- Quarterly loss of $0.14 per share
- Quarterly GAAP combined ratio of
100.9
- Return on equity of (1.2)%
- Book value per share of $20.76
State Auto Financial Corporation (NASDAQ:STFC) today reported a
fourth quarter 2017 net loss of $5.8 million, or $0.14 per diluted
share, versus net income of $32.5 million, or $0.77 per diluted
share, for the fourth quarter of 2016. Net loss from operations1
per diluted share for the fourth quarter 2017 was $0.46 versus net
income from operations1 per diluted share of $0.46 for the same
2016 period.
For the year ended 2017, STFC had a net loss of $10.7 million,
or $0.25 per diluted share, compared to net income of $21.0
million, or $0.50 per diluted share, for the same 2016 period. Net
loss from operations1 per diluted share for the year ended Dec. 31,
2017 was $1.26 versus net loss from operations1 per diluted share
of $0.07 for the same 2016 period.
The fourth quarter and year ended 2017 net loss and net loss
from operations included a charge of $36.4 million, or $0.86 per
diluted share, related to the enactment of the Tax Cuts and Jobs
Act of 2017 (TCJA).
GAAP Operating Results
STFC’s GAAP combined ratio for the fourth quarter 2017 was 100.9
compared to 101.3 for the same 2016 period. Catastrophe losses
during the fourth quarter 2017 accounted for 2.6 points of the 62.9
total loss ratio points, or $8.3 million, versus 5.0 points of the
total 68.6 loss ratio points, or $16.2 million, for the same period
in 2016. Non-catastrophe losses during the fourth quarter 2017
included 3.7 points of favorable development relating to prior
years, or $11.8 million, versus 1.9 points, or $6.3 million, for
the same period in 2016.
Net written premium for the fourth quarter of 2017 decreased
2.1% compared to the same period in 2016. By segment, net written
premium for personal increased 19.1% and commercial and specialty
decreased 1.4% and 51.0%, respectively. The personal segment
increase was primarily due to rate actions taken to improve the
profitability in personal auto and a higher level of new business
policies for the fourth quarter 2017 compared to the fourth quarter
2016. The decrease in the commercial segment was primarily driven
by actions taken to improve commercial auto profitability and a
reduction in workers’ compensation due to the softening market
conditions during the fourth quarter 2017 compared to the fourth
quarter 2016. The decline in the specialty segment was primarily
due to our decision to exit specialty business.
STFC’s GAAP combined ratio for the year ended 2017 was 107.7
compared to 106.2 for the same 2016 period. Catastrophe losses
increased the loss ratio for the year ended 2017 by 9.7 points, or
$124.0 million, compared to 6.3 points, or $81.6 million for the
year ended 2016. Non-catastrophe losses for the year ended 2017
included 3.5 points of favorable development relating to prior
years, or $44.6 million, versus 2.2 points of adverse development,
or $28.4 million, for the same period in 2016.
Net written premium for the year ended 2017 decreased 1.9%
compared to the same 2016 period. By segment, net written premium
for personal increased 5.7% and commercial and specialty decreased
1.3% and 19.7%, respectively. The segment trends were due to the
same factors discussed above.
Personal and Commercial Statutory
Operating Results
STFC previously announced its decision to exit the specialty
insurance segment and identified its continuing operations as the
personal and commercial insurance segments. The statutory personal
and commercial combined ratio2 for the fourth quarter 2017 was 97.1
compared to 96.7 for the same 2016 period. Catastrophe losses
during the fourth quarter 2017 accounted for 0.4 points of the 59.2
total loss ratio points, or $1.1 million, versus 3.6 points of the
total 63.9 points or $9.3 million for the same period in 2016.
Non-catastrophe losses during the fourth quarter 2017 included 5.2
points of favorable development relating to prior years, or $13.7
million, versus 3.0 points or $7.8 million, for the same period in
2016.
The statutory personal and commercial combined ratio2 for the
year ended 2017 was 102.3 compared to 104.5 for the same 2016
period. Catastrophe losses increased the loss ratio for the year
ended 2017 by 6.8 points, or $70.1 million, compared to 7.0 points,
or $74.1 million for the year ended 2016. Non-catastrophe losses
for the year ended 2017 included 4.7 points of favorable
development relating to prior years, or $48.8 million, versus
adverse development of 0.6 points or $6.8 million, for the same
period in 2016.
Book Value and Return on Equity
STFC’s book value was $20.76 per share as of Dec. 31, 2017, a
decrease of $0.52 per share from STFC’s book value on Sept. 30,
2017. The decrease was primarily driven by the revaluation of our
net deferred tax asset due to the enactment of the TCJA. Return on
stockholders’ equity for the twelve months ended December 31, 2017,
was (1.2)% compared to 2.4% for the twelve months ended December
31, 2016.
STFC’s Chairman, President and CEO Mike LaRocco commented on the
quarter and year as follows:
“2017 was the year in which State Auto’s turnaround began to
take hold. We delivered profitable fourth quarter results in our
personal and commercial lines of business, with a statutory
combined ratio of 97.1. Loss ratios in personal and commercial auto
continued to improve as a result of actions we’ve taken around
rates, underwriting and claims handling practices. These efforts
take time to earn out in the numbers, but we have the processes and
people in place to maintain our focus on improving
profitability.
“Retention in our personal auto and homeowners lines declined as
a result of the rate actions, but we know we can’t afford to
knowingly write risks at an unprofitable rate. And while our loss
ratio improved in our largest line, personal auto, our expense
ratio was elevated in the fourth quarter due to continued
investment in our digital technology platform and foundation and
timing and changes in our agent bonus compensation plan.
“Our technology investment is critical if we’re to become more
efficient as we grow profitably. In the fourth quarter, we
continued the rollout of State Auto Connect for personal lines and
successfully rolled out State Auto Connect for our business owners
policy (BOP) and commercial auto in four states. Our decision to go
completely digital is paying off, with approximately a 37% increase
in new business and record quote volumes for the year in our
personal lines. For the first time in eight years, we grew the
number of homeowners policies written, and we ended 2017 with four
straight months of auto policy count growth.
“In our continuing businesses the full year statutory combined
ratio was 102.3. In late 2017, we made the tough call to exit the
specialty segment. I’m pleased to say we’ve made progress toward
completing agreements to exit all our lines except E&S
property, which we placed in run-off in November.
“We accomplished a great deal in 2017, and I’m very proud of our
team’s efforts that moved us even closer to delivering profitable
growth for our policyholders and shareholders.”
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, which include retail agencies and
wholesale brokers. 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 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 amounted to income of $0.32 per diluted
share for the fourth quarter 2017 and income of $1.01 year to date
2017 versus income of $0.31 per diluted share for the fourth
quarter 2016 and income of $0.57 year to date 2016.
2The statutory personal and commercial 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 on page 19 of this release.
STFC has scheduled a conference call with interested investors
for Tuesday, Feb. 20, at 11 a.m. ET to discuss the Company’s fourth
quarter 2017 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., Feb. 20, by calling
855-859-2056, conference ID 51534854. Supplemental schedules
detailing the Company’s fourth quarter 2017 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.
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Selected Consolidated Financial Data ($ in millions,
except per share amounts) (unaudited)
Three months ended December 31 Year ended December 31
2017
2016
2017 2016 Net premiums written
$ 300.7
$ 307.1
$ 1,269.3 $ 1,293.3
Earned premiums
318.7 323.8
1,275.1
1,291.9 Net investment income
22.3 20.6
78.8 74.7 Net
realized gain on investments
21.3 19.9
65.1 36.5
Other income
0.6 0.6
2.3 2.3
Total revenue
362.9 364.9
1,421.3 1,405.4 Income before federal
income taxes
37.9 33.1
33.4 19.2 Federal
income tax expense (benefit)
43.7 0.6
44.1 (1.8 ) Net (loss) income
$ (5.8
) $ 32.5
$ (10.7 ) $ 21.0
(Loss) earnings per common share: - basic
$
(0.14 ) $ 0.78
$ (0.25 ) $ 0.50
- diluted
$ (0.14 ) $ 0.77
$
(0.25 ) $ 0.50 (Loss) earnings per share from
operations (A): - basic
$ (0.46 ) $ 0.47
$ (1.26 ) $ (0.07 ) - diluted
$
(0.46 ) $ 0.46
$ (1.26 ) $ (0.07
) Weighted average shares outstanding: - basic
42.3 41.7
42.1 41.6 - diluted
42.3 42.2
42.1 42.0 Return
on average equity (LTM)
(1.2 )% 2.4 % Book value per
share
$ 20.76 $ 21.31 Dividends paid per share
$ 0.10 $ 0.10
$ 0.40 $ 0.40 Total
shares outstanding
42.4 41.8 GAAP ratios: Cat loss
and ALAE ratio
2.6 5.0
9.7 6.3 Non-cat loss and LAE
ratio
60.3 63.6
62.3 66.6
Loss and LAE ratio
62.9 68.6
72.0 72.9 Expense ratio
38.0 32.7
35.7 33.3
Combined ratio
100.9 101.3
107.7
106.2 (A) Reconciliation of non-GAAP financial
measure: Net (loss) income from operations: Net (loss) income
$ (5.8 ) $ 32.5
$ (10.7 )
$ 21.0
Less net realized gain on investments,
less applicable federal income taxes
13.8 12.9
42.3 23.7 Net
(loss) income from operations
$ (19.6 ) $ 19.6
$ (53.0 ) $ (2.7 )
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets ($ and
shares in millions, except per share amounts)
(unaudited) December 31 December 31
2017 2016
ASSETS Fixed maturities, available-for-sale, at fair value
(amortized cost $2,173.1 and $2,095.9, respectively)
$
2,192.8 $ 2,109.3 Equity securities, available-for-sale, at
fair value (cost $318.6 and $323.1, respectively)
365.3
382.8 Other invested assets, available-for-sale, at fair value
(cost $25.8 and $25.5, respectively)
56.0 45.1 Other
invested assets
5.6 5.4 Notes receivable from affiliate
70.0 70.0 Total investments
2,689.7
2,612.6 Cash and cash equivalents
91.5 51.1 Accrued
investment income and other assets
36.5 40.0 Deferred policy
acquisition costs
117.8 129.8 Reinsurance recoverable on
losses and loss expenses payable
3.1 3.6 Prepaid reinsurance
premiums
6.4 6.1 Current federal income taxes
4.8 6.7
Net deferred federal income taxes
57.2 102.1 Property and
equipment, net
7.3 7.4
Total assets
$ 3,014.3 $ 2,959.4
LIABILITIES Losses and loss expenses payable
$
1,255.6 $ 1,181.6 Unearned premiums
611.8 617.8 Notes
payable (affiliates $15.2 and $15.2, respectively)
122.1
122.1 Pension and postretirement benefits
64.5 74.4 Due to
affiliate
2.7 2.4 Other liabilities
76.7 69.8
Total liabilities 2,133.4 2,068.1
STOCKHOLDERS' EQUITY Common stock, without par
value. Authorized 100.0 shares; 49.2 and 48.6 shares issued,
respectively, at stated value of $2.50 per share
123.0 121.6
Treasury stock, 6.8 and 6.8 shares, respectively, at cost
(116.8 ) (116.5 ) Additional paid-in capital
171.8 159.9 Accumulated other comprehensive income
36.7 32.5 Retained earnings
666.2 693.8
Total stockholders’ equity 880.9 891.3
Total liabilities and stockholders’ equity $
3,014.3 $ 2,959.4
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Statements of Income ($ in
millions, except per share amounts)
(unaudited) Three months ended December 31 Year ended December 31
2017 2016
2017 2016 Earned premiums
$
318.7 $ 323.8
$ 1,275.1 $ 1,291.9 Net
investment income
22.3 20.6
78.8 74.7 Net realized
gain on investments
21.3 19.9
65.1 36.5 Other income
from affiliates
0.6 0.6
2.3 2.3
Total revenues 362.9 364.9
1,421.3 1,405.4 Losses and loss
expenses
200.4 222.2
918.3 942.4 Acquisition and
operating expenses
121.0 105.8
455.8 430.4 Interest
expense
1.5 1.4
5.9 5.5 Other expenses
2.1
2.4
7.9 7.9
Total
expenses 325.0 331.8
1,387.9
1,386.2
Income before federal income taxes
37.9 33.1
33.4 19.2 Federal income tax expense
(benefit): Current
0.4 (0.2 )
0.4 (1.7 ) Deferred
43.3 0.8
43.7 (0.1 ) Federal
income tax expense (benefit)
43.7 0.6
44.1 (1.8 )
Net (loss) income $
(5.8 ) $ 32.5
$ (10.7 ) $
21.0 (Loss) earnings per common share: Basic
$
(0.14 ) $ 0.78
$ (0.25 )
$ 0.50 Diluted
$ (0.14 ) $ 0.77
$ (0.25 ) $ 0.50 Dividends paid per
common share
$ 0.10 $ 0.10
$
0.40 $ 0.40
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Consolidated Statements of Comprehensive Income ($ in
millions) (unaudited) Three months
ended December 31 Year ended December 31
2017 2016
2017 2016 Net (loss) income
$ (5.8 ) $
32.5
$ (10.7 ) $ 21.0 Other comprehensive
(loss) income, net of tax: Net unrealized holding (losses) gains on
investments: Unrealized holding gains (losses)
3.4 (53.7 )
69.0 27.8 Reclassification adjustments for gains realized in
net income
(21.3 ) (19.9 )
(65.1 )
(36.5 ) Income tax expense (benefit)
6.9 25.8
(0.7 ) 3.0 Total net unrealized holding
(losses) gains on investments
(11.0 ) (47.8 )
3.2 (5.7 ) Net unrecognized benefit plan obligations:
Net actuarial loss arising during the period
(1.0 )
(3.0 )
(1.0 ) (3.0 ) Reclassification adjustments for
amortization to net income: Prior service credit
(1.4
) (1.4 )
(5.5 ) (5.5 ) Net actuarial loss
1.9 2.3
8.0 9.4 Income tax expense (benefit)
0.3 0.7
(0.5 ) (0.3 ) Total net
unrecognized benefit plan obligations
(0.2 ) (1.4 )
1.0 0.6 Other comprehensive (loss) income
(11.2 ) (49.2 )
4.2 (5.1 )
Comprehensive (loss) income $ (17.0 ) $
(16.7 )
$ (6.5 ) $ 15.9
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Statement Of Stockholders'
Equity ($ and shares in millions) (unaudited)
Year Ended Year Ended
December 31 December 31
2017 2016
Common shares: Balance at beginning of year
48.6 48.1 Issuance of shares
0.6 0.5
Balance at period ended
49.2 48.6
Treasury shares: Balance at beginning of year and year ended
(6.8 ) (6.8 )
Common stock: Balance at
beginning of year
$ 121.6 $ 120.4 Issuance of shares
1.4 1.2 Balance at period ended
123.0
121.6
Treasury stock: Balance at
beginning of year
$ (116.5 ) $ (116.3 ) Shares
acquired on stock award exercises and vested restricted shares
(0.3 ) (0.2 ) Balance at period ended
(116.8
) (116.5 )
Additional paid-in capital: Balance
at beginning of year
$ 159.9 $ 153.5 Issuance of
common stock
8.8 6.8 Tax expense from share-based
compensation
— (3.0 ) Stock awards granted
3.1
2.6 Balance at period ended
171.8 159.9
Accumulated other comprehensive income: Balance at
beginning of year
$ 32.5 $ 37.6 Change in unrealized
gains on investments, net of tax
3.2 (5.7 ) Change in
unrecognized benefit plan obligations, net of tax
1.0
0.6 Balance at period ended
36.7 32.5
Retained earnings: Balance at beginning of year
$ 693.8 $ 689.4 Net (loss) income
(10.7
) 21.0 Cash dividends paid
(16.9 ) (16.6 )
Balance at period ended
666.2 693.8
Total stockholders' equity at period ended $
880.9 $ 891.3
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow ($
millions) (unaudited) Twelve months ended December 31
2017 2016
Cash flows from operating activities: Net
(loss) income
$ (10.7 ) $ 21.0 Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: Depreciation and amortization, net
12.5 14.6
Share-based compensation
4.2 3.7 Net realized gain on
investments
(65.1 ) (36.5 ) Changes in operating
assets and liabilities: Deferred policy acquisition costs
12.0 (0.7 ) Accrued investment income and other assets
3.5 (4.5 ) Postretirement and pension benefits
(9.0
) (28.8 ) Other liabilities and due to/from affiliate, net
6.0 7.3 Reinsurance recoverable on losses and loss expenses
payable and prepaid reinsurance premiums
0.2 3.0 Losses and
loss expenses payable
74.0 128.6 Unearned premiums
(6.0 ) 1.5 Deferred tax expense (benefit) on
share-based awards
— (0.2 ) Federal income taxes
46.3
4.5
Net cash provided by operating activities
67.9 113.5
Cash flows from investing
activities: Purchases of fixed maturities available-for-sale
(505.4 ) (589.3 ) Purchases of equity securities
available-for-sale
(185.9 ) (143.1 ) Purchases of
other invested assets
(1.4 ) (1.5 ) Maturities, calls
and principal reductions of fixed maturities available-for-sale
233.6 240.9 Sales of fixed maturities available-for-sale
184.8 211.6 Sales of equity securities available-for-sale
252.7 153.0 Sales of other invested assets
available-for-sale
1.1 0.8
Net cash used in
investing activities (20.5 ) (127.6 )
Cash
flows from financing activities: Proceeds from issuance of
common stock
10.2 2.2 Payments to acquire treasury shares
(0.3 ) (0.2 ) Payment of dividends
(16.9
) (16.6 ) Deferred tax expense on share-based awards
— 0.2 Proceeds from long-term debt
— 21.5
Net cash (used in) provided by financing activities
(7.0 ) 7.1 Net increase (decrease) in cash and
cash equivalents
40.4 (7.0 ) Cash and cash equivalents at
beginning of period
51.1 58.1
Cash and cash
equivalents at end of period $ 91.5 $ 51.1
Supplemental
disclosures:
Federal income tax refund
$ (1.6 ) $ —
Interest paid (affiliates $0.8 and $0.8, respectively)
$
5.7 $ 5.4
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Fixed Maturities ($ in millions, at fair value)
(unaudited)
December 31 December 31
2017 % 2016 %
Fixed Maturities:
U.S. treasury securities and obligations
of U.S. government agencies
$ 436.9 19.9 % $ 404.7 19.2 %
Obligations of states and political subdivisions
525.8
24.0 % 643.7 30.5 % Corporate securities
529.7
24.2 % 449.6 21.3 % U.S. government agencies
mortgage-backed securities
700.4 31.9 %
611.3 29.0 % Total fixed maturities
$ 2,192.8
100.0 % $ 2,109.3 100.0 % Ratings
Quality* AAA
$ 56.0 2.6 % $ 62.6 3.0 %
AA**
1,329.6 60.5 % 1,345.7 63.8 % A
450.1 20.5 % 395.4 18.7 % BBB
352.7
16.2 % 294.2 14.0 % Below investment grade
4.4
0.2 % 11.4 0.5 % Total fixed maturities
$ 2,192.8 100.0 % $ 2,109.3
100.0 % TIPS, at fair value
$ 155.8 $
161.8 TIPS, at amortized cost
$ 146.5 $ 153.2
Obligations of states and political subdivisions: By
type of bond State general obligations
$ 13.9
2.6 % $ 12.0 1.9 % Local general obligations
85.0 16.2 % 100.6 15.6 % Revenue bonds
303.8 57.8 % 351.5 54.6 % Pre Refunded bonds
40.2 7.6 % 89.1 13.8 % Other
82.9
15.8 % 90.5 14.1 % Total
$
525.8 100.0 % $ 643.7 100.0 %
Top 10 States Top 10 States New York
$ 78.1
14.9 % New York $ 80.8 12.6 % Texas
53.5
10.2 % Washington 58.2 9.0 % Ohio
50.6
9.6 % Texas 56.9 8.8 % Washington
49.2
9.4 % Ohio 51.1 7.9 % Georgia
26.7 5.1
% Louisiana 39.8 6.2 % North Carolina
23.5 4.5
% Georgia 34.2 5.3 % Nevada
20.8 4.0 %
North Carolina 23.8 3.7 % Maryland
18.0 3.4 %
Pennsylvania 20.2 3.1 % Dist of Columbia
17.9 3.4
% Connecticut 18.2 2.8 % Louisiana
17.4 3.3
% Nevada 17.7 2.7 % Ratings Quality* AAA
$
36.6 7.0 % $ 47.5 7.4 % AA**
318.2
60.5 % 383.2 59.5 % A
161.1 30.6
% 191.8 29.8 % BBB
9.9 1.9 %
21.2 3.3 % Total
$ 525.8 100.0
% $ 643.7 100.0 % *Based on ratings by nationally
recognized rating agencies. All ratings exclude credit
enhancements. **The AA rating category includes securities which
have been either pre-refunded or escrowed to maturity.
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Net Investment Income ($ in millions)
unaudited 12/31/2016 3/31/2017 6/30/2017
9/30/2017
12/31/2017 Quarter to Date Gross investment
income: Fixed maturities $ 15.3 $ 14.6 $ 14.2 $ 14.8
$
14.5 TIPS 1.1 1.2 1.7 0.6
1.6 Total fixed maturities 16.4 15.8 15.9
15.4
16.1 Equity securities 3.0 1.7 2.0 2.0
4.8 Other 1.5 1.5 1.5 1.6
1.7 Total gross investment income 20.9 19.0 19.4 19.0
22.6 Less: Investment expenses 0.3 0.3 0.3
0.3
0.3 Net investment income $ 20.6 $
18.7 $ 19.1 $ 18.7
$ 22.3
Year to Date Gross investment income: Fixed maturities $
59.4 $ 14.6 $ 28.8 $ 43.6
$ 58.1 TIPS 4.0 1.2
2.9 3.5
5.1 Total fixed maturities 63.4
15.8 31.7 47.1
63.2 Equity
securities 7.3 1.7 3.7 5.7
10.5 Other 5.6 1.5
3.0 4.6
6.3 Total gross investment income 76.3
19.0 38.4 57.4
80.0 Less: Investment expenses 1.6 0.3
0.6 0.9
1.2 Net investment income $
74.7 $ 18.7 $ 37.8 $ 56.5
$
78.8 12/31/2016 3/31/2017 6/30/2017 9/30/2017
12/31/2017 TIPS, fair value $ 161.8 $ 171.9 $ 170.7 $ 153.5
$ 155.8 TIPS, book value $ 153.2 $ 162.3 $ 163.4 $
145.5
$ 146.5
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
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 at
December 31, 2017 and 2016:
December 31 December 31
2017 2016 Deferred tax assets: Unearned premiums not
currently deductible
$ 25.5 $ 42.6 Losses and loss
expenses payable discounting
11.3 19.7 Postretirement and
pension benefits
13.6 26.1 Realized loss on
other-than-temporary impairment
2.6 4.0 Other liabilities
9.2 16.6 Net operating loss carryforward
34.3 58.9
Tax credit carryforwards
3.7 3.3 Other
2.0 8.8
Total deferred tax assets
102.2 180.0 Deferred tax
liabilities: Deferral of policy acquisition costs
24.7 45.4
Net unrealized holding gains on investments
20.3 32.5
Total deferred tax liabilities
45.0 77.9
Net deferred federal income taxes
$ 57.2
$ 102.1 The following table sets forth the
federal income tax expense components for the three and twelve
months ended December 31, 2017 and 2016: Three months ended
December 31 Year ended December 31
2017 2016
2017
2016 Income before federal income taxes
$ 37.9 $ 33.1
$ 33.4 $ 19.2 Federal income tax expense (benefit):
Current
0.4 (0.2 )
0.4 (1.7 ) Deferred (A)
43.3 0.8
43.7 (0.1 )
Total
federal income tax expense (benefit) 43.7 0.6
44.1 (1.8 )
Net (loss) income $
(5.8 ) $ 32.5
$ (10.7 ) $
21.0 (A) Includes $36.4 million of deferred
tax expense as a result of the revaluation of our net deferred tax
asset to the new corporate tax rate of 21.0% under the legislation
commonly known as the Tax Cuts and Jobs Act of 2017 .
STATE AUTO FINANCIAL CORPORATION AND
SUBSIDIARIES
Statutory Personal Insurance Segment Results ($ in
millions) unaudited
Personal
Auto 4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net
written premiums
$ 97.9 $ 80.6
$ 362.9
$ 333.8 Net earned premiums
89.2 83.3
340.7 330.6
Losses and LAE incurred: Cat loss and ALAE
(0.5 )
(0.1 )
7.9 7.0 Non-cat loss and ALAE
60.6 63.2
237.2 243.9 Total Loss and ALAE
60.1 63.1
245.1 250.9 ULAE
5.9 5.5
21.7 20.4 Total Loss and LAE
66.0 68.6
266.8 271.3 Underwriting expenses
30.8 21.0
104.2 89.7 Net
underwriting loss
$ (7.6 ) $ (6.3 )
$
(30.3 ) $ (30.4 ) Cat loss and ALAE ratio
(0.6 )% (0.1 )%
2.3 % 2.1 % Non-cat
loss and ALAE ratio
67.9 % 75.8 %
69.6
% 73.8 % Total Loss and ALAE ratio
67.3 % 75.7
%
71.9 % 75.9 % ULAE ratio
6.7 % 6.6 %
6.4 % 6.1 % Total Loss and LAE ratio
74.0
% 82.3 %
78.3 % 82.0 % Expense ratio
31.5 % 26.0 %
28.7 % 26.9 % Combined
ratio
105.5 % 108.3 %
107.0 % 108.9 %
Homeowners 4Q 2017 4Q 2016
YTD 2017 YTD
2016 Net written premiums
$ 59.0 $ 50.7
$ 227.9 $ 223.0 Net earned premiums
56.1 56.3
220.7 226.8 Losses and LAE incurred: Cat loss and ALAE
0.2 3.9
34.4 40.4 Non-cat loss and ALAE
15.3
17.5
89.2 84.2 Total Loss and
ALAE
15.5 21.4
123.6 124.6 ULAE
3.5 3.2
14.8 15.0 Total Loss and LAE
19.0 24.6
138.4 139.6 Underwriting expenses
21.3 15.8
76.0 69.7 Net
underwriting gain
$ 15.8 $ 15.9
$ 6.3 $ 17.5 Cat loss and ALAE
ratio
0.3 % 6.9 %
15.6 % 17.8 % Non-cat
loss and ALAE ratio
27.3 % 31.2 %
40.4
% 37.2 % Total Loss and ALAE ratio
27.6 % 38.1
%
56.0 % 55.0 % ULAE ratio
6.3 % 5.6 %
6.7 % 6.6 % Total Loss and LAE ratio
33.9
% 43.7 %
62.7 % 61.6 % Expense ratio
36.2 % 31.1 %
33.4 % 31.2 % Combined
ratio
70.1 % 74.8 %
96.1 % 92.8 %
Other Personal 4Q
2017 4Q 2016
YTD 2017 YTD 2016 Net written
premiums
$ 5.2 $ 4.8
$ 18.9 $ 20.4 Net
earned premiums
4.7 5.1
18.9 21.1 Losses and LAE
incurred: Cat loss and ALAE
— 0.3
1.1 1.1 Non-cat
loss and ALAE
2.0 1.2
8.8 8.6
Total Loss and ALAE
2.0 1.5
9.9 9.7 ULAE
0.3 0.2
1.2 1.4 Total
Loss and LAE
2.3 1.7
11.1 11.1 Underwriting expenses
2.2 1.6
7.1 7.4 Net
underwriting gain
$ 0.2 $ 1.8
$
0.7 $ 2.6 Cat loss and ALAE ratio
0.4 % 5.0 %
5.7 % 5.1 % Non-cat loss
and ALAE ratio
41.0 % 24.1 %
46.5 %
41.1 % Total Loss and ALAE ratio
41.4 % 29.1 %
52.2 % 46.2 % ULAE ratio
6.8 % 6.2 %
6.5 % 6.8 % Total Loss and LAE ratio
48.2
% 35.3 %
58.7 % 53.0 % Expense ratio
39.8 % 36.6 %
37.4 % 36.8 % Combined
ratio
88.0 % 71.9 %
96.1 % 89.8 %
Total Personal Insurance 4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net written premiums
$
162.1 $ 136.1
$ 609.7 $ 577.2 Net earned
premiums
150.0 144.7
580.3 578.5 Losses and LAE
incurred: Cat loss and ALAE
(0.3 ) 4.1
43.4
48.5 Non-cat loss and ALAE
77.9 81.9
335.2 336.7 Total Loss and ALAE
77.6
86.0
378.6 385.2 ULAE
9.7 8.9
37.7 36.8 Total Loss and LAE
87.3 94.9
416.3 422.0 Underwriting expenses
54.3 38.4
187.3 166.8 Net underwriting gain
(loss)
$ 8.4 $ 11.4
$
(23.3 ) $ (10.3 ) Cat loss and ALAE ratio
(0.2 )% 2.8 %
7.5 % 8.4 % Non-cat loss
and ALAE ratio
51.9 % 56.6 %
57.7 %
58.2 % Total Loss and ALAE ratio
51.7 % 59.4 %
65.2 % 66.6 % ULAE ratio
6.5 % 6.3 %
6.5 % 6.3 % Total Loss and LAE ratio
58.2
% 65.7 %
71.7 % 72.9 % Expense ratio
33.4 % 28.3 %
30.7 % 28.9 % Combined
ratio
91.6 % 94.0 %
102.4 % 101.8 %
Statutory Commercial Insurance Segment Results
($ in millions) unaudited
Commercial
Auto 4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net
written premiums
$ 16.6 $ 18.2
$ 73.5 $
79.0 Net earned premiums
18.6 20.2
76.2 88.3 Losses
and LAE incurred: Cat loss and ALAE
(0.1 ) —
0.8 0.8 Non-cat loss and ALAE
10.7 14.6
44.7 70.1 Total Loss and ALAE
10.6 14.6
45.5 70.9 ULAE
1.2 1.2
4.5
4.8 Total Loss and LAE
11.8 15.8
50.0
75.7 Underwriting expenses
8.1 7.5
31.5
30.5 Net underwriting loss
$ (1.3
) $ (3.1 )
$ (5.3 ) $ (17.9 )
Cat loss and ALAE ratio
(0.5 )% (0.1 )%
1.1
% 1.0 % Non-cat loss and ALAE ratio
57.4 %
72.2 %
58.6 % 79.4 % Total Loss and ALAE ratio
56.9 % 72.1 %
59.7 % 80.4 % ULAE ratio
6.6 % 6.1 %
5.9 % 5.5 % Total Loss and
LAE ratio
63.5 % 78.2 %
65.6 % 85.9 %
Expense ratio
49.4 % 41.1 %
43.0 % 38.5
% Combined ratio
112.9 % 119.3 %
108.6
% 124.4 %
Small Commercial Package 4Q
2017 4Q 2016
YTD 2017 YTD 2016 Net written
premiums
$ 30.1 $ 30.5
$ 123.8 $ 125.6
Net earned premiums
30.9 31.6
127.4 127.5 Losses and
LAE incurred: Cat loss and ALAE
0.4 4.4
12.4 12.9
Non-cat loss and ALAE
14.1 13.8
61.1
65.3 Total Loss and ALAE
14.5 18.2
73.5
78.2 ULAE
1.8 1.8
6.1 6.9
Total Loss and LAE
16.3 20.0
79.6 85.1 Underwriting
expenses
14.8 12.8
55.7 51.3
Net underwriting loss
$ (0.2 ) $ (1.2 )
$ (7.9 ) $ (8.9 ) Cat loss and ALAE
ratio
1.3 % 13.9 %
9.7 % 10.1 % Non-cat
loss and ALAE ratio
45.4 % 43.7 %
48.0
% 51.2 % Total Loss and ALAE ratio
46.7 % 57.6
%
57.7 % 61.3 % ULAE ratio
6.1 % 5.6 %
4.8 % 5.3 % Total Loss and LAE ratio
52.8
% 63.2 %
62.5 % 66.6 % Expense ratio
49.1 % 41.9 %
45.0 % 40.8 % Combined
ratio
101.9 % 105.1 %
107.5 % 107.4 %
Middle Market Commercial
4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net written
premiums
$ 25.9 $ 26.3
$ 111.1 $ 108.8
Net earned premiums
27.9 27.3
109.1 110.5 Losses and
LAE incurred: Cat loss and ALAE
0.8 1.1
8.4 8.4
Non-cat loss and ALAE
12.8 9.8
50.6
61.8 Total Loss and ALAE
13.6 10.9
59.0
70.2 ULAE
1.3 1.3
4.8 6.0
Total Loss and LAE
14.9 12.2
63.8 76.2 Underwriting
expenses
11.5 10.4
42.5 43.0
Net underwriting gain (loss)
$ 1.5 $
4.7
$ 2.8 $ (8.7 ) Cat loss and
ALAE ratio
3.2 % 4.1 %
7.7 % 7.6 %
Non-cat loss and ALAE ratio
45.6 % 35.8 %
46.4
% 55.9 % Total Loss and ALAE ratio
48.8 % 39.9
%
54.1 % 63.5 % ULAE ratio
4.7 % 4.6 %
4.4 % 5.3 % Total Loss and LAE ratio
53.5
% 44.5 %
58.5 % 68.8 % Expense ratio
44.3 % 39.7 %
38.3 % 39.5 % Combined
ratio
97.8 % 84.2 %
96.8 % 108.3 %
Workers' Compensation 4Q 2017 4Q 2016
YTD
2017 YTD 2016 Net written premiums
$ 22.0
$ 21.8
$ 88.4 $ 92.0 Net earned premiums
22.5
23.8
88.8 93.8 Losses and LAE incurred: Cat loss and ALAE
— —
— — Non-cat loss and ALAE
12.6 14.0
50.2 58.5 Total Loss and ALAE
12.6 14.0
50.2 58.5 ULAE
1.6 2.2
6.7 8.4 Total Loss and LAE
14.2 16.2
56.9 66.9 Underwriting expenses
7.4 6.2
28.4 26.7 Net underwriting gain
$
0.9 $ 1.4
$ 3.5 $ 0.2
Cat loss and ALAE ratio
— % — %
— % — % Non-cat loss and ALAE ratio
55.8
% 58.7 %
56.5 % 62.3 % Total Loss and ALAE
ratio
55.8 % 58.7 %
56.5 % 62.3 % ULAE
ratio
7.4 % 9.4 %
7.6 % 9.0 % Total
Loss and LAE ratio
63.2 % 68.1 %
64.1 %
71.3 % Expense ratio
33.4 % 28.4 %
32.1
% 29.1 % Combined ratio
96.6 % 96.5 %
96.2 % 100.4 %
Farm & Ranch 4Q 2017 4Q 2016
YTD 2017 YTD
2016 Net written premiums
$ 11.1 $ 9.5
$ 42.6 $ 37.0 Net earned premiums
10.5 9.2
39.6 35.5 Losses and LAE incurred: Cat loss and ALAE
0.2 (0.3 )
5.1 3.5 Non-cat loss and ALAE
7.8
6.1
23.0 14.4 Total Loss and
ALAE
8.0 5.8
28.1 17.9 ULAE
0.5 0.6
2.1 2.2 Total Loss and LAE
8.5
6.4
30.2 20.1 Underwriting expenses
4.8 3.7
16.3 14.1 Net underwriting (loss) gain
$ (2.8 ) $ (0.9 )
$ (6.9
) $ 1.3 Cat loss and ALAE ratio
2.0
% (3.0 )%
13.0 % 9.9 % Non-cat loss and ALAE
ratio
74.1 % 66.2 %
57.9 % 40.8 % Total
Loss and ALAE ratio
76.1 % 63.2 %
70.9
% 50.7 % ULAE ratio
4.8 % 6.3 %
5.5
% 6.0 % Total Loss and LAE ratio
80.9 % 69.5 %
76.4 % 56.7 % Expense ratio
43.3 % 38.6
%
38.2 % 38.1 % Combined ratio
124.2 %
108.1 %
114.6 % 94.8 %
Other Commercial
4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net written
premiums
$ 3.3 $ 4.2
$ 14.2 $ 17.0 Net
earned premiums
3.5 4.2
14.6 17.0 Losses and LAE
incurred: Cat loss and ALAE
— —
— — Non-cat loss and
ALAE
2.7 1.0
2.6 6.3
Total Loss and ALAE
2.7 1.0
2.6 6.3 ULAE
0.5
0.3
1.1 1.2 Total Loss and LAE
3.2 1.3
3.7 7.5 Underwriting expenses
2.0
1.7
7.7 7.2 Net underwriting
(loss) gain
$ (1.7 ) $ 1.2
$
3.2 $ 2.3 Cat loss and ALAE ratio
— % — %
0.1 % — % Non-cat loss and ALAE
ratio
81.9 % 24.3 %
18.4 % 37.2 % Total
Loss and ALAE ratio
81.9 % 24.3 %
18.5
% 37.2 % ULAE ratio
11.0 % 7.7 %
7.0
% 7.6 % Total Loss and LAE ratio
92.9 % 32.0 %
25.5 % 44.8 % Expense ratio
61.7 % 43.6
%
54.4 % 42.4 % Combined ratio
154.6 %
75.6 %
79.9 % 87.2 %
Total Commercial Insurance 4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net written premiums
$
109.0 $ 110.5
$ 453.6 $ 459.4 Net earned
premiums
113.9 116.3
455.7 472.6 Losses and LAE
incurred: Cat loss and ALAE
1.3 5.2
26.7 25.6 Non-cat
loss and ALAE
60.7 59.3
232.2
276.4 Total Loss and ALAE
62.0 64.5
258.9
302.0 ULAE
6.9 7.4
25.3 29.5
Total Loss and LAE
68.9 71.9
284.2 331.5
Underwriting expenses
48.6 42.3
182.1
172.7 Net underwriting (loss) gain
$
(3.6 ) $ 2.1
$ (10.6 ) $
(31.6 ) Cat loss and ALAE ratio
1.2 % 4.5 %
5.9 % 5.4 % Non-cat loss and ALAE ratio
53.3
% 50.9 %
50.9 % 58.5 % Total Loss and ALAE
ratio
54.5 % 55.4 %
56.8 % 63.9 % ULAE
ratio
6.1 % 6.4 %
5.6 % 6.2 % Total
Loss and LAE ratio
60.6 % 61.8 %
62.4 %
70.1 % Expense ratio
44.6 % 38.4 %
40.2
% 37.6 % Combined ratio
105.2 % 100.2 %
102.6 % 107.7 %
Statutory Personal
& Commercial Insurance Segment Results ($ in millions)
unaudited
4Q 2017 4Q 2016
YTD
2017 YTD 2016 Net written premiums
$ 271.0
$ 246.6
$ 1,063.3 $ 1,036.6 Net earned premiums
263.9 261.0
1,036.0 1,051.1 Losses and LAE incurred:
Cat loss and ALAE
1.1 9.3
70.1 74.1 Non-cat loss and
ALAE
138.4 141.2
567.4 613.1
Total Loss and ALAE
139.5 150.5
637.5 687.2
ULAE
16.7 16.3
63.0 66.3
Total Loss and LAE
156.2 166.8
700.5 753.5
Underwriting expenses
102.8 80.7
369.4
339.5 Net underwriting gain (loss)
$
4.8 $ 13.5
$ (33.9 ) $
(41.9 ) Cat loss and ALAE ratio
0.4 % 3.6 %
6.8 % 7.0 % Non-cat loss and ALAE ratio
52.5
% 54.0 %
54.7 % 58.4 % Total Loss and ALAE
ratio
52.9 % 57.6 %
61.5 % 65.4 % ULAE
ratio
6.3 % 6.3 %
6.1 % 6.3 % Total
Loss and LAE ratio
59.2 % 63.9 %
67.6 %
71.7 % Expense ratio
37.9 % 32.8 %
34.7
% 32.8 % Combined ratio
97.1 % 96.7 %
102.3 % 104.5 %
Statutory Specialty
Insurance Segment Results ($ in millions)
unaudited
E&S Property 4Q 2017 4Q 2016
YTD 2017 YTD 2016 Net written premiums
$
(1.3 ) $ 12.8
$ 30.1 $ 44.4 Net earned
premiums
9.1 10.5
40.5 40.4 Losses and LAE incurred:
Cat loss and ALAE
7.3 6.5
52.6 6.9 Non-cat loss and
ALAE
1.2 4.1
12.6 13.5
Total Loss and ALAE
8.5 10.6
65.2 20.4 ULAE
0.3 (0.1 )
0.1 (0.4 ) Total Loss and
LAE
8.8 10.5
65.3 20.0 Underwriting expenses
2.4 5.2
17.4 20.1 Net
underwriting (loss) gain
$ (2.1 ) $ (5.2 )
$ (42.2 ) $ 0.3 Cat loss and
ALAE ratio
80.7 % 61.9 %
130.1 % 17.0 %
Non-cat loss and ALAE ratio
14.0 % 38.8 %
31.2
% 33.5 % Total Loss and ALAE ratio
94.7 %
100.7 %
161.3 % 50.5 % ULAE ratio
1.7 %
(1.5 )%
— % (0.9 )% Total Loss and LAE ratio
96.4 % 99.2 %
161.3 % 49.6 % Expense
ratio
(180.1 )% 39.7 %
57.9 % 45.1 %
Combined ratio
(83.7 )% 138.9 %
219.2 %
94.7 %
E&S Casualty 4Q 2017 4Q 2016
YTD
2017 YTD 2016 Net written premiums
$ 26.7
$ 23.7
$ 110.3 $ 99.6 Net earned premiums
27.0
24.3
103.1 91.0 Losses and LAE incurred: Cat loss and ALAE
(0.2 ) 0.1
0.1 0.1 Non-cat loss and ALAE
19.7 21.2
72.0 65.3 Total
Loss and ALAE
19.5 21.3
72.1 65.4 ULAE
0.8
0.4
3.7 4.3 Total Loss and LAE
20.3 21.7
75.8 69.7 Underwriting expenses
9.7
8.6
39.2 35.5 Net underwriting
loss
$ (3.0 ) $ (6.0 )
$ (11.9
) $ (14.2 ) Cat loss and ALAE ratio
(0.7
)% 0.4 %
0.1 % 0.1 % Non-cat loss and ALAE
ratio
73.0 % 87.6 %
69.8 % 71.8 % Total
Loss and ALAE ratio
72.3 % 88.0 %
69.9
% 71.9 % ULAE ratio
3.1 % 1.7 %
3.6
% 4.7 % Total Loss and LAE ratio
75.4 % 89.7 %
73.5 % 76.6 % Expense ratio
36.4 % 36.1
%
35.5 % 35.6 % Combined ratio
111.8 %
125.8 %
109.0 % 112.2 %
Programs 4Q 2017 4Q 2016
YTD 2017 YTD
2016 Net written premiums
$ 4.2 $ 24.0
$ 65.6 $ 112.7 Net earned premiums
18.7 28.0
95.5 109.4 Losses and LAE incurred: Cat loss and ALAE
0.2 0.3
1.2 0.5 Non-cat loss and ALAE
13.8
22.5
71.5 94.9 Total Loss and
ALAE
14.0 22.8
72.7 95.4 ULAE 1.5 0.8
5.7 5.5 Total Loss and LAE
15.5 23.6
78.4 100.9 Underwriting expenses
2.6 7.6
20.0 37.3 Net underwriting gain (loss)
$ 0.6 $ (3.2 )
$ (2.9 ) $
(28.8 ) Cat loss and ALAE ratio
1.0 % 1.3 %
1.2 % 0.5 % Non-cat loss and ALAE ratio
73.6
% 80.2 %
74.9 % 86.7 % Total Loss and ALAE
ratio
74.6 % 81.5 %
76.1 % 87.2 % ULAE
ratio
7.8 % 2.4 %
5.9 % 5.1 % Total
Loss and LAE ratio
82.4 % 83.9 %
82.0 %
92.3 % Expense ratio
60.7 % 31.6 %
30.5
% 33.1 % Combined ratio
143.1 % 115.5 %
112.5 % 125.4 %
Total Specialty
Insurance 4Q 2017 4Q 2016
YTD 2017 YTD 2016
Net written premiums
$ 29.6 $ 60.5
$
206.0 $ 256.7 Net earned premiums
54.8 62.8
239.1 240.8 Losses and LAE incurred: Cat loss and ALAE
7.3 6.9
53.9 7.5 Non-cat loss and ALAE
34.7
47.8
156.1 173.7 Total Loss and
ALAE
42.0 54.7
210.0 181.2 ULAE
2.6 1.1
9.5 9.4 Total Loss and LAE
44.6
55.8
219.5 190.6 Underwriting expenses
14.7
21.4
76.6 92.9 Net underwriting loss
$ (4.5 ) $ (14.4 )
$ (57.0
) $ (42.7 ) Cat loss and ALAE ratio
13.4
% 11.1 %
22.5 % 3.1 % Non-cat loss and ALAE
ratio
63.4 % 76.1 %
65.3 % 72.2 % Total
Loss and ALAE ratio
76.8 % 87.2 %
87.8
% 75.3 % ULAE ratio
4.5 % 1.5 %
4.0
% 3.9 % Total Loss and LAE ratio
81.3 % 88.7 %
91.8 % 79.2 % Expense ratio
49.5 % 35.0
%
37.2 % 36.2 % Combined ratio
130.8 %
123.7 %
129.0 % 115.4 %
Statutory
Insurance Segment Results ($ in millions)
unaudited
4Q 2017 4Q 2016
YTD 2017 YTD 2016
Net written premiums
$ 300.7 $ 307.1
$
1,269.3 $ 1,293.3 Net earned premiums
318.7 323.8
1,275.1 1,291.9 Losses and LAE incurred: Cat loss and ALAE
8.3 16.2
124.0 81.6 Non-cat loss and ALAE
173.3 189.0
723.5 786.8
Total Loss and ALAE
181.6 205.2
847.5 868.4 ULAE
19.2 17.4
72.5 75.7 Total
Loss and LAE
200.8 222.6
920.0 944.1 Underwriting
expenses
117.6 102.1
446.0 432.4
Net underwriting gain (loss)
$ 0.3 $
(0.9 )
$ (90.9 ) $ (84.6 ) Cat loss and
ALAE ratio
2.6 % 5.0 %
9.7 % 6.3 %
Non-cat loss and ALAE ratio
54.4 % 58.4 %
56.8
% 60.9 % Total Loss and ALAE ratio
57.0 % 63.4
%
66.5 % 67.2 % ULAE ratio
6.0 % 5.3 %
5.7 % 5.9 % Total Loss and LAE ratio
63.0
% 68.7 %
72.2 % 73.1 % Expense ratio
39.1 % 33.2 %
35.1 % 33.4 % Combined
ratio
102.1 % 101.9 %
107.3 % 106.5 %
The following table provides a reconciliation of our statutory
underwriting results to GAAP consolidated income before federal
income taxes for the fourth quarters and years ended December 31,
2017 and 2016:
($ millions)
4Q 2017 4Q 2016
YTD 2017 YTD 2016 Segment income (loss) before federal
income taxes: Insurance segments: Personal insurance SAP
underwriting gain (loss)
$ 8.4 $ 11.4
$
(23.3 ) $ (10.3 ) Commercial insurance SAP
underwriting (loss) gain
(3.6 ) 2.1
(10.6
) (31.6 ) Specialty insurance SAP underwriting loss
(4.5 ) (14.4 )
(57.0 ) (42.7 ) Total
insurance segments
0.3 (0.9 )
(90.9 ) (84.6 )
Investment operations segment: Net investment income
22.3
20.6
78.8 74.7 Net realized capital gains
21.3
19.9
65.1 36.5 Total investment
operations segment
43.6 40.5
143.9 111.2 All other
segments income
0.4 0.1
0.6 0.4
Reconciling items: GAAP adjustments
(3.4 )
(3.8 )
(10.2 ) 2.0 Interest expense on corporate debt
(1.5 ) (1.4 )
(5.9 ) (5.5 ) Corporate
expenses
(1.5 ) (1.4 )
(4.1 ) (4.3 )
Total reconciling items
(6.4 ) (6.6 )
(20.2
) (7.8 ) Total consolidated income before federal income
taxes
$ 37.9 $ 33.1
$
33.4 $ 19.2
Quarterly
Development of Prior Accident Years Ultimate Liability ($ in
millions) unaudited 12/31/2016
3/31/2017 6/30/2017 9/30/2017
12/31/2017 Redundancy
/(Deficiency) Non-cat loss and ALAE:
Personal Insurance
Segment:
Personal Auto $ 0.6 $ 0.6 $ 1.2 $ 0.5
$ 2.1
Homeowners (0.4 ) (2.8 ) 0.9 —
0.4 Other Personal 0.2
(0.1 ) (2.0 ) (0.4 )
1.1 Personal Insurance Segment
0.4 (2.3 ) 0.1 0.1
3.6
Commercial Insurance
Segment:
Commercial Auto 1.5 1.5 1.6 2.6
3.3 Small Commercial Package
2.0 2.0 2.9 2.9
3.5 Middle Market Commercial 1.5 (1.0 ) 6.4
0.8
2.1 Workers' Compensation 2.2 1.9 2.8 2.2
2.0
Farm & Ranch 0.6 — 0.8 0.2
(0.2 ) Other
Commercial 0.9 3.2 1.1 1.2
0.2
Commercial Insurance Segment 8.7 7.6 15.6
9.9
10.9
Total Personal & Commercial Insurance Segments 9.1
5.3 15.7 10.0
14.5
Specialty Insurance
Segment:
E&S Property (0.8 ) (0.4 ) (1.2 ) (1.4 )
— E&S
Casualty (1.2 ) 0.2 0.1 0.8
(1.5 ) Programs (0.9 )
(0.3 ) 0.2 (0.6 )
(0.1 ) Specialty Insurance
Segment (2.9 ) (0.5 ) (0.9 ) (1.2 )
(1.6 ) Cat
Loss and ALAE 0.1 2.2 (0.6 ) 0.2
0.2 ULAE 0.1 2.7
1.5 0.2
(1.1 ) Total $ 6.4
$ 9.7 $ 15.7 $ 9.2
$ 12.0
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180220005448/en/
State Auto Financial CorporationMedia contact:Kyle Anderson,
614-917-5497Kyle.Anderson@StateAuto.comorInvestor contact:Tara
Shull, 614-917-4478Tara.Shull@StateAuto.com
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