State Auto Financial Corporation (NASDAQ: STFC) today reported a
second quarter 2009 net loss of $3.2 million, or $0.08 per diluted
share, versus net loss of $3.3 million, or $0.08 per diluted share,
for the second quarter of 2008. Net loss from operations* per
diluted share for the second quarter 2009 was $0.12, versus net
loss of $0.12 for the same 2008 period.
STFC’s GAAP combined ratio for the quarter was 110.6 versus
115.9 for the second quarter of 2008. Catastrophe losses during the
second quarter this year, net of loss recoveries under the
company’s aggregate catastrophe reinsurance treaty, accounted for
12.6 points of the total 77.1 loss ratio points, or $36.9 million,
compared to $76.8 million or 27.3 points of the total 84.0 loss
ratio points for the same period in 2008.
Net written premium for the quarter increased 5.8% over the same
period in 2008. STFC’s book value was $19.64 per share as of June
30, 2009, an increase of $0.43 per share from STFC’s book value on
March 31, 2009. Return on stockholders’ equity for the twelve
months ended June 30, 2009 was negative 4.0% compared to positive
5.7% for the twelve months ended June 30, 2008.
“The story in front of our combined ratio is, again, one of
severe storms. Approximately seventy-five percent (75%) of the
quarter’s storm losses occurred in six states: Alabama, Arkansas,
Georgia, Illinois, Indiana and Texas. In addition to our
catastrophe activity, our non-CAT underwriting losses for the
quarter also suffered. Our business insurance underwriting results
were adversely affected by a continuation of large fire losses from
the first quarter and several unusually large liability losses from
prior accident years,” said STFC Chairman, President and CEO Bob
Restrepo.
“Second quarter increases in both net written premium and policy
count were strong. Our investments in technology, products and new
states have fueled STFC’s exceptional organic growth over the last
two years, along with personal auto and homeowners rate increases.
And despite the underwriting losses, STFC’s book value per share
increased on the strength of positive investment results and
changes in unrecognized benefit plan obligations. We continue to
believe that geographic diversification and our emphasis on
enterprise risk management will mitigate the impact that severe
weather has had on our profitability. The company’s aggregate
catastrophe reinsurance treaty has already had a positive impact on
storm losses,” added Restrepo.
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 insurance subsidiaries of State Auto
Financial Corporation are part of the State Auto Group. The State
Auto Group is rated A+ (Superior) by the A.M. Best Company
and consists of 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 can be found online at
www.StateAuto.com.
*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
only by the exclusion of realized capital gains and (losses), net
of applicable taxes, on investment activity for the periods being
reported. For STFC, in 2009 this amounts
to income of $0.04 per diluted share for the second
quarter quarter and a loss of $0.13 year to date, versus
income of $0.04 and $0.01, respectively for the same 2008
periods.
STFC has scheduled a conference call
with interested investors for Tuesday, July 28, 10:00 a.m. Eastern
time to discuss the company’s second quarter 2009 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, July 28, by calling 1- 888-566-0689. Supplemental schedules
detailing the company’s second quarter 2009 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 EndedJune 30
Six Months EndedJune 30
(In millions, except per share amounts)
2009
2008
2009
2008
Net premiums written $ 318.0 $ 300.7 $ 605.1
$ 625.9 (B) Earned premiums 292.6 281.1 578.6
560.3 Net investment income 20.8 22.3 39.1 44.7 Net realized gain
(loss) on investments 2.5 2.4 (8.8 ) 0.6 Other income 1.0
1.2 2.0 2.4 Total
revenue 316.9 307.0 610.9
608.0 Loss before federal income taxes (11.7 )
(24.2 ) (42.6 ) (39.2 ) Federal income tax benefit
(8.5 ) (20.9 ) (25.4 ) (23.4 ) Net loss $ (3.2
) $ (3.3 ) $ (17.2 ) $ (15.8 ) Loss per share: - basic $
(0.08 ) $ (0.08 ) $ (0.44 ) $ (0.40 ) - diluted $ (0.08 ) $ (0.08 )
$ (0.44 ) $ (0.40 ) Loss per share from operations (A): -
basic $ (0.12 ) $ (0.12 ) $ (0.31 ) $ (0.41 ) - diluted $ (0.12 ) $
(0.12 ) $ (0.31 ) $ (0.41 ) Weighted average shares
outstanding: - basic 39.6 39.5 39.6 39.9 - diluted 39.6 39.5 39.6
39.9 Book value per share $ 19.64 $ 21.44 Dividends
paid per share $ 0.15 $ 0.15 $ 0.30 $ 0.30 Total shares
outstanding 39.7 39.4 GAAP ratios: Loss and LAE ratio 77.1
84.0 77.8 80.4 Expense ratio 33.5 31.9
33.4 33.2 Combined ratio 110.6
115.9 111.2 113.6
Reconciliation of non-GAAP financial measure: (A) Net loss
from operations: Net loss $ (3.2 ) $ (3.3 ) $ (17.2 ) $ (15.8 )
Less net realized (losses) gains
on investments,less applicable federal income taxes
1.6 1.6 (5.2 ) 0.4
Net loss from operations $ (4.8 ) $ (4.9 ) $ (12.0 ) $ (16.2 )
(B) Net premiums written for the
six months ended June 30, 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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