UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.___)

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UNITED FIRE & CASUALTY COMPANY

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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UNITED FIRE & CASUALTY COMPANY
118 Second Avenue SE
Cedar Rapids, Iowa 52401

April 18, 2011

Dear Fellow Stockholder:

I am pleased to invite you to join us at United Fire & Casualty Company’s 2011 Annual Meeting of Stockholders. This year’s meeting will be held in the first floor conference room of our building located at 109 Second Street SE, in Cedar Rapids, Iowa. The meeting will take place on Wednesday, May 18, 2011 at 10:00 a.m.

At this year’s Annual Meeting, you will be asked to vote on the following proposals:

Item		Recommended Vote
1.   Election of Four Class A Directors		FOR
2.   Ratification of Independent Registered Public Accounting Firm		FOR
3.   Amendment of United Fire & Casualty Company’s 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan		FOR
4.   Approval, on a non-binding advisory basis, of a resolution approving executive compensation		FOR
5.   Selection, on a non-binding advisory basis, of the frequency of stockholder votes on executive compensation		EVERY 3 YEARS

Management will also report on United Fire & Casualty Company’s business, and stockholders will have an opportunity to ask questions of management and Ernst & Young LLP.

Attached you will find a notice of the meeting and a proxy statement that contains additional information about the meeting and explains the methods you can use to vote your proxy, including by telephone and via the Internet.

Your vote is important. Whether or not you plan to attend the meeting, we encourage you to sign and return your proxy card in the enclosed postage-paid envelope or use telephone or Internet voting prior to the meeting. This ensures that your shares of common stock will be represented and voted at the meeting, even if you cannot attend.

For the Board of Directors,

Jack Evans
Chairman of the Board

UNITED FIRE & CASUALTY COMPANY
118 Second Avenue SE
Cedar Rapids, Iowa 52401

NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS OF
UNITED FIRE & CASUALTY COMPANY

DATE AND TIME:		Wednesday, May 18, 2011, at 10:00 a.m.
PLACE:		United Fire & Casualty Company First Floor Conference Room 109 Second Street SE Cedar Rapids, Iowa
ITEMS OF BUSINESS:		At the meeting, we will ask stockholders to:
		1)   Elect the four Class A directors named in the attached Proxy Statement to three-year terms expiring in 2014.
		2)   Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2011.
		3)   Amend United Fire & Casualty Company’s 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan.
		4)   Consider and vote upon an advisory (non-binding) proposal approving the compensation of our named executive officers.
		5)   Consider and vote upon an advisory (non-binding) proposal approving the frequency of the stockholder vote regarding the compensation of our named executive officers.
		6)   Vote upon such other matters as may properly come before the meeting or at any adjournment or postponement thereof.
WHO CAN VOTE:		You can vote if you were a stockholder of record on March 21, 2011.
2010 ANNUAL REPORT:		If you requested electronic delivery, we have delivered our 2010 Annual Report to you electronically. If you did not request electronic delivery, a copy of our 2010 Annual Report is enclosed.

The Board of Directors recommends that stockholders vote FOR
Items 1, 2, 3 and 4 and THREE YEARS with respect to Item 5.

By Order of the Board of Directors,

Neal R. Scharmer
Corporate Secretary

Dated at Cedar Rapids, Iowa
April 18, 2011

Whether or not you plan to attend the meeting, please complete, sign, date and return the
accompanying proxy card or vote your shares by telephone or via the internet.

Table of Contents

		Page
Annual Meeting Of Stockholders			1
Questions and Answers About the Annual Meeting			1
Delivery of One Set of Annual Meeting Materials to Stockholders in a Single Residence			4
Electronic Availability of Proxy Materials			4
Board Of Directors			5
Corporate Governance			5
Board Size, Composition, and Independence Determination			5
Qualifications and Skills of Directors and Director Nominees			5
Attendance at Directors’ and Stockholders’ Meetings			5
Director Retirement			5
Director Stock Ownership			6
Board Leadership Structure			6
Risk Oversight by the Board of Directors			6
Chief Executive Officer Performance Evaluation			7
Code of Ethics			7
Board Effectiveness Assessment			7
Director Compensation			7
Board Agendas and Meetings			7
Executive Sessions of Independent Directors			8
Access to Management and Independent Advisors			8
Committees of the Board			8
Audit Committee			8
Compensation Committee			9
Nominating & Governance Committee			9
Risk Management Committee			10
Executive Committee			10
Investment Committee			10
Director Nomination Process			10
Communicating with the Board of Directors			11
Concerns and Complaints			11
Stockholder Proposals and Director Nominations			11
Proposal One — Election Of Directors			12
Director Nominees			12
Vote Required and Board Recommendation			14
Continuing Directors Not Up for Election			14
Director Relationships			18
Proposal Two — Ratification of the Appointment of Independent Registered Public Accounting Firm			18
Information About Our Independent Registered Public Accounting Firm			18
Fees Billed to United Fire during 2010 and 2009			19
Audit Committee Pre-Approval			19
Vote Required and Board Recommendation			19

Table of Contents — Cont.

		Page
Proposal Three — Amendment of the United Fire & Casualty Company 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan			20
Description of Plan			20
Nature and Purpose of the Director Plan			20
Shares of Stock Subject to the Director Plan			20
Administration			20
Plan Term			20
Eligibility			20
Limitations			21
Terms, Restrictions and Conditions of Awards			21
Summary of Federal Income Tax Consequences of the Director Plan			22
Amendment and Discontinuation of the Director Plan			23
Vote Required and Board Recommendation			23
Proposal Four — Advisory (Non-Binding) Vote on Compensation of our Named Executive Officers			23
Say-On-Pay Advisory Vote			23
Vote Required and Board Recommendation			24
Proposal Five — Advisory (Non-Binding) Vote on the Frequency of the Advisory Stockholder Vote Approving Compensation of our Named Executive Officers			24
Say-On-Pay Frequency Advisory Vote			24
Vote Required and Board Recommendation			24
Report of the Audit Committee			25
Security Ownership by Certain Beneficial Owners			26
Security Ownership by Management			27
Recent Sales of Unregistered Securities			28
Securities Authorized for Issuance Under Equity Compensation Plans			28
Equity Compensation Plan Information — 2010			29
Section 16(a) Beneficial Ownership Reporting Compliance			29
Executive Officers			30
Executive Compensation			30
Compensation Discussion and Analysis			30
Our Named Executive Officers			31
Changes During 2010			31
Changes Beginning 2011			31
Compensation and Benefits Philosophy			31
Risk Considerations			33
Elements of Compensation			34
Base Salary Compared to Market Consensus — 2010			36
Annual Incentive Plan — 2010			37
The Annual Compensation Process			40
Executive Officers as Stockholders			41
Report of the Compensation Committee			42
Summary Compensation Table — 2010			43

Table of Contents — Cont.

		Page
All Other Compensation Detail — 2010			44
Grants of Plan-Based Awards			44
Grants of Plan-Based Awards — 2010			45
Outstanding Equity Awards at Fiscal Year-End — 2010			46
Option Exercises and Stock Award Vesting			47
Pension Benefits			47
Pension Benefits — 2010			47
Non-Qualified Deferred Compensation			48
Non-Qualified Deferred Compensation — 2010			48
Potential Payments Upon Termination or Change in Control			48
Potential Payments Upon Termination or Change in Control — 2010			49
Director Compensation			50
Non-Employee Director Compensation — 2010			51
Transactions with Related Persons			52
Other Matters			53
Exhibit A — United Fire & Casualty 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan (as amended)			A-1

UNITED FIRE & CASUALTY COMPANY
118 Second Avenue SE
Cedar Rapids, Iowa 52401

PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 2011

This solicitation of proxies is made by the Board of Directors of United Fire & Casualty Company (“United Fire,” “Company,” “we,” “us,” or “our,” as the context requires). Proxies will be used at the Annual Meeting of Stockholders of United Fire & Casualty Company (the “Annual Meeting”), an Iowa corporation, to be held on May 18, 2011 at 10:00 a.m., and at any adjournment or postponement thereof. This year’s meeting will be held in the first floor conference room of our building located at 109 Second Street SE, in Cedar Rapids, Iowa. With respect to shares of our common stock held in the United Fire Group Employee Stock Ownership Plan (the “ESOP”) and the United Fire Group 401(k) Plan (the “401(k) Plan”), the Board of Directors is soliciting participants on behalf of the Trustees of those plans to direct the Trustees how to vote the shares held in those plans.

The notice of meeting, proxy statement, and form of proxy is first being mailed to stockholders and participants in the ESOP and 401(k) Plan on or about April 18, 2011.

We will solicit proxies principally by mail, but our directors and employees may also solicit proxies by telephone, facsimile, or e-mail. Our directors and employees may also conduct personal solicitations.

ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

What is the purpose of the Annual Meeting?

At the Annual Meeting, stockholders will act upon the matters listed in the attached Notice of 2011 Annual Meeting of Stockholders, including (i) the election of the four Class A directors to three-year terms expiring in 2014, (ii) the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2011, (iii) amendment of the United Fire & Casualty Company 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan, (iv) an advisory vote approving the compensation of our named executive officers, and (v) an advisory vote on how frequently to hold a stockholder vote approving the compensation of our named executive officers. Our management will report on our performance during fiscal year 2010. Representatives of Ernst & Young LLP will be present at the meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate stockholder questions.

Who may attend the Annual Meeting?

All stockholders of record as of March 21, 2011 or their duly appointed proxies may attend the Annual Meeting. Although we encourage you to complete and return the enclosed proxy card by mail, or to vote by telephone or via the Internet to ensure your vote is counted, you may attend the Annual Meeting and vote your shares in person.

Who is entitled to vote at the Annual Meeting?

Stockholders of Record

If your shares are registered in your name with Computershare Investor Services, LLC, our dividend agent, transfer agent and registrar, you are considered a stockholder of record. Stockholders of record at the close of business on March 21, 2011, are entitled to receive notice of and to vote at the Annual Meeting or at any postponements or adjournments thereof. At the close of business on March 21, 2011, there were 26,195,552 shares of our common stock issued and outstanding. Each share of common stock entitles its record holder to one vote.

Brokerage and Other Account Holders

If your shares are held in a brokerage account or by a bank or other nominee, you are considered to be the beneficial owner of shares held in “street name.” Holding shares in “street name” means that you hold them through a brokerage firm, bank, or other nominee in the records maintained by our transfer agent, Computershare Investor Services, LLC, instead of in your individual name. These proxy materials are being forwarded to you by your broker or nominee, who is considered to be the holder of record with respect to your shares. As the beneficial owner, you have the right to direct your broker or nominee how to vote your beneficial shares by filling out the voting instruction form provided to you. Telephone and Internet voting options may also be available to beneficial owners. As a beneficial owner, you are invited to attend the Annual Meeting, but you must obtain a legal proxy from the record holder of your shares in order to vote in person at the Annual Meeting.

ESOP and 401(k) Plan Participants

If you are a participant in either our ESOP or our 401(k) Plan, we have shown on your proxy card the number of shares of common stock held for your benefit in the ESOP or the 401(k) Plan, plus your other holdings. If you hold stock through either of these plans, voting your proxy also serves as confidential voting instructions to the Trustees of the ESOP (Timothy G. Spain and Michael T. Wilkins) and/or to the Trustee of the 401(k) Plan (Charles Schwab & Co.). Those Trustees will vote your shares in accordance with the specific voting instructions that you indicate on your proxy card. If you provide no specific voting instructions, the Trustees of the ESOP will not vote your shares, and the Trustee of the 401(k) Plan will vote your shares in proportion to the voting instructions it receives from those plan participants who do submit voting instructions.

What constitutes a quorum for the Annual Meeting?

The presence at the Annual Meeting of a majority of the outstanding shares of our common stock represented either in person or by proxy will constitute a quorum for the transaction of business at the Annual Meeting. Based on the number of shares outstanding on March 21, 2011, 13,097,777 shares of common stock, represented in person or by proxy, will constitute a quorum for conducting business at the Annual Meeting. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum at the Annual Meeting.

How do I vote my shares?

You may vote in the following ways:

•

In person: We will distribute paper ballots to anyone who wishes to vote in person at the Annual Meeting. However, if you hold your shares in street name, you must request a proxy card from your broker in order to vote in person at the Annual Meeting.

	•		By mail: Complete and sign your proxy card and return it by mail in the enclosed business reply envelope. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct. If an additional proposal comes up for a vote at the Annual Meeting that is not on the proxy card, your shares will be voted in the best judgment of the authorized proxies, Jack B. Evans and Neal R. Scharmer.
			If you do not mark voting instructions on your proxy card, your shares will be voted FOR approval of the director nominees, FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2011, FOR approval of the resolution regarding compensation of our named executive officers and FOR THREE YEARS as the frequency with which to hold an advisory vote regarding compensation of our named executive officers.

•

By telephone: Call the toll-free telephone number on your proxy card to vote by telephone. You must have a touch-tone telephone to use this voting method. You will need to follow the instructions on your proxy card and the voice prompts to vote your shares.

•

Via the Internet: If you have Internet access available to you, you may go to the website listed on your proxy card to vote your shares via the Internet. You will need to follow the instructions on your proxy card and the website to vote your shares.

Telephone and Internet voting options are available 24 hours a day, seven days a week. When prompted, you will need to enter the control number shown on your proxy card. You will then be able to vote your shares and confirm that your instructions have been properly recorded. If you vote by telephone or via the Internet, your electronic vote authorizes the proxies in the same manner as if you had signed, dated and returned your proxy card by mail. Telephone and Internet voting procedures, including the use of control numbers found on the proxy cards, are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares of stock and to confirm that their instructions have been properly recorded. If you vote by telephone or via the Internet, you do not need to return your proxy card.

If you hold your shares in street name, you may vote by telephone or via the Internet only if your bank, broker or other nominee makes those methods available to you, in which case your broker or nominee will enclose specific instructions for using those options along with this proxy statement.

If I hold my shares in a brokerage account and do not return voting instructions, will my shares be voted?

If your shares are held in a brokerage account or by a bank or other nominee, your broker, bank or other nominee will ask you how you want your shares to be voted. If you provide voting instructions, your shares must be voted as you direct. If you do not furnish voting instructions, one of two things can happen, depending upon whether a proposal is “routine.” Under the rules that govern brokers who have record ownership of shares beneficially owned by their clients, brokers have discretion to cast votes on routine matters, such as the ratification of the choice of auditor, without receiving voting instructions from their clients. Brokers are not permitted, however, to cast votes on “non-routine” matters, such as the election of directors, approval of stock incentive plans or amendment of our articles of incorporation, without client voting instructions. A “broker non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for that proposal and has not received voting instructions from the beneficial owner.

Can I revoke my proxy or change my vote after I return my proxy?

Yes. Even after you submit a proxy, you may revoke your proxy or change your vote at any time before it is exercised by:

•

Delivering written notice to our transfer agent, Computershare Investor Services, LLC at its proxy tabulation center at P. O. Box 43126, Providence, Rhode Island 02940-5138;

•

Delivering written notice to the Corporate Secretary of United Fire & Casualty Company at P.O. Box 73909, Cedar Rapids, Iowa 52407-3909;

•

Executing and delivering a later-dated proxy; or

•

Appearing and voting in person at the Annual Meeting. Attendance at the Annual Meeting will not by itself revoke a previously granted proxy.

Who pays for this proxy solicitation?

United Fire will pay the total expense of this solicitation of proxies. The expenses may include reimbursement to brokerage firms and others of their cost for forwarding solicitation material to beneficial owners.

What is “householding” and how does it affect me?

United Fire has adopted “householding,” a procedure under which stockholders of record who have the same address and last name and do not receive proxy materials electronically will receive a single Notice of Internet Availability of Proxy Materials or set of proxy materials, unless one or more of these stockholders notifies United Fire that they wish to continue receiving individual copies. Stockholders who participate in householding will continue to receive separate proxy cards. This procedure can result in significant savings to United Fire by reducing printing and postage costs.

Does United Fire offer an opportunity to receive future proxy materials electronically?

Yes. If you wish to receive future proxy materials over the Internet instead of receiving copies in the mail, follow the instructions provided when you vote by telephone or via the Internet. If you elect electronic delivery, United Fire will discontinue mailing the proxy materials to you beginning next year and will send you an e-mail message notifying you of the Internet address or addresses where you may access next year’s proxy materials and vote your shares. You may discontinue electronic delivery at any time.

What are the benefits of electronic delivery?

Electronic delivery reduces United Fire’s printing and mailing costs as well as the environmental impact of the Annual Meeting. It is also a convenient way for you to receive your proxy materials and makes it easy to vote your shares over the Internet.

DELIVERY OF ONE SET OF ANNUAL MEETING MATERIALS TO STOCKHOLDERS IN A SINGLE RESIDENCE

SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and annual reports to stockholders with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to stockholders addressed to those stockholders. This process, commonly referred to as “householding,” provides cost savings for companies. We and some brokers household proxy materials and annual reports to stockholders unless contrary instructions have been received from the affected stockholders. Once you have received notice from us, your broker, or other designated intermediary that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report to stockholders, please notify your broker, or notify us by calling our transfer agent at (800)-542-1061, or write to: Householding Department, 51 Mercedes Way, Edgewood, New York 11717, and include your name, the name of your broker or other nominee, and your account number(s).

Stockholders who currently receive multiple copies of the proxy statement or annual report to stockholders at their address and would like to request “householding” of their communications should contact their broker or, if a stockholder is a registered holder of shares of common stock, he or she should submit a written request to or call Householding Department, 51 Mercedes Way, Edgewood, New York 11717, telephone number (800)-542-1061.

Upon written or oral request to us, we will provide you a copy of the proxy statement and annual report to stockholders. If you are currently receiving multiple copies of our proxy statement or annual report to stockholders, and you wish to receive only a single copy, you may make that request by contacting us. Upon written or oral request, we will promptly deliver a separate copy of the proxy statement and annual report to stockholders at a shared address to which a single copy was delivered. To contact us, you may write to or call United Fire Group, Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, telephone number (319) 399-5700.

ELECTRONIC AVAILABILITY OF PROXY MATERIALS

Electronic versions of our annual proxy statement and 2010 Annual Report to Stockholders are available on our public website, www.unitedfiregroup.com by selecting “Investor Relations” and then “Reports / Proxy.”

BOARD OF DIRECTORS

Our Board of Directors currently consists of 12 directors: Christopher R. Drahozal, Jack B. Evans (Chairman), Thomas W. Hanley, Douglas M. Hultquist, Casey D. Mahon, George D. Milligan, James W. Noyce, Mary K. Quass, John A. Rife (Vice Chairman), Randy A. Ramlo, Kyle D. Skogman, and Frank S. Wilkinson Jr.

CORPORATE GOVERNANCE

In order to promote the highest standards of management for the benefit of stockholders, our Board of Directors follows certain governance practices regarding how the Board conducts its business and fulfills its duties. Among these practices are:

Board Size, Composition, and Independence Determination

The Board of Directors requires a majority of our Directors to be independent, as defined in the listing standards of The NASDAQ Stock Market LLC (“NASDAQ”). Currently, nine (9) of our twelve (12) directors are independent. The Board of Directors has analyzed the independence of each director and each director nominee and has determined that the following directors qualify as independent directors within the meaning of the applicable rules of NASDAQ, and that each is free of any relationship that would interfere with his or her individual exercise of independent judgment: Ms. Mahon, Ms. Quass, and Messrs. Drahozal, Evans, Hanley, Milligan, Noyce, Skogman, and Wilkinson. To our knowledge, there are no family relationships among the directors or executive officers.

In determining director independence, the Board of Directors considers transactions, relationships, and arrangements between the directors and our Company. During 2010, the Board of Directors considered the following transactions not required to be disclosed pursuant to Item 404(a) of Regulation S-K and determined that such transactions did not affect the independence of the directors: certain independent directors and parties related to directors were policyholders of United Fire, and it is anticipated that such individuals or parties will continue to be policyholders of United Fire; and an insurance agency relationship. All such transactions between United Fire and its independent directors or related parties were made in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons, and, in the opinion of management, did not involve more than the normal risk assumed by United Fire.

Qualifications and Skills of Directors and Director Nominees

Our Nominating & Governance Committee, with input from our Chief Executive Officer, reviews and evaluates all director candidates, including incumbents. The Nominating & Governance Committee and the Board of Directors seek qualified individuals who possess the minimum qualifications and the desirable qualities or skills described under “Director Nomination Process” found on page 10 of this proxy statement.

All of our incumbent directors possess both the specific minimum qualifications and the desirable qualities or skills. The specific expertise and qualifications that led to each director’s inclusion on our Board of Directors are discussed in each director’s individual biography beginning on page 12 of this proxy statement.

Attendance at Directors’ and Stockholders’ Meetings

The Board of Directors met seven (7) times during 2010. All of the directors attended 75 percent or more of the aggregate number of meetings of the Board of Directors and the committees on which they served. The Board of Directors’ policy requires directors to attend our Annual Meeting. All directors serving at the time of the 2010 Annual Meeting attended that meeting.

Director Retirement

Pursuant to our bylaws, each director must retire from the Board of Directors no later than the February after he or she reaches age 72, effective no later than the next Annual Meeting.

Director Stock Ownership

We believe that non-management directors should own and hold common stock of the Company to further align their interests and actions with the interests of the Company’s stockholders. Our articles of incorporation require that all of our directors own Company stock. The Board of Directors has adopted stock ownership guidelines indicating that each non-employee director should beneficially own at least 100 shares of Company stock when they join the Board of Directors and at least 5,000 shares of our common stock by December 31, 2013, or within five years after first being elected to the Board of Directors, whichever comes first. Current beneficial stock ownership for each director can be found in the table on page 27 of this proxy statement.

Board Leadership Structure

Our Board of Directors is led by an independent Chairman who is responsible for providing guidance to our Chief Executive Officer, setting the agenda for Board meetings, and presiding at all stockholder and director meetings. We also have a Vice Chairman whose responsibility it is to preside in the Chairman’s absence. Neither our Chairman nor our Vice Chairman serves as our Chief Executive Officer. Our Chief Executive Officer is responsible for setting strategic direction for our Company and providing us with day-to-day leadership. We have separated the roles of Chairman and Chief Executive Officer since 2000. We feel that this is the most appropriate leadership structure for our Board of Directors and executive management because we recognize the difference between the two roles and the skill sets required to most effectively and efficiently perform these functions. Our Board of Directors does not have a policy requiring the positions of Chairman and Chief Executive Officer to be separate; preferring to preserve the freedom to decide what is in the best interest of our Company at any time. Our Board of Directors strongly endorses the concept of an independent director being in a position of leadership for the rest of our independent directors. If at any time neither our Chairman nor Vice Chairman is an independent director, the independent directors will elect an independent director to serve as lead director. Currently our Vice Chairman is not considered to be independent.

During 2010, the Board of Directors had six standing committees: Audit Committee, Compensation Committee, Executive Committee, Investment Committee, Nominating & Governance Committee, and Risk Management Committee. Each committee is governed by a charter, which is reviewed and approved annually by the committee, our Nominating & Governance Committee, and the full Board of Directors. Only independent directors may be members of the Audit Committee, Compensation Committee, and Nominating & Governance Committee. All committee charters are available for review either on our public website, www.unitedfiregroup.com by selecting “Investor Relations” and then “Corporate Governance,” or in paper form upon request to: United Fire Group, Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909.

Risk Oversight by the Board of Directors

The members of the Risk Management Committee are Douglas M. Hultquist (Chair), Christopher R. Drahozal, Casey D. Mahon, and Mary K. Quass. The Risk Management Committee is governed by a charter that requires it to assist the Board of Directors in identifying and evaluating risks inherent in our business and to oversee and review the significant policies, procedures, and practices employed to manage risks. During 2010, the Risk Management Committee met two (2) times as a committee.

We approach risk management carefully, using a combination of methods. In addition to the Risk Management Committee, we have an executive enterprise risk management committee (“executive ERM committee”) made up of a broad range of management personnel, including senior management; its meetings are attended by two directors. The Board’s Risk Management Committee meets independently and works closely with the executive ERM committee.

Enterprise Risk Management (“ERM”) is a methodology that helps organizations assess and manage their overall exposure to risk. We employ a multi-disciplinary approach to risk identification and evaluation, analyzing risk from the point of view of claims, underwriting, financial, and investments. Our executive ERM committee includes our Chief Executive Officer, Chief Financial Officer, Executive Vice President, Vice President of Claims, Vice President of Corporate Underwriting, Chief Investment Officer, and Chief Operating Officer of our life insurance subsidiary (United Life Insurance Company), as well as United Life Insurance Company’s independent actuary. During 2010, this committee met on a quarterly basis with two members of the Board’s Risk Management Committee to oversee our risk management process and to implement risk management strategies.

During its meetings, the executive ERM committee discusses the risks that our Company faces, as well as the controls that are in place to mitigate those risks. Collectively, the committee has identified two broad categories of risk faced by our company — insurance risk and operational risk. Types of insurance risks generally include, but are not limited to, those risks associated with catastrophes, loss reserving practices, underwriting practices, policy pricing, geographical concentrations of property insured, competition, and business mix. Types of operational risks we face generally include, but are not limited to, those risks associated with diversification and quality of investments, information technology, regulatory and legal compliance, business continuity planning, executive succession planning, and the application of accounting policies and procedures.

ERM issues are also discussed during quarterly meetings of our full Board of Directors, where directors are updated on ERM issues and the ongoing efforts of the executive ERM committee and our Risk Management Committee. The work of our executive ERM committee, in conjunction with the Risk Management Committee and the Board of Directors, has led to the development of new tools designed to aid in the evaluation and mitigation of business risks.

Chief Executive Officer Performance Evaluation

The Executive Committee and the Compensation Committee meet each year with our Chief Executive Officer to review his goals for the current year. During the year, the Executive Committee meets regularly with our Chief Executive Officer to review his performance. The Executive Committee and the Compensation Committee annually review the performance of our Chief Executive Officer and compare his performance with his goals for that year.

Code of Ethics

Our Board of Directors has adopted a Code of Ethics and Business Conduct that applies to all of our officers, directors, and employees. Copies of the United Fire Group^® Code of Ethics and Business Conduct can be obtained free of charge by writing to United Fire Group, Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, or on our public website, www.unitedfiregroup.com by selecting “Investor Relations,” then “Corporate Governance” and then “Code of Ethics.” The Code of Ethics and Business Conduct establishes procedures regarding the reporting of a violation of the code.

Board Effectiveness Assessment

Our Nominating & Governance Committee conducts an annual survey of the directors to assess the effectiveness of our Board of Directors. The Nominating & Governance Committee reviews and considers the results of the survey and reports its findings to the Board of Directors. That committee also makes recommendations to the Board of Directors regarding our corporate governance practices. All standing committees of our Board of Directors also conduct annual self-assessments and report such self-assessments to the Board of Directors.

Director Compensation

We have designed the compensation of our directors to attract and retain qualified directors and to align director compensation with the interests of our stockholders. See pages 50-52 of this proxy statement for a description of our directors’ compensation program and the directors’ fees paid during 2010.

Board Agendas and Meetings

Each year the Board of Directors establishes the dates of regularly scheduled meetings of the Board of Directors. The Chairman of the Board, working with our Chief Executive Officers and Committee Chairpersons, establishes agendas for each meeting of the Board of Directors and distributes the agendas in advance of each meeting. Each director is free to suggest items for each agenda, and each director is free to raise subjects at any meeting of the Board of Directors that are not on the agenda for that meeting. At each meeting of the Board of Directors, the Board receives reports of each of the Committees.

Executive Sessions of Independent Directors

The independent directors meet in executive session following each meeting of the Board of Directors. The Chairman of the Board presides at the meetings of the independent directors.

Access to Management and Independent Advisers

The independent directors have access to management and, as necessary and appropriate, independent advisers.

COMMITTEES OF THE BOARD

The Board of Directors has six standing committees: Audit Committee, Compensation Committee, Executive Committee, Investment Committee, Nominating & Governance Committee, and Risk Management Committee. Each committee is governed by a charter that is reviewed and approved annually by the committee, our Nominating & Governance Committee, and the Board of Directors. Only independent directors may be members of the Audit Committee, Compensation Committee and Nominating & Governance Committee. All committee charters are available for review either on our public website, www.unitedfiregroup.com, by selecting “Investor Relations” and then “Corporate Governance;” or in paper form upon request to our Corporate Secretary, United Fire Group, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909.

The following table shows the current committee assignments of our directors.

Risk

Nominating &

Audit

Compensation

Executive

Investment

Management

Governance

Director

Committee

Committee

Committee

Committee

Committee

Committee

Jack B. Evans, Chairman (I)

ü

ü

(C)

ü

ü

John A. Rife, Vice Chairman

ü

Christopher R. Drahozal (I)

ü

ü

ü

Thomas W. Hanley (I)

ü

(C)(FE)

Douglas M. Hultquist

ü

ü

(C)

Casey D. Mahon (I)

ü

ü

George D. Milligan (I)

ü

ü

(1)

ü

(C)

ü

James W. Noyce (I)

ü

(FE)

ü

(2)

Mary K. Quass (I)

ü

ü

Randy A. Ramlo

ü

ü

Kyle D. Skogman (I)

ü

ü

ü

ü

(C)

Frank S. Wilkinson Jr. (I)

ü

(C)

ü

Audit Committee

We have a separately designated standing Audit Committee, as defined in Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). Thomas W. Hanley is the chair of our Audit Committee. The other members of the Audit Committee are Jack B. Evans, George D. Milligan, James W. Noyce and Kyle D. Skogman. All of the members of the Audit Committee are independent under the rules of NASDAQ, applicable law, and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”), including Section 10A(m)(3) of the Exchange Act, as amended. The written policy of the Board of Directors requires each member of the Audit Committee to be an independent director. The Board of Directors has determined that Mr. Hanley and Mr. Noyce are audit committee financial experts, as defined by Item 407(d)(5) of Regulation S-K of the Exchange Act, and that they are independent, as independence for audit committee members is defined in the listing standards of NASDAQ. The Audit Committee met six (6) times during 2010.

The Audit Committee is governed by a charter and is directly responsible for the appointment, compensation and retention (or termination) of our independent registered public accounting firm. The Audit Committee is also responsible for oversight of our internal audit function. The Audit Committee seeks to maintain free and open communications between the directors, the independent registered public accounting firm, the internal auditors and management. Its duties consist of reviewing recommendations by the internal auditor and the independent registered public accounting firm on accounting matters and internal controls; advising the Board of Directors on the scope of audits; reviewing our annual Consolidated Financial Statements and the accounting standards and principles followed; appointing the independent registered public accounting firm; and, if necessary, conducting independent inquiries. The Audit Committee Charter requires the Audit Committee to meet at least four (4) times each year.

Compensation Committee

Compensation Committee Interlocks and Insider Participation

Frank S. Wilkinson Jr. is the chair of our Compensation Committee. The other members of the Compensation Committee are Christopher R. Drahozal, Casey D. Mahon, James W. Noyce, and Mary K. Quass. The Board of Directors has determined that, in accordance with its policy, each member of our Compensation Committee is independent from management and free from any relationship that, in the opinion of the directors, would interfere with their exercise of independent judgment. No Compensation Committee member was an employee or former employee of our Company. No Compensation Committee member had any relationship requiring disclosure under the “Transactions with Related Persons” section of this proxy statement. During 2010, none of our executive officers served on the Compensation Committee (or its equivalent) or Board of Directors of another entity whose executive officer(s) served on our Compensation Committee. The Compensation Committee met five (5) times during 2010.

Scope of Authority

The Compensation Committee is governed by a charter. The Compensation Committee Charter requires the Compensation Committee to meet at least two (2) times each calendar year. The role of the Compensation Committee is to address the Board of Director’s responsibilities relating to compensation of our senior executive officers and directors. The Compensation Committee oversees all aspects of the compensation of our executive officers and directors, including our director and management equity plans, deferred compensation plan, and other management incentive compensation programs. In overseeing those plans, the Compensation Committee may delegate authority to Company officers for day-to-day plan administration and interpretation, including selecting participants, determining award levels within plan parameters, and approving award documents. However, the Compensation Committee may not delegate any authority for matters affecting the executive officers. The Compensation Committee’s primary processes with respect to compensation of our senior executive officers can be found in the “Compensation Discussion and Analysis” section beginning on page 30 of this proxy statement. During 2010, the Compensation Committee engaged the services of Compensation Resources, Inc. as its independent outside compensation consultant to provide advice on executive and director compensation matters. For a discussion of the specific services provided by Compensation Resources, Inc., see the “Compensation Discussion and Analysis” section beginning on page 30 of this proxy statement.

Nominating & Governance Committee

Kyle D. Skogman is the chair of our Nominating & Governance Committee. The other members of the Nominating & Governance Committee are Jack B. Evans, George D. Milligan, and Frank S. Wilkinson Jr. All of the members of the Nominating & Governance Committee are independent, as defined in the listing standards of NASDAQ, and are free from any relationship that, in the opinion of the Board of Directors, would interfere with their exercise of independent judgment.

The Nominating & Governance Committee is governed by a charter. The Nominating & Governance Committee Charter requires the Compensation Committee to meet at least two (2) times each calendar year. The Nominating & Governance Committee is responsible for reviewing all director candidates, including incumbents, and making recommendations of nominees to the entire Board of Directors. The Nominating & Governance Committee is also responsible for assessing and reporting on nominee qualifications, making assessments of director independence, identifying and reviewing related persons transactions, and other matters, including director education and succession planning. The Nominating & Governance Committee met four (4) times during 2010.

Risk Management Committee

Douglas M. Hultquist is the chair of our Risk Management Committee. The other members of the Risk Management Committee are Christopher R. Drahozal, Casey D. Mahon, and Mary K. Quass. For a description of responsibilities and activities of the Risk Management Committee, see “Risk Oversight by the Board of Directors” on page 6 of this proxy statement.

Executive Committee

Jack B. Evans is the chair of our Executive Committee. The other members of the Executive Committee are Randy A. Ramlo, John A. Rife, and Kyle D. Skogman. The Executive Committee meets during the intervals between Board of Directors’ meetings and has the right and authority to exercise the full powers of our Boards of Directors, except where limited by law, or where responsibility and authority is reserved to the Board of Directors or vested in another Committee of the Board of Directors. This committee also meets regularly with our Chief Executive Officer, participates with management in the development of our strategic initiatives, and monitors the implementation of these initiatives. In addition, the Executive Committee provides regular advice and counsel to management. The Executive Committee met six (6) times during 2010.

Investment Committee

George D. Milligan is the chair of our Investment Committee. The other members of the Investment Committee are Jack B. Evans, Christopher R. Drahozal, Douglas M. Hultquist, Randy A. Ramlo, and Kyle D. Skogman. The Investment Committee establishes our overall investment policies and guidelines. In addition, it reviews and ratifies our Company’s investments. The Investment Committee meets regularly with our Chief Investment Officer and his staff. The Investment Committee met four (4) times during 2010.

DIRECTOR NOMINATION PROCESS

The Nominating & Governance Committee has adopted a written policy with regard to the consideration of director candidates, including candidates recommended by stockholders. The Nominating & Governance Committee evaluates candidates recommended by stockholders in the same manner as it evaluates other candidates. The Nominating & Governance Committee seeks candidates with the following minimum qualifications:

•

Each candidate shall be prepared to represent the best interests of all of our stockholders and not just one particular constituency.

•

Each candidate shall be an individual who has demonstrated integrity and ethics in his or her personal, business, and professional life and has an established record of business and professional accomplishment in his or her chosen field.

•

No candidate, candidate’s family member (as defined in the rules of NASDAQ) or affiliate or associate of a candidate (as defined in Rule 405 of the Securities Act of 1933) shall have any material personal, financial, or professional interest in any present or potential competitor of ours.

•

Each candidate shall participate fully in Board of Directors activities, including active membership on at least one Board committee and attendance at, and active participation in, meetings of the Board and the committee(s) of which he or she is a member, and not have other personal, business, or professional commitments that would interfere with or limit his or her ability to do so.

•

Each candidate shall be willing to make, and financially capable of making, an investment in our common stock as required by our Articles of Incorporation and provided for in a policy adopted by our Board of Directors.

The Nominating & Governance Committee considers it desirable for candidates to possess the following qualities or skills:

•

Each candidate should contribute to the Board of Director’s overall diversity, diversity being broadly construed to mean a variety of opinions, perspectives, personal experience, business experience, professional experience, and backgrounds (such as gender, race, and ethnicity), as well as other differentiating characteristics.

•

Each candidate should contribute positively to the existing chemistry and collaborative culture among the directors.

•

Each candidate should possess professional, business, and personal experience and expertise relevant to the Company’s business. In this regard the Nominating & Governance Committee will consider financial, management, and business background; personal and educational background and experience; community leadership; independence; and other qualifications, attributes and potential contributions.

The Nominating & Governance Committee selects candidates to be recommended to the Board of Directors each year based on its assessment of, among other things:

•

The candidates’ personal qualifications as discussed above.

•

The past and future contributions of our current directors, and the value of continuity and prior experience on our Board of Directors.

•

The existence of one or more vacancies on our Board of Directors.

•

The need for a director possessing particular attributes or particular experience or expertise.

•

Other factors that it considers relevant, including any specific qualifications the Nominating & Governance Committee adopts from time to time.

Any stockholder may recommend a person to be considered as a candidate or nominate one or more persons for election as a director of our Company. Our Board of Directors encourages stockholders who wish to recommend candidates to the Nominating & Governance Committee to send their recommendations in writing addressed to the Nominating & Governance Committee, United Fire & Casualty Company, Attention: Corporate Secretary, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909 using the procedures outlined below in the “Communicating with the Board of Directors.”

COMMUNICATING WITH THE BOARD OF DIRECTORS

Concerns and Complaints

United Fire has adopted a process for communicating with our Board of Directors. To communicate directly with our Board of Directors regarding issues of concern to our Company, access our website, www.unitedfiregroup.com by selecting “Investor Relations” and then “Corporate Governance,” toll free by telephone at 1-877-256-1056, or write to the Audit Committee — Confidential c/o United Fire Group, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909. Our Vice President / General Counsel / Corporate Secretary, Neal R. Scharmer, and Audit Committee Chair, Thomas W. Hanley, are responsible for reviewing and reporting such communications to our Board of Directors. If requested, and to the extent possible, all communications with our Board of Directors are kept strictly confidential.

Stockholder Proposals and Director Nominations

To be eligible for inclusion in the proxy materials for the 2012 annual meeting, a stockholder proposal must be received by our Corporate Secretary by the close of business on December 20, 2011. All proposals must comply with Rule 14a-8 of the Exchange Act, which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals must be delivered to our Corporate Secretary at United Fire & Casualty Company, Attn: Corporate Secretary, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909.

Any stockholder proposal that is not submitted for inclusion in next year’s proxy statement under SEC Rule 14a-8, but is instead sought to be presented directly at our 2012 Annual Meeting, must be received at our principal executive offices by the close of business on March 3, 2012. Proposals must be delivered to our Corporate Secretary at United Fire & Casualty Company, Attn: Corporate Secretary, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909. SEC Rules permit management to vote proxies in its discretion in certain cases if the stockholder does not comply with this deadline, and in certain other cases notwithstanding the stockholder’s compliance with this deadline.

PROPOSAL ONE — ELECTION OF DIRECTORS

Our articles of incorporation require that our Board of Directors be divided into three classes, A, B, and C, with one class elected at each Annual Meeting. The Board of Directors must consist of no more than fifteen (15) and no less than nine (9) members, with the number fixed by the directors. The directors have fixed current membership of the Board of Directors at twelve (12) and the number of Class A directors to be elected at this year’s Annual Meeting at four (4), subject to such changes as the Board of Directors may make at the time of the Annual Meeting if any director nominations are made by minority stockholders, as described in the next paragraph.

According to our articles of incorporation, minority stockholders who collectively hold and vote one-fifth of our outstanding common stock are entitled to nominate and elect 20 percent of our directors. Therefore, minority stockholders collectively holding one-fifth of our outstanding common stock are entitled to nominate and elect one (1) director if we have nine (9) directors; two (2) directors if we have a total of ten (10) through fourteen (14) directors (our current number is twelve (12)); and three (3) directors if we have fifteen (15) directors. The majority of our stockholders can always elect a majority of our directors.

Upon the recommendation of the Nominating & Governance Committee, our Board of Directors has nominated the following individuals for re-election this year.

DIRECTOR NOMINEES

Nominees for Director (Class A) — Terms Expire in 2011

Douglas M. Hultquist (Director since 2007)		Mr. Hultquist, 55, has a strong business background and extensive experience with public companies. He is the President, Chief Executive Officer, and a director of QCR Holdings, Inc., a multi-bank holding company he co-founded that is headquartered in Moline, Illinois, and that has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (“Exchange Act”). He has served in those positions since 1993. From 1977 to 1993, Mr. Hultquist was a certified public accountant (and a partner from 1987 to 1993) with KPMG Peat Marwick and McGladrey & Pullen, LLP, national tax and accounting firms. As a certified public accountant, Mr. Hultquist provided services to and advised a wide range of businesses. Mr. Hultquist is an active, long-time community leader and supporter, being involved as a director and past Chairman of the PGA TOUR John Deere Classic golf tournament, a director of The Robert Young Center for Mental Health, a trustee and past Chairman of Augustana College, a director of TPC at Deere Run, and Finance Chairman of the William Butterworth Memorial Trust. Mr. Hultquist is also a member of the Finance Committee and Board of the Quad Cities Chamber of Commerce and is co-chair of the Genesis Health System Golf Tournament.
		Mr. Hultquist currently serves on the Risk Management Committee, which he chairs, and the Investment Committee. Through his professional and business background and his service to us, Mr. Hultquist has a broad and strong understanding of our Company and business as well as the operations of a public company. The Board of Directors believes that Mr. Hultquist’s qualifications to serve as director include his business acumen, executive leadership and management experience, accounting background, and extensive experience with public companies. Mr. Hultquist is not independent as defined in the listing standards of The NASDAQ and is not a member of our Audit Committee; however, he has the professional and business experience to qualify as an audit committee financial expert.

Casey D. Mahon (Director since 1993)		Ms. Mahon, 59, is an Adjunct Professor of Law at the University of Iowa College of Law, Iowa City, Iowa, where she has periodically taught business law since 1998. She has a strong public company background, having served from 1986 to 1990 as Senior Vice President and General Counsel of Teleconnect Company and its successor, Telecom USA, both of which had classes of securities registered pursuant to Section 12 of the Exchange Act at the time she was employed by them. From 1993 until 1998 Ms. Mahon served as Senior Vice President and General Counsel for McLeodUSA, Inc., Cedar Rapids, Iowa, a company that, at the time, had a class of securities registered pursuant to Section 12 of the Exchange Act. McLeodUSA, Inc. provided integrated communications services to its customers. Ms. Mahon has served for many years on the Compensation Committee of our Board of Directors. She now serves on that committee and on our Risk Management Committee. The Board of Directors believes that Ms. Mahon’s qualifications to serve as director include her extensive legal experience with public companies and her knowledge of the insurance industry gained from her years of service to our Company. Ms. Mahon also serves as a member of the Board of Directors of the University of Iowa Foundation. Ms. Mahon is an independent director as defined in the listing standards of NASDAQ.
Randy A. Ramlo (Director since 2008)		Mr. Ramlo, 50, has served as our President and Chief Executive Officer since May 2007. He previously served us as Chief Operating Officer (May 2006 — May 2007), as Executive Vice President (May 2004 — May 2007), and as Vice President, Fidelity and Surety (November 2001 — May 2004). Mr. Ramlo has been with us since 1984 and has a very strong knowledge of our Company and the insurance industry. He holds numerous professional insurance designations including Chartered Property and Casualty Underwriter, Associate in Fidelity and Surety Bonding, Associate in Management, and Associate in Risk Management. Mr. Ramlo is a long-time community leader and supporter, with service on many diverse organizations such as director of Priority One, the economic development arm of the Cedar Rapids Chamber of Commerce, and on the board of trustees of the Cedar Rapids Museum of Art and the Eastern Iowa Branch of the Juvenile Diabetes Research Foundation International. He is also on the Self-Supported Municipal Improvement District board of the Cedar Rapids Downtown District.
		The Board of Directors believes that Mr. Ramlo’s qualifications to serve as director include his extensive experience in the insurance industry and with our Company, and his executive leadership and management experience. Mr. Ramlo is not an independent director as defined in the listing standards of NASDAQ.

Frank S. Wilkinson Jr. (Director since 2001)		Mr. Wilkinson, 71, has a strong insurance industry background. He retired in December 2000 from E.W. Blanch Co., a company in Minneapolis, Minnesota that provides risk management and distribution services and arranges reinsurance coverage between insurers and reinsurers. Before retiring after 31 years of service, Mr. Wilkinson held a number of positions with E.W. Blanch Co., including Executive Vice President and director from 1993 to 2000. Mr. Wilkinson previously served on the Board of Directors of Benfield Group, Ltd. of London, England, a publicly held reinsurance intermediary and capital advisor, where he served on the audit, remuneration (compensation) and nominating & governance committees. Mr. Wilkinson also served on the Board of Directors of Hub International, Ltd. of Chicago, Illinois, a company that has a class of securities registered pursuant to Section 12 of the Exchange Act that provides risk management and wealth management services, where he served on the compensation committee. Mr. Wilkinson currently serves, and has for many years served, on our Compensation Committee, which he chairs, and on our Nominating & Governance Committee. The Board of Directors believes that Mr. Wilkinson’s qualifications to serve as director include his extensive business experience in the insurance industry, his experience with public companies, and his knowledge of our Company, gained from his many years of service to us. Mr. Wilkinson is an independent director as defined in the listing standards of NASDAQ.

VOTE REQUIRED AND BOARD RECOMMENDATION

Directors are elected by a plurality of the votes cast (either in person or by proxy) by the shares entitled to vote in the election at a meeting at which a quorum is present. In tabulating the voting results for the election of directors, “FOR” votes are counted in favor of the election of a director, and “WITHHOLD” votes are counted against the election of a director. Abstentions will not affect the election of directors. In tabulating the voting results for the election of directors, only “FOR” and “WITHHOLD” votes are counted. Stockholders do not have the right to cumulate their votes in the election of directors.

The Board of Directors recommends a vote FOR the
election to the board of each of the nominees.

CONTINUING DIRECTORS NOT UP FOR ELECTION

The following individuals are continuing members of our Board of Directors who are not up for election.

Directors (Class C) — Terms Expire in 2012

Christopher R. Drahozal (Director since 1997)		Mr. Drahozal, 49, is an internationally known legal scholar. He is the John M. Rounds Professor of Law at the University of Kansas School of Law in Lawrence, Kansas, where he has taught since 1994. Prior to teaching, Mr. Drahozal was in private law practice in Washington, D.C., and served as a law clerk for the Iran-U.S. Claims Tribunal, the United States Court of Appeals for the Fifth Circuit and the United States Supreme Court. Mr. Drahozal currently serves on our Compensation Committee, our Investment Committee and our Risk Management Committee. The Board of Directors believes that Mr. Drahozal’s qualifications to serve as director include his legal background and his knowledge of the insurance industry and our Company, gained from his many years of service to us. Mr. Drahozal is an independent director as defined in the listing standards of NASDAQ.

Jack B. Evans (Director since 1995)		Mr. Evans, 62, became Chairman or our Board of Directors in October 2009. He has served us as a director since 1995 and as Vice Chairman from 1997 to 2009. Mr. Evans has a very strong business background, and currently holds the position of President of the Hall-Perrine Foundation, a private philanthropic corporation located in Cedar Rapids, Iowa. He has held that position since 1996. From 1993 to 1995, he served as President of SCI Financial Group, a regional financial services firm located in Cedar Rapids providing brokerage, insurance and related services to its clients. Mr. Evans has extensive experience with public companies. He currently serves on the Board of Trustees of 241 registered investment companies in the Nuveen Funds fund complex. He has served as a director of Alliant Energy Corporation of Madison, Wisconsin, a utility company that has a class of securities registered pursuant to Section 12 of the Exchange Act, and as a director of the Federal Reserve Bank of Chicago. Mr. Evans is currently President Pro Tem of the Iowa Board of Regents, overseeing the state’s public university system.
		Mr. Evans is a long-standing member of our Audit Committee and our Nominating & Governance Committee. He also serves as Chair of our Executive Committee and on our Investment Committee. As a long-serving director of our Company, Mr. Evans has gained broad knowledge of the insurance industry generally and our Company in particular. The Board of Directors believes that Mr. Evans’ qualifications to serve as director include his business acumen, executive leadership, management experience, and extensive experience with public companies and our Company. Mr. Evans is an independent director as defined in the listing standards of NASDAQ.
Thomas W. Hanley (Director since 2003)		Mr. Hanley, 59, is a full-time teacher at Xavier High School, a high school in Cedar Rapids, Iowa. He began teaching full-time in 2004. From 2002 to 2004, Mr. Hanley conducted post-graduate studies in Theology at Loras College in Dubuque, Iowa. Mr. Hanley has a strong financial, insurance, and business background, having served from 1979 until 2003 as a certified public accountant (and as a partner from 1983 to 2003) with McGladrey & Pullen, LLP, a national accounting and tax firm. As a certified public accountant, Mr. Hanley provided services to and advised a wide range of businesses, with a focus on insurance companies. From 1983 until 2002, Mr. Hanley was his firm’s lead partner for tax services to insurance companies. Mr. Hanley has chaired our Audit Committee since 2003, and serves as an audit committee financial expert. The Board of Directors believes that Mr. Hanley’s qualifications to serve as director include his accounting background and experience and his knowledge of the insurance industry and our Company. Mr. Hanley is an independent director as defined in the listing standards of NASDAQ.

George D. Milligan (Director since 1999)		Mr. Milligan, 54, has a strong business background, with service since 1985 as President of The Graham Group, Inc., of Des Moines, Iowa. The Graham Group, Inc. consists of a real estate firm specializing in developing office buildings and a construction firm specializing in constructing hospital facilities. Since 2005, Mr. Milligan has also served as a director of West Bancorporation, Inc. of West Des Moines, Iowa, a bank holding company that has a class of securities registered pursuant to Section 12 of the Exchange Act. As a member of the West Bancorporation, Inc. board of directors, Mr. Milligan serves on their audit committee, loan committee, and as chair of their Risk Committee. Mr. Milligan previously served as director of Allied Life Insurance Company, which had a class of securities registered pursuant to Section 12 of the Exchange Act at the time of his service. Mr. Milligan is a long-time community leader and supporter, being active with the Boy Scouts, the Dowling Foundation, and the Des Moines Rotary. Mr. Milligan serves on our Audit Committee, Nominating & Governance Committee, and now also serves on and chairs our Investment Committee. The Board of Directors believes that Mr. Milligan’s qualifications to serve as director include his business acumen, executive leadership, management experience, and extensive experience with public companies and our Company, as well as his knowledge of the insurance industry and our Company. Mr. Milligan is an independent director as defined in the listing standards of NASDAQ.

Directors (Class B) for Terms Expiring in 2013

James W. Noyce (Director since 2009)		Mr. Noyce, 55, has a strong business, accounting and insurance industry background, with extensive public company experience. Before retiring, Mr. Noyce had nearly three decades of experience in the financial services industry, most recently as Chief Executive Officer and director of FBL Financial Group, Inc. (“FBL”), an insurance holding company headquartered in West Des Moines, Iowa. While at FBL, Mr. Noyce served as Chief Executive Officer and director from January 2007 until May 2009, Chief Financial Officer from January 1996 until January 2007 and Chief Administrative Officer from July 2002 until January 2007. From January 2000 to July 2002 he was Executive Vice President and General Manager of the property-casualty companies managed by FBL. Mr. Noyce began his employment with FBL and its affiliates in 1985. From August 2009 until November 2010, Mr. Noyce served as the Senior Advisor and Major Gifts Officer for the Athletics Department of Drake University, a private university in Des Moines, Iowa. Mr. Noyce holds or has held numerous professional certifications and designations including certified public accountant; Fellow, Casualty Actuarial Society; Associate, Society of Actuaries; Fellow, Life Management Institute; and Member, American Academy of Actuaries. He was named Outstanding CPA in Business and Industry by the Iowa Society of CPAs and was inducted into the American Institute of Certified Public Accountants’ Business and Industry Hall of Fame in 2007.
		Since August 2009, Mr. Noyce has been a director of West Bancorporation, Inc., West Des Moines, Iowa, a bank holding company that has a class of securities registered pursuant to Section 12 of the Exchange Act. Mr. Noyce serves as the audit committee chair of West Bancorporation, Inc. He also serves or has served on several community boards, including the United Way of Central Iowa, the Greater Des Moines Partnership, Grandview College, Special Olympics Iowa, and the Mid-Iowa Council of Boy Scouts of America.
		Mr. Noyce serves on our Audit Committee and has the professional and business experience to qualify as an audit committee financial expert. Mr. Noyce is an independent director as defined in the listing standards of NASDAQ. The Board of Directors believes that Mr. Noyce’s qualifications to serve as director include his extensive background and experience in the insurance industry and his public company, executive leadership, and management experience.

Mary K. Quass (Director since 1998)		Ms. Quass, 61, is President and Chief Executive Officer of NRG Media, LLC, Cedar Rapids, Iowa, a position she has held since 2002. NRG Media, LLC is a radio broadcasting group of over 60 stations. Since 1998, Ms. Quass has also served as President and Chief Executive Officer of Quass Communications, LLC, a privately held investment company. Ms. Quass has a strong business background and has been a long-time community leader and volunteer in Cedar Rapids, Iowa. She currently serves on the board of directors of the National Association of Broadcasters, Mercy Medical Center (executive committee), Entrepreneurial Development Center, Inc. (chair), US Bank (Cedar Rapids region), the Quarton-McElroy Broadcaster Foundation, and other local boards of directors in Cedar Rapids. Her service as our director, together with her business background, provides her with a very strong understanding of the insurance industry in general and our business operations in particular. Ms. Quass serves on our Compensation Committee and Risk Management Committee. The Board of Directors believes that Ms. Quass’ qualifications to serve as director include her executive leadership and management experience, and her understanding of the insurance industry, gained from her years of service to our Company. Ms. Quass is an independent director as defined in the listing standards of NASDAQ.
John A. Rife (Director since 1998)		Mr. Rife, 68, served as our President from 1997 to 2007 and as our CEO from 2000 to 2007. He also served as President of our life insurance subsidiary, United Life Insurance Company (“United Life”), from 1984 until his retirement in May 2009. He began his service with us in 1976 as a marketing representative for United Life. Based on his 31 years of service with our group, Mr. Rife has a very extensive background in and knowledge of our Company including both the property-casualty and life insurance segments. Mr. Rife holds the Chartered Life Underwriter professional insurance designation. Mr. Rife was elected Vice Chairman of our Board of Directors in 2009 and currently serves on the Executive Committee. Since 2006, Mr. Rife has served on the Board of Directors of QCR Holdings, Inc., a multi-bank holding company headquartered in Moline, Illinois, that is registered pursuant to Section 12 of the Exchange Act. He currently serves on the QCR Holdings, Inc. executive committee. Mr. Rife is an active member of the community, currently serving as President of the McIntyre Foundation, a private charitable organization. He also currently serves on the board of trustees of the United Way of East Central Iowa, Mercy Medical Center, and the Mount Vernon Community School District Foundation. Mr. Rife is a past board member of the Cedar Rapids Area Chamber of Commerce and Priority One, an economic development arm of the Chamber.
		The Board of Directors believes that Mr. Rife’s qualifications to serve as director include his extensive experience with our Company and in the insurance industry, as described above, and his executive leadership and management experience. Mr. Rife is not an independent director as defined in the listing standards of NASDAQ.

Kyle D. Skogman (Director since 2000)		Mr. Skogman, 60, possesses a strong business background. Since 1990, he has served as President of Skogman Construction Co. of Iowa, a company that specializes in residential construction, primarily in Cedar Rapids, Iowa. Mr. Skogman also owns an interest in a property-casualty insurance agency. Mr. Skogman is a long-time active community leader and supporter, with service to many diverse organizations including as director and Chairman of the Board of Trustees of Mercy Medical Center in Cedar Rapids; as director of the Cedar Rapids Chamber of Commerce and Chairman of Priority One, an economic development arm of the Chamber; and as director of Brucemore, a public historic site in Cedar Rapids. Mr. Skogman currently serves, and has for many years served, on our Audit Committee and our Nominating & Governance Committee, which he has chaired for many years. He is also a member of our Executive Committee and Investment Committee. Through his prior business experience and his service to us, Mr. Skogman has a broad and strong understanding of our Company and our business. The Board of Directors believes that Mr. Skogman’s qualifications to serve as director include his business acumen, executive leadership and management experience, and his understanding of the insurance industry, gained from his many years of service to our Company. Mr. Skogman is an independent director as defined in the listing standards of NASDAQ.

DIRECTOR RELATIONSHIPS

None of the directors or nominees holds a directorship in any other company with a class of securities registered under Section 12 or subject to Section 15(d) of the Exchange Act or registered as an investment company under the Investment Company Act of 1940, except as follows: Messrs. Hultquist and Rife are directors of QCR Holdings, Inc.; Messrs. Milligan and Noyce are directors of West Bancorporation, Inc.; and Mr. Evans is a member of the Board of Trustees of 241 registered investment companies in the Nuveen Funds fund complex.

PROPOSAL TWO — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

INFORMATION ABOUT OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for 2011 and has directed that management submit the selection of the independent registered public accounting firm to stockholders for ratification at the Annual Meeting. Ernst & Young LLP has served as our independent registered public accounting firm since 2002. Representatives from Ernst & Young LLP will attend the Annual Meeting, will have the opportunity to make a statement if they wish to do so, and will be available to respond to appropriate stockholder questions. Stockholder ratification of the appointment of Ernst & Young LLP as United Fire’s independent registered public accounting firm is not required by our articles of incorporation, bylaws or otherwise. However, as a matter of good corporate governance, the Board of Directors is seeking stockholder ratification of the appointment of our independent registered public accounting firm. The Audit Committee will consider the outcome of this vote in future deliberations regarding the appointment of our independent registered public accounting firm.

FEES BILLED TO UNITED FIRE DURING 2010 AND 2009

The following table represents the total fees billed, or expected to be billed, for services rendered to us by Ernst & Young LLP for the fiscal years ended December 31, 2010, and December 31, 2009, respectively.

Services		2010 Fees				2009 Fees
Audit (1)		$	1,110,000			$	1,135,600
Audit Related (2)			352,300				53,000
Tax (3)			—				—
All Other (4)			3,388				—
Total Fees:		$	1,465,688			$	1,188,600

AUDIT COMMITTEE PRE-APPROVAL

The Audit Committee of our Board of Directors is governed by a charter that requires the Audit Committee to appoint, evaluate, and oversee our independent registered public accounting firm. As part of its responsibilities, the Audit Committee reviews and approves the provision of all audit and non-audit services for the purpose of assuring the independence of our independent auditors. The Audit Committee pre-approved all of the services provided and the fees charged by Ernst & Young LLP during 2010 and 2009.

VOTE REQUIRED AND BOARD RECOMMENDATION

Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm requires the affirmative vote of a majority of the shares (represented either in person or by proxy) entitled to vote in the election at a meeting at which a quorum is present.

The Audit Committee of the Board of Directors recommends a vote FOR the ratification of the
appointment of Ernst & Young LLP as United Fire’s independent registered public accounting firm.

PROPOSAL THREE — AMENDMENT OF THE UNITED FIRE & CASUALTY COMPANY 2005 NON-QUALIFIED NON-EMPLOYEE DIRECTOR STOCK OPTION AND RESTRICTED STOCK PLAN

DESCRIPTION OF PLAN

Our Board of Directors has adopted, subject to stockholder approval, an amendment to the United Fire & Casualty Company 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan (the “Director Plan”) to increase to 300,000 the number of shares that may be issued under the Director Plan and to extend the life of the Director Plan from December 31, 2014 to December 31, 2020. The amendment to the Director Plan will become effective upon stockholder approval. The following summary description of the Director Plan, as proposed to be amended, is qualified in its entirety by reference to the full text of the Director Plan, as amended, that is attached to this Proxy Statement as Exhibit A.

Nature and Purpose of the Director Plan

The Director Plan authorizes the Board of Directors to grant to non-employee directors awards of restricted stock and awards of non-qualified options to purchase our common stock. Such awards may be granted alone, in tandem, or in addition to other awards. The purpose of the Director Plan is to advance the interests of our company through the attraction, motivation, and retention of qualified non-employee directors. The Director Plan provides a means for non-employee directors to increase their equity ownership of our company. By increasing their equity ownership, their economic interests will more closely align with those of our other stockholders, and the non-employee directors will have an additional incentive to contribute to our company’s success.

Shares of Stock Subject to the Director Plan

The Director Plan originally reserved 150,000 shares of common stock that the Board of Directors could allocate between awards of non-qualified options and awards of restricted stock. As of March 1, 2011, only 4,003 shares remained available to be awarded under the Director Plan; awards covering 145,997 shares were outstanding under the Director Plan. The proposed amendment increases the number of shares that may be issued under the Director Plan from 150,000 to 300,000, which would ensure uninterrupted continuation of the Director Plan. If the stockholders approve the amendment to the Director Plan, the Board of Directors will be able to grant up to an additional 150,000 options and shares of restricted stock without again seeking approval from the stockholders.

If there is any change in the shares of our common stock because of a merger, consolidation or reorganization, or if the Board of Directors declares a stock dividend or stock split distributable in shares of common stock, or if there is a change in our capital stock structure affecting our common stock, the number of shares of common stock reserved for issuance under the Director Plan will be correspondingly adjusted to prevent dilution or enlargement of options granted under the Director Plan.

Administration

The Director Plan is administered by the Board of Directors and the Compensation Committee.

Plan Term

The effective date of the Director Plan was May 18, 2005, the date it was approved by the stockholders, and it will expire on December 31, 2014. The proposed amendment to the Director Plan provides that the Director Plan will expire on December 31, 2020, thereby extending the life of the Director Plan.

Eligibility

An award of options or restricted stock may be made only to non-employee directors, as recommended by the Compensation Committee and approved by the Board of Directors. As of March 21, 2011, there were 11 non-employee directors eligible to receive awards of options and restricted stock pursuant to the Director Plan. In making awards of options or restricted stock to directors, our Compensation Committee takes into account the duties of the directors, their present and potential contribution to our success and the success of our subsidiaries, and such other factors as our Compensation Committee deems relevant in connection with accomplishing the purposes of the Director Plan. See pages 50-52 of this proxy statement for a description of our directors’ compensation program.

Although all of our non-employee directors will be eligible for awards under the Director Plan, as amended, it is not possible, at this time, to predict the benefits and amounts that will actually be received by all individual directors or groups of directors in the future.

Limitations

The Director Plan provides that the maximum aggregate number of common shares underlying all awards to be granted in any single fiscal year of the Company shall not exceed 30,000 shares (adjusted proportionately, in the event of any stock split, stock dividend or similar event with respect to our shares of common stock).

Terms, Restrictions, and Conditions of Awards

The Compensation Committee or Board of Directors may grant awards of options and restricted stock subject to such restrictions and conditions as they determine. Each award must be evidenced by a written agreement between us and the individual director specifying the number of shares and the other terms, restrictions, and conditions of the award. Restrictions and conditions may lapse in full or in installments on the basis of such factors, including the director’s continued service, as determined by the Compensation Committee or Board of Directors. Neither the award nor the shares acquired pursuant to the award may be sold or otherwise transferred or pledged until the restrictions lapse or are terminated. Awards may be subject to additional terms and conditions, including the following:

Exercise Price; Consideration

At the time an award is granted, the Compensation Committee or the Board of Directors will determine the exercise price for the shares of common stock underlying each stock option. The exercise price for shares under a stock option may not be less than 100% of the fair market value of the shares on the date the option is granted, as defined in the Director Plan. The Compensation Committee or the Board of Directors may grant awards of restricted stock for such consideration as they may determine, including cash, cash equivalents, full-recourse promissory notes, past services and future services, provided, however, that to the extent an award of restricted stock consists of newly issued restricted stock, the director shall furnish consideration having a value not less than the par value of the restricted stock.

Payment of Consideration

The means of payment for shares issued upon exercise of an award may be specified in each award agreement. The Director Plan permits payment to be made by cash, delivery of other shares of Company stock, or broker assisted sales. The Board of Directors may condition the delivery of any shares or other benefits under the Director Plan on satisfaction of applicable withholding obligations.

Term of Award

The Board of Directors has the discretion to set the term of each award., provided, however, the term of an award may be no more than ten (10) years from the date of grant. No award may be exercised after the expiration of its term.

Change in Control

Notwithstanding any restrictions set forth in the award agreement, all awards shall become immediately exercisable upon the occurrence of a change in control event, as described in Section II.E of the Director Plan. A Change in Control of the Company shall be deemed to have occurred if: (i) any person becomes the beneficial owner, directly or indirectly, of 20% or more of the combined voting power of our outstanding securities; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors; (iii) we enter into an agreement, the consummation of which would result in a change in control of us; or (iv) our stockholders approve a merger, share exchange or consolidation with any other company, other than a merger, share exchange or consolidation that would result in the voting securities outstanding immediately prior thereto continuing to represent at least 50% of the combined voting power of the surviving entity outstanding immediately after such merger, share exchange or consolidation, or our stockholders approve a plan of complete liquidation or an agreement for the sale or disposition by us of all or substantially all our assets.

Death or Retirement of Director

Upon the death of a director or the retirement of a director from the Board of Directors, that director’s options whose terms have not expired become fully vested and immediately exercisable. If a director dies during the term of an option without having fully exercised the option, the executor or administrator of the director’s estate or the person who inherits the right to exercise the option by bequest or inheritance shall have the right at any time following the director’s death until the expiration date of the option to exercise the option. Upon the death of the transferee of an option transferred upon the death of a director, the transferee’s executors, administrators or beneficiaries may exercise the option for a period of one (1) year following the date of the transferee’s death, provided that in no event may an option be exercised after its expiration date. Upon the retirement, disability or death of a director or in special circumstances, the Board of Directors may waive restrictions with respect to that director’s restricted stock.

Non-Transferability of Awards

Unless otherwise provided by the Compensation Committee or the Board of Directors, awards granted under the Director Plan are not transferable other than by will or the laws of descent and distribution.

Other Provisions

An award agreement may contain other terms, provisions, and conditions not inconsistent with the Director Plan, as the Compensation Committee or the Board of Directors may determine.

Summary of Federal Income Tax Consequences of the Director Plan

The following summary is intended only as a general guide to the current U.S. federal income tax consequences of participation in the Director Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances. Furthermore, the tax consequences are complex and subject to change, and a taxpayer’s particular situation may be such that some variation of the described rules is applicable.

The following discussion is based on an analysis of the Internal Revenue Code, existing laws, judicial decisions and administrative rulings and regulations, all of which are subject to change. In addition to being subject to the Federal income tax consequences described below, a director may also be subject to state and local tax consequences in the jurisdiction in which he or she works and/or resides.

The grant of a stock option under the Director Plan will create no income tax consequences to the non-employee director or to us. A director who is granted a non-qualified stock option will generally recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the common stock acquired at such time over the exercise price. We will generally be entitled to a deduction in the same amount and at the same time as ordinary income is recognized by the non-employee director, subject to the requirement of reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and the satisfaction of tax reporting obligations. A subsequent disposition of the common stock will give rise to capital gain or loss to the extent the amount realized from the sale differs from the exercise price of the option. This capital gain or loss will be long-term capital gain or loss if the common stock has been held for more than one year from the date of exercise.

No taxable income is recognized upon receipt of a restricted stock award. In general, a director will recognize ordinary income in the year in which the shares subject to that award vest and are actually issued to the director in an amount equal to the fair market value of the shares on the date of issuance less any consideration paid to us by the director. We will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and the satisfaction of tax reporting obligations) to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the shares are issued. In general, the deduction will be allowed for the taxable year in which such ordinary income is recognized by the director.

Amendment and Discontinuance of the Director Plan

The Board of Directors may at any time amend or discontinue the Director Plan ; provided, however, the Board of Directors may not (i) revoke or alter the terms of any award previously granted pursuant to the Director Plan, (ii) decrease the exercise price for shares under a stock option to less than 100% of the fair market value of the shares on the date the option is granted, as defined in the Director Plan, (iii) change the class of persons to whom awards may be made pursuant to the Director Plan, (iv) provide for awards to be exercisable more than 10 years after the date granted, or (v) without stockholder approval, increase the number of shares to be reserved for issuance and sale pursuant to awards granted pursuant to the Director Plan.

VOTE REQUIRED AND BOARD RECOMMENDATION

Approval regarding the amendment of United Fire & Casualty Company’s 2005 Non-Qualified Non-Employee Director Stock Options and Restricted Stock Plan requires the affirmative vote of a majority of the shares (represented either in person or by proxy) entitled to vote in the election at a meeting at which a quorum is present.

The Board of Directors recommends a vote FOR the proposed amendment of
United Fire & Casualty Company’s 2005 Non-Qualified Non-Employee
Director Stock Option and Restricted Stock Plan.

PROPOSAL FOUR — ADVISORY (NON-BINDING) VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

SAY-ON-PAY ADVISORY VOTE

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), stockholders have the opportunity to vote, on a non-binding advisory basis, on the compensation of our named executive officers. This is commonly referred to as “Say on Pay”.

Our Board of Directors is committed to corporate governance best practices and recognizes the interest of stockholders in executive compensation matters. Although the vote is advisory and is not binding on the Board of Directors, the Compensation Committee will review the voting results. The Compensation Committee would consider the constructive feedback obtained through the stockholder advisory vote in making decisions about future compensation arrangements for our named executive officers.

As discussed in the Compensation Discussion and Analysis beginning on page 30 of this proxy statement, the Board of Directors believes that our current executive compensation program directly links executive compensation to our Company’s performance and aligns the interests of our named executive officers with those of our stockholders. For example:

•

Our executive compensation encourages executive decision-making that is aligned with the long-term interests of our stockholders.

•

Bonuses and equity awards for named executive officers are tied to specific performance goals.

•

We do not have any employment agreements with our executive officers, and we do not provide cash severance payments upon termination of employment or in connection with a change in control.

•

We encourage long-term stock ownership by our executive officers with award features such as 20 percent vesting of stock option awards beginning on the first anniversary of the grant and no vesting on restricted stock until the fifth anniversary of the grant.

•

We have adopted stock ownership guidelines for our executive officers

•

Our compensation uses a balance of short- and long-term performance metrics to encourage the efficient management of our business and minimize excessive risk-taking.

The Board of Directors believes that United Fire’s executive compensation program is designed to meet the objectives discussed in the Compensation Discussion and Analysis. Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the compensation paid to United Fire’s named executive officers as described in this Proxy Statement under “Executive Compensation,” including the Compensation Discussion and Analysis, the compensation tables and other narrative disclosure contained herein, is hereby APPROVED.”

VOTE REQUIRED AND BOARD RECOMMENDATION

Approval of the resolution regarding the compensation of our executive officers requires the affirmative vote of a majority of the shares (represented either in person or by proxy) entitled to vote in the election at a meeting at which a quorum is present.

The Board of Directors recommends a vote FOR the approval, on an
advisory basis, of compensation of our named executive officers.

PROPOSAL FIVE — ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF THE ADVISORY STOCKHOLDER VOTE APPROVING COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

SAY-ON-PAY FREQUENCY ADVISORY VOTE

In accordance with the Dodd-Frank Act, stockholders have the opportunity to vote, on a non-binding advisory basis, on the frequency of future advisory votes on executive compensation, commonly referred to as a “say when on pay.” You are given the option on the proxy card of selecting a frequency of every one, two or three years, or abstaining.

Although the vote is non-binding, the Board of Directors and the Compensation Committee will carefully review the voting results. Notwithstanding the Board of Director’s recommendation and the outcome of the stockholder vote, we may decide to conduct future advisory votes on a more or less frequent basis and may vary the frequency of advisory votes based on factors such as discussions with stockholders and the adoption of material changes to our compensation programs.

The Board of Directors has determined that an advisory vote on executive compensation that occurs every three years is the best approach for our Company. In formulating its recommendation, the Board of Directors considered that because our compensation program for executive officers is not complex, a stockholder advisory vote every three years should be sufficient to permit our stockholders to express their views about our compensation program. Also, the Board of Directors believes that the success of our executive compensation program should be judged over a period of time that is longer than one year.

VOTE REQUIRED AND BOARD RECOMMENDATION

Approval of the resolution regarding the frequency of the stockholder vote approving the compensation of our executive officers requires the affirmative vote of a majority of the shares (represented either in person or by proxy) entitled to vote in the election at a meeting at which a quorum is present. If stockholders follow the Board’s recommendation on this proposal, the next time stockholders will be asked to vote on this proposal will be at our 2017 Annual Meeting.

The Board of Directors recommends a vote FOR a vote on compensation of our
named executive officers, on an advisory basis, every THREE years.

REPORT OF THE AUDIT COMMITTEE*

March 2011

The Audit Committee reviews United Fire & Casualty Company’s financial reporting process on behalf of the Board of Directors. Management has primary responsibility for the financial statements and the reporting process, including the system of internal controls. In accordance with standards established by the Public Company Accounting Oversight Board (United States), the independent registered public accounting firm is responsible for performing an audit of United Fire & Casualty Company’s Consolidated Financial Statements, assessing the effectiveness of United Fire & Casualty Company’s internal control over financial reporting and issuing reports thereon. The Audit Committee monitors these processes. The Audit Committee consists entirely of independent directors and operates pursuant to a charter adopted by it and by the Board of Directors. The Audit Committee met six (6) times during 2010.

The Audit Committee has:

•

reviewed and discussed the audited Consolidated Financial Statements with management and Ernst & Young LLP, our independent registered public accounting firm;

•

discussed with Ernst & Young LLP, our independent registered public accounting firm, the matters required to be discussed by AICPA Statement on Auditing Standards No. 61, as adopted by the Public Company Accounting Oversight Board in Rule 3200T, Securities and Exchange Commission Rules and other professional standards;

•

received from Ernst & Young LLP, our independent registered public accounting firm, the written disclosures required by Public Company Accounting Oversight Board Ethics and Independence Rule 3526 regarding the independent registered public accounting firm’s independence; and

•

discussed with Ernst & Young LLP, our independent registered public accounting firm, Ernst & Young LLP’s independence.

The Audit Committee has discussed with United Fire & Casualty Company’s internal auditor and Ernst & Young LLP, our independent registered public accounting firm, the overall scope and plans for their respective audits. The Audit Committee met with the internal auditor and Ernst & Young LLP, our independent registered public accounting firm, both with and without management present, to discuss the results of their examinations, the evaluations of United Fire & Casualty Company’s internal controls and the overall quality of United Fire & Casualty Company’s financial reporting.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board of Directors has approved) that the audited Consolidated Financial Statements be included in United Fire & Casualty Company’s Annual Report on Form 10-K for the year ended December 31, 2010, for filing with the Securities and Exchange Commission. The Audit Committee appointed Ernst & Young LLP as United Fire & Casualty Company’s independent registered public accounting firm for the year ending December 31, 2011 and recommended that the stockholders ratify the appointment.

Audit Committee Members
Thomas W. Hanley, Chair
Jack B. Evans
George D. Milligan
James W. Noyce
Kyle D. Skogman

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information as of March 21, 2011, with respect to the ownership of United Fire’s $3.33⅓ par value common stock by principal security holders.

As of March 21, 2011, we had 26,195,552 shares of $3.33⅓ par value common stock outstanding. Except as otherwise indicated, each of the stockholders listed in the following table has sole voting and investment power over the shares beneficially owned.

				Amount and
				Nature of
		Name and Address		Beneficial
Title of Class		of Beneficial Owner		Ownership				Percent of Class
Common		Dee Ann McIntyre
		1218 Bishops Lodge Road
		Santa Fe, New Mexico 87501-1099			3,475,794	(1)			13.27	%
Common		Dimensional Fund Advisors LP
		1299 Ocean Avenue
		Santa Monica, California 90401			2,222,333	(2)			8.47
Common		BlackRock, Inc.
		40 East 52nd Street
		New York, New York 10022			1,847,227	(3)			7.04
Common		EARNEST Partners LLC
		75 Fourteenth Street, Suite 2300
		Atlanta, Georgia 30309			1,624,954	(4)			6.20

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of our $3.33¹/₃ par value common stock as of March 21, 2011, with respect to each of our directors, our named executive officers, and all of our directors and executive officers as a group.

As of March 21, 2011, we had 26,195,552 shares of $3.33¹/₃ par value common stock outstanding. Except as otherwise indicated, each of the stockholders listed in the following table has sole voting and investment power over the shares beneficially owned.

				Amount and Nature of				Percent
Title of Class		Name of Beneficial Owner		Beneficial Ownership (1)				of Class
Common		Christopher R. Drahozal			917,513	(2)			3.50	%
Common		Barrie W. Ernst			33,684	(3)			0.13
Common		Jack B. Evans			33,726	(4)			*
Common		Thomas W. Hanley			15,481	(5)			*
Common		Douglas M. Hultquist			4,945	(6)			*
Common		Dianne M. Lyons			27,892	(7)			0.11
Common		Casey D. Mahon			18,762	(8)			*
Common		George D. Milligan			15,959	(9)			*
Common		James W. Noyce			1,545	(10)			*
Common		Mary K. Quass			13,478	(11)			*
Common		Randy A. Ramlo			46,107	(12)			0.18
Common		John A. Rife			105,321	(13)			*
Common		Neal R. Scharmer			14,801	(14)			0.06
Common		Kyle D. Skogman			20,028	(15)			*
Common		Michael T. Wilkins			463,123	(16)			1.77
Common		Frank S. Wilkinson Jr.			21,171	(17)			*
Common		All directors and executive officers as a group (includes 18 persons)			1,775,920				6.78	%

RECENT SALES OF UNREGISTERED SECURITIES

Based on a review of corporate records and to best knowledge of management, there were no sales of unregistered securities by our Company during the fiscal year ended December 31, 2010.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have a stock plan that authorizes United Fire to grant incentive stock options, non-qualified stock options, unrestricted and restricted stock, and stock appreciation rights to acquire 1,900,000 shares of United Fire common stock with 833,495 authorized shares available for future issuance at December 31, 2010. The plan is administered by our Board of Directors. The Board has the authority to determine which employees (including affiliate company employees) will receive incentive stock options, and which employees (including affiliate company employees) and persons to whom offers of employment have been extended will receive non-qualified stock options, stock awards, and stock appreciation rights. The Board also has authority to determine when plan awards will be granted and the terms and conditions of those awards. The Board may also take any action it deems necessary and appropriate for the administration of the plan. Stock options are granted to buy shares of our common stock at the market value of the stock on the date of grant. Stock options granted to date vest and are exercisable in installments of 20 percent of the number of shares covered by the option award each year from the grant date. To the extent not exercised, installments shall accumulate and be exercisable by the optionee, in whole or in part, in any subsequent year included in the option period, but not later than ten (10) years from the grant date. Stock options have historically been granted free of charge to eligible recipients as designated by the Board of Directors.

We have a non-qualified non-employee director stock option and restricted stock plan that authorizes United Fire to grant restricted stock and non-qualified stock options to purchase 150,000 shares of United Fire’s common stock with 40,006 shares available for future issuance at December 31, 2010. The Board has the authority to determine which non-employee directors receive options and restricted stock, when options and restricted stock shall be granted, the option price, the option expiration date, the date of grant, the vesting schedule of options and restricted stock or whether the shares 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. The Board may also take any action it deems necessary and appropriate for the administration of the plan.

The number of securities to be issued upon exercise of outstanding restricted awards and options awards and the number of securities available for future grant under our equity compensation plans at December 31, 2010, are displayed in the following table:

Equity Compensation Plan Information — 2010

(C)

(A)

Number of Securities

Number of Securities

(B)

Remaining Available for

to be Issued Upon

Weighted-Average

Future Issuance Under

Exercise of

Exercise Price of

Equity Compensation

Outstanding

Outstanding Stock

Plans (Excluding

Options, Warrants

Options, Warrants

Securities Reflected in

and Rights

and Rights

Column (A))

Equity Compensation Plans Approved by Security Holders

Nonqualified Stock Plan

Incentive Stock Options

877,994

$

29.48

Restricted Stock Awards

19,464

—

Plan Total

897,458

28.84

833,495

(1)

Nonqualified Nonemployee Director Stock Option and Restricted Stock Plan

109,994

30.45

40,006

(2)

Total All Plans

1,007,452

$

29.02

873,501

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, requires the Company’s directors, executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities (collectively “Reporting Persons”) to file initial reports of ownership and reports of changes in ownership of the Company’s common stock and other equity securities with the SEC. SEC regulations require us to identify in this proxy statement any Reporting Person who filed a required report late during the most recent calendar year. Based solely on our review of copies of reports filed under Section 16(a) and written representations made to us by Reporting Persons, we believe that all applicable filing requirements were complied with for the fiscal year ended December 31, 2010 with the following exceptions: due to a technical filing error, the Form 4 filed on February 24, 2010 indicating the stock options granted to Frank S. Wilkinson Jr. was filed one day late.

EXECUTIVE OFFICERS

Listed below are the names, ages as of December 31, 2010, and positions held by each of our executive officers.

Name		Age				Position
Randy A. Ramlo			49			President and Chief Executive Officer
Michael T. Wilkins			47			Executive Vice President, Corporate Administration
Dianne M. Lyons			47			Vice President and Chief Financial Officer
David E. Conner			52			Vice President and Chief Claims Officer
Barrie W. Ernst			56			Vice President and Chief Investment Officer
Michael J. Sheeley			50			Vice President and Chief Operating Officer, United Life Insurance Company
Neal R. Scharmer			54			Vice President, General Counsel and Corporate Secretary

The business experience of Randy A. Ramlo is set forth on page 13 under the caption “Director Nominees.”

Michael T. Wilkins became our Executive Vice President, Corporate Administration, in May 2007. He was our Senior Vice President, Corporate Administration, from May 2004 until May 2007, our Vice President, Corporate Administration, from August 2002 until May 2004 and the resident Vice President in our Lincoln regional office from 1998 until 2002. Prior to 1998, Mr. Wilkins held various other positions within our Company since joining us in 1985.

Dianne M. Lyons was appointed Chief Financial Officer in May 2006. She was appointed Vice President in May 2003 and served as our Controller from 1999 until May 2006. Ms. Lyons has been employed by us in the accounting department since 1983.

David E. Conner was appointed our Vice President and Chief Claims Officer, effective January 1, 2005. Mr. Conner has served in various capacities within the claims department, including claims manager and Assistant Vice President, since joining us in 1998.

Barrie W. Ernst is our Vice President and Chief Investment Officer. He joined us in August 2002. Previously, Mr. Ernst served as Senior Vice President of SCI Financial Group, Cedar Rapids, Iowa, where he worked from 1980 to 2002. SCI Financial Group was a regional financial services firm providing brokerage, insurance and related services to its clients.

Michael J. Sheeley was named Vice President and Chief Operating Officer of our life insurance subsidiary, United Life Insurance Company, in March 2011 after serving as Personal Lines Underwriting Manager from 1991 to 2011. Since joining us in 1985, Mr. Sheeley has served us in several capacities including as Commercial Underwriting Manager, Claims Supervisor and Commercial Underwriter.

Neal R. Scharmer was appointed our Vice President and General Counsel in May 2001 and Corporate Secretary in May 2006. He joined us in 1995.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee of our Board of Directors is responsible for developing the philosophy and structure of compensation for, and recommending to the Board of Directors the compensation of, our named executive officers and other executive officers.

Our Named Executive Officers

Our named executive officers are: Randy A. Ramlo, President, Chief Executive Officer and principal executive officer; Dianne M. Lyons, Vice President, Chief Financial Officer and principal financial officer; Michael T. Wilkins, Executive Vice President; Barrie W. Ernst, Vice President and Chief Investment Officer; and Neal R. Scharmer, Vice President, General Counsel and Corporate Secretary.

Changes During 2010

In order to provide for a more comprehensive view of marketplace compensation practices, during 2010 our Compensation Committee began to use competitive peer group data to assist it in its executive compensation review and deliberations. The Compensation Committee selected two peer groups with the assistance of Compensation Resources, Inc. (“CRI”), which served as an independent compensation consultant to the Compensation Committee. One peer group was selected for our consolidated insurance operations and one for United Life Insurance Company.

For 2010, we eliminated the limits on term life insurance benefits for employees aged 65 and older. Previously we had limited the term life benefit for these employees to 50% of their benefit immediately prior to reaching age 65 with a maximum benefit limit of $15,000.

Changes Beginning 2011

For the 2011 benefit year, we modified our flexible benefit credits program, eliminating the service credit portion of the flexible benefit credit. Instead of a service credit, employees received a one-time adjustment to their base salary for 2011 equal to what the service credit portion of their flexible benefit credits would have been. Although the basic credit portion of the flexible benefit credits program remained unchanged for 2011, the program will be phased out entirely over the next two years. In 2011, for the 2012 benefit year, employees will receive basic credits equal to one half of what they would have received under the old benefit calculation. In 2012 for the 2013 benefit year, employees will receive no basic credits. Management is still reviewing options for replacing the flexible benefit program.

Compensation and Benefits Philosophy

The objectives of our executive compensation programs are to attract and retain qualified executive officers, assure that our compensation of executive officers is fair and reasonable and provide incentives to our executive officers that are tied to both executing a sound business strategy and achieving stockholder value.

The Compensation Committee Charter governs the Compensation Committee’s activities and sets forth its responsibilities. Some key features of that charter include:

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The Compensation Committee must be composed of only independent directors, with a minimum of three members.

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The Compensation Committee must conduct at least two meetings each calendar year.

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The Compensation Committee has the resources and authority to retain and compensate any outside counsel, expert, consultant or advisor it deems appropriate and necessary.

The responsibilities and functions of the Compensation Committee that relate to compensation for executive officers and directors are as follows:

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Annually review and recommend to the Board of Directors for approval the salaries, bonuses and other compensation for all of our named executive officers.

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Review and discuss with management the information reported in the Compensation Discussion and Analysis section of the Company’s proxy statement, and based on the review and discussions recommend to the Board of Directors that it be included in our proxy statement and incorporated by reference in our Annual Report on Form 10-K.

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Approve and grant, or recommend to the Board of Directors the approval and granting of stock options, restricted stock, and other types of equity-based compensation in accordance with the terms of stock option and other equity-based plans.

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Periodically review and evaluate and report to the Board of Directors concerning the competitiveness of the Company’s executive compensation programs.

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Annually evaluate the Compensation Committee Charter and the Compensation Committee’s performance and make such reports to the Board of Directors as it deems warranted.

When determining compensation levels for our named executive officers, the Compensation Committee considers the following principles:

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Performance. We strive to reward performance of our executive officers by linking compensation to individual performance, company performance and, where applicable, business unit performance. Management believes that tying an individual’s compensation to these performance indicators is an important part of aligning our Company’s objectives with the personal interests of our executive officers.

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Fairness and Reasonableness. We strive to provide compensation and benefit programs that are fair and that reasonably reward executive officers for their services without outpacing the compensation and benefits provided by comparable companies. The Compensation Committee reviews a variety of factors, including the cost of living and quality of life in the geographical areas in which the executive is located, the executive’s experience level, the responsibilities of an executive’s position, our employee-friendly culture, the desire to avoid significant compensation disparities between executive officers and all other employees, and compensation and benefits of executives of other insurance companies and other companies of comparable size and geographic scope.

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Cost. By designing compensation programs that are cost-effective and affordable, we strive to protect the interests of our stockholders.

Our Compensation Committee and Board of Directors use a total compensation approach to executive compensation, and consider both currently-paid compensation and long-term incentive compensation to be necessary compensation tools. They award long-term incentive compensation on a discretionary basis to individuals other than our named executive officers. Currently-paid compensation, coupled with long-term incentives, provides the Compensation Committee and the Board of Directors the flexibility necessary to design an executive compensation program that they consider to be fair and appropriate.

The Compensation Committee commissioned CRI to assist it in developing peer groups and to conduct an executive compensation market study. The Compensation Committee received CRI’s market study and relied on it to assist in developing peer groups and setting 2010 salaries. As described below, CRI’s market study used both peer group data and published survey data.

CRI developed two distinct peer groups that recognized the property/casualty and life insurance marketplaces in which we compete, together with the following criteria:

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Industry group — insurance carriers

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Geographic location — national

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Assets — $2.7 billion (consolidated group), $1.5 billion (life insurance segment)

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Premium — $600 million (property / casualty insurance segment), $100 million (life insurance segment)

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Market Capitalization — $484 million (property / casualty insurance segment)

The 2010 peer group for our consolidated insurance operations consisted of the following fifteen companies:

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Affirmative Insurance Holdings Inc.

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American Physicians Capital

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Baldwin & Lyons Inc.

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CNA Surety Corporation

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EMC Insurance Group Inc.

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Employers Holdings Inc.

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Hilltop Holdings Inc.

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Horace Mann Educators Corporation

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Meadowbrook Insurance Group Inc.

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Midland Company

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National Interstate Corporation

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Procentury Corporation

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RLI Corporation

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Selective Insurance Group Inc.

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State Auto Financial Corporation

United Life Insurance Company’s 2010 peer group consisted of the following three companies:

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Atlantic American Corporation

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Citizens, Inc.

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Financial Industries Corp

In addition to peer group data, the CRI study also utilized data from the following published salary surveys:

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Benchmark Database Finance, Accounting, & Legal Survey Report©; William M. Mercer

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Executive Assessor©; Economic Research Institute

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Executive Compensation Review — Insurance Companies©; SNL Securities

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Salary Survey©; National Association of Mutual Insurance Companies

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Survey Report on Insurance Industry Management Personnel Compensation ©; Watson Wyatt

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US Property and Casualty Insurance Compensation Survey©; William M. Mercer

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Relevant executive compensation data from three (3) confidential published surveys

CRI’s market study determined a market consensus base salary at or near the 50^th percentile of market study data for each of our named executive officers by weighting peer data to published survey data at a ratio of 2 to 1. CRI placed a greater emphasis on peer data in relation to published survey data because peer data is more representative of the companies with which we compete for executive talent.

The Compensation Committee considered CRI’s market study as one of many components used to determine overall compensation. The other factors considered by the Compensation Committee include our Company’s profitability for the year just ended, the cost of living and quality of life in the geographical areas in which the executive is located, the executive’s experience level, the responsibilities of an executive’s position, our employee-friendly culture, our existing compensation structure, and our desire to avoid significant compensation disparities between our executive officers and all other employees.

As a result of its review of executive compensation, the Compensation Committee determined that overall compensation of our executive officers should be within a range of 75 percent to 100 percent of the 50^th percentile, as determined by CRI’s market study. As a result, for 2010, the Compensation Committee raised the base salaries of our executive officers within the appropriate market consensus ranges, which placed these officer’s salaries at or slightly below the market consensus base salary levels of the 50^th percentile.

We have no written employment contracts or severance agreements with any of our executives. All our employees, including all of our executive officers, are “at-will” employees.

Risk Considerations

We believe that the design and objectives of our executive compensation program provides an appropriate balance of incentives for executives. The program encourages them to take appropriate risks aimed at improving Company performance and driving long-term stockholder value, while avoiding inappropriate risks. In this regard, our executive compensation program includes, among other things, the following design features:

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A balanced mix of fixed versus variable compensation and cash-based versus equity-based compensation;

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Variable compensation based on a variety of performance goals, including Company and, where appropriate, business unit and individual performance goals;

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Compensation Committee discretion to vary annual incentive award amounts;

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A balanced mix of short-term and long-term incentives;

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Maximum award limits for annual incentive awards and equity-based compensation;

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Additional time-based vesting requirements for equity-based compensation; and

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Stock ownership guidelines for executive officers.

Elements of Compensation

We compensate our executive officers using direct compensation and company-sponsored benefit plans. As direct compensation, we pay base salary, performance-based cash awards, equity awards, and flexible benefit credits. Company-sponsored benefit plans include insurance plans and retirement plans. In addition, we provide perquisites to certain of our executive officers.

Direct Compensation

During 2010, direct compensation consisted of (a) base salary, (b) annual performance-based cash awards, (c) long-term equity based awards, and (d) flexible benefit credits. We pay these elements of direct compensation because we believe each of the following to be true:

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A fair and reasonable base salary is essential to attract and retain strong management.

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Annual performance-based cash awards recognize and reward both individual achievement and the executive’s role in our overall performance.

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Equity-based compensation helps executives to “think like owners” and, therefore, aligns their interests with those of our stockholders.

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Flexible benefit credits allow executives to elect benefits that correspond to their individual needs and preferences.

Base Salary

We design base salary to attract and retain experienced executives who can help us achieve our business goals. We determine an executive’s initial base salary by considering a variety of components, including the executive’s experience level, the responsibilities of the executive’s position, our existing compensation structure, compensation levels at other companies, the cost of living and quality of life in the geographical area in which the executive is located and our employee-friendly culture. In addition, to determine increases in an executive’s base salary, we consider individual performance, pertinent experience with us and increases in responsibility. We have also considered the continuing impact that Hurricane Katrina, which occurred in 2005, has had on our operating results.

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Randy A. Ramlo — In establishing his base salary for 2010, the Compensation Committee considered the following factors when assessing Mr. Ramlo’s performance as CEO:

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Mr. Ramlo’s performance against his goals and objectives for 2009, which included the following: attaining specified targets relating to return on equity, written premium levels, loss adjustment expenses, underwriting expense ratio, combined ratio, and average agency premium size; improving reserving processes; increasing service center business; continuing our emphasis on loss control; emphasizing life company products and attaining specified targets in the life company, including with respect to premiums, net income and return on equity; expanding use of predictive modeling; managing catastrophe exposure; and exploring acquisition opportunities.

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Factors that could hinder the achievement of Mr. Ramlo’s goals, including the continuing soft market conditions within the insurance industry, the weak investment market environment, the continuing loss development related to Hurricane Katrina in 2005, which predates Mr. Ramlo’s tenure as CEO, and the historic flooding of our home office in 2008.

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Our performance relative to the insurance industry.

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Mr. Ramlo’s leadership during the relocation of the home office caused by the 2008 flood.

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Mr. Ramlo’s growth as our President and Chief Executive Officer.

The Compensation Committee also considered CRI’s market study, the committee’s general understanding of current compensation practices, and Mr. Ramlo’s promotion from within our organization which resulted in his initial base salary substantially below his peers. Based on its overall assessment, the Compensation Committee recommended, and the Board of Directors set, Mr. Ramlo’s 2010 base salary at $405,000, a 1.25 percent increase over 2009.

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Other Named Executive Officers — Mr. Ramlo evaluated the performance and experience of the other named executive officers and presented his assessment of their individual performance and his salary recommendation to the Compensation Committee. The Compensation Committee considered Mr. Ramlo’s recommendations along with its own evaluations when determining its compensation recommendation to the Board of Directors.

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Dianne M. Lyons — Mr. Ramlo based his evaluation of Ms. Lyons on the following performance and experience criteria: timeliness and accuracy of financial reporting; the number and materiality of audit recommendations; the quality and efficiency of internal controls; growth in her role as Chief Financial Officer; assumption of new duties relating to our registration under the Exchange Act; assumption of new duties as liaison to our institutional investors and the investment community; and handling of our flood-related disaster cash management.

Based upon Mr. Ramlo’s report, its overall assessment of Ms. Lyons’ performance, CRI’s market study, the Compensation Committee’s general understanding of current compensation practices, and her promotion from within our organization, which resulted in her initial base salary substantially below her peers, the Compensation Committee recommended, and the Board of Directors set, Ms. Lyons’ 2010 base salary at $256,000, a 2.50 percent increase over 2009.

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Michael T. Wilkins — Mr. Ramlo based his evaluation of Mr. Wilkins on the following performance and experience criteria: personal lines underwriting experience; the implementation and quality of our reinsurance program in general and our catastrophe coverage in particular; evaluation and analysis of our catastrophe exposure; management of our product development and rate setting functions; maintaining industry competitiveness through the use of information technology; the efficiency of our information technology operations; and growth in his role as Executive Vice President.

Based upon Mr. Ramlo’s report, its overall assessment of Mr. Wilkins’ performance, CRI’s market study, the Compensation Committee’s general understanding of current compensation practices, and his promotion from within our organization, which resulted in his initial base salary substantially below his peers, the Compensation Committee recommended, and the Board of Directors set, Mr. Wilkins’ 2010 base salary at $277,000, a 2.59 percent increase over 2009.

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Barrie W. Ernst — Mr. Ramlo based his evaluation of Mr. Ernst on the following performance and experience criteria: management of our investment portfolio during challenging economic times; maintaining adequate return on investments to meet our ongoing financial obligations; hiring and management of various outside investment firms; and the ability to limit our exposure to below investment grade securities as identified by the National Association of Insurance Commissioners.

Based upon Mr. Ramlo’s report, its overall assessment of Mr. Ernst’s performance, CRI’s market study, and the Compensation Committee’s general understanding of current compensation practices, the Compensation Committee recommended, and the Board of Directors set, Mr. Ernst’s 2010 base salary at $255,000, a 2.00 percent increase over 2009.

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Neal R. Scharmer — Mr. Ramlo based his evaluation of Mr. Scharmer on the following performance and experience criteria: management and settlement of claims litigation, particularly as related to catastrophe losses; negotiation and review of key vendor contracts; hiring and management of various outside legal counsel used by our Company; management of outside legal expenses incurred by our Company; and hiring, development and management of our in-house legal staff.

Based upon Mr. Ramlo’s report, its overall assessment of Mr. Scharmer’s performance, CRI’s market study, the Compensation Committee’s general understanding of current compensation practices, the fact that certain general counsel functions are currently performed by outside counsel, and his promotion from within our organization, which resulted in his initial base salary substantially below his peers, the Compensation Committee recommended, and the Board of Directors set, Mr. Scharmer’s 2010 base salary at $178,500, a 3.47 percent increase over 2009.

The following table shows the market consensus compensation for each of the named executive officers based on CRI’s market study and the 2010 base salary for each individual.

Base Salary Compared to Market Consensus — 2010

		Market
		Consensus				2010 Base
Name and Principal Position		Base Salary (1)				Salary
Randy A. Ramlo — President / Chief Executive Officer		$	663,000			$	405,000
Dianne M. Lyons — Vice President / Chief Financial Officer			268,000				256,000
Michael T. Wilkins — Executive Vice President			292,000				277,000
Barrie W. Ernst — Vice President / Chief Investment Officer			256,000				255,000
Neal R. Scharmer — Vice President / General Counsel / Corporate Secretary			259,000				178,500

Annual Performance-Based Cash Awards

We have an annual incentive plan that provides annual performance-based cash awards to all eligible Company employees. This plan links a portion of annual compensation directly to our performance. Our objective in using the annual incentive plan is to provide a strong financial incentive to all employees to achieve critical corporate and business unit goals. To measure achievement under the annual incentive plan for all eligible employees (except Mr. Ramlo), we use three performance indicators, corporate return on equity (“ROE”), business unit targets based on losses and loss settlement expenses (loss ratio), and cost center expense targets. For Mr. Ramlo, we use two performance indicators, ROE and our corporate growth rate, as measured by our property—casualty segment’s direct premiums written through our independent agencies. Each year, we establish minimum, target and maximum levels of performance for each performance indicator. After each fiscal year, we assess Company and business unit performance for each applicable performance indicator, comparing actual results to the pre-determined minimum, target and maximum performance levels. Attaining the highest level of performance in each of the three indicators would result in a cash award of 48.0 percent of base salary for Mr. Ramlo and 30.0 percent of base salary for our other named executive officers.

The Compensation Committee chose ROE as an annual incentive plan performance indicator because it believes that ROE is a good overall measure for evaluating our operating performance and that the value of our common stock is closely related to ROE performance. Accordingly, the Compensation Committee believes that achieving ROE target levels should enhance our stock value and stockholder return. In determining whether we have achieved our ROE target goal, we calculate ROE based on after-tax consolidated earnings divided by average equity. We exclude the impact of net unrealized appreciation/ depreciation from our ROE calculation so that our employees are not penalized or rewarded as a result of extraordinary fluctuations in the equity and fixed income markets.

The Compensation Committee chose corporate growth rate as an annual incentive plan performance indicator for Mr. Ramlo because growth is an important goal for any organization. The Compensation Committee believes that organizational growth is ultimately the responsibility of the CEO.

The Compensation Committee chose business unit loss ratio and cost center expense ratio as annual incentive plan performance indicators because it believes they are good measures of our underwriting performance and overall profitability. If the Company is able to keep expenses in line with guidelines established for cost center expense ratio, the Compensation Committee believes that the Company is more likely to achieve profitability and value for our stockholders. In determining whether we have achieved our business unit targets, the loss ratio is calculated by dividing direct premiums earned by direct losses incurred plus direct allocated loss settlement expenses paid. The cost center expense ratio is measured by expenses expressed as a percentage of direct written premiums.

The following table shows the 2010 performance goals for each performance indicator and the actual results for each performance indicator and relative weightings. Payments to named executive officers under our annual incentive plan were made in March 2011 for performance during 2010 and are reported in the Summary Compensation Table — 2010 under the “Non-Equity Incentive Plan Compensation” column.

Annual Incentive Plan — 2010

																		Potential
																		Percentage of
														2010 Annual				Total Incentive
		2010 Plan Goals												Incentive Plan				Plan Award to
		Threshold				Target				Maximum				Actual Results				Executive
Performance Indicators		(%)				(%)				(%)				(%)				(%)
Chief Executive Officer:
Return on Equity			8.00	%			12.00	%			16.00	%			8.02	%(1)			75.00	%
Corporate Growth Rate			2.50				5.00				7.50				(4.04	)			25.00
Other Named Executive Officers:
Return on Equity			8.00				12.00				16.00				8.02				60.00
Business Unit Loss Ratio			60.00				52.50				45.00				59.35				20.00
Cost Center Expense Ratio			3.00				2.50				2.00				2.88				20.00

Discretionary Performance-Based Cash Awards

At its discretion, the Board of Directors, based on a recommendation of the Compensation Committee, may award discretionary performance-based cash awards which are not tied to any specific executive compensation plan. The amount and timing of any awards is solely at the discretion of the Board of Directors. In 2010, the Board of Directors awarded discretionary performance-based cash awards to Messrs. Ramlo and Wilkins and Ms. Lyons for their work related to the acquisition of Mercer Insurance Group, Inc., that was announced on November 30, 2010.

Long-Term Equity Based Awards

The Company has an equity compensation program for our executive officers. The program utilizes our 2008 Stock Plan, approved by the stockholders in May 2008, which permits the issuance of both restricted stock and stock options, among other forms of equity compensation. The Compensation Committee believes that providing a balance of restricted stock and stock options is beneficial to us, our executives, and our stockholders. The Board of Directors grants stock options and restricted stock to executive officers to retain those executives and to provide compensation that encourages those executives to increase stockholder value. The expense related to the stock option awards is recognized in our Consolidated Financial Statements over the vesting period of the awards.

The size of awards to executives under our equity compensation program is initially tied to the executive’s base salary. Under the equity compensation program, our executive officers are assigned to one of three “tiers” with each tier receiving a proportionate share of the pool of equity awards designated annually for all program participants. The size of the awards is adjusted based on our prior year’s return on equity, so that in years when results exceed targets, our executives receive higher annual incentive awards and more equity, and in years when results attain lower targets or are not at target, the awards are reduced or eliminated.

If no awards are made under our equity compensation program, under our 2008 Stock Plan the Compensation Committee has the discretion to make discretionary awards to our executive officers. In 2010, the Compensation Committee recommended and the Board of Directors made discretionary awards of options for 3,000 shares to each of our named executive officers.

Flexible Benefit Credits

During 2010, we maintained a flexible benefit credits program for all of our employees, including our executive officers. Under this program, we allocated flexible benefit credits to each employee based on a formula that considered length of service (service credits) with us and base salary (basic credits) to arrive at each employee’s total number of flexible benefit credits. During 2010, we modified this program to begin eliminating service credits, beginning with the 2011 plan year. To offset this change, employees received a one-time adjustment to their 2011 base salary equal to what their service credit would have been for the year. The basic credit portion of the flexible benefit credits program remained unchanged for 2010, but we will phase it out over the next two years. In 2011, for the 2012 benefit year, employees will receive basic credits equal to one half of what they would have received under the old benefit calculation. In 2012, for the 2013 benefit year, employees will receive no basic credits. Management is still reviewing options for replacing the flexible benefit program.

Before the end of 2010, employees determined how to “spend” their flexible benefit credits for the 2011 benefit year. Employees allocated their credits among a variety of benefits, including supplemental life insurance, medical insurance, dental insurance, dependent life insurance, and up to one week of vacation. If the flexible benefit credits allocated to an individual employee were not enough to cover the employee’s selected benefits, the difference will be deducted from the employee’s base salary. If an employee had excess flexible benefit credits available after making the employee’s benefit elections, the employee elected to take the excess credits as direct cash compensation or contribute cash to our 401(k) plan.

This program gives each employee the opportunity to select the medical and other insurance options that meets the employee’s individual needs and preferences. Under the program, each employee may choose between three company-sponsored medical plan options or may waive medical coverage. If an employee waives medical coverage, we reduce that employee’s flexible benefit credits.

Company-Sponsored Benefit Plans

We believe the insurance and retirement benefit plans we sponsor are an important part of fair and reasonable compensation for all of our employees, including our executive officers. We design these benefit plans to attract and retain a strong employee base, to provide a measure of financial security for our employees and to assist our employees in providing for their own financial security in a manner that recognizes individual needs and preferences. We also provide these programs because we believe that employees who have a plan for health and financial security are better employees. We apply these programs equally to all employees. Our benefit plans consist of an insurance plan that provides health, vision, dental, disability and basic term life insurance coverage, and various retirement plans. These benefit plans are described below.

Insurance Plans

Our insurance package includes health, vision, dental, disability and basic term life insurance coverage. Executive officers participate in these benefits on the same basis as all of our other employees. These plans permit our employees to establish flexible spending accounts, up to statutorily prescribed maximum contribution amounts, to pay for qualifying unreimbursed medical and dependent care expenses. Beginning in 2009, we offered our employees a high deductible health insurance coverage option that allows them to establish a health savings account for the payment of deductibles and qualifying unreimbursed expenses. Employees can use their flexible benefit credits as discussed above to tailor their insurance coverage to meet their individual financial security goals and needs.

We use a schedule to provide basic term life benefits to each full-time employee based on that employee’s salary, with a maximum amount of $250,000 of coverage for employees with salaries in excess of $200,000.

We provide both short-term and long-term disability benefits to all of our employees. Employees are eligible to participate in our short-term disability program after one-half year of continuous employment. Benefits accrue under our short-term disability plan based on the number of years of service with us and then are calculated as a percentage of base salary. Short-term disability benefits terminate after six months.

Employees with one year of continuous service are eligible for our long-term disability program. Benefits under this program begin once an employee has been totally disabled for a period of six months. Benefits are calculated as a percentage of base salary. Employment with us terminates when an employee begins receiving long-term disability benefits.

Retirement Plans

We provide retirement benefits to all of our employees, including executive officers, through tax qualified retirement plans. In addition, executives employed at the vice president level or higher, are eligible to participate in a non-qualified deferred compensation plan. Benefit plan levels under all of the Company sponsored retirement plans are not tied to Company, business unit, or individual performance.

Defined Benefit Pension Plan. The United Pension Plan is a qualified defined benefit pension plan intended to supplement our employees’ retirement income and provide a measure of financial security in retirement.

Self-Funded 401(k) Investment Plan. We sponsor a 401(k) plan that allows all our employees, including executive officers, to make pre-tax contributions, up to statutorily allowed maximums, to an individual 401(k) retirement account and/or to make after-tax contributions to a Roth 401(k) retirement account. Our 401(k) plan offers a variety of investment options, including investment in our stock. Our 401(k) plan allows us to make discretionary contributions to the plan. Because we maintain and fund the defined benefit pension plan, we make no discretionary contributions to the 401(k) plan and we do not match employees’ contributions to the 401(k) plan.

Deferred Compensation Plan. We maintain a non-qualified deferred compensation plan for executives at the vice president level or higher. We use this plan to provide these executives the opportunity to plan and supplement their retirement income by deferring receipt of part of their base salary and/or annual performance-based cash award. We hold the amounts deferred by an executive in a separate account for the benefit of that executive.

Employee Stock Ownership Plan. We established the United Fire Group Employee Stock Ownership Plan (the “ESOP”) so employees could share in our growth and prosperity. This plan does not permit employee contributions. We make contributions to this plan from time to time at the discretion of management. The plan allocates contributions to plan participants on a basis determined by base salary level. All employees, including executive officers, automatically participate in this plan when they reach age 21, complete one year of service and meet minimum hourly service requirements. Newly eligible participants begin participation on the next January 1 or July 1 following eligibility. Participants are 100 percent vested in the ESOP plan after completing three years of eligible service. Because employees must be participants in this plan for three years to be fully vested, we believe this plan provides additional incentive to employees to remain with us.

Employee Stock Purchase Plan. The employee stock purchase plan is a non-qualified plan that allows all our employees, including executive officers, to purchase shares of our common stock through periodic payroll deductions of $10 or more per pay period. Plan participants can also make optional cash contributions of $10 or more in any given month to purchase additional shares. We maintain this plan to provide an opportunity for employees to invest in our stock. We believe that employees who own our stock will be more likely to execute our business strategies to achieve stockholder value.

Perquisites

We do not rely upon perquisites as a method of providing significant compensation to any of our employees, preferring instead to use direct compensation and benefit plans. We provide only those perquisites that are related to our business or that we believe are necessary to attract and retain key executive personnel.

For security reasons, during 2010 our Board of Directors required Mr. Ramlo to use our corporate aircraft for business travel whenever it was practical to do so. We expect our other executive officers to use our corporate aircraft for business travel whenever it is reasonable to do so. During 2010, we permitted Mr. Ramlo and his family to use our corporate aircraft for personal travel. Under Internal Revenue Service regulations, we report the value of their personal use of the corporate aircraft as ordinary income. We increased Mr. Ramlo’s cash compensation to pay the income taxes associated with his and his family’s personal aircraft usage.

During 2010, we paid one-half of the monthly country club dues for Mr. Ramlo, Ms. Lyons, Mr. Wilkins and Mr. Ernst. We provided this benefit to these named executive officers because they used the country club for business entertainment on our behalf.

The Annual Compensation Process

Role of Management

Our Chief Executive Officer has a key role in determining compensation levels for all executive officers other than his own. He directs the collection and compilation of data for consideration by the Compensation Committee. Guided by the principles discussed under “Compensation and Benefits Philosophy,” our Chief Executive Officer:

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Identifies appropriate performance measures and recommends to the Compensation Committee performance targets to determine annual and long-term incentive awards.

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Using CRI’s market study, develops compensation guidelines for each executive position.

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Based on CRI’s market study and on our performance, annually recommends to the Compensation Committee the base salary and long-term incentive awards for each executive position.

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Briefs each executive on the guidelines established for that executive’s position.

Role of the Compensation Committee and the Board of Directors

The Compensation Committee and the Board of Directors refer to the principles discussed under “Compensation and Benefits Philosophy” to guide them in determining and implementing compensation programs for our executive officers. For executive officers other than our Chief Executive Officer, the Compensation Committee receives and reviews the recommendation of management as described above and makes recommendations to the full Board of Directors. The full Board of Directors then acts on these recommendations to set the compensation of our executive officers.

The Compensation Committee and the Board of Directors take the following steps to approve the compensation of our Chief Executive Officer:

•

The Compensation Committee, with the occasional assistance of CRI, identifies appropriate performance measures.

•

The Compensation Committee considers the various components of compensation discussed under the headings Compensation and Benefits Philosophy and Base Salary, above, and reviews data provided by CRI’s market study. Based on that consideration and review, it annually recommends to the full Board of Directors the base salary and long-term incentive awards for our Chief Executive Officer.

•

The full Board of Directors reviews and considers the proposals of the Compensation Committee and makes its final determination based on what it believes to be in the best interests of the Company and our stockholders.

Role of Independent Consultants

Under its charter, the Compensation Committee has the authority to employ the services of outside advisors to assist in carrying out its duties. During 2010, the Compensation Committee engaged CRI to advise it on executive compensation matters. CRI provided its services related to executive compensation and reported directly to the Compensation Committee. Management did not participate in the selection process or recommend CRI, and management does not participate in specific matters assigned to CRI by the Compensation Committee. Although particular assignments may vary, compensation consultant engagements by the Compensation Committee have generally included:

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Reviewing and advising on all principal aspects of executive and non-employee director compensation, including base salaries and annual incentive awards for executive officers, and cash compensation and equity awards for non-employee directors.

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Reviewing and advising on target performance payout levels and the design of our annual incentive plan.

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Providing advice on executive and director compensation matters as requested by the Compensation Committee.

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Reviewing and advising on the equity compensation program and the 2008 Stock Plan.

The Compensation Committee engaged CRI during 2010 to assist it in developing peer groups, to conduct an executive market study, and to advise the Compensation Committee generally on executive compensation matters.

CRI also assists our human resources department with, among other things, structuring various compensation programs that are available to all of our employees. To maintain the independence of the CRI employee who provides services to the Compensation Committee, during 2010 this individual did not provide any other services to us. Furthermore, the Compensation Committee requires the following:

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The individual who provides consulting services to the Compensation Committee shall not provide any other services to us.

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The individual who provides services to the Compensation Committee shall report only to the committee, shall not provide reports to our human resources department or to management, and shall not meet with our human resources department or management.

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The individual who provides services to the Compensation Committee shall keep confidential and separate from management all information provided by or to the Compensation Committee.

The fees charged by CRI for work done on behalf of our human resources department during 2010 did not rise to the level requiring disclosure under Item 407(e)(3)(iii) of Regulation S-K of the Exchange Act, as amended.

Executive Officers as Stockholders

We believe that ownership of our common stock by our executive officers promotes the alignment of their interests with those of our Company and our stockholders. A Board of Directors’ policy sets forth guidelines for stock ownership by our executive officers. The goal of these guidelines is to have our executive officers hold a meaningful stake in our Company.

The following table shows the number of shares targeted by the guidelines to be owned by our named executive officers, as well as the share ownership by each of our named executive officers as of the record date.

										Number of Shares of
						Target Number of Shares				Common Stock
						of Common Stock to				Beneficially Held at				Target Date Shares are to
Name		Tier (1)				be Beneficially Held				Record Date				be Beneficially Held by
Randy A. Ramlo			3				24,063				46,107			December 31, 2012
Dianne M. Lyons			2				11,602				27,892			December 31, 2012
Michael T. Wilkins			2				12,375				28,533	(2)		December 31, 2012
Barrie W. Ernst			1				8,319				33,684			December 31, 2012
Neal R. Scharmer			1				5,523				14,801			December 31, 2012

REPORT OF THE COMPENSATION COMMITTEE

March 2011

The Compensation Committee has reviewed and discussed with management the “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in the Company’s annual proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Compensation Committee
Frank S. Wilkinson Jr., Chair
Christopher R. Drahozal
Casey D. Mahon
James W. Noyce
Mary K. Quass

Summary Compensation Table — 2010

																										Change in
																										Pension
																										Value and
																										Nonqualified
																						Non-Equity				Deferred
														Stock				Option				Incentive Plan				Compensation				All Other
						Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
Name and Principal Position		Year				($)				($) (1)				($)				($) (2)(3)				($) (4)				($) (5)				($) (6)				($)
Randy A. Ramlo			2010			$	405,000			$	40,000			$	—			$	32,636			$	72,900			$	10,660			$	21,489			$	582,685
President / Chief Executive Officer			2009				400,000				—				—				—				—				13,109				9,882				422,991
			2008				350,000				—				131,012				128,593				—				14,093				10,930				634,629
Dianne M. Lyons			2010				255,500				30,000				—				32,636				38,325				15,337				8,203				380,001
Vice President / Chief Financial Officer			2009				250,000				—				—				—				12,500				15,008				8,310				285,818
			2008				225,000				—				71,908				70,591				11,250				13,587				8,141				400,477
Michael T. Wilkins			2010				276,000				30,000				—				32,636				41,400				11,309				8,203				399,548
Executive Vice President			2009				270,000				—				—				—				13,500				12,112				8,310				303,922
			2008				240,000				—				77,324				75,891				12,000				12,555				8,141				425,911
Barrie W. Ernst			2010				255,000				—				—				32,636				38,250				5,789				9,236				340,911
Vice President / Chief Investment Officer			2009				250,000				—				—				—				12,500				4,844				8,254				275,598
			2008				242,000				—				64,988				63,794				12,100				4,186				8,141				395,209
Neal R. Scharmer			2010				177,500				—				—				32,636				21,300				5,235				7,570				244,241
Vice President / General Counsel /			2009				172,500				—				—				—				—				4,952				8,310				185,762
Corporate Secretary			2008				160,675				—				42,389				41,600				—				4,583				8,141				257,388