Schedule II. Condensed Financial Statements of Parent Company

United Fire Group, Inc. (parent company only)

Condensed Balance Sheets



	December 31,
(In thousands, except share data)	2017		2016

Assets
Fixed maturities, held-to-maturity, at amortized cost (fair value $150 in 2017 and $150 in 2016)	$	150	$	150
Investment in subsidiary	967,590		925,887
Cash and cash equivalents	4,537		14,325
Federal income tax receivable	1,095		1,521
Accrued investment income	1		1
Total assets	$	973,373	$	941,884

Liabilities and stockholders' equity
Liabilities	$	—	$	—

Stockholders' equity
Common stock, $0.001 par value, authorized 75,000,000 shares; 24,916,806 and 25,429,769 issued and outstanding in 2017 and 2016, respectively	$	25	$	25
Additional paid-in capital	196,334		216,482
Retained earnings	608,700		616,322
Accumulated other comprehensive income, net of tax	168,314		109,055
Total stockholders' equity	$	973,373	$	941,884

Total liabilities and stockholders' equity	$	973,373	$	941,884

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8 of this Annual Report on Form 10-K.

Schedule II. Condensed Financial Statements of Parent Company (continued)

United Fire Group, Inc. (parent company only)

Condensed Statements of Income and Comprehensive Income



	For the Years Ended December 31,
(In thousands)	2017			2016			2015

Revenues
Investment income	$	133		$	66		$	25
Total revenues	133			66			25

Expenses
Other operating expenses	$	103		$	73		$	116
Total expenses	103			73			116

Income (loss) before income taxes and equity in net income of subsidiary	30			(7		)	(91		)
Federal income tax benefit	(1,060		)	(3		)	(42		)
Net income (loss) before equity in net income of subsidiary	$	1,090		$	(4	)	$	(49	)
Equity in net income of subsidiary	49,933			49,908			89,175
Net income	$	51,023		$	49,904		$	89,126

Other comprehensive income (loss)
Change in unrealized appreciation on investments held by subsidiary	$	72,251		$	13,017		$	(28,185	)
Change in liability for underfunded employee benefit plans of subsidiary	(26,122		)	30,045			8,714
Other comprehensive income (loss), before tax and reclassification adjustments	$	46,129		$	43,062		$	(19,471	)
Income tax effect	(17,540		)	(15,072		)	6,814
Other comprehensive income (loss), after tax, before reclassification adjustments	$	28,589		$	27,990		$	(12,657	)
Reclassification adjustment for net realized gains of the subsidiary included in income	(6,390		)	(4,520		)	(4,513		)
Reclassification adjustment for employee benefit costs of the subsidiary included in expense	5,408			5,486			7,468
Total reclassification adjustments, before tax	$	(982	)	$	966		$	2,955
Income tax effect	344			(338		)	(1,034		)
Total reclassification adjustments, after tax	$	(638	)	$	628		$	1,921

Comprehensive income	$	78,974		$	78,522		$	78,390

United Fire Group, Inc. and its subsidiaries file a consolidated federal income tax return. The federal income tax provision represents an allocation under its tax allocation agreements.

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8 of this Annual Report on Form 10-K.

Schedule II. Condensed Financial Statements of Parent Company (continued)

United Fire Group, Inc. (parent company only)

Condensed Statements of Cash Flows



	For the Years Ended December 31,
(In thousands)	2017			2016			2015

Cash flows from operating activities
Net income	$	51,023		$	49,904		$	89,126
Adjustments to reconcile net income to net cash provided by operating activities
Equity in net income of subsidiary	(49,933		)	(49,908		)	(89,175		)
Dividends received from subsidiary	40,000			24,000			22,500
Other, net	1,415			2,995			1,269
Total adjustments	$	(8,518	)	$	(22,913	)	$	(65,406	)
Net cash provided by operating activities	$	42,505		$	26,991		$	23,720

Cash flows from investing activities
Proceeds from maturity of held-to-maturity investments	$	150		$	—		$	—
Purchase of held-to-maturity investments	(150		)	—			—
Net cash used in investing activities	$	—		$	—		$	—

Cash flows from financing activities
Payment of cash dividends	$	(27,337	)	$	(24,591	)	$	(21,658	)
Repurchase of common stock	(29,784		)	(3,746		)	(2,423		)
Issuance of common stock	4,828			9,922			5,496
Tax impact from issuance of common stock	—			(816		)	(833		)
Net cash used in financing activities	$	(52,293	)	$	(19,231	)	$	(19,418	)

Net change in cash and cash equivalents	$	(9,788	)	$	7,760		$	4,302
Cash and cash equivalents at beginning of period	14,325			6,565			2,263
Cash and cash equivalents at end of year	$	4,537		$	14,325		$	6,565

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8 of this Form 10-K.