State Auto Financial Reports First Quarter 2008 Results
24 April 2008 - 8:00PM
Business Wire
State Auto Financial Corporation (NASDAQ: STFC) today reported a
first quarter 2008 net loss of $12.5 million, or $0.31 per diluted
share, versus net income of $30.8 million, or $0.74 per diluted
share, for the first quarter of 2007. Net loss from operations(a)
per diluted share for the first quarter 2008 was $0.28, versus net
income of $0.72 for the same 2007 period. STFC�s GAAP combined
ratio for the quarter was 111.3 versus 91.3 for the first quarter
of 2007. Catastrophe losses accounted for 12.5 points of the total
76.8 loss ratio points, or $35.0 million, during the first quarter
this year, compared to 3.2 points of the total 56.8 loss ratio
points, or $8.1 million, for the same period in 2007. STFC�s first
quarter 2008 revenue was $301.0 million versus $275.5 million for
the same period in 2007. STFC�s book value per share decreased to
$22.18 per share as of March 31, 2008. Return on stockholders�
equity for the twelve months ended March 31, 2008 was 8.7% compared
to 13.4% for the twelve months ended March 31, 2007. �On February
14, we reported that a series of catastrophic storms would
significantly impact our first quarter results. As the quarter
developed, additional catastrophes occurring in the central states
resulted in a record level of first quarter catastrophe losses
totaling $35.0 million,� said STFC Chairman, President and CEO Bob
Restrepo. �On the property side we also saw a higher level of
non-catastrophe weather losses in our homeowners book, as well as
poor experience in commercial multi-peril and other commercial
liability lines driven by large losses from prior accident years,
particularly in commercial umbrella,� commented Restrepo. �Although
catastrophe losses were the main story during the quarter, there
are positive trends occurring in our business. We continue to be
encouraged by the progress we are seeing on the production front.
Net premiums written grew 9.7% during the quarter. Excluding the
pooling changes previously announced, net premiums written
increased 1.3%. Our largest line of business, standard auto, is
growing organically with healthy levels of new business
applications and retention is holding steady. We are also pleased
with the reception and utilization by our agents of our commercial
lines rating portal bizXpress, which has resulted in a nice lift in
our businessowners (BOP) book. �This quarter�s results were
disappointing, being driven by bad weather and liability losses
that were unusual if not unprecedented. We feel confident with the
underlying quality of our business and our plans for the future,�
added Restrepo. STFC repurchased 761,919 shares during the first
quarter and 1,575,449 shares to date under the previously announced
share repurchase program which authorized purchasing up to 4.0
million common shares through December 31, 2009. State Auto
Financial Corporation, headquartered in Columbus, Ohio, is a super
regional property and casualty insurance holding company. The
company markets its personal and business insurance products
exclusively through independent insurance agencies in 33 states and
is proud to be a Trusted Choice� company partner. STFC stock is
traded on the NASDAQ Global Select Market, which represents the top
third of all NASDAQ listed companies. The company is one of
NASDAQ�s listed companies to be named a 2007 Mergent Dividend
Achiever for having increased its dividends for ten or more years
in succession. The State Auto Insurance Companies are rated A+
(Superior) by the A.M. Best Company. The State Auto Insurance
Companies include State Automobile Mutual, State Auto Property
& Casualty, State Auto National, State Auto Ohio, State Auto
Wisconsin, State Auto Florida, Milbank, Farmers Casualty, Meridian
Security, Meridian Citizens Mutual, Beacon National, Beacon Lloyds,
Patrons Mutual and Litchfield Mutual Fire. Additional information
on State Auto Financial Corporation and the State Auto Insurance
Companies can be found online at www.StateAuto.com. (a)Net income
(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 realized capital gains and (losses), net of applicable
taxes, on investment activity for the periods being reported. For
STFC, this amounts to ($0.03) per diluted share for the first
quarter 2008 versus $0.02 for the same 2007 period. STFC has
scheduled a conference call with interested investors for Thursday,
April 24, 10:00 a.m. Eastern time to discuss the company�s first
quarter 2008 performance. Live and archived broadcasts of the call
can be accessed on www.StateAuto.com. A replay of the call can be
heard beginning at noon, April 24, by calling 1-800-510-0118.
Supplemental schedules detailing the company�s first quarter 2008
financial, sales and underwriting results are made available on
www.StateAuto.com prior to the conference call. This news release
may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on the current assumptions,
expectations and projections of State Auto Financial Corporation�s
(the �Company�) management about future events. Although we believe
these statements are based on reasonable assumptions, the Company
can give no assurance that they will prove to be correct. Numerous
factors, including those related to market conditions and those
detailed in the Company�s filings with the Securities and Exchange
Commission, may cause actual results of the Company to differ
materially from those anticipated in these forward-looking
statements. Many of the factors that will determine the Company�s
future results are beyond the control to predict. These
forward-looking statements are subject to these risks and
uncertainties and, therefore, actual results may differ materially.
The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) � Three
Months Ended March 31 (In millions, except per share amounts) 2008
2007 � Net premiums written $ 325.2 � (B) $ 247.5 � Earned premiums
279.2 251.9 Net investment income 22.4 21.3 Net realized (loss)
gain on investments (1.8 ) 1.1 Other income � 1.2 � � 1.2 Total
revenue � 301.0 � � 275.5 � (Loss) income before federal income
taxes (15.0 ) 40.8 � Federal income tax (benefit) expense � (2.5 )
� 10.0 Net (loss) income $ (12.5 ) $ 30.8 � Earnings per share: -
basic $ (0.31 ) $ 0.75 - diluted $ (0.31 ) $ 0.74 � Earnings per
share from operations (A): - basic $ (0.28 ) $ 0.73 - diluted $
(0.28 ) $ 0.72 � Weighted average shares outstanding: - basic 40.3
41.1 - diluted 40.8 41.8 � Book value per share $ 22.18 $ 20.94 �
Dividends paid per share $ 0.15 $ 0.10 � Total shares outstanding
39.8 41.1 � GAAP ratios: Loss and LAE ratio 76.8 56.8 Expense ratio
� 34.5 � � 34.5 Combined ratio � 111.3 � � 91.3 � (A) Net (loss)
income from operations: Net (loss) income $ (12.5 ) $ 30.8 Less net
realized (losses) gains on investments, less applicable federal
income taxes � (1.2 ) � 0.7 Net (loss) income from operations $
(11.3 ) $ 30.1 � � (B) Net premiums written for the three months
ended March 31, 2008, includes $53.6 million of unearned premiums
transferred to STFC in connection with the addition of The Patrons
Group, Beacon National and SAMMI to the State Auto Pool, effective
January 1, 2008.
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