care [Member]
Available-for-sale
Less than 12 months, Number of Issues	2	10
Less than 12 months, Fair Value	7,214	25,888
Less than 12 months, Gross Unrealized Depreciation	9	942
12 months or longer, Number of Issues	3	2
12 months or longer, Fair Value	7,194	4,427
12 months or longer, Gross Unrealized Depreciation	139	258
Total, Fair Value	14,408	30,315
Total, Gross Unrealized Depreciation	148	1,200
Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Available-for-sale
Less than 12 months, Number of Issues	2	18
Less than 12 months, Fair Value	4,591	58,105
Less than 12 months, Gross Unrealized Depreciation	25	2,147
12 months or longer, Number of Issues	7	2
12 months or longer, Fair Value	27,169	7,468
12 months or longer, Gross Unrealized Depreciation	760	1,174
Total, Fair Value	31,760	65,573
Total, Gross Unrealized Depreciation	785	3,321
Corporate Bonds [Member] | Financial Services [Member]
Available-for-sale
Less than 12 months, Number of Issues	2	7
Less than 12 months, Fair Value	2,264	15,191
Less than 12 months, Gross Unrealized Depreciation	8	720
12 months or longer, Number of Issues	2	1
12 months or longer, Fair Value	6,137	1,525
12 months or longer, Gross Unrealized Depreciation	60	3
Total, Fair Value	8,401	16,716
Total, Gross Unrealized Depreciation	68	723
Mortgage-Backed Securities [Member]
Available-for-sale
Less than 12 months, Number of Issues	3	16
Less than 12 months, Fair Value	47	4,476
Less than 12 months, Gross Unrealized Depreciation	1	177
12 months or longer, Number of Issues	5	6
12 months or longer, Fair Value	5,868	3,113
12 months or longer, Gross Unrealized Depreciation	75	114
Total, Fair Value	5,915	7,589
Total, Gross Unrealized Depreciation	76	291
Collateralized Mortgage Obligations [Member]
Available-for-sale
Less than 12 months, Number of Issues	21	111
Less than 12 months, Fair Value	43,158	208,855
Less than 12 months, Gross Unrealized Depreciation	489	11,062
12 months or longer, Number of Issues	72	23
12 months or longer, Fair Value	144,536	55,184
12 months or longer, Gross Unrealized Depreciation	7,514	5,857
Total, Fair Value	187,694	264,039
Total, Gross Unrealized Depreciation	8,003	16,919
Equity Securities [Member]
Available-for-sale
Less than 12 months, Number of Issues	1	4
Less than 12 months, Fair Value	15	3,494
Less than 12 months, Gross Unrealized Depreciation	2	117
12 months or longer, Number of Issues	12	17
12 months or longer, Fair Value	1,227	1,953
12 months or longer, Gross Unrealized Depreciation	160	330
Total, Fair Value	1,242	5,447
Total, Gross Unrealized Depreciation	162	447
Common Stocks [Member] | Public Utilities [Member]
Available-for-sale
Less than 12 months, Number of Issues		0
Less than 12 months, Fair Value		0
Less than 12 months, Gross Unrealized Depreciation		0
12 months or longer, Number of Issues		3
12 months or longer, Fair Value		281
12 months or longer, Gross Unrealized Depreciation		27
Total, Fair Value		281
Total, Gross Unrealized Depreciation		27
Common Stocks [Member] | Industrials [Member]
Available-for-sale
Less than 12 months, Number of Issues	0	1
Less than 12 months, Fair Value	0	1
Less than 12 months, Gross Unrealized Depreciation	0	1
12 months or longer, Number of Issues	2	2
12 months or longer, Fair Value	73	81
12 months or longer, Gross Unrealized Depreciation	40	31
Total, Fair Value	73	82
Total, Gross Unrealized Depreciation	40	32
Common Stocks [Member] | Consumer Goods and Services [Member]
Available-for-sale
Less than 12 months, Number of Issues	1
Less than 12 months, Fair Value	15
Less than 12 months, Gross Unrealized Depreciation	2
12 months or longer, Number of Issues	0
12 months or longer, Fair Value	0
12 months or longer, Gross Unrealized Depreciation	0
Total, Fair Value	15
Total, Gross Unrealized Depreciation	2
Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Available-for-sale
Less than 12 months, Number of Issues	0	0
Less than 12 months, Fair Value	0	0
Less than 12 months, Gross Unrealized Depreciation	0	0
12 months or longer, Number of Issues	6	6
12 months or longer, Fair Value	229	206
12 months or longer, Gross Unrealized Depreciation	61	83
Total, Fair Value	229	206
Total, Gross Unrealized Depreciation	61	83
Common Stocks [Member] | Financial Services [Member]
Available-for-sale
Less than 12 months, Number of Issues	0	0
Less than 12 months, Fair Value	0	0
Less than 12 months, Gross Unrealized Depreciation	0	0
12 months or longer, Number of Issues	3	4
12 months or longer, Fair Value	223	215
12 months or longer, Gross Unrealized Depreciation	54	128
Total, Fair Value	223	215
Total, Gross Unrealized Depreciation	54	128
Nonredeemable Preferred Stocks [Member]
Available-for-sale
Less than 12 months, Number of Issues	0	3
Less than 12 months, Fair Value	0	3,493
Less than 12 months, Gross Unrealized Depreciation	0	116
12 months or longer, Number of Issues	1	2
12 months or longer, Fair Value	702	1,170
12 months or longer, Gross Unrealized Depreciation	5	61
Total, Fair Value	702	4,663
Total, Gross Unrealized Depreciation	$ 5	$ 177

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Components of Basic and Diluted Earnings Per Share

The components of basic and diluted earnings per share were as follows for the three-month periods ended June 30, 2014 and 2013:

	Three Months Ended June 30,
(In Thousands Except Share Data)	2014				2013
	Basic		Diluted		Basic		Diluted
Net income	$	10,685	$	10,685	$	15,496	$	15,496
Weighted-average common shares outstanding	25,330,066		25,330,066		25,297,718		25,297,718
Add dilutive effect of restricted stock awards	—		114,313		—		59,849
Add dilutive effect of stock options	—		112,248		—		114,735
Weighted-average common shares	25,330,066		25,556,627		25,297,718		25,472,302
Earnings per common share	$	0.42	$	0.42	$	0.61	$	0.61
Awards excluded from diluted earnings per share calculation(1)	—		904,580		—		647,726

(1) Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

The components of basic and diluted earnings per share were as follows for the six-month periods ended June 30, 2014 and 2013:

	Six Months Ended June 30,
(In Thousands Except Share Data)	2014				2013
	Basic		Diluted		Basic		Diluted
Net income	$	24,016	$	24,016	$	37,889	$	37,889
Weighted-average common shares outstanding	25,351,056		25,351,056		25,271,752		25,271,752
Add dilutive effect of restricted stock awards	—		114,313		—		59,849
Add dilutive effect of stock options	—		125,889		—		82,791
Weighted-average common shares	25,351,056		25,591,258		25,271,752		25,414,392
Earnings per common share	$	0.95	$	0.94	$	1.50	$	1.49
Awards excluded from diluted earnings per share calculation(1)	—		904,580		—		663,326

(1) Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 segment	Jun. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Number of business segments			2
Net premiums earned	$ 201,827	$ 186,367	$ 395,168	$ 363,184
Investment income, net of investment expenses	27,603	29,019	54,365	55,483
Net realized investment gains	2,708	4,151	4,902	6,060
Other income	535	182	1,142	297
Total revenues	232,673	219,719	455,577	425,024
Net income	10,685	15,496	24,016	37,889
Assets	3,851,910	3,700,749	3,851,910	3,700,749	3,720,672
Invested assets	3,145,098	3,023,303	3,145,098	3,023,303	3,050,137
Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Number of business locations	7		7
Total revenues	202,321	186,447	394,825	360,674
Net income	9,540	13,195	21,351	33,924
Assets	2,100,863	1,951,033	2,100,863	1,951,033
Invested assets	1,519,110	1,379,947	1,519,110	1,379,947
Life Insurance [Member]
Segment Reporting Information [Line Items]
Total revenues	30,352	33,272	60,752	64,350
Net income	1,145	2,301	2,665	3,965
Assets	1,751,047	1,749,716	1,751,047	1,749,716
Invested assets	1,625,988	1,643,356	1,625,988	1,643,356
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net premiums earned	201,959	186,490	395,433	363,430
Investment income, net of investment expenses	27,596	29,010	54,308	55,410
Net realized investment gains	2,708	4,151	4,902	6,060
Other income	535	182	1,142	297
Total revenues	232,798	219,833	455,785	425,197
Operating Segments [Member] | Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Net premiums earned	187,832	170,527	367,326	333,228
Investment income, net of investment expenses	11,831	12,279	22,944	22,700
Net realized investment gains	2,337	3,560	3,704	4,589
Other income	314	72	794	84
Total revenues	202,314	186,438	394,768	360,601
Operating Segments [Member] | Life Insurance [Member]
Segment Reporting Information [Line Items]
Net premiums earned	14,127	15,963	28,107	30,202
Investment income, net of investment expenses	15,765	16,731	31,364	32,710
Net realized investment gains	371	591	1,198	1,471
Other income	221	110	348	213
Total revenues	30,484	33,395	61,017	64,596
Intersegment Elimination [Member]
Segment Reporting Information [Line Items]
Total revenues	(125)	(114)	(208)	(173)
Intersegment Elimination [Member] | Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Total revenues	7	9	57	73
Intersegment Elimination [Member] | Life Insurance [Member]
Segment Reporting Information [Line Items]
Total revenues	$ (132)	$ (123)	$ (265)	$ (246)

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Fair Value of Financial Instruments (Level 3 Securities) (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014		Jun. 30, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	$ 19,624		$ 19,988
Realized gains	(56)	[1]	(56)	[1]
Unrealized gains (losses)	84	[1]	17	[1]
Purchases			99
Disposals	(401)		(797)
Ending Balance	19,251		19,251
States, Municipalities and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	698		698
Realized gains	0	[1]	0	[1]
Unrealized gains (losses)	(18)	[1]	(18)	[1]
Purchases			0
Disposals	(70)		(70)
Ending Balance	610		610
Corporate Bonds [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	13,122		13,480
Realized gains	0	[1]	0	[1]
Unrealized gains (losses)	9	[1]	(53)	[1]
Purchases			0
Disposals	(204)		(500)
Ending Balance	12,927		12,927
Asset-Backed Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	1,913		2,029
Realized gains	0	[1]	0	[1]
Unrealized gains (losses)	45	[1]	40	[1]
Purchases			0
Disposals	(116)		(227)
Ending Balance	1,842		1,842
Equities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	3,891		3,781
Realized gains	(56)	[1]	(56)	[1]
Unrealized gains (losses)	48	[1]	48	[1]
Purchases			99
Disposals	(11)		0
Ending Balance	$ 3,872		$ 3,872

[1] Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

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Nature of Operations and Basis of Presentation

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Basis of Presentation

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Nature of Business

United Fire Group, Inc. ("United Fire", the "Registrant", the "Company", "we", "us", or "our") and its consolidated subsidiaries and affiliates are engaged in the business of writing property and casualty insurance and life insurance and selling annuities through a network of independent agencies. We report our operations in two business segments: property and casualty insurance and life insurance. Our insurance company subsidiaries are licensed as a property and casualty insurer in 43 states and the District of Columbia, and as a life insurer in 37 states.

Basis of Presentation

The unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X promulgated by the SEC. Certain financial information that is included in our Annual Report on Form 10-K, including certain financial statement footnote disclosures, are not required by the rules and regulations of the SEC for interim financial reporting and have been condensed or omitted.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statement categories that are most dependent on management estimates and assumptions include: investments; deferred policy acquisition costs; reinsurance receivables and recoverables (for net realizable value); future policy benefits and losses, claims and loss settlement expenses; and pension and postretirement benefit obligations.

In the preparation of the accompanying unaudited Consolidated Financial Statements, we have evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date on which the financial statements were issued for potential recognition or disclosure.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Management of United Fire believes the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. All significant intercompany transactions have been eliminated in consolidation. The results reported for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013. The review report of Ernst & Young LLP as of June 30, 2014 and for the three- and six-month periods ended June 30, 2014 and 2013 accompanies the unaudited Consolidated Financial Statements included in Part I, Item 1 "Financial Statements."

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and non-negotiable certificates of deposit with original maturities of three months or less.

For the six-month periods ended June 30, 2014 and 2013, we made payments for income taxes totaling $9,115 and $2,512, respectively. We received tax refunds of $615 and $8,744, respectively, during the six-month periods ended June 30, 2014 and 2013.

For the six-month periods ended June 30, 2014 and 2013, we made no interest payments (excluding interest credited to policyholders’ accounts).

Deferred Policy Acquisition Costs ("DAC")

Certain costs associated with underwriting new business (primarily commissions, premium taxes and variable underwriting and policy issue expenses associated with successful acquisition efforts) are deferred. The following table is a summary of the components of DAC, including the related amortization recognized for the six-month period ended June 30, 2014.

	Property & Casualty Insurance			Life Insurance			Total
Recorded asset at beginning of period	$	67,663		$	82,429		$	150,092
Underwriting costs deferred	87,193			3,680			90,873
Amortization of deferred policy acquisition costs	(76,378		)	(3,352		)	(79,730		)
Ending unamortized deferred policy acquisition costs	$	78,478		$	82,757		$	161,235
Change in "shadow" deferred policy acquisition costs	—			(17,921		)	(17,921		)
Recorded asset at end of period	$	78,478		$	64,836		$	143,314

Property and casualty insurance policy acquisition costs deferred are amortized as premium revenue is recognized. The method followed in computing DAC limits the amount of such deferred costs to their estimated realizable value. This takes into account the premium to be earned, losses and loss settlement expenses expected to be incurred and certain other costs expected to be incurred as the premium is earned.

For traditional life insurance policies, DAC is amortized to income over the premium-paying period in proportion to the ratio of the expected annual premium revenue to the expected total premium revenue. Expected premium revenue and gross profits are based on the same mortality and withdrawal assumptions used in determining future policy benefits. These assumptions are not revised after policy issuance unless the recorded DAC asset is deemed to be unrecoverable from future expected profits.

For non-traditional life insurance policies, DAC is amortized over the anticipated terms in proportion to the ratio of the expected annual gross profits to the total expected gross profits. Changes in the amount or timing of expected gross profits result in adjustments to the cumulative amortization of these costs. The effect on amortization of DAC for revisions to estimated gross profits is reported in earnings in the period the estimated gross profits are revised.

The effect on DAC that results from the assumed realization of unrealized gains (losses) on investments allocated to non-traditional life insurance business is recognized with an offset, or "shadow" DAC, to net unrealized investment appreciation as of the balance sheet date. The "shadow" DAC adjustment decreased the DAC asset by $14,514 at June 30, 2014 and increased the DAC asset by $3,407 at December 31, 2013.

Income Taxes

Deferred tax assets and liabilities are established based on differences between the financial statement bases of assets and liabilities and the tax bases of those same assets and liabilities, using the currently enacted statutory tax rates. Deferred income tax expense is measured by the year-to-year change in the net deferred tax asset or liability, except for certain changes in deferred tax amounts that affect stockholders' equity and do not impact federal income tax expense.

We reported a federal income tax expense of $4,937 and $12,279 for the six-month periods ended June 30, 2014 and 2013, respectively. Our effective tax rate is different than the federal statutory rate of 35.0 percent due principally to the effect of tax-exempt municipal bond interest income and non-taxable dividend income.

We did not recognize any liability for unrecognized tax benefits at June 30, 2014 or December 31, 2013. In addition, we have not accrued for interest and penalties related to unrecognized tax benefits. However, if interest and penalties would need to be accrued related to unrecognized tax benefits, such amounts would be recognized as a component of federal income tax expense.

We file a consolidated federal income tax return. We also file income tax returns in various state jurisdictions. We are no longer subject to federal or state income tax examination for years before 2009. The Internal Revenue Service is conducting a routine examination of our income tax return for the 2011 tax year.

Recently Issued Accounting Standards

Adopted Accounting Standards in 2014

Unrecognized tax benefit

In July 2013, the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance was effective for annual and interim periods beginning after December 15, 2013. The Company currently does not have any liability for unrecognized tax benefits. The Company adopted the new guidance effective January 1, 2014. The adoption of the new guidance had no impact on the Company's financial position or results of operations.

Pending Adoption of Accounting Standards

Share Based Payments

In June 2014, the FASB issued new guidance on the accounting for share based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The new guidance requires a performance target that affects vesting and that could be achieved after the service period, be treated as a performance condition. The guidance is effective for interim and annual periods beginning after December 15, 2015. The amendments can be applied prospectively or retrospectively and early adoption is permitted. The Company will adopt the guidance on January 1, 2016 and is currently evaluating the impact on the Company's financial position and results of operations.

Revenue Recognition

In May 2014, the FASB issued comprehensive new guidance on revenue recognition which supersedes nearly all existing revenue recognition guidance under GAAP. The new guidance requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a five-step model that requires companies to exercise judgment when considering the terms of the contract(s) and all relevant facts and circumstances. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The Company will adopt the guidance on January 1, 2017 and is currently evaluating the impact on the Company's financial position and results of operations. Management does not expect insurance contracts to be in the scope of this new guidance.

Discontinued Operations

In April 2014, the FASB issued new guidance on reporting discontinued operations and disclosures of disposals of components of an entity. The new guidance raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It is effective for annual periods beginning after December 15, 2014. Early adoption is permitted but only for disposals that have not been reported in financial statements previously issued. The Company will adopt the guidance on January 1, 2015 and is currently evaluating the impact on the Company's financial position and results of operations.

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Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Basic and Diluted Earnings per Share [Line Items]
Net income	$ 10,685		$ 15,496		$ 24,016		$ 37,889
Weighted-average common shares outstanding (in shares)	25,330,066		25,297,718		25,351,056		25,271,752
Weighted-average common share for EPS calculation (in shares)	25,556,627		25,472,302		25,591,258		25,414,392
Basic earnings per common share (in dollars per share)	$ 0.42		$ 0.61		$ 0.95		$ 1.50
Diluted earnings per common share (in dollars per share)	$ 0.42		$ 0.61		$ 0.94		$ 1.49
Awards excluded from diluted earnings per share calculation(1)	904,580	[1]	647,726	[1]	904,580	[1]	663,326	[1]
Restricted Stock Awards [Member]
Basic and Diluted Earnings per Share [Line Items]
Add dilutive effect of share-based awards outstanding (in shares)	114,313		59,849		114,313		59,849
Stock Options [Member]
Basic and Diluted Earnings per Share [Line Items]
Add dilutive effect of share-based awards outstanding (in shares)	112,248		114,735		125,889		82,791

[1] Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

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Summary of Investments (Fair Value of Investments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Held-to-maturity Securities, Debt Maturities [Abstract]
Amortized Cost	$ 630	$ 656
Fair Value	640	669
Available-for-sale Securities [Abstract]
Amortized Cost	2,821,143	2,804,514
Gross Unrealized Appreciation	261,864	235,940
Gross Unrealized Depreciation	19,745	59,830
Fair Value	3,063,262	2,980,624
Fixed Maturities [Member]
Held-to-maturity Securities, Debt Maturities [Abstract]
Amortized Cost	630	656
Gross Unrealized Appreciation	10	13
Gross Unrealized Depreciation	0	0
Fair Value	640	669
Available-for-sale Securities [Abstract]
Amortized Cost	2,749,458	2,733,557
Gross Unrealized Appreciation	94,143	77,082
Gross Unrealized Depreciation	19,583	59,383
Fair Value	2,824,018	2,751,256
U.S. Treasury [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	30,468	33,612
Gross Unrealized Appreciation	298	423
Gross Unrealized Depreciation	63	140
Fair Value	30,703	33,895
U.S. Government Agency [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	360,249	287,988
Gross Unrealized Appreciation	3,018	258
Gross Unrealized Depreciation	6,586	18,663
Fair Value	356,681	269,583
States, Municipalities and Political Subdivisions [Member]
Held-to-maturity Securities, Debt Maturities [Abstract]
Amortized Cost	249	250
Gross Unrealized Appreciation	2	4
Gross Unrealized Depreciation	0	0
Fair Value	251	254
Available-for-sale Securities [Abstract]
Amortized Cost	705,556	690,461
Gross Unrealized Appreciation	33,895	34,151
Gross Unrealized Depreciation	2,683	10,705
Fair Value	736,768	713,907
Foreign Bonds [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	143,172	167,390
Gross Unrealized Appreciation	7,054	5,863
Gross Unrealized Depreciation	1	397
Fair Value	150,225	172,856
Public Utilities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	212,385	213,479
Gross Unrealized Appreciation	8,114	6,873
Gross Unrealized Depreciation	155	1,776
Fair Value	220,344	218,576
Corporate Bonds [Member] | Energy [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	149,380	157,620
Gross Unrealized Appreciation	5,593	4,398
Gross Unrealized Depreciation	373	1,008
Fair Value	154,600	161,010
Corporate Bonds [Member] | Industrials [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	216,342	234,221
Gross Unrealized Appreciation	7,888	5,626
Gross Unrealized Depreciation	429	2,819
Fair Value	223,801	237,028
Corporate Bonds [Member] | Consumer Goods and Services [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	159,084	165,565
Gross Unrealized Appreciation	5,455	3,770
Gross Unrealized Depreciation	213	1,421
Fair Value	164,326	167,914
Corporate Bonds [Member] | Health Care [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	78,429	91,008
Gross Unrealized Appreciation	3,679	3,138
Gross Unrealized Depreciation	148	1,200
Fair Value	81,960	92,946
Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	128,124	121,746
Gross Unrealized Appreciation	4,485	2,541
Gross Unrealized Depreciation	785	3,321
Fair Value	131,824	120,966
Corporate Bonds [Member] | Financial Services [Member]
Held-to-maturity Securities, Debt Maturities [Abstract]
Amortized Cost	200	200
Gross Unrealized Appreciation	0	0
Gross Unrealized Depreciation	0	0
Fair Value	200	200
Available-for-sale Securities [Abstract]
Amortized Cost	223,412	234,739
Gross Unrealized Appreciation	10,199	7,735
Gross Unrealized Depreciation	68	723
Fair Value	233,543	241,751
Mortgage-Backed Securities [Member]
Held-to-maturity Securities, Debt Maturities [Abstract]
Amortized Cost	181	206
Gross Unrealized Appreciation	8	9
Gross Unrealized Depreciation	0	0
Fair Value	189	215
Available-for-sale Securities [Abstract]
Amortized Cost	19,654	22,034
Gross Unrealized Appreciation	610	323
Gross Unrealized Depreciation	76	291
Fair Value	20,188	22,066
Collateralized Mortgage Obligations [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	320,180	309,975
Gross Unrealized Appreciation	3,559	1,707
Gross Unrealized Depreciation	8,003	16,919
Fair Value	315,736	294,763
Asset-Backed Securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	3,023	3,719
Gross Unrealized Appreciation	296	276
Gross Unrealized Depreciation	0	0
Fair Value	3,319	3,995
Equity Securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	71,685	70,957
Gross Unrealized Appreciation	167,721	158,858
Gross Unrealized Depreciation	162	447
Fair Value	239,244	229,368
Common Stocks [Member] | Public Utilities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	7,231	7,231
Gross Unrealized Appreciation	11,435	9,068
Gross Unrealized Depreciation	0	27
Fair Value	18,666	16,272
Common Stocks [Member] | Energy [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	5,094	5,094
Gross Unrealized Appreciation	11,391	9,269
Gross Unrealized Depreciation	0	0
Fair Value	16,485	14,363
Common Stocks [Member] | Industrials [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	13,286	13,308
Gross Unrealized Appreciation	33,378	32,823
Gross Unrealized Depreciation	40	32
Fair Value	46,624	46,099
Common Stocks [Member] | Consumer Goods and Services [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	10,287	10,363
Gross Unrealized Appreciation	11,492	10,895
Gross Unrealized Depreciation	2	0
Fair Value	21,777	21,258
Common Stocks [Member] | Health Care [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	7,920	7,920
Gross Unrealized Appreciation	18,846	17,078
Gross Unrealized Depreciation	0	0
Fair Value	26,766	24,998
Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	6,205	6,204
Gross Unrealized Appreciation	7,779	7,183
Gross Unrealized Depreciation	61	83
Fair Value	13,923	13,304
Common Stocks [Member] | Financial Services [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	16,678	15,853
Gross Unrealized Appreciation	73,260	72,537
Gross Unrealized Depreciation	54	128
Fair Value	89,884	88,262
Nonredeemable Preferred Stocks [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	4,984	4,984
Gross Unrealized Appreciation	140	5
Gross Unrealized Depreciation	5	177
Fair Value	$ 5,119	$ 4,812

XML

Nature of Operations and Basis of Presentation (Deferred Policy Acquisition Costs) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward]
Recorded asset at beginning of period	$ 150,092
Underwriting costs deferred	90,873
Amortization of deferred policy acquisition costs	(79,730)
Ending unamortized deferred policy acquisition costs	161,235
Change in shadow deferred policy acquisition costs	(17,921)	29,223
Recorded asset at end of period	143,314
Property and Casualty Insurance [Member]
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward]
Recorded asset at beginning of period	67,663
Underwriting costs deferred	87,193
Amortization of deferred policy acquisition costs	(76,378)
Ending unamortized deferred policy acquisition costs	78,478
Change in shadow deferred policy acquisition costs	0
Recorded asset at end of period	78,478
Life Insurance [Member]
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward]
Recorded asset at beginning of period	82,429
Underwriting costs deferred	3,680
Amortization of deferred policy acquisition costs	(3,352)
Ending unamortized deferred policy acquisition costs	82,757
Change in shadow deferred policy acquisition costs	(17,921)
Recorded asset at end of period	$ 64,836

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Credit Facility (Details) (USD $)	1 Months Ended
	Dec. 31, 2011	Jun. 04, 2013
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit agreement term	4 years
Current borrowing capacity	$ 100,000,000	$ 100,000,000
Maximum borrowing capacity		125,000,000
Letter of Credit [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	20,000,000
Swing Line of Credit [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 5,000,000

XML

Summary of Investments (Maturities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Held-To-Maturity, Amortized Cost
Due in one year or less	$ 135
Due after one year through five years	314
Due after five years through 10 years	0
Due after 10 years	0
Amortized Cost	630	656
Held-To-Maturity, Fair Value
Due in one year or less	136
Due after one year through five years	315
Due after five years through 10 years	0
Due after 10 years	0
Fair Value	640	669
Available-For-Sale, Amortized Cost
Due in one year or less	234,849
Due after one year through five years	886,016
Due after five years through 10 years	818,255
Due after 10 years	467,481
Amortized Cost	2,821,143	2,804,514
Available-For-Sale, Fair Value
Due in one year or less	238,774
Due after one year through five years	934,018
Due after five years through 10 years	845,767
Due after 10 years	466,216
Fair Value	3,063,262	2,980,624
Trading, Amortized Cost
Due in one year or less	1,701
Due after one year through five years	7,416
Due after five years through 10 years	1,139
Due after 10 years	5,211
Amortized Cost	15,467	8,049
Trading, Fair Value
Due in one year or less	1,699
Due after one year through five years	8,715
Due after five years through 10 years	1,563
Due after 10 years	6,328
Fair Value	18,305	9,940
Asset-Backed Securities [Member]
Held-To-Maturity, Amortized Cost
Securities not categorized by contractual maturity	0
Held-To-Maturity, Fair Value
Securities not categorized by contractual maturity	0
Available-For-Sale, Amortized Cost
Securities not categorized by contractual maturity	3,023
Amortized Cost	3,023	3,719
Available-For-Sale, Fair Value
Securities not categorized by contractual maturity	3,319
Fair Value	3,319	3,995
Mortgage-Backed Securities [Member]
Held-To-Maturity, Amortized Cost
Securities not categorized by contractual maturity	181
Amortized Cost	181	206
Held-To-Maturity, Fair Value
Securities not categorized by contractual maturity	189
Fair Value	189	215
Available-For-Sale, Amortized Cost
Securities not categorized by contractual maturity	19,654
Amortized Cost	19,654	22,034
Available-For-Sale, Fair Value
Securities not categorized by contractual maturity	20,188
Fair Value	20,188	22,066
Collateralized Mortgage Obligations [Member]
Held-To-Maturity, Amortized Cost
Securities not categorized by contractual maturity	0
Held-To-Maturity, Fair Value
Securities not categorized by contractual maturity	0
Available-For-Sale, Amortized Cost
Securities not categorized by contractual maturity	320,180
Amortized Cost	320,180	309,975
Available-For-Sale, Fair Value
Securities not categorized by contractual maturity	315,736
Fair Value	315,736	294,763
Fixed Maturities [Member]
Held-To-Maturity, Amortized Cost
Amortized Cost	630	656
Held-To-Maturity, Fair Value
Fair Value	640	669
Available-For-Sale, Amortized Cost
Amortized Cost	2,749,458	2,733,557
Available-For-Sale, Fair Value
Fair Value	2,824,018	2,751,256
Trading, Amortized Cost
Amortized Cost	15,467
Trading, Fair Value
Fair Value	$ 18,305

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Summary of Investments (Net Realized Investment Gains and Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	$ 2,708	$ 4,151	$ 4,902	$ 6,060
Available-for-sale Securities [Abstract]
Proceeds from sales	10	3,161	10	5,971
Gross realized gains	0	96	0	238
Gross realized losses	56	0	56	0
Fixed Maturities [Member] | Available-for-sale [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	705	1,185	1,352	1,905
Fixed Maturities [Member] | Trading Securities, Change in Fair Value [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	648	(130)	948	430
Fixed Maturities [Member] | Trading Securities, Sales [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	285	298	520	298
Equity Securities [Member] | Available-for-sale [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	901	3,232	1,736	3,748
Equity Securities [Member] | Trading Securities, Change in Fair Value [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	169	(132)	346	(19)
Equity Securities [Member] | Trading Securities, Sales [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	0	38	0	38
Other Long-term Investments [Member]
Gain (Loss) on Investments [Line Items]
Net realized investment gains (losses)	$ 0	$ (340)	$ 0	$ (340)

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash Flows From Operating Activities
Net income	$ 24,016	$ 37,889
Adjustments to reconcile net income to net cash provided by operating activities
Net accretion of bond premium	7,601	7,989
Depreciation and amortization	3,757	2,930
Stock-based compensation expense	944	818
Net realized investment gains	(4,902)	(6,060)
Net cash flows from trading investments	(7,481)	1,285
Deferred income tax benefit	(1,346)	(2,096)
Changes in:
Accrued investment income	764	994
Premiums receivable	(49,459)	(49,357)
Deferred policy acquisition costs	(11,143)	(3,288)
Reinsurance receivables	6,137	9,625
Prepaid reinsurance premiums	(610)	(573)
Income taxes receivable	(2,105)	16,536
Other assets	699	1,182
Future policy benefits and losses, claims and loss settlement expenses	37,769	10,716
Unearned premiums	54,682	42,827
Accrued expenses and other liabilities	(1,083)	(2,465)
Income taxes payable	0	1,567
Deferred income taxes	(72)	2,720
Other, net	(2,975)	(2,834)
Total adjustments	31,177	32,516
Net cash provided by operating activities	55,193	70,405
Cash Flows From Investing Activities
Proceeds from sale of available-for-sale investments	10	5,971
Proceeds from call and maturity of held-to-maturity investments	26	180
Proceeds from call and maturity of available-for-sale investments	249,251	238,639
Proceeds from short-term and other investments	1,648	1,882
Purchase of available-for-sale investments	(270,194)	(295,586)
Purchase of short-term and other investments	(1,938)	(2,575)
Net purchases and sales of property and equipment	(4,154)	(2,659)
Net cash used in investing activities	(25,351)	(54,148)
Policyholders’ account balances
Deposits to investment and universal life contracts	96,119	52,086
Withdrawals from investment and universal life contracts	(114,096)	(87,827)
Payment of cash dividends	(9,630)	(8,342)
Repurchase of common stock	(5,567)	(99)
Issuance of common stock	1,457	1,465
Tax impact from issuance of common stock	(42)	(217)
Net cash used in financing activities	(31,759)	(42,934)
Net Change in Cash and Cash Equivalents	(1,917)	(26,677)
Cash and Cash Equivalents at Beginning of Period	92,193	107,466
Cash and Cash Equivalents at End of Period	$ 90,276	$ 80,789

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Summary of Investments (Unrealized Appreciation) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Unrealized Gain (Loss) on Investments [Abstract]
Available-for-sale fixed maturities	$ 56,861	$ (91,636)
Available-for-sale equity securities	9,148	19,467
Deferred policy acquisition costs	(17,921)	29,223
Income tax effect	(16,831)	15,023
Total change in net unrealized investment appreciation, net of tax	$ 31,257	$ (27,923)

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Stock-based Compensation (Details)	1 Months Ended	6 Months Ended	73 Months Ended	6 Months Ended	73 Months Ended	6 Months Ended	73 Months Ended	6 Months Ended	73 Months Ended	6 Months Ended	114 Months Ended	6 Months Ended	114 Months Ended
	May 31, 2014 Employee Stock Award Plan-2008 [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member] Options Awards [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member] Options Awards [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member] Unrestricted Stock Awards [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member] Unrestricted Stock Awards [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member] Restricted Stock Awards [Member]	Jun. 30, 2014 Employee Stock Award Plan-2008 [Member] Restricted Stock Awards [Member]	Jun. 30, 2014 Director Plan - 2005 [Member]	Jun. 30, 2014 Director Plan - 2005 [Member]	Jun. 30, 2014 Director Plan - 2005 [Member] Options Awards [Member]	Jun. 30, 2014 Director Plan - 2005 [Member] Options Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option awards vest and exercisable in installments		20.00%
Expiration period				10 years
Vesting period								5 years
Share-based Compensation Arrangement by Share-based Payment Award Available for Grant [Roll Forward]
Beginning balance		353,649	1,900,000							103,912	300,000
Additional shares authorized	1,500,000	1,500,000
Number of awards granted		313,948	1,996,444			660	5,215			16,718	218,809
Number of awards forfeited or expired		5,000	141,145							0	6,003
Ending balance		1,544,701	1,544,701							87,194	87,194
Number of option awards exercised				46,231	427,999							1,519	4,675
Number of restricted stock awards vested								0	18,576			5,040	11,442

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fixed maturities
Held-to-maturity, at amortized cost (fair value $640 in 2014 and $669 in 2013)	$ 630	$ 656
Available-for-sale, at fair value (amortized cost $2,749,458 in 2014 and $2,733,557 in 2013)	2,824,018	2,751,256
Trading securities, at fair value (amortized cost $15,467 in 2014 and $8,049 in 2013)	18,305	9,940
Equity securities
Available-for-sale, at fair value (cost $71,685 in 2014 and $70,957 in 2013)	239,244	229,368
Trading securities, at fair value (cost $2,740 in 2014 and $2,367 in 2013)	3,206	2,487
Mortgage loans	4,313	4,423
Policy loans	6,200	6,261
Other long-term investments	48,707	44,946
Short-term investments	475	800
Total investments	3,145,098	3,050,137
Cash and cash equivalents	90,276	92,193
Accrued investment income	27,159	27,923
Premiums receivable (net of allowance for doubtful accounts of $993 in 2014 and $896 in 2013)	268,094	218,635
Deferred policy acquisition costs	143,314	150,092
Property and equipment (primarily land and buildings, at cost, less accumulated depreciation of $39,109 in 2014 and $36,972 in 2013)	48,001	47,218
Reinsurance receivables and recoverables	81,314	87,451
Prepaid reinsurance premiums	3,770	3,160
Income taxes receivable	3,891	1,786
Goodwill and intangible assets	26,662	27,047
Other assets	14,331	15,030
TOTAL ASSETS	3,851,910	3,720,672
Future policy benefits and losses, claims and loss settlement expenses
Property and casualty insurance	981,927	960,651
Life insurance	1,470,647	1,472,132
Unearned premiums	395,146	340,464
Accrued expenses and other liabilities	140,058	142,677
Deferred income taxes	37,866	21,915
TOTAL LIABILITIES	3,025,644	2,937,839
Stockholders’ Equity
Common stock, $0.001 par value; authorized 75,000,000 shares; 25,240,105 and 25,360,893 shares issued and outstanding in 2014 and 2013, respectively	25	25
Additional paid-in capital	208,366	211,574
Retained earnings	498,470	484,084
Accumulated other comprehensive income, net of tax	119,405	87,150
TOTAL STOCKHOLDERS’ EQUITY	826,266	782,833
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 3,851,910	$ 3,720,672

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	$ 102,330		$ 87,150
Change in accumulated other comprehensive income before reclassifications	17,620	(33,667)	33,264	(24,249)
Reclassification adjustments from accumulated other comprehensive income	(545)	(2,063)	(1,009)	(2,059)
Balance at end of period	119,405		119,405
Net unrealized appreciation on investments [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	131,282		116,601
Change in accumulated other comprehensive income before reclassifications	17,620		33,264
Reclassification adjustments from accumulated other comprehensive income	(1,044)		(2,007)
Balance at end of period	147,858		147,858
Liability for underfunded employee benefit costs [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(28,952)		(29,451)
Change in accumulated other comprehensive income before reclassifications	0		0
Reclassification adjustments from accumulated other comprehensive income	499		998
Balance at end of period	$ (28,453)		$ (28,453)

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Consolidated Statement of Stockholders' Equity (Unaudited) (USD $) In Thousands, unless otherwise specified		Total	Common Stocks [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income, Net of Tax [Member]
Balance, beginning of year at Dec. 31, 2013		$ 782,833	$ 25	$ 211,574	$ 484,084	$ 87,150
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares repurchased			0	(5,567)
Compensation expense and related tax benefit for stock-based award grants				902
Shares issued for stock-based awards			0	1,457
Net income		24,016			24,016
Dividends on common stock ($0.38 per share)					(9,630)
Change in net unrealized investment appreciation	[1]					31,257
Change in liability for underfunded employee benefit plans	[2]					998
All other changes in stockholders’ equity accounts		19,417
Balance, end of year at Jun. 30, 2014		$ 826,266	$ 25	$ 208,366	$ 498,470	$ 119,405

[1] The change in net unrealized appreciation is net of reclassification adjustments and income taxes.

[2] The change in liability for underfunded employee benefit plans is net of reclassification adjustments and income taxes.

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Fair Value of Financial Instruments (Carrying Value and Estimated Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Investments
Held-to-maturity fixed maturities	$ 640		$ 669
Available-for-sale securities	3,063,262		2,980,624
Trading securities	21,511		12,427
Fair Value [Member]
Investments
Mortgage loans	4,724		4,724
Policy loans	6,200		6,261
Other long-term investments	48,707		44,946
Short-term investments	475		800
Cash and cash equivalents	90,276		92,193
Cash surrender value	578		0
Policy reserves
Annuity (accumulations)	949,519	[1]	941,636	[1]
Annuity (benefit payments)	147,594		140,276
Fair Value [Member] | Fixed Maturities [Member]
Investments
Held-to-maturity fixed maturities	640		669
Available-for-sale securities	2,824,018		2,751,256
Trading securities	18,305		9,940
Fair Value [Member] | Equity Securities [Member]
Investments
Available-for-sale securities	239,244		229,368
Trading securities	3,206		2,487
Carrying Value [Member]
Investments
Mortgage loans	4,313		4,423
Policy loans	6,200		6,261
Other long-term investments	48,707		44,946
Short-term investments	475		800
Cash and cash equivalents	90,276		92,193
Cash surrender value	578		0
Policy reserves
Annuity (accumulations)	908,765	[1]	925,832	[1]
Annuity (benefit payments)	96,661		94,805
Carrying Value [Member] | Fixed Maturities [Member]
Investments
Held-to-maturity fixed maturities	630		656
Available-for-sale securities	2,824,018		2,751,256
Trading securities	18,305		9,940
Carrying Value [Member] | Equity Securities [Member]
Investments
Available-for-sale securities	239,244		229,368
Trading securities	$ 3,206		$ 2,487

[1] Annuity accumulations represent deferred annuity contracts that are currently earning interest.

XML

Employee Benefits (Tables)

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Net Periodic Benefit Cost

The components of the net periodic benefit cost for our pension and postretirement benefit plans are as follows:

	Pension Plan						Postretirement Benefit Plan
Three Months Ended June 30,	2014			2013			2014		2013
Net periodic benefit cost
Service cost	$	1,303		$	1,868		$	924	$	752
Interest cost	1,468			1,326			586		423
Expected return on plan assets	(1,739		)	(1,550		)	—		—
Amortization of net loss	544			1,105			224		138
Net periodic benefit cost	$	1,576		$	2,749		$	1,734	$	1,313

	Pension Plan						Postretirement Benefit Plan
Six Months Ended June 30,	2014			2013			2014		2013
Net periodic benefit cost
Service cost	$	2,606		$	3,150		$	1,848	$	1,505
Interest cost	2,936			2,587			1,172		847
Expected return on plan assets	(3,478		)	(2,886		)	—		—
Amortization of net loss	1,088			2,211			448		274
Net periodic benefit cost	$	3,152		$	5,062		$	3,468	$	2,626

XML

Fair Value of Financial Instruments (Financial Instruments Measured at Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014 security	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	$ 3,063,262	$ 2,980,624
Trading Securities	21,511	12,427
Fair value of security transferred between Level 1 and 2	1,228
Number of securities transferred between Level 1 and 2	1
Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	2,824,018	2,751,256
U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	30,703	33,895
U.S. Government Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	356,681	269,583
States, Municipalities and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	736,768	713,907
Foreign Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	150,225	172,856
Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	220,344	218,576
Corporate Bonds [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	154,600	161,010
Corporate Bonds [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	223,801	237,028
Corporate Bonds [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	164,326	167,914
Corporate Bonds [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	81,960	92,946
Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	131,824	120,966
Corporate Bonds [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	233,543	241,751
Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	20,188	22,066
Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	315,736	294,763
Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	3,319	3,995
Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	239,244	229,368
Common Stocks [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	18,666	16,272
Common Stocks [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	16,485	14,363
Common Stocks [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	46,624	46,099
Common Stocks [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	21,777	21,258
Common Stocks [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	26,766	24,998
Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	13,923	13,304
Common Stocks [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	89,884	88,262
Nonredeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	5,119	4,812
Recurring [Member] | Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	3,063,262	2,980,624
Trading Securities	21,511	12,427
Short- Term Investments	475	800
Money Market Accounts	30,120	37,811
Corporate-Owned Life Insurance	578
Total Assets Measured at Fair Value	3,115,946	3,031,662
Recurring [Member] | Fair Value [Member] | Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	2,824,018	2,751,256
Recurring [Member] | Fair Value [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	30,703	33,895
Recurring [Member] | Fair Value [Member] | U.S. Government Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	356,681	269,583
Recurring [Member] | Fair Value [Member] | States, Municipalities and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	736,768	713,907
Recurring [Member] | Fair Value [Member] | Foreign Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	150,225	172,856
Trading Securities	1,252	1,253
Recurring [Member] | Fair Value [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	220,344	218,576
Recurring [Member] | Fair Value [Member] | Corporate Bonds [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	154,600	161,010
Recurring [Member] | Fair Value [Member] | Corporate Bonds [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	223,801	237,028
Trading Securities	2,128	1,122
Recurring [Member] | Fair Value [Member] | Corporate Bonds [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	164,326	167,914
Trading Securities	1,099	106
Recurring [Member] | Fair Value [Member] | Corporate Bonds [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	81,960	92,946
Trading Securities	2,517	1,154
Recurring [Member] | Fair Value [Member] | Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	131,824	120,966
Trading Securities	3,004	2,054
Recurring [Member] | Fair Value [Member] | Corporate Bonds [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	233,543	241,751
Trading Securities	4,214	1,866
Recurring [Member] | Fair Value [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	20,188	22,066
Recurring [Member] | Fair Value [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	315,736	294,763
Recurring [Member] | Fair Value [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	3,319	3,995
Recurring [Member] | Fair Value [Member] | Redeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	4,091	2,385
Recurring [Member] | Fair Value [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	239,244	229,368
Recurring [Member] | Fair Value [Member] | Equity Securities [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	659	563
Recurring [Member] | Fair Value [Member] | Equity Securities [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	32	39
Recurring [Member] | Fair Value [Member] | Equity Securities [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	389	332
Recurring [Member] | Fair Value [Member] | Equity Securities [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	364
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	18,666	16,272
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	16,485	14,363
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	46,624	46,099
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	21,777	21,258
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	26,766	24,998
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	13,923	13,304
Recurring [Member] | Fair Value [Member] | Common Stocks [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	89,884	88,262
Recurring [Member] | Fair Value [Member] | Nonredeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	5,119	4,812
Trading Securities	1,762	1,553
Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	230,734	222,411
Trading Securities	7,297	4,872
Short- Term Investments	475	800
Money Market Accounts	30,120	37,811
Corporate-Owned Life Insurance	0
Total Assets Measured at Fair Value	268,626	265,894
Recurring [Member] | Level 1 [Member] | Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | U.S. Government Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | States, Municipalities and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | Foreign Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 1 [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate Bonds [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate Bonds [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate Bonds [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate Bonds [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate Bonds [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 1 [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 1 [Member] | Redeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	4,091	2,385
Recurring [Member] | Level 1 [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	230,734	222,411
Recurring [Member] | Level 1 [Member] | Equity Securities [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	659	563
Recurring [Member] | Level 1 [Member] | Equity Securities [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	32	39
Recurring [Member] | Level 1 [Member] | Equity Securities [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	389	332
Recurring [Member] | Level 1 [Member] | Equity Securities [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	364
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	18,666	16,272
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	16,485	14,363
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	46,619	46,083
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	21,777	21,258
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	26,766	24,998
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	13,923	13,304
Recurring [Member] | Level 1 [Member] | Common Stocks [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	85,945	84,419
Recurring [Member] | Level 1 [Member] | Nonredeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	553	1,714
Trading Securities	1,762	1,553
Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	2,813,277	2,738,225
Trading Securities	14,214	7,555
Short- Term Investments	0	0
Money Market Accounts	0	0
Corporate-Owned Life Insurance	578
Total Assets Measured at Fair Value	2,828,069	2,745,780
Recurring [Member] | Level 2 [Member] | Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	2,808,639	2,735,049
Recurring [Member] | Level 2 [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	30,703	33,895
Recurring [Member] | Level 2 [Member] | U.S. Government Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	356,681	269,583
Recurring [Member] | Level 2 [Member] | States, Municipalities and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	736,158	713,209
Recurring [Member] | Level 2 [Member] | Foreign Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	150,225	172,856
Trading Securities	1,252	1,253
Recurring [Member] | Level 2 [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	220,344	218,576
Recurring [Member] | Level 2 [Member] | Corporate Bonds [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	154,600	161,010
Recurring [Member] | Level 2 [Member] | Corporate Bonds [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	223,801	237,028
Trading Securities	2,128	1,122
Recurring [Member] | Level 2 [Member] | Corporate Bonds [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	162,937	166,460
Trading Securities	1,099	106
Recurring [Member] | Level 2 [Member] | Corporate Bonds [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	81,960	92,946
Trading Securities	2,517	1,154
Recurring [Member] | Level 2 [Member] | Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	131,824	120,966
Trading Securities	3,004	2,054
Recurring [Member] | Level 2 [Member] | Corporate Bonds [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	222,005	229,725
Trading Securities	4,214	1,866
Recurring [Member] | Level 2 [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	20,188	22,066
Recurring [Member] | Level 2 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	315,736	294,763
Recurring [Member] | Level 2 [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	1,477	1,966
Recurring [Member] | Level 2 [Member] | Redeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 2 [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	4,638	3,176
Recurring [Member] | Level 2 [Member] | Equity Securities [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 2 [Member] | Equity Securities [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 2 [Member] | Equity Securities [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 2 [Member] | Equity Securities [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	5	16
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 2 [Member] | Common Stocks [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	67	62
Recurring [Member] | Level 2 [Member] | Nonredeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	4,566	3,098
Trading Securities	0	0
Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	19,251	19,988
Trading Securities	0	0
Short- Term Investments	0	0
Money Market Accounts	0	0
Corporate-Owned Life Insurance	0
Total Assets Measured at Fair Value	19,251	19,988
Recurring [Member] | Level 3 [Member] | Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	15,379	16,207
Recurring [Member] | Level 3 [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | U.S. Government Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | States, Municipalities and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	610	698
Recurring [Member] | Level 3 [Member] | Foreign Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate Bonds [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate Bonds [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate Bonds [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	1,389	1,454
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate Bonds [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate Bonds [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate Bonds [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	11,538	12,026
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	1,842	2,029
Recurring [Member] | Level 3 [Member] | Redeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	3,872	3,781
Recurring [Member] | Level 3 [Member] | Equity Securities [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Equity Securities [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Equity Securities [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0	0
Recurring [Member] | Level 3 [Member] | Equity Securities [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Public Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Industrials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Consumer Goods and Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Technology, Media and Telecommunications [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Recurring [Member] | Level 3 [Member] | Common Stocks [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	3,872	3,781
Recurring [Member] | Level 3 [Member] | Nonredeemable Preferred Stocks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities	0	0
Trading Securities	$ 0	$ 0

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

We have reconciled the following table for the three-month periods ended June 30, 2014 and 2013 to the amounts reported in our unaudited Consolidated Financial Statements to adjust for intersegment eliminations.

	Property and Casualty Insurance		Life Insurance			Total
Three Months Ended June 30, 2014
Net premiums earned	$	187,832	$	14,127		$	201,959
Investment income, net of investment expenses	11,831		15,765			27,596
Net realized investment gains	2,337		371			2,708
Other income	314		221			535
Total reportable segment	$	202,314	$	30,484		$	232,798
Intersegment eliminations	7		(132		)	(125		)
Total revenues	$	202,321	$	30,352		$	232,673
Net income	$	9,540	$	1,145		$	10,685
Assets	$	2,100,863	$	1,751,047		$	3,851,910
Invested assets	$	1,519,110	$	1,625,988		$	3,145,098
Three Months Ended June 30, 2013
Net premiums earned	$	170,527	$	15,963		$	186,490
Investment income, net of investment expenses	12,279		16,731			29,010
Net realized investment gains	3,560		591			4,151
Other income	72		110			182
Total reportable segment	$	186,438	$	33,395		$	219,833
Intersegment eliminations	9		(123		)	(114		)
Total revenues	$	186,447	$	33,272		$	219,719
Net income	$	13,195	$	2,301		$	15,496
Assets	$	1,951,033	$	1,749,716		$	3,700,749
Invested assets	$	1,379,947	$	1,643,356		$	3,023,303

We have reconciled the following table for the six-month periods ended June 30, 2014 and 2013 to the amounts reported in our unaudited Consolidated Financial Statements to adjust for intersegment eliminations.

	Property and Casualty Insurance		Life Insurance			Total
Six Months Ended June 30, 2014
Net premiums earned	$	367,326	$	28,107		$	395,433
Investment income, net of investment expenses	22,944		31,364			54,308
Net realized investment gains	3,704		1,198			4,902
Other income	794		348			1,142
Total reportable segment	$	394,768	$	61,017		$	455,785
Intersegment eliminations	57		(265		)	(208		)
Total revenues	$	394,825	$	60,752		$	455,577
Net income	$	21,351	$	2,665		$	24,016
Assets	$	2,100,863	$	1,751,047		$	3,851,910
Invested assets	$	1,519,110	$	1,625,988		$	3,145,098
Six Months Ended June 30, 2013
Net premiums earned	$	333,228	$	30,202		$	363,430
Investment income, net of investment expenses	22,700		32,710			55,410
Net realized investment gains	4,589		1,471			6,060
Other income	84		213			297
Total reportable segment	$	360,601	$	64,596		$	425,197
Intersegment eliminations	73		(246		)	(173		)
Total revenues	$	360,674	$	64,350		$	425,024
Net income	$	33,924	$	3,965		$	37,889
Assets	$	1,951,033	$	1,749,716		$	3,700,749
Invested assets	$	1,379,947	$	1,643,356		$	3,023,303

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Consolidated Statements of Stockholders' Equity (Unaudited) (Parentheticals) (USD $)	6 Months Ended
	Jun. 30, 2014
Statement of Stockholders' Equity [Abstract]
Stock repurchased (in shares)	201,516
Shares issued for stock-based awards (in shares)	69,050
Dividends on common stock, per share (in dollars per share)	$ 0.38

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Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Balance Sheet Related Disclosures [Abstract]
Fixed maturities, held-to-maturity securities, fair value	$ 640	$ 669
Fixed maturities, available-for-sale securities, amortized cost	2,749,458	2,733,557
Fixed maturities, trading securities, amortized cost	15,467	8,049
Equity securities, available-for-sale securities, amortized cost	71,685	70,957
Equity securities, trading securities, amortized cost	2,740	2,367
Allowance for doubtful accounts	993	896
Property and equipment accumulated depreciation	$ 39,109	$ 36,972
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	25,240,105	25,360,893
Common stock, shares outstanding	25,240,105	25,360,893

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Accumulated Other Comprehensive Income

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the three-month period ended June 30, 2014:

				Liability for
	Net unrealized			underfunded
	appreciation			employee
	on investments			benefit costs			Total
Balance as of March 31, 2014	$	131,282		$	(28,952	)	$	102,330
Change in accumulated other comprehensive income before reclassifications	17,620			—			17,620
Reclassification adjustments from accumulated other comprehensive income	(1,044		)	499			(545		)
Balance as of June 30, 2014	$	147,858		$	(28,453	)	$	119,405

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the six-month period ended June 30, 2014:

				Liability for
	Net unrealized			underfunded
	appreciation			employee
	on investments			benefit costs			Total
Balance as of January 1, 2014	$	116,601		$	(29,451	)	$	87,150
Change in accumulated other comprehensive income before reclassifications	33,264			—			33,264
Reclassification adjustments from accumulated other comprehensive income	(2,007		)	998			(1,009		)
Balance as of June 30, 2014	$	147,858		$	(28,453	)	$	119,405

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	UFCS
Entity Registrant Name	UNITED FIRE GROUP INC
Entity Central Index Key	0000101199
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		25,212,125

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Nature of Operations and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X promulgated by the SEC. Certain financial information that is included in our Annual Report on Form 10-K, including certain financial statement footnote disclosures, are not required by the rules and regulations of the SEC for interim financial reporting and have been condensed or omitted.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statement categories that are most dependent on management estimates and assumptions include: investments; deferred policy acquisition costs; reinsurance receivables and recoverables (for net realizable value); future policy benefits and losses, claims and loss settlement expenses; and pension and postretirement benefit obligations.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and non-negotiable certificates of deposit with original maturities of three months or less.

Deferred Policy Acquisition Costs

Deferred Policy Acquisition Costs ("DAC")

Certain costs associated with underwriting new business (primarily commissions, premium taxes and variable underwriting and policy issue expenses associated with successful acquisition efforts) are deferred.

Property and casualty insurance policy acquisition costs deferred are amortized as premium revenue is recognized. The method followed in computing DAC limits the amount of such deferred costs to their estimated realizable value. This takes into account the premium to be earned, losses and loss settlement expenses expected to be incurred and certain other costs expected to be incurred as the premium is earned.

For traditional life insurance policies, DAC is amortized to income over the premium-paying period in proportion to the ratio of the expected annual premium revenue to the expected total premium revenue. Expected premium revenue and gross profits are based on the same mortality and withdrawal assumptions used in determining future policy benefits. These assumptions are not revised after policy issuance unless the recorded DAC asset is deemed to be unrecoverable from future expected profits.

For non-traditional life insurance policies, DAC is amortized over the anticipated terms in proportion to the ratio of the expected annual gross profits to the total expected gross profits. Changes in the amount or timing of expected gross profits result in adjustments to the cumulative amortization of these costs. The effect on amortization of DAC for revisions to estimated gross profits is reported in earnings in the period the estimated gross profits are revised.

The effect on DAC that results from the assumed realization of unrealized gains (losses) on investments allocated to non-traditional life insurance business is recognized with an offset, or "shadow" DAC, to net unrealized investment appreciation as of the balance sheet date.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are established based on differences between the financial statement bases of assets and liabilities and the tax bases of those same assets and liabilities, using the currently enacted statutory tax rates. Deferred income tax expense is measured by the year-to-year change in the net deferred tax asset or liability, except for certain changes in deferred tax amounts that affect stockholders' equity and do not impact federal income tax expense.

We reported a federal income tax expense of $4,937 and $12,279 for the six-month periods ended June 30, 2014 and 2013, respectively. Our effective tax rate is different than the federal statutory rate of 35.0 percent due principally to the effect of tax-exempt municipal bond interest income and non-taxable dividend income.

We did not recognize any liability for unrecognized tax benefits at June 30, 2014 or December 31, 2013. In addition, we have not accrued for interest and penalties related to unrecognized tax benefits. However, if interest and penalties would need to be accrued related to unrecognized tax benefits, such amounts would be recognized as a component of federal income tax expense.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Adopted Accounting Standards in 2014

Unrecognized tax benefit

In July 2013, the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance was effective for annual and interim periods beginning after December 15, 2013. The Company currently does not have any liability for unrecognized tax benefits. The Company adopted the new guidance effective January 1, 2014. The adoption of the new guidance had no impact on the Company's financial position or results of operations.

Pending Adoption of Accounting Standards

Share Based Payments

In June 2014, the FASB issued new guidance on the accounting for share based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The new guidance requires a performance target that affects vesting and that could be achieved after the service period, be treated as a performance condition. The guidance is effective for interim and annual periods beginning after December 15, 2015. The amendments can be applied prospectively or retrospectively and early adoption is permitted. The Company will adopt the guidance on January 1, 2016 and is currently evaluating the impact on the Company's financial position and results of operations.

Revenue Recognition

In May 2014, the FASB issued comprehensive new guidance on revenue recognition which supersedes nearly all existing revenue recognition guidance under GAAP. The new guidance requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a five-step model that requires companies to exercise judgment when considering the terms of the contract(s) and all relevant facts and circumstances. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The Company will adopt the guidance on January 1, 2017 and is currently evaluating the impact on the Company's financial position and results of operations. Management does not expect insurance contracts to be in the scope of this new guidance.

Discontinued Operations

In April 2014, the FASB issued new guidance on reporting discontinued operations and disclosures of disposals of components of an entity. The new guidance raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It is effective for annual periods beginning after December 15, 2014. Early adoption is permitted but only for disposals that have not been reported in financial statements previously issued. The Company will adopt the guidance on January 1, 2015 and is currently evaluating the impact on the Company's financial position and results of operations.

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Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues
Net premiums earned	$ 201,827	$ 186,367	$ 395,168	$ 363,184
Investment income, net of investment expenses	27,603	29,019	54,365	55,483
Net realized investment gains (includes reclassifications for net unrealized investment gains on available-for-sale securities of $1,606 and $3,088 in 2014; and $4,417 and $5,653 in 2013; previously included in accumulated other comprehensive income (loss))	2,708	4,151	4,902	6,060
Other income	535	182	1,142	297
Total revenues	232,673	219,719	455,577	425,024
Benefits, Losses and Expenses
Losses and loss settlement expenses	142,716	120,435	267,953	217,905
Increase in liability for future policy benefits	8,077	9,869	15,898	18,105
Amortization of deferred policy acquisition costs	40,196	36,708	79,730	74,789
Other underwriting expenses (includes reclassifications for employee benefit costs of $768 and $1,536 in 2014; and $1,243 and $2,485 in 2013; previously included in accumulated other comprehensive income (loss))	20,776	23,308	47,204	45,656
Interest on policyholders’ accounts	7,852	9,081	15,839	18,401
Total benefits, losses and expenses	219,617	199,401	426,624	374,856
Income before income taxes	13,056	20,318	28,953	50,168
Federal income tax expense (includes reclassifications of $293 and $543 in 2014; and $1,111 and $1,109 in 2013; previously included in accumulated other comprehensive income (loss))	2,371	4,822	4,937	12,279
Net income	10,685	15,496	24,016	37,889
Other comprehensive income (loss)
Change in net unrealized appreciation on investments	27,108	(51,782)	51,177	(37,294)
Change in liability for underfunded employee benefit plans	0	0	0	0
Other comprehensive income (loss), before tax and reclassification adjustments	27,108	(51,782)	51,177	(37,294)
Income tax effect	(9,488)	18,115	(17,913)	13,045
Other comprehensive income (loss), after tax, before reclassification adjustments	17,620	(33,667)	33,264	(24,249)
Reclassification adjustment for net realized investment gains included in income	(1,606)	(4,417)	(3,088)	(5,653)
Reclassification adjustment for employee benefit costs included in expense	768	1,243	1,536	2,485
Total reclassification adjustments, before tax	(838)	(3,174)	(1,552)	(3,168)
Income tax effect	293	1,111	543	1,109
Total reclassification adjustments, after tax	(545)	(2,063)	(1,009)	(2,059)
Comprehensive income (loss)	$ 27,760	$ (20,234)	$ 56,271	$ 11,581
Weighted average common shares outstanding (in shares)	25,330,066	25,297,718	25,351,056	25,271,752
Basic earnings per common share (in dollars per share)	$ 0.42	$ 0.61	$ 0.95	$ 1.50
Diluted earnings per common share (in dollars per share)	$ 0.42	$ 0.61	$ 0.94	$ 1.49

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Employee Benefits

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Employee Benefits

EMPLOYEE BENEFITS

Net Periodic Benefit Cost

The components of the net periodic benefit cost for our pension and postretirement benefit plans are as follows:

	Pension Plan						Postretirement Benefit Plan
Three Months Ended June 30,	2014			2013			2014		2013
Net periodic benefit cost
Service cost	$	1,303		$	1,868		$	924	$	752
Interest cost	1,468			1,326			586		423
Expected return on plan assets	(1,739		)	(1,550		)	—		—
Amortization of net loss	544			1,105			224		138
Net periodic benefit cost	$	1,576		$	2,749		$	1,734	$	1,313

	Pension Plan						Postretirement Benefit Plan
Six Months Ended June 30,	2014			2013			2014		2013
Net periodic benefit cost
Service cost	$	2,606		$	3,150		$	1,848	$	1,505
Interest cost	2,936			2,587			1,172		847
Expected return on plan assets	(3,478		)	(2,886		)	—		—
Amortization of net loss	1,088			2,211			448		274
Net periodic benefit cost	$	3,152		$	5,062		$	3,468	$	2,626

Employer Contributions

We previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 that we expected to contribute $6,260 to the pension plan in 2014. For the six-month period ended June 30, 2014, we contributed $3,315 to the pension plan. We anticipate that the total contribution in 2014 will not vary significantly from our expected contribution.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

We estimate the fair value of our financial instruments based on relevant market information or by discounting estimated future cash flows at estimated current market discount rates appropriate to the specific asset or liability.

When possible, we use quoted market prices to determine the fair value of fixed maturities, equity securities, trading securities and short-term investments. When quoted market prices do not exist, we base estimates of fair value on market prices obtained from independent pricing services and brokers or on valuation techniques that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management’s own assumptions about the assumptions a market participant would use in pricing the financial instrument. Our valuation techniques are discussed in more detail later in this section.

The fair value of our mortgage loans is determined by modeling performed by us based on the stated principal and coupon payments provided for in the loan agreements. These cash flows are then discounted using an appropriate risk-adjusted discount rate to determine the security's fair value, which is a Level 3 fair value measurement.

The fair value of our policy loans is equivalent to carrying value, which is a reasonable estimate of fair value. We do not make policy loans for amounts in excess of the cash surrender value of the related policy. In all instances, the policy loans are fully collateralized by the related liability for future policy benefits for traditional insurance policies or by the policyholders' account balance for non-traditional policies.

Our other long-term investments consist primarily of our interests in limited liability partnerships that are recorded on the equity method of accounting. The fair value of the partnerships is obtained from the fund managers, which is based on the fair value of the underlying investments held in the partnerships. In management's opinion, these values represent a reasonable estimate of fair value. We have not adjusted the net asset value provided by the fund managers.

For cash and cash equivalents and accrued investment income, carrying value is a reasonable estimate of fair value due to the short-term nature of these financial instruments.

Policy reserves are developed and recorded for deferred annuities, which is an interest-sensitive product, and income annuities. The fair value of the reserve liability for these annuity products is based upon an estimate of the discounted pretax cash flows that are forecast for the underlying business, which is a Level 3 fair value measurement. We base the discount rate on the current U.S. Treasury spot yield curve, which is then risk-adjusted for nonperformance risk and, for interest-sensitive business, market risk factors. The risk-adjusted discount rate is developed using interest rates that are available in the market and representative of the risks applicable to the underlying business.

A summary of the carrying value and estimated fair value of our financial instruments at June 30, 2014 and December 31, 2013 is as follows:

	June 30, 2014				December 31, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Held-to-maturity securities	$	640	$	630	$	669	$	656
Available-for-sale securities	2,824,018		2,824,018		2,751,256		2,751,256
Trading securities	18,305		18,305		9,940		9,940
Equity securities:
Available-for-sale securities	239,244		239,244		229,368		229,368
Trading securities	3,206		3,206		2,487		2,487
Mortgage loans	4,724		4,313		4,724		4,423
Policy loans	6,200		6,200		6,261		6,261
Other long-term investments	48,707		48,707		44,946		44,946
Short-term investments	475		475		800		800
Cash and cash equivalents	90,276		90,276		92,193		92,193
Corporate-owned life insurance	578		578		—		—
Liabilities
Policy reserves
Annuity (accumulations) (1)	$	949,519	$	908,765	$	941,636	$	925,832
Annuity (benefit payments)	147,594		96,661		140,276		94,805

(1) Annuity accumulations represent deferred annuity contracts that are currently earning interest.

Current accounting guidance on fair value measurements includes the application of a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Our financial instruments that are recorded at fair value are categorized into a three-level hierarchy, which is based upon the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (i.e., Level 1) and the lowest priority to unobservable inputs (i.e., Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the financial instrument.

Financial instruments recorded at fair value are categorized in the fair value hierarchy as follows:

• Level 1: Valuations are based on unadjusted quoted prices in active markets for identical financial instruments that we have the ability to access.

• Level 2: Valuations are based on quoted prices for similar financial instruments, other than quoted prices included in Level 1, in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument.

• Level 3: Valuations are based on pricing or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management’s own assumptions about the assumptions a market participant would use in pricing the financial instrument.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.

To determine the fair value of the majority of our investments, we utilize prices obtained from independent, nationally recognized pricing services. We obtain one price for each security. When the pricing services cannot provide a determination of fair value for a specific security, we obtain non-binding price quotes from broker-dealers with whom we have had several years experience and who have demonstrated knowledge of the subject security. We request and utilize one broker quote per security.

We validate the prices obtained from independent pricing services and brokers prior to their use for reporting purposes by evaluating their reasonableness on a monthly basis. Our validation process includes a review for unusual fluctuations. In our opinion, the pricing obtained at June 30, 2014 and December 31, 2013 was reasonable.

In order to determine the proper classification in the fair value hierarchy for each security where the price is obtained from an independent pricing service, we obtain and evaluate the vendors' pricing procedures and inputs used to price the security, which include unadjusted quoted market prices for identical securities, such as a New York Stock Exchange closing price, and quoted prices for identical securities in markets that are not active. For fixed maturity securities, an evaluation of interest rates and yield curves observable at commonly quoted intervals, volatility, prepayment speeds, credit risks and default rates may also be performed. We have determined that these processes and inputs result in fair values and classifications consistent with the applicable accounting guidance on fair value measurements.

We review our fair value hierarchy categorizations on a quarterly basis at which time the classification of certain financial instruments may change if the input observations have changed.

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis in our Consolidated Balance Sheets at June 30, 2014 and December 31, 2013:

June 30, 2014			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,703	$	—	$	30,703	$	—
U.S. government agency	356,681		—		356,681		—
States, municipalities and political subdivisions	736,768		—		736,158		610
Foreign bonds	150,225		—		150,225		—
Public utilities	220,344		—		220,344		—
Corporate bonds
Energy	154,600		—		154,600		—
Industrials	223,801		—		223,801		—
Consumer goods and services	164,326		—		162,937		1,389
Health care	81,960		—		81,960		—
Technology, media and telecommunications	131,824		—		131,824		—
Financial services	233,543		—		222,005		11,538
Mortgage-backed securities	20,188		—		20,188		—
Collateralized mortgage obligations	315,736		—		315,736		—
Asset-backed securities	3,319		—		1,477		1,842
Total Available-for-Sale Fixed Maturities	$	2,824,018	$	—	$	2,808,639	$	15,379
Equity securities:
Common stocks
Public utilities	$	18,666	$	18,666	$	—	$	—
Energy	16,485		16,485		—		—
Industrials	46,624		46,619		5		—
Consumer goods and services	21,777		21,777		—		—
Health care	26,766		26,766		—		—
Technology, media and telecommunications	13,923		13,923		—		—
Financial services	89,884		85,945		67		3,872
Nonredeemable preferred stocks	5,119		553		4,566		—
Total Available-for-Sale Equity Securities	$	239,244	$	230,734	$	4,638	$	3,872
Total Available-for-Sale Securities	$	3,063,262	$	230,734	$	2,813,277	$	19,251
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,252	$	—	$	1,252	$	—
Corporate bonds
Industrials	2,128		—		2,128		—
Consumer goods and services	1,099		—		1,099		—

Health care	2,517		—		2,517		—
Technology, media and telecommunications	3,004		—		3,004		—
Financial services	4,214		—		4,214		—
Redeemable preferred stocks	4,091		4,091		—		—
Equity securities:
Energy	659		659		—		—
Consumer goods and services	32		32		—		—
Health care	389		389		—		—
Technology, media and telecommunications	364		364		—		—
Nonredeemable preferred stocks	1,762		1,762		—		—
Total Trading Securities	$	21,511	$	7,297	$	14,214	$	—
Short-Term Investments	$	475	$	475	$	—	$	—
Money Market Accounts	$	30,120	$	30,120	$	—	$	—
Corporate-Owned Life Insurance	$	578	$	—	$	578	$	—
Total Assets Measured at Fair Value	$	3,115,946	$	268,626	$	2,828,069	$	19,251

December 31, 2013			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,895	$	—	$	33,895	$	—
U.S. government agency	269,583		—		269,583		—
States, municipalities and political subdivisions	713,907		—		713,209		698
Foreign bonds	172,856		—		172,856		—
Public utilities	218,576		—		218,576		—
Corporate bonds
Energy	161,010		—		161,010		—
Industrials	237,028		—		237,028		—
Consumer goods and services	167,914		—		166,460		1,454
Health care	92,946		—		92,946		—
Technology, media and telecommunications	120,966		—		120,966		—
Financial services	241,751		—		229,725		12,026
Mortgage-backed securities	22,066		—		22,066		—
Collateralized mortgage obligations	294,763		—		294,763		—
Asset-backed securities	3,995		—		1,966		2,029
Total Available-for-Sale Fixed Maturities	$	2,751,256	$	—	$	2,735,049	$	16,207
Equity securities:
Common stocks
Public utilities	$	16,272	$	16,272	$	—	$	—
Energy	14,363		14,363		—		—
Industrials	46,099		46,083		16		—
Consumer goods and services	21,258		21,258		—		—
Health care	24,998		24,998		—		—
Technology, media and telecommunications	13,304		13,304		—		—
Financial services	88,262		84,419		62		3,781
Nonredeemable preferred stocks	4,812		1,714		3,098		—
Total Available-for-Sale Equity Securities	$	229,368	$	222,411	$	3,176	$	3,781
Total Available-for-Sale Securities	$	2,980,624	$	222,411	$	2,738,225	$	19,988
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,253	$	—	$	1,253	$	—
Corporate bonds
Industrials	1,122		—		1,122		—
Consumer goods and services	106		—		106		—
Health care	1,154		—		1,154		—
Technology, media and telecommunications	2,054		—		2,054		—

Financial services	1,866		—		1,866		—
Redeemable preferred stocks	2,385		2,385		—		—
Equity securities:
Energy	563		563		—		—
Consumer goods and services	39		39		—		—
Health care	332		332		—		—
Nonredeemable preferred stocks	1,553		1,553		—		—
Total Trading Securities	$	12,427	$	4,872	$	7,555	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	37,811	$	37,811	$	—	$	—
Total Assets Measured at Fair Value	$	3,031,662	$	265,894	$	2,745,780	$	19,988

The fair value of securities that are categorized as Level 1 is based on quoted market prices that are readily and regularly available.

The fair value of securities that are categorized as Level 2 is determined by management after reviewing market prices obtained from independent pricing services and brokers. Such estimated fair values do not necessarily represent the values for which these securities could have been sold at the reporting date. Our independent pricing services and brokers obtain prices from reputable pricing vendors in the marketplace. They continually monitor and review the external pricing sources, while actively participating to resolve any pricing issues that may arise.

For the three- and six-month periods ended June 30, 2014, the change in our available-for-sale securities categorized as Level 1 and Level 2 is the result of investment purchases that were made using funds held in our money market accounts, disposals and the change in unrealized gains on both fixed maturities and equity securities. During the three- and six-month periods ended June 30, 2014, there was one nonredeemable preferred stock security with a fair value of $1,228 transfered between Level 1 and Level 2 because the security was delisted and is no longer actively traded on a major exchange.

Securities categorized as Level 3 include holdings in certain private placement fixed maturity and equity securities for which an active market does not currently exist.

The fair value of our Level 3 private placement securities is determined by management relying on pricing received from our independent pricing services and brokers consistent with the process to estimate fair value for Level 2 securities. If pricing cannot be obtained from these sources, which occurs on a limited basis, management will perform a cash flow analysis, using an appropriate risk-adjusted discount rate, on the underlying security to estimate fair value.

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended June 30, 2014:

	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at March 31, 2014	$	698		$	13,122		$	1,913		$	3,891		$	19,624
Realized losses (1)	—			—			—			(56		)	(56		)
Unrealized gains (losses)(1)	(18		)	9			45			48			84
Disposals	(70		)	(204		)	(116		)	(11		)	(401		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the six-month period ended June 30, 2014:

	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at January 1, 2014	$	698		$	13,480		$	2,029		$	3,781		$	19,988
Realized losses (1)	—			—			—			(56		)	(56		)
Unrealized gains (losses) (1)	(18		)	(53		)	40			48			17
Purchases	—			—			—			99			99
Disposals	(70		)	(500		)	(227		)	—			(797		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

The fixed maturities reported as disposals relate to the receipt of principal on calls or sinking fund bonds, in accordance with the indentures.

Corporate-Owned Life Insurance

The Company formed a rabbi trust in 2014 to fund obligations under the United Fire & Casualty Company Non-qualified Deferred Compensation Plan and United Fire Group Supplemental Executive Retirement and Deferral Plan ("Plan"). Within the rabbi trust, corporate-owned life insurance (“COLI”) policies are utilized as an investment vehicle and source of funding for the Company's Plan. As of June 30, 2014, the cash surrender value of the COLI was $578, which is equal to the fair value measured using Level 2 inputs, based on the underlying assets of the COLI policy, and included in other assets in the Consolidated Balance Sheets. The COLI policy invests in mutual funds, which are priced daily by independent sources.

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Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Share-based Compensation [Abstract]

Activity in Stock Award Plans

The activity in the Director Plan is displayed in the following table:

Authorized Shares Available for Future Award Grants	Six Months Ended June 30, 2014		From Inception to June 30, 2014
Beginning balance	103,912		300,000
Number of awards granted	(16,718	)	(218,809	)
Number of awards forfeited or expired	—		6,003
Ending balance	87,194		87,194
Number of option awards exercised	1,519		4,675
Number of restricted stock awards vested	5,040		11,442

he activity in the Stock Plan is displayed in the following table:

Authorized Shares Available for Future Award Grants	Six Months Ended June 30, 2014		From Inception to June 30, 2014
Beginning balance	353,649		1,900,000
Additional shares authorized	1,500,000		1,500,000
Number of awards granted	(313,948	)	(1,996,444	)
Number of awards forfeited or expired	5,000		141,145
Ending balance	1,544,701		1,544,701
Number of option awards exercised	46,231		427,999
Number of unrestricted stock awards granted	660		5,215
Number of restricted stock awards vested	—		18,576

Remaining Stock-Based Compensation Expense

We expect this compensation to be recognized over the remainder of 2014 and subsequent years according to the following table, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.

2014	$	1,000
2015	1,864
2016	1,439
2017	1,200
2018	779
2019	90
Total	$	6,372

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Nature of Operations and Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Deferred Policy Acquisition Costs

The following table is a summary of the components of DAC, including the related amortization recognized for the six-month period ended June 30, 2014.

	Property & Casualty Insurance			Life Insurance			Total
Recorded asset at beginning of period	$	67,663		$	82,429		$	150,092
Underwriting costs deferred	87,193			3,680			90,873
Amortization of deferred policy acquisition costs	(76,378		)	(3,352		)	(79,730		)
Ending unamortized deferred policy acquisition costs	$	78,478		$	82,757		$	161,235
Change in "shadow" deferred policy acquisition costs	—			(17,921		)	(17,921		)
Recorded asset at end of period	$	78,478		$	64,836		$	143,314

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Common Share

EARNINGS PER COMMON SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share gives effect to all dilutive common shares outstanding during the reporting period. The dilutive shares we consider in our diluted earnings per share calculation relate to our outstanding stock options and restricted stock awards.

We determine the dilutive effect of our outstanding stock options using the "treasury stock" method. Under this method, we assume the exercise of all of the outstanding stock options whose exercise price is less than the weighted-average market value of our common stock during the reporting period. This method also assumes that the proceeds from the hypothetical stock option exercises are used to repurchase shares of our common stock at the weighted-average market value of the stock during the reporting period. The net of the assumed stock options exercised and assumed common shares repurchased represents the number of dilutive common shares, which we add to the denominator of the earnings per share calculation.

The components of basic and diluted earnings per share were as follows for the three-month periods ended June 30, 2014 and 2013:

	Three Months Ended June 30,
(In Thousands Except Share Data)	2014				2013
	Basic		Diluted		Basic		Diluted
Net income	$	10,685	$	10,685	$	15,496	$	15,496
Weighted-average common shares outstanding	25,330,066		25,330,066		25,297,718		25,297,718
Add dilutive effect of restricted stock awards	—		114,313		—		59,849
Add dilutive effect of stock options	—		112,248		—		114,735
Weighted-average common shares	25,330,066		25,556,627		25,297,718		25,472,302
Earnings per common share	$	0.42	$	0.42	$	0.61	$	0.61
Awards excluded from diluted earnings per share calculation(1)	—		904,580		—		647,726

(1) Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

The components of basic and diluted earnings per share were as follows for the six-month periods ended June 30, 2014 and 2013:

	Six Months Ended June 30,
(In Thousands Except Share Data)	2014				2013
	Basic		Diluted		Basic		Diluted
Net income	$	24,016	$	24,016	$	37,889	$	37,889
Weighted-average common shares outstanding	25,351,056		25,351,056		25,271,752		25,271,752
Add dilutive effect of restricted stock awards	—		114,313		—		59,849
Add dilutive effect of stock options	—		125,889		—		82,791
Weighted-average common shares	25,351,056		25,591,258		25,271,752		25,414,392
Earnings per common share	$	0.95	$	0.94	$	1.50	$	1.49
Awards excluded from diluted earnings per share calculation(1)	—		904,580		—		663,326

(1) Outstanding awards that are not "in-the-money" are excluded from the diluted earnings per share calculation because the effect of including them would have been anti-dilutive.

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Stock-based Compensation

6 Months Ended

Jun. 30, 2014

Share-based Compensation [Abstract]

Stock-based Compensation

STOCK-BASED COMPENSATION

Non-qualified Employee Stock Award Plan

The United Fire Group, Inc. Stock Plan (the "Stock Plan") authorized the issuance of restricted and unrestricted stock or stock unit awards, stock appreciation rights, incentive stock options, and non-qualified stock options for up to 1,900,000 shares of United Fire common stock to our employees. In May 2014, the Registrant's shareholders approved an additional 1,500,000 shares of United Fire common stock issuable at any time and from time to time pursuant to the Stock Plan, as amended. At June 30, 2014, there are 1,544,701 authorized shares remaining available for future issuance. The Stock Plan is administered by the Board of Directors, which determines those employees who will receive awards, when awards will be granted, and the terms and conditions of the awards. The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Stock Plan. Pursuant to the Stock Plan, the Board of Directors may, at its sole discretion, grant awards to our employees who are in positions of substantial responsibility with United Fire.

Options granted pursuant to the Stock Plan are granted to buy shares of United Fire's common stock at the market value of the stock on the date of grant. Unless the Board of Directors authorizes the acceleration of vesting, all outstanding option awards vest and are exercisable in installments of 20.0 percent of the number of shares covered by the option award each year from the grant date. To the extent not exercised, vested option awards accumulate and are exercisable by the awardee, in whole or in part, in any subsequent year included in the option period, but not later than 10 years from the grant date. Restricted and unrestricted stock awards granted pursuant to the Stock Plan are granted at the market value of our common stock on the date of the grant. Restricted stock or stock unit awards fully vest after five years from the date of issuance, unless accelerated upon the approval of the Board of Directors, at which time United Fire common stock will be issued to the awardee.

The activity in the Stock Plan is displayed in the following table:

Authorized Shares Available for Future Award Grants	Six Months Ended June 30, 2014		From Inception to June 30, 2014
Beginning balance	353,649		1,900,000
Additional shares authorized	1,500,000		1,500,000
Number of awards granted	(313,948	)	(1,996,444	)
Number of awards forfeited or expired	5,000		141,145
Ending balance	1,544,701		1,544,701
Number of option awards exercised	46,231		427,999
Number of unrestricted stock awards granted	660		5,215
Number of restricted stock awards vested	—		18,576

Non-qualified Non-employee Director Stock Option and Restricted Stock Plan

The United Fire and Casualty Company 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan (the "Director Plan") authorizes the issuance of restricted stock awards and non-qualified stock options to purchase shares of United Fire’s common stock to non-employee directors. At June 30, 2014, we had 87,194 authorized shares available for future issuance under the Director Plan.

The Board of Directors has the authority to determine which non-employee directors receive awards, when options and restricted stock shall be granted, the option price, the option expiration date, the date of grant, the vesting schedule of options or whether the options shall be immediately vested, the terms and conditions of options and restricted stock (other than those terms and conditions set forth in the plan) and the number of shares of common stock to be issued pursuant to an option agreement or restricted stock agreement (subject to limits set forth in the plan). The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Director Plan.

The activity in the Director Plan is displayed in the following table:

Authorized Shares Available for Future Award Grants	Six Months Ended June 30, 2014		From Inception to June 30, 2014
Beginning balance	103,912		300,000
Number of awards granted	(16,718	)	(218,809	)
Number of awards forfeited or expired	—		6,003
Ending balance	87,194		87,194
Number of option awards exercised	1,519		4,675
Number of restricted stock awards vested	5,040		11,442

Stock-Based Compensation Expense

For the three-month periods ended June 30, 2014 and 2013, we recognized stock-based compensation expense of $507 and $407, respectively. For the six-month periods ended June 30, 2014 and 2013, we recognized stock-based compensation expense of $944 and $818, respectively. Stock-based compensation expense is recognized over the vesting period of the stock options.

As of June 30, 2014, we had $6,372 in stock-based compensation expense that has yet to be recognized through our results of operations. We expect this compensation to be recognized over the remainder of 2014 and subsequent years according to the following table, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.

2014	$	1,000
2015	1,864
2016	1,439
2017	1,200
2018	779
2019	90
Total	$	6,372

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Segment Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We have two reportable business segments in our operations: property and casualty insurance and life insurance. The property and casualty insurance segment has seven domestic locations from which it conducts its business. The life insurance segment operates from our home office. Because all of our insurance is sold domestically, we have no revenues from foreign operations.

We evaluate the two segments on the basis of both statutory accounting principles prescribed or permitted by our states of domicile and GAAP. We analyze results based on profitability (i.e., loss ratios), expenses, and return on equity. The basis we use to determine and analyze segments and to measure segment profit or loss have not changed from that reported in our Annual Report on Form 10-K for the year ended December 31, 2013.

We have reconciled the following table for the three-month periods ended June 30, 2014 and 2013 to the amounts reported in our unaudited Consolidated Financial Statements to adjust for intersegment eliminations.

	Property and Casualty Insurance		Life Insurance			Total
Three Months Ended June 30, 2014
Net premiums earned	$	187,832	$	14,127		$	201,959
Investment income, net of investment expenses	11,831		15,765			27,596
Net realized investment gains	2,337		371			2,708
Other income	314		221			535
Total reportable segment	$	202,314	$	30,484		$	232,798
Intersegment eliminations	7		(132		)	(125		)
Total revenues	$	202,321	$	30,352		$	232,673
Net income	$	9,540	$	1,145		$	10,685
Assets	$	2,100,863	$	1,751,047		$	3,851,910
Invested assets	$	1,519,110	$	1,625,988		$	3,145,098
Three Months Ended June 30, 2013
Net premiums earned	$	170,527	$	15,963		$	186,490
Investment income, net of investment expenses	12,279		16,731			29,010
Net realized investment gains	3,560		591			4,151
Other income	72		110			182
Total reportable segment	$	186,438	$	33,395		$	219,833
Intersegment eliminations	9		(123		)	(114		)
Total revenues	$	186,447	$	33,272		$	219,719
Net income	$	13,195	$	2,301		$	15,496
Assets	$	1,951,033	$	1,749,716		$	3,700,749
Invested assets	$	1,379,947	$	1,643,356		$	3,023,303

We have reconciled the following table for the six-month periods ended June 30, 2014 and 2013 to the amounts reported in our unaudited Consolidated Financial Statements to adjust for intersegment eliminations.

	Property and Casualty Insurance		Life Insurance			Total
Six Months Ended June 30, 2014
Net premiums earned	$	367,326	$	28,107		$	395,433
Investment income, net of investment expenses	22,944		31,364			54,308
Net realized investment gains	3,704		1,198			4,902
Other income	794		348			1,142
Total reportable segment	$	394,768	$	61,017		$	455,785
Intersegment eliminations	57		(265		)	(208		)
Total revenues	$	394,825	$	60,752		$	455,577
Net income	$	21,351	$	2,665		$	24,016
Assets	$	2,100,863	$	1,751,047		$	3,851,910
Invested assets	$	1,519,110	$	1,625,988		$	3,145,098
Six Months Ended June 30, 2013
Net premiums earned	$	333,228	$	30,202		$	363,430
Investment income, net of investment expenses	22,700		32,710			55,410
Net realized investment gains	4,589		1,471			6,060
Other income	84		213			297
Total reportable segment	$	360,601	$	64,596		$	425,197
Intersegment eliminations	73		(246		)	(173		)
Total revenues	$	360,674	$	64,350		$	425,024
Net income	$	33,924	$	3,965		$	37,889
Assets	$	1,951,033	$	1,749,716		$	3,700,749
Invested assets	$	1,379,947	$	1,643,356		$	3,023,303

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Credit Facility

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Credit Facility

CREDIT FACILITY

In December 2011, United Fire entered into a credit agreement with a syndicate of financial institutions as lenders. KeyBank National Association is the administrative agent, lead arranger, sole book runner, swingline lender, and letter of credit issuer, and Bankers Trust Company is the syndication agent. The four-year credit agreement provides for a $100,000 unsecured revolving credit facility that includes a $20,000 letter of credit subfacility and a swing line subfacility of up to $5,000.

On June 4, 2013, United Fire & Casualty Company, United Fire Group, Inc. and the syndicated lenders entered into an Assignment, Joinder, Assumption, and Release Agreement (the "Joinder Agreement") transferring the obligations under the credit agreement from United Fire & Casualty Company to United Fire Group, Inc. Effective with the execution of the Joinder Agreement, United Fire & Casualty Company was released from any further obligations under the credit agreement.

During the term of this credit agreement, we have the right to increase the total credit facility from $100,000 up to $125,000 if no event of default has occurred and is continuing and certain other conditions are satisfied. The credit facility is available for general corporate purposes, including working capital, acquisitions and liquidity purposes. Any principal outstanding under the credit facility is due in full at maturity, on December 22, 2015. The interest rate is based on our monthly choice of either a base rate or the London Interbank Offered Rate ("LIBOR") plus, in each case, a calculated margin amount. A commitment fee on each lender's unused commitment under the credit facility is also payable quarterly.

The credit agreement contains customary representations, covenants and events of default, including certain covenants that limit or restrict our ability to engage in certain activities. Subject to certain exceptions, these activities include restricting our ability to sell or transfer assets or enter into a merger or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into leaseback transactions, or incur certain indebtedness. The credit agreement contains certain financial covenants including covenants that require us to maintain a minimum consolidated net worth, a debt to capitalization ratio and minimum shareholders' equity.

There was no outstanding balance on the credit facility at June 30, 2014 and 2013. For the six-month periods ended June 30, 2014 and 2013, we did not incur any interest expense related to this credit facility. We were in compliance with all covenants for the credit agreement at June 30, 2014.

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Summary of Investments (Narratives) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Trading securities	$ 21,511	$ 12,427
Equity Securities [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Largest unrealized loss greater than 12 months on an individual security	$ 54

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Carrying Value and Estimated Fair Value of Financial Instruments

A summary of the carrying value and estimated fair value of our financial instruments at June 30, 2014 and December 31, 2013 is as follows:

	June 30, 2014				December 31, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Held-to-maturity securities	$	640	$	630	$	669	$	656
Available-for-sale securities	2,824,018		2,824,018		2,751,256		2,751,256
Trading securities	18,305		18,305		9,940		9,940
Equity securities:
Available-for-sale securities	239,244		239,244		229,368		229,368
Trading securities	3,206		3,206		2,487		2,487
Mortgage loans	4,724		4,313		4,724		4,423
Policy loans	6,200		6,200		6,261		6,261
Other long-term investments	48,707		48,707		44,946		44,946
Short-term investments	475		475		800		800
Cash and cash equivalents	90,276		90,276		92,193		92,193
Corporate-owned life insurance	578		578		—		—
Liabilities
Policy reserves
Annuity (accumulations) (1)	$	949,519	$	908,765	$	941,636	$	925,832
Annuity (benefit payments)	147,594		96,661		140,276		94,805

(1) Annuity accumulations represent deferred annuity contracts that are currently earning interest.

Financial Instruments Measured at Fair Value on Recurring Basis

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis in our Consolidated Balance Sheets at June 30, 2014 and December 31, 2013:

June 30, 2014			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,703	$	—	$	30,703	$	—
U.S. government agency	356,681		—		356,681		—
States, municipalities and political subdivisions	736,768		—		736,158		610
Foreign bonds	150,225		—		150,225		—
Public utilities	220,344		—		220,344		—
Corporate bonds
Energy	154,600		—		154,600		—
Industrials	223,801		—		223,801		—
Consumer goods and services	164,326		—		162,937		1,389
Health care	81,960		—		81,960		—
Technology, media and telecommunications	131,824		—		131,824		—
Financial services	233,543		—		222,005		11,538
Mortgage-backed securities	20,188		—		20,188		—
Collateralized mortgage obligations	315,736		—		315,736		—
Asset-backed securities	3,319		—		1,477		1,842
Total Available-for-Sale Fixed Maturities	$	2,824,018	$	—	$	2,808,639	$	15,379
Equity securities:
Common stocks
Public utilities	$	18,666	$	18,666	$	—	$	—
Energy	16,485		16,485		—		—
Industrials	46,624		46,619		5		—
Consumer goods and services	21,777		21,777		—		—
Health care	26,766		26,766		—		—
Technology, media and telecommunications	13,923		13,923		—		—
Financial services	89,884		85,945		67		3,872
Nonredeemable preferred stocks	5,119		553		4,566		—
Total Available-for-Sale Equity Securities	$	239,244	$	230,734	$	4,638	$	3,872
Total Available-for-Sale Securities	$	3,063,262	$	230,734	$	2,813,277	$	19,251
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,252	$	—	$	1,252	$	—
Corporate bonds
Industrials	2,128		—		2,128		—
Consumer goods and services	1,099		—		1,099		—

Health care	2,517		—		2,517		—
Technology, media and telecommunications	3,004		—		3,004		—
Financial services	4,214		—		4,214		—
Redeemable preferred stocks	4,091		4,091		—		—
Equity securities:
Energy	659		659		—		—
Consumer goods and services	32		32		—		—
Health care	389		389		—		—
Technology, media and telecommunications	364		364		—		—
Nonredeemable preferred stocks	1,762		1,762		—		—
Total Trading Securities	$	21,511	$	7,297	$	14,214	$	—
Short-Term Investments	$	475	$	475	$	—	$	—
Money Market Accounts	$	30,120	$	30,120	$	—	$	—
Corporate-Owned Life Insurance	$	578	$	—	$	578	$	—
Total Assets Measured at Fair Value	$	3,115,946	$	268,626	$	2,828,069	$	19,251

December 31, 2013			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,895	$	—	$	33,895	$	—
U.S. government agency	269,583		—		269,583		—
States, municipalities and political subdivisions	713,907		—		713,209		698
Foreign bonds	172,856		—		172,856		—
Public utilities	218,576		—		218,576		—
Corporate bonds
Energy	161,010		—		161,010		—
Industrials	237,028		—		237,028		—
Consumer goods and services	167,914		—		166,460		1,454
Health care	92,946		—		92,946		—
Technology, media and telecommunications	120,966		—		120,966		—
Financial services	241,751		—		229,725		12,026
Mortgage-backed securities	22,066		—		22,066		—
Collateralized mortgage obligations	294,763		—		294,763		—
Asset-backed securities	3,995		—		1,966		2,029
Total Available-for-Sale Fixed Maturities	$	2,751,256	$	—	$	2,735,049	$	16,207
Equity securities:
Common stocks
Public utilities	$	16,272	$	16,272	$	—	$	—
Energy	14,363		14,363		—		—
Industrials	46,099		46,083		16		—
Consumer goods and services	21,258		21,258		—		—
Health care	24,998		24,998		—		—
Technology, media and telecommunications	13,304		13,304		—		—
Financial services	88,262		84,419		62		3,781
Nonredeemable preferred stocks	4,812		1,714		3,098		—
Total Available-for-Sale Equity Securities	$	229,368	$	222,411	$	3,176	$	3,781
Total Available-for-Sale Securities	$	2,980,624	$	222,411	$	2,738,225	$	19,988
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,253	$	—	$	1,253	$	—
Corporate bonds
Industrials	1,122		—		1,122		—
Consumer goods and services	106		—		106		—
Health care	1,154		—		1,154		—
Technology, media and telecommunications	2,054		—		2,054		—

Financial services	1,866		—		1,866		—
Redeemable preferred stocks	2,385		2,385		—		—
Equity securities:
Energy	563		563		—		—
Consumer goods and services	39		39		—		—
Health care	332		332		—		—
Nonredeemable preferred stocks	1,553		1,553		—		—
Total Trading Securities	$	12,427	$	4,872	$	7,555	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	37,811	$	37,811	$	—	$	—
Total Assets Measured at Fair Value	$	3,031,662	$	265,894	$	2,745,780	$	19,988

Changes in Fair Value of Level 3 Securities

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended June 30, 2014:

	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at March 31, 2014	$	698		$	13,122		$	1,913		$	3,891		$	19,624
Realized losses (1)	—			—			—			(56		)	(56		)
Unrealized gains (losses)(1)	(18		)	9			45			48			84
Disposals	(70		)	(204		)	(116		)	(11		)	(401		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the six-month period ended June 30, 2014:

	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at January 1, 2014	$	698		$	13,480		$	2,029		$	3,781		$	19,988
Realized losses (1)	—			—			—			(56		)	(56		)
Unrealized gains (losses) (1)	(18		)	(53		)	40			48			17
Purchases	—			—			—			99			99
Disposals	(70		)	(500		)	(227		)	—			(797		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the three-month period ended June 30, 2014:

				Liability for
	Net unrealized			underfunded
	appreciation			employee
	on investments			benefit costs			Total
Balance as of March 31, 2014	$	131,282		$	(28,952	)	$	102,330
Change in accumulated other comprehensive income before reclassifications	17,620			—			17,620
Reclassification adjustments from accumulated other comprehensive income	(1,044		)	499			(545		)
Balance as of June 30, 2014	$	147,858		$	(28,453	)	$	119,405

The following table shows the changes in the components of our accumulated other comprehensive income (loss), net of tax, for the six-month period ended June 30, 2014:

				Liability for
	Net unrealized			underfunded
	appreciation			employee
	on investments			benefit costs			Total
Balance as of January 1, 2014	$	116,601		$	(29,451	)	$	87,150
Change in accumulated other comprehensive income before reclassifications	33,264			—			33,264
Reclassification adjustments from accumulated other comprehensive income	(2,007		)	998			(1,009		)
Balance as of June 30, 2014	$	147,858		$	(28,453	)	$	119,405

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Stock-based Compensation (Stock-based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based Compensation [Abstract]
Stock-based compensation expense	$ 507	$ 407	$ 944	$ 818
2014	1,000		1,000
2015	1,864		1,864
2016	1,439		1,439
2017	1,200		1,200
2018	779		779
2019	90		90
Stock-based compensation expense that has yet to be recognized	$ 6,372		$ 6,372

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Consolidated Statements of Income and Comprehensive Income (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Reclassifications for unrealized net gains on available-for-sale securities	$ 1,606	$ 4,417	$ 3,088	$ 5,653
Reclassification adjustment for employee benefit costs included in expense	768	1,243	1,536	2,485
Reclassifications adjustments - tax	$ 293	$ 1,111	$ 543	$ 1,109

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Summary of Investments

6 Months Ended

Jun. 30, 2014

Investments [Abstract]

Summary of Investments

SUMMARY OF INVESTMENTS

Fair Value of Investments

A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities as of June 30, 2014 and December 31, 2013, is as follows:

June 30, 2014
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities:
Bonds
States, municipalities and political subdivisions	$	249	$	2	$	—	$	251
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	181		8		—		189
Total Held-to-Maturity Fixed Maturities	$	630	$	10	$	—	$	640
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,468	$	298	$	63	$	30,703
U.S. government agency	360,249		3,018		6,586		356,681
States, municipalities and political subdivisions	705,556		33,895		2,683		736,768
Foreign bonds	143,172		7,054		1		150,225
Public utilities	212,385		8,114		155		220,344
Corporate bonds
Energy	149,380		5,593		373		154,600
Industrials	216,342		7,888		429		223,801
Consumer goods and services	159,084		5,455		213		164,326
Health care	78,429		3,679		148		81,960
Technology, media and telecommunications	128,124		4,485		785		131,824
Financial services	223,412		10,199		68		233,543
Mortgage-backed securities	19,654		610		76		20,188
Collateralized mortgage obligations	320,180		3,559		8,003		315,736
Asset-backed securities	3,023		296		—		3,319
Total Available-for-Sale Fixed Maturities	$	2,749,458	$	94,143	$	19,583	$	2,824,018
Equity securities:
Common stocks
Public utilities	$	7,231	$	11,435	$	—	$	18,666
Energy	5,094		11,391		—		16,485
Industrials	13,286		33,378		40		46,624
Consumer goods and services	10,287		11,492		2		21,777
Health care	7,920		18,846		—		26,766
Technology, media and telecommunications	6,205		7,779		61		13,923
Financial services	16,678		73,260		54		89,884
Nonredeemable preferred stocks	4,984		140		5		5,119
Total Available-for-Sale Equity Securities	$	71,685	$	167,721	$	162	$	239,244
Total Available-for-Sale Securities	$	2,821,143	$	261,864	$	19,745	$	3,063,262

December 31, 2013
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities:
Bonds
States, municipalities and political subdivisions	$	250	$	4	$	—	$	254
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	206		9		—		215
Total Held-to-Maturity Fixed Maturities	$	656	$	13	$	—	$	669
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,612	$	423	$	140	$	33,895
U.S. government agency	287,988		258		18,663		269,583
States, municipalities and political subdivisions	690,461		34,151		10,705		713,907
Foreign bonds	167,390		5,863		397		172,856
Public utilities	213,479		6,873		1,776		218,576
Corporate bonds
Energy	157,620		4,398		1,008		161,010
Industrials	234,221		5,626		2,819		237,028
Consumer goods and services	165,565		3,770		1,421		167,914
Health care	91,008		3,138		1,200		92,946
Technology, media and telecommunications	121,746		2,541		3,321		120,966
Financial services	234,739		7,735		723		241,751
Mortgage-backed securities	22,034		323		291		22,066
Collateralized mortgage obligations	309,975		1,707		16,919		294,763
Asset-backed securities	3,719		276		—		3,995
Total Available-for-Sale Fixed Maturities	$	2,733,557	$	77,082	$	59,383	$	2,751,256
Equity securities:
Common stocks
Public utilities	$	7,231	$	9,068	$	27	$	16,272
Energy	5,094		9,269		—		14,363
Industrials	13,308		32,823		32		46,099
Consumer goods and services	10,363		10,895		—		21,258
Health care	7,920		17,078		—		24,998
Technology, media and telecommunications	6,204		7,183		83		13,304
Financial services	15,853		72,537		128		88,262
Nonredeemable preferred stocks	4,984		5		177		4,812
Total Available-for-Sale Equity Securities	$	70,957	$	158,858	$	447	$	229,368
Total Available-for-Sale Securities	$	2,804,514	$	235,940	$	59,830	$	2,980,624

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at June 30, 2014, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.

	Held-To-Maturity				Available-For-Sale				Trading
June 30, 2014	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	135	$	136	$	234,849	$	238,774	$	1,701	$	1,699
Due after one year through five years	314		315		886,016		934,018		7,416		8,715
Due after five years through 10 years	—		—		818,255		845,767		1,139		1,563
Due after 10 years	—		—		467,481		466,216		5,211		6,328
Asset-backed securities	—		—		3,023		3,319		—		—
Mortgage-backed securities	181		189		19,654		20,188		—		—
Collateralized mortgage obligations	—		—		320,180		315,736		—		—
	$	630	$	640	$	2,749,458	$	2,824,018	$	15,467	$	18,305

Net Realized Investment Gains and Losses

Net realized gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net realized investment gains is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
Net realized investment gains
Fixed maturities:
Available-for-sale	$	705	$	1,185		1,352		1,905
Trading securities
Change in fair value	648		(130		)	948		430
Sales	285		298			520		298
Equity securities:
Available-for-sale	901		3,232			1,736		3,748
Trading securities
Change in fair value	169		(132		)	346		(19		)
Sales	—		38			—		38
Other long-term investments	—		(340		)	—		(340		)
Total net realized investment gains	$	2,708	$	4,151		$	4,902	$	6,060

The proceeds and gross realized gains on the sale of available-for-sale securities are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds from sales	$	10	$	3,161	$	10	$	5,971
Gross realized gains	—		96		—		238
Gross realized losses	56		—		56		—

There were no sales of held-to-maturity securities during the three- and six-month periods ended June 30, 2014 and 2013.

Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains. Our portfolio of trading securities had a fair value of $21,511 and $12,427 at June 30, 2014 and December 31, 2013, respectively.

Unrealized Appreciation

A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:

	Six Months Ended June 30,
	2014			2013
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	56,861		$	(91,636	)
Available-for-sale equity securities	9,148			19,467
Deferred policy acquisition costs	(17,921		)	29,223
Income tax effect	(16,831		)	15,023
Total change in net unrealized investment appreciation, net of tax	$	31,257		$	(27,923	)

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment ("OTTI") charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.

The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position at June 30, 2014 and December 31, 2013. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at June 30, 2014, if future events or information cause us to determine that a decline in fair value is other-than-temporary.

We have evaluated the near-term prospects of the issuers of our fixed maturity securities in relation to the severity and duration of the unrealized loss, and unless otherwise noted, these losses do not warrant the recognition of an OTTI charge at June 30, 2014. We believe the unrealized depreciation in value of other securities in our fixed maturity portfolio is primarily attributable to changes in market interest rates and not the credit quality of the issuer. We have no intent to sell and it is more likely than not that we will not be required to sell these securities until the fair value recovers to at least equal to our cost basis or the securities mature.

We have evaluated the near-term prospects of the issuers of our equity securities in relation to the severity and duration of the unrealized loss, and unless otherwise noted, these losses do not warrant the recognition of an OTTI charge at June 30, 2014. Our largest unrealized loss greater than 12 months on an individual equity security at June 30, 2014 was $54. We have no intention to sell any of these securities prior to a recovery in value, but will continue to monitor the fair value reported for these securities as part of our overall process to evaluate investments for OTTI recognition.

June 30, 2014	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	2	$	1,326	$	4	6	$	6,125	$	59	$	7,451	$	63
U.S. government agency	11	28,268		188		46	131,825		6,398		160,093		6,586
States, municipalities and political subdivisions	22	23,311		108		101	90,012		2,575		113,323		2,683
Foreign bonds	1	3,285		1		—	—		—		3,285		1
Public utilities	2	252		3		10	19,883		152		20,135		155
Corporate bonds
Energy	—	—		—		5	10,266		373		10,266		373
Industrials	—	—		—		4	14,088		429		14,088		429
Consumer goods and services	2	4,274		28		8	15,497		185		19,771		213
Health care	2	7,214		9		3	7,194		139		14,408		148
Technology, media and telecommunications	2	4,591		25		7	27,169		760		31,760		785
Financial services	2	2,264		8		2	6,137		60		8,401		68
Mortgage-backed securities	3	47		1		5	5,868		75		5,915		76
Collateralized mortgage obligations	21	43,158		489		72	144,536		7,514		187,694		8,003
Total Available-for-Sale Fixed Maturities	70	$	117,990	$	864	269	$	478,600	$	18,719	$	596,590	$	19,583
Equity securities:
Common stocks
Industrials	—	$	—	$	—	2	$	73	$	40	$	73	$	40
Consumer goods and services	1	15		2		—	—		—		15		2
Technology, media and telecommunications	—	—		—		6	229		61		229		61
Financial services	—	—		—		3	223		54		223		54
Nonredeemable preferred stocks	—	—		—		1	702		5		702		5
Total Available-for-Sale Equity Securities	1	$	15	$	2	12	$	1,227	$	160	$	1,242	$	162
Total Available-for-Sale Securities	71	$	118,005	$	866	281	$	479,827	$	18,879	$	597,832	$	19,745

December 31, 2013	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	10	$	9,196	$	140	—	$	—	$	—	$	9,196	$	140
U.S. government agency	101	256,203		18,019		2	4,356		644		260,559		18,663
States, municipalities and political subdivisions	136	97,950		7,423		29	29,670		3,282		127,620		10,705
Foreign bonds	10	20,832		397		—	—		—		20,832		397
Public utilities	31	61,582		1,776		—	—		—		61,582		1,776
Corporate bonds
Energy	9	23,735		1,008		—	—		—		23,735		1,008
Industrials	34	77,788		2,819		—	—		—		77,788		2,819
Consumer goods and services	31	58,833		1,276		6	3,218		145		62,051		1,421
Health care	10	25,888		942		2	4,427		258		30,315		1,200
Technology, media and telecommunications	18	58,105		2,147		2	7,468		1,174		65,573		3,321
Financial services	7	15,191		720		1	1,525		3		16,716		723
Mortgage-backed securities	16	4,476		177		6	3,113		114		7,589		291
Collateralized mortgage obligations	111	208,855		11,062		23	55,184		5,857		264,039		16,919
Total Available-for-Sale Fixed Maturities	524	$	918,634	$	47,906	71	$	108,961	$	11,477	$	1,027,595	$	59,383
Equity securities:
Common stocks
Public utilities	—	$	—	$	—	3	$	281	$	27	$	281	$	27
Industrials	1	1		1		2	81		31		82		32
Technology, media and telecommunications	—	—		—		6	206		83		206		83
Financial services	—	—		—		4	215		128		215		128
Nonredeemable preferred stocks	3	3,493		116		2	1,170		61		4,663		177
Total Available-for-Sale Equity Securities	4	$	3,494	$	117	17	$	1,953	$	330	$	5,447	$	447
Total Available-for-Sale Securities	528	$	922,128	$	48,023	88	$	110,914	$	11,807	$	1,033,042	$	59,830

XML

Nature of Operations and Basis of Presentation (Narratives) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 segment	Jun. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Number of business segments			2
Payment for income taxes			$ 9,115,000	$ 2,512,000
Federal tax refund received			615,000	8,744,000
Interest payments			0	0
Increase (decrease) in DAC asset	(14,514,000)		(14,514,000)		3,407,000
Federal income tax expense (benefit)	$ 2,371,000	$ 4,822,000	$ 4,937,000	$ 12,279,000
Federal statutory rate			35.00%	35.00%
Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Number of states in which we are licensed as insurer	43		43
Life Insurance [Member]
Segment Reporting Information [Line Items]
Number of states in which we are licensed as insurer	37		37

XML

Fair Value of Financial Instruments (Corporate-Owned Life Insurance) (Details) (Rabbi Trust [Member], Other Assets [Member], Level 2 [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Rabbi Trust [Member] | Other Assets [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash surrender value	$ 578

XML

Summary of Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investments [Abstract]

Fair Value of Investments

A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities as of June 30, 2014 and December 31, 2013, is as follows:

June 30, 2014
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities:
Bonds
States, municipalities and political subdivisions	$	249	$	2	$	—	$	251
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	181		8		—		189
Total Held-to-Maturity Fixed Maturities	$	630	$	10	$	—	$	640
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,468	$	298	$	63	$	30,703
U.S. government agency	360,249		3,018		6,586		356,681
States, municipalities and political subdivisions	705,556		33,895		2,683		736,768
Foreign bonds	143,172		7,054		1		150,225
Public utilities	212,385		8,114		155		220,344
Corporate bonds
Energy	149,380		5,593		373		154,600
Industrials	216,342		7,888		429		223,801
Consumer goods and services	159,084		5,455		213		164,326
Health care	78,429		3,679		148		81,960
Technology, media and telecommunications	128,124		4,485		785		131,824
Financial services	223,412		10,199		68		233,543
Mortgage-backed securities	19,654		610		76		20,188
Collateralized mortgage obligations	320,180		3,559		8,003		315,736
Asset-backed securities	3,023		296		—		3,319
Total Available-for-Sale Fixed Maturities	$	2,749,458	$	94,143	$	19,583	$	2,824,018
Equity securities:
Common stocks
Public utilities	$	7,231	$	11,435	$	—	$	18,666
Energy	5,094		11,391		—		16,485
Industrials	13,286		33,378		40		46,624
Consumer goods and services	10,287		11,492		2		21,777
Health care	7,920		18,846		—		26,766
Technology, media and telecommunications	6,205		7,779		61		13,923
Financial services	16,678		73,260		54		89,884
Nonredeemable preferred stocks	4,984		140		5		5,119
Total Available-for-Sale Equity Securities	$	71,685	$	167,721	$	162	$	239,244
Total Available-for-Sale Securities	$	2,821,143	$	261,864	$	19,745	$	3,063,262

December 31, 2013
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities:
Bonds
States, municipalities and political subdivisions	$	250	$	4	$	—	$	254
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	206		9		—		215
Total Held-to-Maturity Fixed Maturities	$	656	$	13	$	—	$	669
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,612	$	423	$	140	$	33,895
U.S. government agency	287,988		258		18,663		269,583
States, municipalities and political subdivisions	690,461		34,151		10,705		713,907
Foreign bonds	167,390		5,863		397		172,856
Public utilities	213,479		6,873		1,776		218,576
Corporate bonds
Energy	157,620		4,398		1,008		161,010
Industrials	234,221		5,626		2,819		237,028
Consumer goods and services	165,565		3,770		1,421		167,914
Health care	91,008		3,138		1,200		92,946
Technology, media and telecommunications	121,746		2,541		3,321		120,966
Financial services	234,739		7,735		723		241,751
Mortgage-backed securities	22,034		323		291		22,066
Collateralized mortgage obligations	309,975		1,707		16,919		294,763
Asset-backed securities	3,719		276		—		3,995
Total Available-for-Sale Fixed Maturities	$	2,733,557	$	77,082	$	59,383	$	2,751,256
Equity securities:
Common stocks
Public utilities	$	7,231	$	9,068	$	27	$	16,272
Energy	5,094		9,269		—		14,363
Industrials	13,308		32,823		32		46,099
Consumer goods and services	10,363		10,895		—		21,258
Health care	7,920		17,078		—		24,998
Technology, media and telecommunications	6,204		7,183		83		13,304
Financial services	15,853		72,537		128		88,262
Nonredeemable preferred stocks	4,984		5		177		4,812
Total Available-for-Sale Equity Securities	$	70,957	$	158,858	$	447	$	229,368
Total Available-for-Sale Securities	$	2,804,514	$	235,940	$	59,830	$	2,980,624

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at June 30, 2014, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.

	Held-To-Maturity				Available-For-Sale				Trading
June 30, 2014	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	135	$	136	$	234,849	$	238,774	$	1,701	$	1,699
Due after one year through five years	314		315		886,016		934,018		7,416		8,715
Due after five years through 10 years	—		—		818,255		845,767		1,139		1,563
Due after 10 years	—		—		467,481		466,216		5,211		6,328
Asset-backed securities	—		—		3,023		3,319		—		—
Mortgage-backed securities	181		189		19,654		20,188		—		—
Collateralized mortgage obligations	—		—		320,180		315,736		—		—
	$	630	$	640	$	2,749,458	$	2,824,018	$	15,467	$	18,305

Net Realized Investment Gains and Losses

A summary of the components of net realized investment gains is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
Net realized investment gains
Fixed maturities:
Available-for-sale	$	705	$	1,185		1,352		1,905
Trading securities
Change in fair value	648		(130		)	948		430
Sales	285		298			520		298
Equity securities:
Available-for-sale	901		3,232			1,736		3,748
Trading securities
Change in fair value	169		(132		)	346		(19		)
Sales	—		38			—		38
Other long-term investments	—		(340		)	—		(340		)
Total net realized investment gains	$	2,708	$	4,151		$	4,902	$	6,060

Proceeds and Gross Realized Gains and Losses

The proceeds and gross realized gains on the sale of available-for-sale securities are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds from sales	$	10	$	3,161	$	10	$	5,971
Gross realized gains	—		96		—		238
Gross realized losses	56		—		56		—

Unrealized Appreciation and Depreciation

A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:

	Six Months Ended June 30,
	2014			2013
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	56,861		$	(91,636	)
Available-for-sale equity securities	9,148			19,467
Deferred policy acquisition costs	(17,921		)	29,223
Income tax effect	(16,831		)	15,023
Total change in net unrealized investment appreciation, net of tax	$	31,257		$	(27,923	)

Investments in Unrealized Loss Position

June 30, 2014	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	2	$	1,326	$	4	6	$	6,125	$	59	$	7,451	$	63
U.S. government agency	11	28,268		188		46	131,825		6,398		160,093		6,586
States, municipalities and political subdivisions	22	23,311		108		101	90,012		2,575		113,323		2,683
Foreign bonds	1	3,285		1		—	—		—		3,285		1
Public utilities	2	252		3		10	19,883		152		20,135		155
Corporate bonds
Energy	—	—		—		5	10,266		373		10,266		373
Industrials	—	—		—		4	14,088		429		14,088		429
Consumer goods and services	2	4,274		28		8	15,497		185		19,771		213
Health care	2	7,214		9		3	7,194		139		14,408		148
Technology, media and telecommunications	2	4,591		25		7	27,169		760		31,760		785
Financial services	2	2,264		8		2	6,137		60		8,401		68
Mortgage-backed securities	3	47		1		5	5,868		75		5,915		76
Collateralized mortgage obligations	21	43,158		489		72	144,536		7,514		187,694		8,003
Total Available-for-Sale Fixed Maturities	70	$	117,990	$	864	269	$	478,600	$	18,719	$	596,590	$	19,583
Equity securities:
Common stocks
Industrials	—	$	—	$	—	2	$	73	$	40	$	73	$	40
Consumer goods and services	1	15		2		—	—		—		15		2
Technology, media and telecommunications	—	—		—		6	229		61		229		61
Financial services	—	—		—		3	223		54		223		54
Nonredeemable preferred stocks	—	—		—		1	702		5		702		5
Total Available-for-Sale Equity Securities	1	$	15	$	2	12	$	1,227	$	160	$	1,242	$	162
Total Available-for-Sale Securities	71	$	118,005	$	866	281	$	479,827	$	18,879	$	597,832	$	19,745

December 31, 2013	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	10	$	9,196	$	140	—	$	—	$	—	$	9,196	$	140
U.S. government agency	101	256,203		18,019		2	4,356		644		260,559		18,663
States, municipalities and political subdivisions	136	97,950		7,423		29	29,670		3,282		127,620		10,705
Foreign bonds	10	20,832		397		—	—		—		20,832		397
Public utilities	31	61,582		1,776		—	—		—		61,582		1,776
Corporate bonds
Energy	9	23,735		1,008		—	—		—		23,735		1,008
Industrials	34	77,788		2,819		—	—		—		77,788		2,819
Consumer goods and services	31	58,833		1,276		6	3,218		145		62,051		1,421
Health care	10	25,888		942		2	4,427		258		30,315		1,200
Technology, media and telecommunications	18	58,105		2,147		2	7,468		1,174		65,573		3,321
Financial services	7	15,191		720		1	1,525		3		16,716		723
Mortgage-backed securities	16	4,476		177		6	3,113		114		7,589		291
Collateralized mortgage obligations	111	208,855		11,062		23	55,184		5,857		264,039		16,919
Total Available-for-Sale Fixed Maturities	524	$	918,634	$	47,906	71	$	108,961	$	11,477	$	1,027,595	$	59,383
Equity securities:
Common stocks
Public utilities	—	$	—	$	—	3	$	281	$	27	$	281	$	27
Industrials	1	1		1		2	81		31		82		32
Technology, media and telecommunications	—	—		—		6	206		83		206		83
Financial services	—	—		—		4	215		128		215		128
Nonredeemable preferred stocks	3	3,493		116		2	1,170		61		4,663		177
Total Available-for-Sale Equity Securities	4	$	3,494	$	117	17	$	1,953	$	330	$	5,447	$	447
Total Available-for-Sale Securities	528	$	922,128	$	48,023	88	$	110,914	$	11,807	$	1,033,042	$	59,830