Debt

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

DEBT

DEBT

Long Term Debt

December 2020 Private Placement

The Company executed a private placement debt transaction on December 15, 2020, by and between United Fire & Casualty Company ("UF&C"), and Federated Mutual Insurance Company, a mutual insurance company domiciled in Minnesota ("Federated Mutual"), and Federated Life Insurance Company, an insurance company domiciled in Minnesota ("Federated Life" and, together with Federated Mutual, the "Note Purchasers").

UF&C sold an aggregate principal amount of $50,000 of notes due in 2040 to the Note Purchasers. One note with a principal amount of $35,000 was issued to Federated Mutual and one note with a principal amount of $15,000 was issued to Federated Life subject to the terms of their respective notes.

Interest payments under the long-term debt will be paid quarterly on March 15, June 15, September 15 and December 15 of each year (each such date, an "Interest Payment Date"). The interest rate will equal the rate that corresponds to the A.M. Best Co. (or its successor's) financial strength rating for members of the United Fire & Casualty Pooled Group as of the applicable Interest Payment Date, as set forth in the table below. For the six-month

period ended June 30, 2024, interest expense totaled $1,719. Payment of interest is subject to approval by the Iowa Insurance Division.

A.M. Best Co. Financial Strength Rating	Applicable Interest Rate
A+	5.875%
A	6.375%
A-	6.875%
B++ (or lower)	7.375%

May 2024 Private Placement

On May 31, 2024, the Company completed the private placement of $70,000 aggregate principal of senior unsecured notes due May 31, 2039 (the "Notes"), to certain qualified institutional buyers pursuant to a Master Note Purchase Agreement, dated as of May 31, 2024, by and among the Company, Ares Management, LLC ("Ares") as the lead investor (including several affiliate investors of Ares), American Republic Insurance Company and Illinois Casualty Company. The Notes were issued in a single series, with a maturity date of May 31, 2039, and bearing interest at an annual rate of 9%. Costs incurred in the issuance of debt of $3,050 are capitalized and amortized over the life of the non-cancellable period of the debt. The capitalization of such debt issuance costs are included as an offset to the "Long Term Debt" in the Consolidated Balance Sheets and the related amortization is included in "Interest expense" in the Consolidated Statements of Income and Comprehensive Income. The interest on the Notes will be payable quarterly in arrears beginning on August 31, 2024. For the six-month period ended June 30, 2024, interest expense totaled $540.

Credit Facilities

In December 2023, UF&C became a member of the Federal Home Loan Bank of Des Moines ("FHLB Des Moines"). As part of the FHLB Des Moines application process and in connection with its membership in FHLB Des Moines, UF&C entered into FHLB Des Moines' standard Advances, Pledge and Security Agreement (the "Advances Agreement"). The Advances Agreement governs the terms and conditions under which UF&C may borrow and FHLB Des Moines may make loans or advances from time to time. The Advances Agreement requires UF&C to pledge certain collateral, including the capital stock in FHLB Des Moines owned by UF&C and such other assets (including mortgage-related securities, loans, and stock in the Company) as agreed by UF&C and FHLB Des Moines in connection with any such loans or advances.

Membership in FHLB Des Moines provides the Company with access to FHLB Des Moines' product line of financial services, including funding agreements, general asset/liability management, and collateralized advances that can be used for liquidity management. As a member, the Company has an aggregate borrowing capacity of up to 20.0 percent of total assets of UF&C. As of June 30, 2024, the Company has FHLB Des Moines borrowing capacity up to $452.7 million if an immediate liquidity need would arise. The Company had no outstanding balance as of June 30, 2024 and 2023 related to these lines of credit.