- Quarterly earnings of $1.12 per
share
- Quarterly net income from operations1
of $0.31 per share
- Quarterly GAAP combined ratio of
99.7
- Return on equity of 7.5%
- Book value per share of $20.67
State Auto Financial Corporation (NASDAQ:STFC) today reported
first quarter 2019 net income of $49.4 million, or $1.12 per
diluted share, compared to a net loss of $2.1 million, or $0.05 per
diluted share, for the same 2018 period. Net earnings from
operations1 per diluted share for the first three months of 2019
was $0.31 versus $0.17 for the same 2018 period.
GAAP Operating Results
STFC’s GAAP combined ratio for the first three months of 2019
was 99.7 compared to 102.6 for the same 2018 period. Catastrophe
losses for the first three months of 2019 accounted for 5.9 points
of the 64.2 total loss ratio points, or $17.7 million, versus 3.1
points of the total 67.4 loss ratio points, or $9.8 million, for
the same period in 2018. Non-catastrophe losses and ALAE for the
first three months of 2019 included 6.9 points of favorable
development relating to prior years, or $20.9 million, versus 5.1
points of favorable development, or $16.0 million, for the same
period in 2018.
SAP Personal and Commercial Operating
Results
The exit from our specialty insurance business resulted in the
elimination of specialty insurance as a reportable segment as it no
longer is material to our results. Specialty results, labeled as
"specialty run-off," are included in the SAP Insurance Segment
Results table below to enable reconciliation to total underwriting
results.
Net written premium for the first three months of 2019 increased
4.7% compared to the same period in 2018. Net written premium for
the personal and commercial segments increased 11.6% and 5.9%,
respectively. The increase in the personal segment was primarily
due to (i) rate actions taken to improve the profitability in
personal auto partially offset by lower retention, and (ii) new
business growth and a higher level of homeowners policies in force.
The increase in the commercial segment was led by new business
growth in commercial auto and middle market commercial. The
improvements were partially offset by a decrease in net written
premiums in workers’ compensation due to continued intense
competition in this market.
The SAP personal and commercial segments' combined ratio2 for
the first quarter 2019 was 99.7 compared to 101.4 for the same 2018
period. Catastrophe losses during the first quarter 2019 accounted
for 5.8 points of the total 63.6 loss ratio points, or $17.2
million, versus 3.7 points of the total 66.5 loss ratio points, or
$9.8 million, for the same period in 2018. Non-catastrophe losses
and ALAE during the first quarter 2019 included 7.4 points of
favorable development relating to prior years, or $22.2 million,
versus 6.0 points of favorable development, or $16.3 million, for
the same period in 2018.
Book Value and Return on Equity
STFC’s book value increased to $20.67 per share as of
March 31, 2019, compared to $18.91 on December 31, 2018.
This was driven by increases in the market value of our investment
portfolio and net income from operations.
Return on stockholders’ equity for the 12 months ended
March 31, 2019, was 7.5% compared to (1.1)% for the 12 months
ended March 31, 2018.
STFC’s Chairman, President and CEO Mike LaRocco commented on the
quarter as follows:
"We once again delivered profitable growth during first quarter
2019, following our strong 2018 results. The personal and
commercial segments' combined ratio for the first quarter was 99.7,
a 1.7-point improvement over first quarter 2018, largely driven by
personal auto, small commercial package and workers compensation.
Our go forward lines delivered a 9.2% increase in net written
premium. Our distribution partners clearly see the value in our
products and platform and are responding.
"This was a solid start to 2019. The trends we're seeing in both
growth and losses are positive, and our focused improvements in
pricing and claim handling are producing results. We're delivering
innovative approaches to every aspect of our business. Our smart
home product is now live in nine states, and we made significant
progress toward launching a pilot program to make the property
inspection process easier for our customers, and more efficient.
Our use of robotic process automation is getting attention and
gathering steam, with more than 50 bots now in production.
"State Auto is a different company than it was just four years
ago. Now a customer-focused organization that's an insurance
technology leader – and growing profitably."
About State Auto Financial Corporation
State Auto Financial Corporation, headquartered in Columbus,
Ohio, is a super regional property and casualty insurance holding
company and is proud to be a Trusted Choice® company partner. STFC
stock is traded on the NASDAQ Global Select Market, which
represents the top fourth of all NASDAQ listed companies.
The insurance subsidiaries of State Auto Financial Corporation
are part of the State Auto Group. The State Auto Group markets its
insurance products throughout the United States, through
independent insurance agencies. The State Auto Group is rated A-
(Excellent) by the A.M. Best Company and includes State Automobile
Mutual, State Auto Property & Casualty, State Auto Ohio, State
Auto Wisconsin, Milbank, Meridian Security, Patrons Mutual,
Rockhill Insurance, Plaza Insurance, American Compensation and
Bloomington Compensation. Additional information on State Auto
Financial Corporation and the State Auto Insurance Companies can be
found online at http://www.StateAuto.com/STFC.
1 Net earnings (loss) from operations, a non-GAAP financial
measure which management believes is informative to Company
management and investors, differs from GAAP net income (loss) only
by the exclusion of net investment gain (loss), net of applicable
taxes, on investment activity for the periods being reported. For
STFC, this amounted to income of $0.81 per diluted share for the
first quarter of 2019 versus income of $0.22 per diluted share for
the first quarter 2018. 2
Insurance industry regulators require
STFC's insurance subsidiaries to report their financial condition
and results of operations using Statutory Accounting Practices
("SAP"). The SAP personal and commercial segments combined ratio is
a measure used by management to evaluate STFC’s operating
performance for its ongoing operations. Details behind the
compilation of these results can be found in the SAP Insurance
Segment Results table of this release.
STFC has scheduled a conference call with interested investors
for Thursday, May 2, at 11 a.m. ET to discuss the Company’s
first quarter 2019 performance. Live and archived broadcasts of the
call can be accessed at http://www.StateAuto.com/STFC. A replay of
the call can be heard beginning at 2 p.m., May 2, by calling
855-859-2056, conference ID 4067169. Supplemental schedules
detailing the Company’s first quarter 2019 financial, sales and
underwriting results are made available on
http://www.StateAuto.com/STFC prior to the conference call.
Except for historical information, all other information in this
news release consists of forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated or implied. The most significant
of these uncertainties are described in State Auto Financial's Form
10-K and Form 10-Q reports and exhibits to those reports, and
include (but are not limited to) legislative changes at both the
state and federal level, state and federal regulatory rule making
promulgations and adjudications, class action litigation involving
the insurance industry and judicial decisions affecting claims,
policy coverages and the general costs of doing business, the
impact of competition on products and pricing, inflation in the
costs of the products and services insurance pays for, product
development, geographic spread of risk, weather and weather-related
events, and other types of catastrophic events. State Auto
Financial undertakes no obligation to update or revise any
forward-looking statements.
Selected Consolidated Financial Data ($ in millions, except
per share amounts) (unaudited) Three months ended
March 31
2019 2018 Net premiums written
$
306.0 $ 292.2 Earned premiums
302.7 314.9 Net investment income
19.4 19.9 Net
investment gain
44.9 (11.7 ) Other income
0.6
0.6 Total revenue
367.6 323.7
Income (loss) before federal income taxes
61.6 (3.3 )
Federal income tax expense (benefit)
12.2 (1.2 ) Net
income (loss)
$ 49.4 $ (2.1 ) Earnings
(loss) per common share: - basic
$ 1.14 $ (0.05 ) -
diluted
$ 1.12 $ (0.05 ) Earnings (loss) per share
from operations (A): - basic
$ 0.32 $ 0.17 - diluted
$ 0.31 $ 0.17 Weighted average shares outstanding: -
basic
43.3 42.6 - diluted
43.9 42.6 Return on average
equity (LTM)
7.5 % (1.1 )% Book value per share
$ 20.67 $ 18.97 Dividends paid per share
$
0.10 $ 0.10 Total shares outstanding
43.3 42.7
GAAP ratios: Cat loss and ALAE ratio
5.9 3.1 Non-cat loss
and LAE ratio
58.3 64.3 Loss and LAE ratio
64.2 67.4 Expense ratio
35.5 35.2
Combined ratio
99.7 102.6 (A)
Reconciliation of non-GAAP financial measure: Net income from
operations: Net income (loss)
$ 49.4 $ (2.1 ) Net
investment gain (loss), net of tax
35.8 (9.2 ) Net
income from operations
$ 13.6 $ 7.1
Condensed Consolidated Balance Sheets ($ and
shares in millions, except per share amounts)
(unaudited)
March 31 December 31
2019 2018
ASSETS Fixed maturities, available-for-sale, at fair value
(amortized cost $2,130.9 and $2,188.2, respectively)
$
2,136.6 $ 2,159.5 Equity securities
363.9 315.0 Other
invested assets
53.5 48.8 Other invested assets, at cost
5.6 5.6 Notes receivable from affiliate
70.0
70.0 Total investments
2,629.6 2,598.9 Cash
and cash equivalents
72.3 59.8 Accrued investment income and
other assets
36.6 32.4 Deferred policy acquisition costs
104.3 101.9 Reinsurance recoverable on losses and loss
expenses payable
4.6 5.5 Prepaid reinsurance premiums
6.7 6.6 Current federal income taxes
6.3 5.9 Net
deferred federal income taxes
57.7 77.8 Property and
equipment, net
6.0 7.1
Total assets
$ 2,924.1 $ 2,895.9
LIABILITIES Losses and loss expenses payable
$
1,128.9 $ 1,146.8 Unearned premiums
587.5 584.2 Notes
payable (affiliates $15.2 and $15.2, respectively)
122.0
122.0 Pension and postretirement benefits
82.4 83.0 Due to
affiliate
18.4 22.4 Other liabilities
89.6
119.0
Total liabilities 2,028.8 2,077.4
STOCKHOLDERS' EQUITY Common stock, without par
value. Authorized 100.0 shares; 50.1 and 50.0 shares issued,
respectively, at stated value of $2.50 per share
125.3 125.0
Treasury stock, 6.8 and 6.8 shares, respectively, at cost
(117.5 ) (117.0 ) Additional paid-in capital
198.4 194.2 Accumulated other comprehensive loss
(68.6 ) (96.4 ) Retained earnings
757.7
712.7
Total stockholders' equity 895.3
818.5
Total liabilities and stockholders' equity
$ 2,924.1 $ 2,895.9
Condensed Consolidated Statements of Income ($ in millions,
except per share amounts) (unaudited) Three months
ended March 31
2019 2018 Earned premiums
$
302.7 $ 314.9 Net investment income
19.4 19.9 Net
investment gain (loss)
44.9 (11.7 ) Other income from
affiliates
0.6 0.6
Total revenues
367.6 323.7 Losses and loss expenses
194.3 212.3 Acquisition and operating expenses
107.6
110.8 Interest expense
1.2 1.6 Other expenses
2.9
2.3
Total expenses 306.0 327.0
Income (loss) before federal income taxes
61.6 (3.3 ) Federal income tax expense (benefit): Current
(0.4 ) (1.0 ) Deferred
12.6 (0.2 )
Federal income tax expense (benefit)
12.2 (1.2 )
Net income (loss) $ 49.4 $ (2.1 )
Earnings (loss) per common share: Basic
$ 1.14
$ (0.05 ) Diluted
$ 1.12 $ (0.05 ) Dividends
paid per common share
$ 0.10 $ 0.10
Consolidated Statements of Comprehensive
Income ($ in millions) (unaudited) Three months ended March 31
2019 2018 Net income (loss)
$ 49.4 $ (2.1 )
Other comprehensive income (loss), net of tax: Net unrealized
holding gain (loss) on available-for-sale investments: Unrealized
holding gain (loss)
34.5 (36.7 ) Reclassification
adjustments for gains realized in net income
(0.1 )
(0.4 ) Income tax (expense) benefit
(7.2 ) 7.8
Total net unrealized holding gain (loss) on available- for-sale
investments
27.2 (29.3 ) Net unrecognized benefit
plan obligations: Reclassification adjustments for amortization to
statements of income: Prior service credit
(1.6 )
(1.6 ) Net actuarial loss
2.4 3.3 Income tax expense
(0.2 ) (0.4 ) Total net unrecognized benefit plan
obligations
0.6 1.3 Other comprehensive income
(loss)
27.8 (28.0 )
Comprehensive income
(loss) $ 77.2 $ (30.1 )
Condensed Consolidated Statement of Stockholders' Equity ($
and shares in millions) (unaudited)
Three Months
Ended Year Ended
March 31
December 31
2019 2018
Common shares: Balance at
beginning of year
50.0 49.2 Issuance of shares
0.1
0.8 Balance at period ended
50.1 50.0
Treasury shares: Balance at beginning of year
(6.8 ) (6.8 ) Balance at period ended
(6.8
) (6.8 )
Common stock: Balance at beginning of
year
$ 125.0 $ 123.0 Issuance of shares
0.3
2.0 Balance at period ended
125.3 125.0
Treasury stock: Balance at beginning of year
$ (117.0 ) $ (116.8 ) Shares acquired on stock
award exercises and vested restricted shares
(0.5 )
(0.2 ) Balance at beginning of year and period ended
(117.5
) (117.0 )
Additional paid-in capital: Balance
at beginning of year
$ 194.2 $ 171.8 Issuance of
common stock
0.7 13.3 Stock awards granted
3.5
9.1 Balance at period ended
198.4 194.2
Accumulated other comprehensive income: Balance at
beginning of the year
$ (96.4 ) $ 3.8
Cumulative effect of change in accounting for equity securities and
other invested assets and reclassification of stranded tax effects
as of January 1, 2018
— (63.9 ) Change in unrealized losses
on available-for-sale investments, net of tax
27.2 (38.3 )
Change in unrecognized benefit plan obligations, net of tax
0.6 2.0 Balance at period ended
(68.6
) (96.4 )
Retained earnings: Balance at
beginning of year
$ 712.7 $ 653.2 Cumulative effect
of change in accounting for equity securities and other invested
assets and reclassification of stranded tax effects as of January
1, 2018
— 63.9 Net income
49.4 12.8 Cash dividends
paid
(4.4 ) (17.2 ) Balance at period ended
757.7 712.7
Total stockholders' equity at
period ended $ 895.3 $ 818.5
Condensed Consolidated Statements of Cash Flow ($ in
millions) (unaudited) Three months ended March 31
2019 2018
Cash flows from operating activities: Net
income (loss)
$ 49.4 $ (2.1 ) Adjustments to
reconcile net income to net cash (used in) provided by operating
activities: Depreciation and amortization, net
3.1 2.9
Share-based compensation
3.8 2.3 Net investment (gain) loss
(44.9 ) 11.8 Changes in operating assets and
liabilities: Deferred policy acquisition costs
(2.5 )
5.2 Accrued investment income and other assets
(4.1 )
(3.8 ) Postretirement and pension benefits
(0.1 )
(0.3 ) Other liabilities and due to/from affiliates, net
(33.7 ) 6.3 Reinsurance recoverable on losses and
loss expenses payable and prepaid reinsurance premiums
0.8
(1.2 ) Losses and loss expenses payable
(17.9 ) (8.0
) Unearned premiums
3.3 (22.6 ) Deferred tax expense on
share-based awards
0.2 — Federal income taxes
12.2
(1.2 )
Net cash used in operating activities
(30.4 ) (10.7 )
Cash flows from investing
activities: Purchases of fixed maturities available-for-sale
(137.2 ) (99.0 ) Purchases of equity securities
(19.5 ) (61.5 ) Purchases of other invested assets
(1.0 ) (0.5 ) Maturities, calls and pay downs of
fixed maturities available-for-sale
125.9 55.5 Sales of
fixed maturities available-for-sale
65.6 15.3 Sales of
equity securities
12.7 65.1 Sales of other invested assets
0.3 0.3
Net cash provided by (used in)
investing activities 46.8 (24.8 )
Cash flows
from financing activities: Proceeds from issuance of common
stock
1.0 9.3 Payments to acquire treasury stock
(0.5
) (0.1 ) Payment of dividends
(4.4 ) (4.3 )
Payment of prepayment fee
— —
Net cash
(used in) provided by financing activities (3.9 )
4.9 Net increase (decrease) in cash and cash equivalents
12.5 (30.6 ) Cash and cash equivalents at beginning of
period
59.8 91.5
Cash and cash equivalents
at end of period $ 72.3 $ 60.9
Supplemental
disclosures:
Interest paid (affiliates $0.2 and $0.2, respectively)
$
1.7 $ 1.6
Net Investment Income
($ in millions) (unaudited)
3/31/2018 6/30/2018 9/30/2018 12/31/2018
3/31/2019
Quarter to Date Gross investment income: Fixed maturities $
15.0 $ 14.9 $ 15.1 $ 15.0
$ 15.4 TIPS 1.1 2.0
1.3 0.9
(0.3 ) Total fixed
maturities 16.1 16.9 16.4 15.9
15.1 Equity securities 2.5 3.1 3.0 4.8
2.8
Other 1.7 1.8 1.7 2.0
1.7
Total gross investment income 20.3 21.8 21.1 22.7
19.6 Less:
Investment expenses 0.4 0.3 0.3 —
0.2 Net investment income $ 19.9 $ 21.5
$ 20.8 $ 22.7
$ 19.4
Year to Date Gross investment income: Fixed maturities $
15.0 $ 29.9 $ 45.0 $ 60.0
$ 15.4 TIPS 1.1 3.1
4.4 5.3
(0.3 ) Total fixed
maturities 16.1 33.0 49.4 65.3
15.1 Equity securities 2.5 5.6 8.6 13.4
2.8
Other 1.7 3.5 5.2 7.2
1.7
Total gross investment income 20.3 42.1 63.2 85.9
19.6 Less:
Investment expenses 0.4 0.7 1.0 1.0
0.2 Net investment income $ 19.9 $ 41.4
$ 62.2 $ 84.9
$ 19.4
3/31/2018 6/30/2018 9/30/2018 12/31/2018
3/31/2019 TIPS,
fair value $ 147.4 $ 156.5 $ 143.8 $ 142.3
$ 147.0
TIPS, book value $ 140.7 $ 150.6 $ 140.8 $ 141.2
$
140.5 Net Investment Gain (Loss)
($ in millions) unaudited Three months ended March 31
2019 2018 Realized gains on sales of securities: Fixed
maturities
$ 0.1 $ 0.4 Equity securities
0.3
3.3 Other invested assets
— 0.1 Total realized
gains
0.4 3.8 Realized losses on sales of securities: Sales
of equity securities
(2.2 ) (0.2 ) Total realized
losses
(2.2 ) (0.2 ) Net realized (loss) gain on
investments
$ (1.8 ) $ 3.6
Net unrealized gain (loss) on
investments(1):
Equity securities
44.1 (14.6 ) Other invested assets
3.9 (0.7 ) Net unrealized gain (loss) on investments
48.0 (15.3 ) Other net realized loss
$
(1.3 ) $ — Net investment gain (loss)
$
44.9 $ (11.7 ) (1) Unrealized holding losses
recognized during the period on securities held at the reporting
date
Income Taxes ($ in millions)
(unaudited)
The following table sets forth the tax
effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities:
March 31 December 31
2019 2018 Deferred tax
assets: Unearned premiums not currently deductible
$
24.4 $ 24.3 Losses and loss expenses payable discounting
19.5 19.9 Postretirement and pension benefits
21.3
21.4 Net unrealized holding losses on investments
— 6.2
Realized loss on other-than-temporary impairment
2.0 1.9
Other liabilities
12.3 14.8 Net operating loss carryforward
15.2 15.1 Tax credit carryforwards
2.3 2.7 Other
2.0 1.6 Total deferred tax assets
99.0
107.9 Deferred tax liabilities: Deferral of policy acquisition
costs
21.9 21.4 Net unrealized holding gains on investments
11.0 — Losses and loss expenses payable discounting
(transition rule)
8.4 8.7 Total deferred tax
liabilities
41.3 30.1 Net deferred federal income
taxes
$ 57.7 $ 77.8 The following table sets
forth the components of federal income tax expense (benefit):
Three months ended March 31
2019 2018 Income
(loss) before federal income taxes
$ 61.6 $ (3.3 )
Federal income tax expense (benefit): Current
(0.4 )
(1.0 ) Deferred
12.6 (0.2 )
Total federal income
tax expense (benefit) 12.2 (1.2 ) Net income
(loss)
$ 49.4 $ (2.1 )
SAP
Personal Insurance Segment Results ($ in millions)
Three Months Ended March 31, 2019
Personal Auto Homeowners Other Personal Total Net written
premiums
$ 107.7 $ 64.4 $
8.4 $ 180.5 Net earned premiums
105.4
68.7 7.4 181.5 Losses and LAE incurred: Cat
loss and ALAE
0.9 12.4 0.7 14.0 Non-cat
loss and ALAE Prior accident years non-cat loss and ALAE
(6.8 ) 0.6 (0.7 ) (6.9
) Current accident year non-cat loss and ALAE
65.8
29.9 4.4 100.1
Total non-cat loss and ALAE
59.0 30.5
3.7 93.2 Total Loss and ALAE
59.9 42.9 4.4 107.2 ULAE
7.2
5.2 0.3 12.7 Total
Loss and LAE
67.1 48.1 4.7 119.9
Underwriting expenses
32.7 21.8
2.9 57.4 Net underwriting gain (loss)
$ 5.6 $ (1.2 ) $
(0.2 ) $ 4.2 Cat loss and
ALAE ratio
0.8 % 18.1 % 9.6
% 7.7 % Non-cat loss and ALAE ratio Prior
accident years non-cat loss and ALAE ratio
(6.5 )%
0.9 % (8.9 )% (3.8 )%
Current accident year non-cat loss and ALAE ratio
62.4
% 43.6 % 58.6 % 55.2
% Total non-cat loss and ALAE ratio
55.9 %
44.5 % 49.7 % 51.4 %
Total Loss and ALAE ratio
56.7 % 62.6 %
59.3 % 59.1 % ULAE ratio
6.8
% 7.5 % 4.1 % 7.0
% Total Loss and LAE ratio
63.5 % 70.1
% 63.4 % 66.1 % Expense ratio
30.4 % 33.7 % 34.6 %
31.8 % Combined ratio
93.9 %
103.8 % 98.0 % 97.9 % ($
in millions) Three Months Ended March
31, 2018 Personal Auto Homeowners Other Personal Total Net
written premiums $ 101.9 $ 54.3 $ 5.5 $ 161.7 Net earned premiums
93.5 57.9 4.9 156.3 Losses and LAE incurred: Cat loss and ALAE 0.1
4.7 0.4 5.2 Non-cat loss and ALAE Prior accident years non-cat loss
and ALAE (4.0 ) (2.8 ) 0.2 (6.6 ) Current accident year non-cat
loss and ALAE 66.9 28.4 2.0 97.3 Total
non-cat loss and ALAE 62.9 25.6 2.2 90.7
Total Loss and ALAE 63.0 30.3 2.6 95.9 ULAE 5.0 4.0
0.3 9.3 Total Loss and LAE 68.0 34.3 2.9 105.2
Underwriting expenses 28.9 18.2 2.3 49.4
Net underwriting (loss) gain $ (3.4 ) $ 5.4 $ (0.3 )
$ 1.7 Cat loss and ALAE ratio 0.1 % 8.2 % 7.9 % 3.4 %
Non-cat loss and ALAE ratio Prior accident years non-cat loss and
ALAE ratio (4.3 )% (4.8 )% 4.8 % (4.2 )% Current accident year
non-cat loss and ALAE ratio 71.6 % 49.0 % 40.9 % 62.2 % Total
non-cat loss and ALAE ratio 67.3 % 44.2 % 45.7 % 58.0 % Total Loss
and ALAE ratio 67.4 % 52.4 % 53.6 % 61.4 % ULAE ratio 5.2 % 6.9 %
5.2 % 5.9 % Total Loss and LAE ratio 72.6 % 59.3 % 58.8 % 67.3 %
Expense ratio 28.4 % 33.6 % 42.5 % 30.6 % Combined ratio 101.0 %
92.9 % 101.3 % 97.9 %
SAP Commercial Insurance
Segment Results ($ in millions)
Small Middle
Three months ended
Commercial Commercial Market Workers' Farm & Other
March 31,
2019 Auto Package Commercial Comp Ranch Commercial Total
Net written premiums
$ 24.0 $ 30.5
$ 34.2 $ 19.5 $ 12.4
$ 4.5 $ 125.1 Net earned premiums
19.7 29.6 30.7 20.5 11.8
4.1 116.4 Losses and LAE incurred: Cat loss and ALAE
0.1 1.5 1.3 — 0.3 —
3.2 Non-cat loss and ALAE Prior accident years non-cat loss
and ALAE
(1.5 ) (4.8 ) (3.1
) (4.5 ) (0.4 ) (1.0
) (15.3 ) Current accident year non-cat loss
and ALAE
11.9 15.9 26.0
13.6 5.1 2.1 74.6
Total non-cat loss and ALAE
10.4 11.1
22.9 9.1 4.7
1.1 59.3 Total Loss and ALAE
10.5 12.6 24.2 9.1 5.0
1.1 62.5 ULAE
1.3 1.8
1.3 1.6 0.6 0.2
6.8 Total Loss and LAE
11.8 14.4
25.5 10.7 5.6 1.3 69.3
Underwriting expenses
10.7 12.5
14.2 7.4 6.2 2.0
53.0 Net underwriting (loss) gain
$
(2.8 ) $ 2.7 $
(9.0 ) $ 2.4 $ —
$ 0.8 $ (5.9 ) Cat
loss and ALAE ratio
0.4 % 5.1 %
4.3 % — % 2.2 % —
% 2.7 % Non-cat loss and ALAE ratio Prior
accident years non-cat loss and ALAE ratio
(7.3 )%
(16.2 )% (10.2 )% (22.0
)% (3.7 )% (23.5 )% (13.1
)% Current accident year non-cat loss and ALAE ratio
60.2 % 53.8 % 84.7 %
66.4 % 43.0 % 52.6 %
64.1 %
Total non-cat loss and ALAE ratio
52.9 % 37.6 % 74.5 %
44.4 % 39.3 % 29.1 %
51.0 % Total Loss and ALAE ratio
53.3 %
42.7 % 78.8 % 44.4 %
41.5 % 29.1 % 53.7 % ULAE
ratio
6.6 % 6.1 % 4.2 %
8.1 % 5.0 % 4.4 %
5.9 % Total Loss and LAE ratio
59.9 %
48.8 % 83.0 % 52.5 %
46.5 % 33.5 % 59.6 %
Expense ratio
44.8 % 41.0 % 41.5
% 37.9 % 50.0 % 44.6
% 42.4 % Combined ratio
104.7 %
89.8 % 124.5 % 90.4 %
96.5 % 78.1 % 102.0 %
($ in millions)
Small Middle Three months ended Commercial Commercial Market
Workers' Farm & Other March 31, 2018 Auto Package Commercial
Comp Ranch Commercial Total Net written premiums $ 18.6 $
30.4 $ 29.1 $ 24.4 $ 11.5 $ 4.1 $ 118.1 Net earned premiums 18.4
30.4 28.6 22.8 11.0 3.7 114.9 Losses and LAE incurred: Cat loss and
ALAE — 3.2 1.5 — (0.1 ) — 4.6 Non-cat loss and ALAE Prior accident
years non-cat loss and ALAE (3.5 ) (0.5 ) (2.5 ) (2.3 ) 0.3 (1.2 )
(9.7 ) Current accident year non-cat loss and ALAE 12.4 18.2
21.5 15.1 4.2 2.0 73.4
Total non-cat loss and ALAE 8.9 17.7 19.0 12.8
4.5 0.8 63.7 Total Loss and ALAE 8.9
20.9 20.5 12.8 4.4 0.8 68.3 ULAE 1.2 1.3 1.5
2.3 0.3 0.3 6.9 Total Loss and LAE 10.1
22.2 22.0 15.1 4.7 1.1 75.2 Underwriting expenses 8.1 13.8
11.3 8.0 4.8 2.0 48.0 Net
underwriting (loss) gain $ 0.2 $ (5.6 ) $ (4.7 ) $ (0.3 ) $
1.5 $ 0.6 $ (8.3 ) Cat loss and ALAE ratio — % 10.7 %
5.1 % — % (0.5 )% (0.2 )% 4.1 % Non-cat loss and ALAE ratio Prior
accident years non-cat loss and ALAE ratio (18.9 )% (1.5 )% (8.8 )%
(10.0 )% 2.9 % (33.8 )% (8.4 )% Current accident year non-cat loss
and ALAE ratio 67.2 % 59.4 % 75.7 % 66.2 % 37.4 % 55.7 % 63.7 %
Total non-cat loss and ALAE ratio
48.3 % 57.9 % 66.9 % 56.2 % 40.3 % 21.9 % 55.3 % Total Loss and
ALAE ratio 48.3 % 68.6 % 72.0 % 56.2 % 39.8 % 21.7 % 59.4 % ULAE
ratio 6.3 % 4.2 % 5.3 % 9.8 % 3.0 % 8.0 % 6.0 % Total Loss and LAE
ratio 54.6 % 72.8 % 77.3 % 66.0 % 42.8 % 29.7 % 65.4 % Expense
ratio 43.8 % 45.4 % 39.0 % 33.1 % 41.7 % 47.2 % 40.7 % Combined
ratio 98.4 % 118.2 % 116.3 % 99.1 % 84.5 % 76.9 % 106.1 %
SAP Insurance Segment Results ($ in millions)
(unaudited) Personal &
Three months ended March 31,
2019 Commercial Specialty run-off Total Net written
premiums
$ 305.6 $ 0.4 $
306.0 Net earned premiums
297.9 4.8
302.7 Losses and LAE incurred: Cat loss and ALAE
17.2
0.5 17.7 Non-cat loss and ALAE Prior accident years
non-cat loss and ALAE
(22.2 ) 1.3 (20.9
) Current accident year non-cat loss and ALAE
174.7
4.0 178.7 Total non-cat loss and
ALAE
152.5 5.3 157.8
Total Loss and ALAE
169.7 5.8
175.5 ULAE
19.5 (0.4 )
19.1 Total Loss and LAE
189.2 5.4
194.6 Underwriting expenses
110.4 0.8
111.2 Net underwriting loss
$
(1.7 ) $ (1.4 ) $
(3.1 ) Cat loss and ALAE ratio
5.8 %
N/M(1) 5.9 % Non-cat loss and ALAE
ratio Prior accident years non-cat loss and ALAE ratio
(7.4
)% N/M (6.9 )% Current accident year
non-cat loss and ALAE ratio
58.6 % N/M
59.0 % Total non-cat loss and ALAE ratio
51.2
% N/M 52.1 % Total Loss and ALAE ratio
57.0 % N/M 58.0 % ULAE ratio
6.6 % N/M 6.3 % Total Loss and
LAE ratio
63.6 % N/M 64.3 %
Expense ratio
36.1 % N/M 36.4 %
Combined ratio
99.7 % N/M 100.7
% (1) N/M = Not Meaningful
($ in millions) Personal
&
Three months ended March 31, 2018 Commercial
Specialty run-off
Total Net written premiums $ 279.8 $ 12.4 $ 292.2 Net earned
premiums 271.2 43.7 314.9 Losses and LAE incurred: Cat loss and
ALAE 9.8 — 9.8 Non-cat loss and ALAE Prior accident years non-cat
loss and ALAE (16.3 ) 0.3 (16.0 ) Current accident year non-cat
loss and ALAE 170.7 30.0 200.7 Total non-cat
loss and ALAE 154.4 30.3 184.7 Total Loss and
ALAE 164.2 30.3 194.5 ULAE 16.2 2.2
18.4 Total Loss and LAE 180.4 32.5 212.9 Underwriting
expenses 97.4 9.6 107.0 Net underwriting
(loss) gain $ (6.6 ) $ 1.6 $ (5.0 ) Cat loss and ALAE
ratio 3.7 % (0.1 )% 3.1 % Non-cat loss and ALAE ratio Prior
accident years non-cat loss and ALAE ratio (6.0 )% 0.7 % (5.1 )%
Current accident year non-cat loss and ALAE ratio 62.9 % 68.7 %
63.8 % Total non-cat loss and ALAE ratio 56.9 % 69.4 % 58.7 % Total
Loss and ALAE ratio 60.6 % 69.3 % 61.8 % ULAE ratio 5.9 % 5.0 % 5.8
% Total Loss and LAE ratio 66.5 % 74.3 % 67.6 % Expense ratio 34.9
% 77.2 % 36.7 % Combined ratio 101.4 % 151.5 % 104.3 %
The following table provides a reconciliation of our statutory
underwriting results to GAAP consolidated income before federal
income taxes for the three months ended March 31, 2019 and
2018:
($ millions)
YTD 2019 YTD 2018 Segment income
before federal income taxes: Insurance operations: Personal
insurance SAP underwriting gain
$ 4.2 $ 1.7
Commercial insurance SAP underwriting loss
(5.9 )
(8.3 ) Specialty run-off
(1.4 ) 1.6 Total
insurance operations
(3.1 ) (5.0 ) Investment
operations: Net investment income
19.4 19.9 Net investment
gain (loss)
44.9 (11.7 ) Total investment operations
64.3 8.2 All other segments income
0.1 0.1
Reconciling items: GAAP adjustments
4.1 (4.0 )
Interest expense on corporate debt
1.2 1.6 Corporate
expenses
(5.0 ) (4.2 ) Total reconciling items
0.3 (6.6 ) Total consolidated income (loss) before
federal income taxes
$ 61.6 $ (3.3 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005099/en/
State Auto Financial Corporation
Media contact:Kyle Anderson,
614-917-5497Kyle.Anderson@StateAuto.com
Investor contact:Natalie Schoolcraft,
614-917-4341Natalie.Schoolcraft@StateAuto.com
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