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Employee Benefits
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Employee Benefits EMPLOYEE BENEFITS
We offer various benefits to our employees including a non-contributory cash balance pension plan and an employee health and dental benefit plan.
Pension and Post-Retirement Benefit Plans
We offer a non-contributory cash balance pension plan in which all of our employees are eligible to participate after they have completed one year of service, attained 21 years of age and have met the hourly service requirements. Retirement benefits under our cash balance pension plan are based on the number of years of service and level of compensation. Our policy to fund the pension plan on a current basis to not less than the minimum amounts required by the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as
amended, is designed to ensure that plan assets will be adequate to provide retirement benefits. We are not required to make a contribution to the pension plan in 2023.
In December 2020, the Company made the decision to amend the non-contributory defined benefit pension plan and put in place a non-contributory cash balance pension plan effective July 1, 2021. All benefits under the former non-contributory defined benefit pension plan stopped accruing on June 30, 2021.
We also offer health and dental benefit plans to all of our eligible employees that is self-funded. We previously offered a fully-funded (post-65) retiree health and dental plan (the "post-retirement benefit plan"). In January 2021, the Company changed the post-retirement benefit plan to a voluntary plan funded exclusively by participants, commencing at the start of 2023. The impact of this decision is reflected in the tables in this note, with a one-time adjustment presented in the line "Special event plan closure" and an additional adjustment in the line "Amortization of prior service credit." The amortization of prior service credits continued through the end of 2022 related to these plan changes. As of December 31, 2022, the post-retirement benefit obligation was $0.
Investment Policies and Strategies
Our investment policy and objective for the pension plan is to generate long-term capital growth and income by way of a diversified investment portfolio along with appropriate employer contributions, which is intended to allow us to provide for the pension plan's benefit obligation.
The investments held by the pension plan at December 31, 2022 include the following asset categories:
•Fixed income securities, which may include bonds, and convertible securities;
•Equity securities, which may include various types of stock, such as large-cap, mid-cap, small-cap, and international stocks;
•Pooled separate accounts, which includes two separate funds, a core plus bond separate account and a real estate separate account;
•An arbitrage fund, which is a fund that takes advantage of price discrepancies, primarily equity securities, for the same asset in different markets;
•A group annuity contract that is administered by United Life, a former subsidiary of United Fire; and
•Cash and cash equivalents, which include money market funds.
We have an internal investment/retirement committee, which includes our Chief Executive Officer, Chief Financial Officer, Chief Investment Officer, and Chief Operating Officer, all of whom receive monthly information on the value of the pension plan assets and their performance. Quarterly, the committee meets to review and discuss the performance of the pension plan assets as well as the allocation of investments within the pension plan.
As of December 31, 2022, we had six external investment managers that are allowed to exercise investment discretion, subject to limitations, if any, established by the investment/retirement committee. We utilize multiple investment managers in order to maximize the pension plan's investment return while mitigating risk. None of our investment managers uses leverage in managing the pension plan. Annually, the investment/retirement committee meets with each investment manager to review the investment manager's goals, objectives and the performance of the assets they manage. The decision to establish or terminate a relationship with an investment manager is at the discretion of our investment/retirement committee.
We consider historical experience for comparable investments and the target allocations we have established for the various asset categories of the pension plan to determine the expected long-term rate of return, which is an assumption as to the average rate of earnings expected on the pension plan funds invested, or to be invested, by the pension plan, to provide for the settlement of benefits included in the projected pension benefit obligation. Investment securities, in general, are exposed to various risks, such as fluctuating interest rates, credit standing of
the issuer of the security and overall market volatility. Annually, we perform an analysis of expected long-term rates of return based on the composition and allocation of our pension plan assets and recent economic conditions.
The following is a summary of the pension plan's actual and target asset allocations at December 31, 2022 and 2021 by asset category:
Target
Pension Plan Assets2022% of Total2021% of TotalAllocation
Fixed maturity securities - corporate bonds$18,102 7.9 %$21,683 7.6 %0 %-15 %
Redeemable preferred stock2,946 1.3 4,633 1.6 0 %-10 %
Equity securities134,663 58.6 178,766 63.1 50 %-70 %
Pooled separate accounts
Core plus bond separate account fund16,768 7.3 23,916 8.4 0 %-40 %
U.S. property separate account fund28,468 12.4 27,328 9.6 0 %-25 %
Arbitrage fund10,831 4.7 10,588 3.7 0 %-10 %
United Life annuity12,567 5.5 11,968 4.2 0 %-10 %
Cash and cash equivalents5,356 2.3 5,058 1.8 0 %-10 %
Total plan assets$229,701 100.0 %$283,940 100.0 %
The investment return expectations for the pension plan are used to develop the asset allocation based on the specific needs of the pension plan. Accordingly, equity securities comprise the largest portion of our pension plan assets, as they yield the highest rate of return. The United Life annuity, which is the fifth-largest asset category and was originally written by our former life insurance subsidiary in 1976, provides a guaranteed rate of return. The interest rate on the group annuity contract is determined annually.
The availability of assets held in cash and cash equivalents enables the pension plan to mitigate market risk that is associated with other types of investments and allows the pension plan to maintain liquidity both for the purpose of making future benefit payments to participants and their beneficiaries and for future investment opportunities.
Valuation of Investments
Fixed Maturity and Equity Securities
Investments in equity securities are stated at fair value based upon quoted market prices reported on recognized securities exchanges on the last business day of the year. Purchases and sales of securities are recorded as of the trade date.

The fair value of fixed maturity securities categorized as Level 2 is determined by management based on fair value
information reported in the custodial statements received from Plan’s investment managers, which is derived from
recent trading activity of the underlying security in the financial markets. These securities represent various taxable bonds held by the pension plan. These securities categorized as Level 2 are valued in the same manner as described in Note 3 "Fair Value of Financial Instruments" and have the same controls in place.
Pooled Separate Accounts
The pension plan invests in two pooled separate account funds, a core plus bond separate account fund and a U.S. property separate account fund. Investments in the core plus bond separate account fund are stated at fair value as provided by the administrator of the fund based on the fair value of the underlying assets owned by the fund. The fair value measurement is classified within Level 2 of the fair value hierarchy. The fair value of the investments in the U.S. property separate account fund is provided by the administrator of the fund based on the net asset value of the fund. The net asset value is based on the fair value of the underlying properties included in the fund. The fair value of the underlying properties are based on property appraisals conducted by an independent third party. The fair
value measurement is classified within Level 3 of the fair value hierarchy. We have not adjusted the net asset value provided by the custodian for either fund.
Arbitrage Fund
The fair value of the arbitrage fund is determined based on its net asset value, which is obtained from the custodian and determined monthly with issuances and redemptions of units of the fund made, based on the net asset value per unit as determined on the valuation date. We have not adjusted the net asset value provided by the custodian.
United Life Annuity
The United Life group annuity contract, which is a deposit administration contract, is stated at contract value as determined by United Life. Under the group annuity contract, the plan's investment account is credited with compound interest on the average account balance for the year. The interest rate is equivalent to the ratio of net investment income to mean assets of United Life, net of investment expenses.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of insured cash and money market funds held with various financial institutions. Interest is earned on a daily basis. The fair value of these funds approximates their cost basis due to their short-term nature.
Fair Value Measurement
The following tables present the categorization of the pension plan's assets measured at fair value on a recurring basis at December 31, 2022 and 2021:
 Fair Value Measurements
DescriptionDecember 31, 2022Level 1Level 2Level 3
Fixed maturity securities - corporate bonds$18,102 $— $18,102 $— 
Redeemable preferred stock2,946 2,946 — — 
Equity securities134,663 134,663 — — 
Pooled separate accounts
Core plus bond separate account fund16,768 — 16,768 — 
U.S. property separate account fund28,468 — — 28,468 
Arbitrage fund10,831 — 10,831 — 
Money market funds5,348 5,348 — — 
Total assets measured at fair value$217,126 $142,957 $45,701 $28,468 
Fair Value Measurements
DescriptionDecember 31, 2021Level 1Level 2Level 3
Fixed maturity securities - corporate bonds$21,683 $— $21,683 $— 
Redeemable preferred stock4,633 4,633 — — 
Equity securities178,766 178,766 — — 
Pooled separate accounts
Core plus bond separate account fund23,916 — 23,916 — 
U.S. property separate account fund27,328 — — 27,328 
Arbitrage fund10,588 — 10,588 — 
Money market funds5,053 5,053 — — 
Total assets measured at fair value$271,967 $188,452 $56,187 $27,328 
The fair value of investments categorized as Level 1 is based on quoted market prices that are readily and regularly available.
The fair value of fixed maturity securities categorized as Level 2 is determined by management based on fair value information reported in the custodial statements, which is derived from recent trading activity of the underlying security in the financial markets. These securities represent various taxable bonds held by the pension plan. These securities categorized as Level 2 are valued in the same manner as described in Part II, Item 8, Note 3 "Fair Value of Financial Instruments" and have the same controls in place.
The fair value of the arbitrage fund and bond and mortgage pooled separate account fund are categorized as Level 2 since there are no restrictions as to the pension plan's ability to redeem its investment at the net asset value of the fund as of the reporting date.  

The following tables provide a summary of the changes in fair value of the pension plan's Level 3 securities:
U.S. property separate account fund
Balance at January 1, 2022$27,328 
Unrealized gains1,140 
Balance at December 31, 2022$28,468 

U.S. property separate account fund
Balance at January 1, 2021$22,269 
Unrealized gains5,059 
Balance at December 31, 2021$27,328 
Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires us to make various estimates and assumptions that affect the reporting of net periodic benefit cost, plan assets and plan obligations for each plan at the date of the financial statements. Actual results could differ from these estimates. One significant estimate relates to the calculation of the benefit obligation for each plan. The discount rate assumption uses the Principal© Pension Discount Rate Curve (“Principal© Curve”) and reflects the expected future benefit discounted cash flows to determine the present value of the plan benefit obligations as of December 31. The Principal Curve uses pricing and yield information for high quality corporate bonds. We have reviewed the updated curve and materials provided by our external actuaries with regard to the assumptions used in the curve. We will continue to monitor this curve and intend to make changes as appropriate.
The Society of Actuaries ("SOA") is an actuarial organization that periodically reviews mortality data and publishes mortality tables and improvement scales. In October 2019, the SOA released the Pri-2012 mortality tables for private sector retirement plans in the United States. The mortality assumptions are based on the Pri-2012 white collar base rate mortality projected generationally using the Principal Mortality Improvement Scale ("Principal 2022 MI"). The Principal 2022 MI scale is based on latest mortality improvement release, the MIM-2021-v3 application tool issued by SOA in October 2022 with a few user-selected assumptions: 2028 as the ultimate year for age/cohort transition and long-term rate assumptions using sex-distinct and age based rated developed from the latest Social Security Trustee Reports. We have reviewed these updated tables and have updated the mortality assumptions based on this information and also based on research provided by our external actuaries. We will continue to monitor mortality assumptions and intend to make changes as appropriate to reflect additional research and our resulting best estimate of future mortality rates.
Assumptions Used to Determine Benefit Obligations
The following actuarial assumptions were used to determine the reported plan benefit obligations at December 31:
Weighted-average assumptions as ofPension BenefitsPost-retirement Benefits
December 31,2022202120222021
Discount rate5.15 %2.84 %N/A0.48 %
Rate of compensation increase3.00 3.00 N/AN/A
Rising interest rates resulted in an increase in the discount rates we use to value our respective plan's benefit obligations at December 31, 2022 compared to December 31, 2021.
Assumptions Used to Determine Net Periodic Benefit Cost
The following actuarial assumptions were used at January 1 to determine our reported net periodic benefit costs for the year ended December 31:
Weighted-average assumptions as ofPension BenefitsPost-retirement Benefits
January 1,202220212020202220212020
Discount rate2.84 %2.58 %3.32 %0.48 %2.58 %3.32 %
Expected long-term rate of return on plan assets6.70 6.70 6.70 N/AN/AN/A
Rate of compensation increase3.00 2.75 3.00 N/AN/AN/A
Assumed Health Care Cost Trend Rates
 Health Care BenefitsDental Claims
Years Ended December 31,2022202120222021
Health care cost trend rates assumed for next yearN/AN/AN/A3.00 %
Rate to which the health care trend rate is assumed to decline (ultimate trend rate)N/AN/AN/AN/A
Year that the rate reaches the ultimate trend rateN/AN/AN/AN/A

Benefit Obligation and Funded Status
The following table provides a reconciliation of benefit obligations, plan assets and funded status of our plans:
Pension BenefitsPost-retirement Benefits
Years Ended December 31,2022202120222021
Reconciliation of benefit obligation
Benefit obligation at beginning of year$276,587 $271,744 $960 $31,666 
Service cost4,481 12,082 — 148 
Interest cost7,730 6,911 2 72 
Actuarial loss (gain)(79,303)(6,593)(122)(1,101)
Adjustment for plan amendment— (408)— — 
Special event plan closure— — — (28,889)
Benefit payments(7,819)(7,149)(840)(936)
Benefit obligation at end of year (1)
$201,676 $276,587 $— $960 
Reconciliation of fair value of plan assets
Fair value of plan assets at beginning of year$283,940 $248,735 $— $— 
Actual return on plan assets(50,420)37,354 — 
Employer contributions4,000 5,000 840 936 
Benefit payments(7,819)(7,149)(840)(936)
Fair value of plan assets at end of year$229,701 $283,940 $— $— 
Funded status at end of year$28,025 $7,353 $— $(960)
(1)For the pension plan, the benefit obligation is the projected benefit obligation. For the post-retirement benefit plan, the benefit obligation is the accumulated post-retirement benefit obligation.
Our accumulated pension benefit obligation was $201,669 and $276,518 at December 31, 2022 and 2021, respectively.
The following table displays the effect that the unrecognized prior service cost and unrecognized actuarial loss of our plans had on accumulated other comprehensive income ("AOCI"), as reported in the accompanying Consolidated Balance Sheets:
Pension BenefitsPost-retirement Benefits
Years Ended December 312022202120222021
Amounts recognized in AOCI
Unrecognized prior service cost$(26,066)$(29,346)$— $(15,085)
Unrecognized actuarial (gain) loss24,961 35,730 — 2,920 
Total amounts recognized in AOCI$(1,105)$6,384 $— $(12,165)
We anticipate amortization of the net actuarial losses for our pension plan in 2023 to be $207.


Net Periodic Benefit Cost

The components of the net periodic benefit cost for our pension and post-retirement benefit plans are as follows:
Pension PlanPost-retirement Benefit Plan
Years Ended December 31,202220212020202220212020
Net periodic benefit cost
Service cost$4,481 $12,082 $10,829 $— $148 $1,728 
Interest cost7,730 6,911 8,266 2 72 1,014 
Expected return on plan assets(18,891)(16,807)(13,539)— — — 
Amortization of prior service cost(3,280)(3,237)— (15,085)(14,490)(8,084)
Special event plan closure— — — (26)(20,177)— 
Amortization of net loss777 3,995 3,914 2,824 2,607 375 
Net periodic benefit cost$(9,183)$2,944 $9,470 $(12,285)$(31,840)$(4,967)

A portion of the service cost component of net periodic pension and postretirement benefit costs are capitalized and amortized as part of deferred acquisition costs and is included in the income statement line titled "amortization of deferred policy acquisition costs." The portion not related to the compensation and the other components of net periodic pension and postretirement benefit costs are included in the income statement line titled "other underwriting expenses."
Projected Benefit Payments
The following table summarizes the expected benefits to be paid from our plans over the next 10 years:
202320242025202620272028 - 2032
Pension benefits$10,880 $10,410 $11,270 $11,940 $12,780 $74,080