State Auto Financial Reports First Quarter 2021 Results

  • Quarterly income of $0.08 per share
  • Quarterly net loss from operations1 of $0.61 per share
  • Quarterly GAAP combined ratio of 112.9
  • Quarterly SAP combined ratio of 112.3
  • Return on equity of 14.3%
  • Book value per share of $22.07

COLUMBUS, Ohio--()--State Auto Financial Corporation (NASDAQ:STFC) today reported first quarter 2021 net income of $3.6 million, or $0.08 per diluted share, compared to a net loss of $114.6 million, or $2.62 per diluted share, for the same 2020 period. Net loss from operations1 per diluted share for the first quarter of 2021 was $0.61 versus $0.18 for the same 2020 period. STFC’s GAAP combined ratio for the first quarter 2021 was 112.9 compared to 107.2 for the same 2020 period.

SAP Operating Results

STFC's SAP combined ratio for the first quarter 2021 was 112.3 compared to 107.4 for the same 2020 period. Catastrophe losses and ALAE during the first quarter 2021 accounted for 20.1 points of the 78.8 total loss ratio points, or $71.6 million, versus 12.7 points of the 72.5 total loss ratio points, or $41.9 million, for the same period in 2020. The first quarter 2021 was impacted by winter storms Uri and Viola in Texas, which added 17.0 points to the first quarter loss and ALAE ratio. Approximately 75% of the first quarter 2021 catastrophe losses occurred within homeowners. Non-catastrophe losses and ALAE during the first quarter 2021 included 6.9 points of favorable development relating to prior years, or $24.6 million, versus 3.2 points of favorable development, or $10.5 million, for the same period in 2020.

Net written premium for the first quarter 2021 increased 3.5% compared to the same period in 2020. By insurance segment, net written premium for the commercial insurance segment increased 13.0% and the personal insurance segment decreased 3.2%. The increase in the commercial segment was primarily driven by new business growth and rate increases in commercial auto and small commercial package and new business growth in farm & ranch. The net written premium growth was partially offset by a decrease in net written premiums in workers’ compensation due to our 2020 decision to not renew and no longer write nursing home business, and a decrease in net written premiums in middle market commercial due to a decline in new business. The decrease in the personal segment was primarily due to a decline in new business in personal auto, partially offset by new business growth and rate increases in other personal and rate increases in homeowners.

Book Value and Return on Equity

STFC’s book value decreased to $22.07 per share as of March 31, 2021, compared to $23.00 on December 31, 2020. The decrease in book value was primarily driven by a decline in the fair market value of fixed income investments attributable to higher interest rates.

Return on stockholders’ equity for the 12 months ended March 31, 2021, was 14.3% compared to (8.7)% for the 12 months ended March 31, 2020.

STFC’s Chairman, President and CEO Mike LaRocco commented on the quarter as follows:

“Our first quarter was solid, with continued growth, expense ratio improvement and progress toward sustained profitability. Catastrophes, though, had a significant impact on our results.

“The winter weather in Texas was devastating for many of our customers. Our Claims and Risk Engineering (CARE) team, on the ground in Texas and remotely from locations throughout the country, delivered exceptional service to those affected. I couldn’t be more proud of their efforts.

“The Texas weather added 17.0 points to the first quarter 2021 SAP combined ratio of 112.3, primarily in the homeowners line. Commercial lines added another quarter of profitability while producing 13.0% net written premium growth. Personal lines net written premium decreased 3.2%, with a 125.9 combined ratio that included 30.1 points of catastrophe losses. Personal auto returned to profitability with a 98.9 combined ratio. The team worked hard over the last two years to return this line to profitability and we’re seeing the results of those actions.

“We are beginning to see improvement in our expense ratio having recently completed the five-year build phase of our State Auto Connect digital technology platform, which gives us the ability to efficiently add scale. Middle market commercial launched in its last state in April and workers’ compensation will continue its rollout through the end of 2021.

“During the first quarter, we delivered in the most important way: By taking care of our customers in their time of need. At the same time, we produced results that represented continued progress toward our goal of consistent, sustained profitable growth.”

About State Auto Financial Corporation

State Auto Financial Corporation, headquartered in Columbus, Ohio, is a super regional property and casualty insurance holding company. 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.

STFC has scheduled a conference call with interested investors for Thursday, May 6, at 11 a.m. ET to discuss the Company’s first quarter 2021 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 6, by calling 855-859-2056, conference ID 6944689. Supplemental schedules detailing the Company’s first quarter 2021 financial, sales and underwriting results are made available on http://www.StateAuto.com/STFC prior to the conference call.

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 $0.69 per diluted share for the first quarter of 2021 versus a loss of $2.44 per diluted share for the first quarter 2020.

* * * * *

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

 

 

2021

 

2020

Net premiums written

 

$

358.7

 

 

$

346.5

 

 

 

 

 

 

Earned premiums

 

355.9

 

 

330.5

 

Net investment income

 

17.6

 

 

18.9

 

Net investment gain (loss)

 

38.2

 

 

(135.2

)

Other income

 

0.5

 

 

0.6

 

Total revenue

 

412.2

 

 

214.8

 

 

 

 

 

 

Income (loss) before federal income taxes

 

5.6

 

 

(144.0

)

 

 

 

 

 

Federal tax expense (benefit)

 

2.0

 

 

(29.4

)

Net income (loss)

 

$

3.6

 

 

$

(114.6

)

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

- basic

 

$

0.08

 

 

$

(2.62

)

- diluted

 

$

0.08

 

 

$

(2.62

)

Loss per share from operations(A):

 

 

 

 

- basic

 

$

(0.61

)

 

$

(0.18

)

- diluted

 

$

(0.61

)

 

$

(0.18

)

Weighted average shares outstanding:

 

 

 

 

- basic

 

43.9

 

 

43.7

 

- diluted

 

44.6

 

 

43.7

 

Return on average equity (LTM)

 

14.3

%

 

(8.7

)%

Book value per share

 

$

22.07

 

 

$

19.83

 

Dividends paid per share

 

$

0.10

 

 

$

0.10

 

Total shares outstanding

 

44.0

 

 

43.7

 

 

 

 

 

 

GAAP ratios:

 

 

 

 

Cat loss and ALAE ratio

 

20.1

 

 

12.7

 

Non-cat loss and LAE ratio

 

58.8

 

 

59.7

 

Loss and LAE ratio

 

78.9

 

 

72.4

 

Expense ratio

 

34.0

 

 

34.8

 

Combined ratio

 

112.9

 

 

107.2

 

 

 

 

 

 

(A) Reconciliation of non-GAAP financial measure:

 

 

 

 

Net loss from operations:

 

 

 

 

Net income (loss)

 

$

3.6

 

 

$

(114.6

)

Net investment gain (loss), net of tax

 

30.2

 

 

(106.8

)

Net loss from operations

 

$

(26.6

)

 

$

(7.8

)

 

 

 

 

 

Condensed Consolidated Balance Sheets

($ and shares in millions, except per share amounts)

(unaudited)

 

March 31

 

December 31

 

 

2021

 

2020

ASSETS

 

 

 

 

Fixed maturities, available-for-sale, at fair value (amortized cost $2,147.5 and $2,117.0, respectively)

 

$

2,209.0

 

 

$

2,237.2

 

Equity securities

 

399.6

 

 

389.7

 

Other invested assets

 

76.4

 

 

71.1

 

Other invested assets, at cost

 

11.8

 

 

12.1

 

Notes receivable from affiliate

 

70.0

 

 

70.0

 

Total investments

 

2,766.8

 

 

2,780.1

 

 

 

 

 

 

Cash and cash equivalents

 

59.1

 

 

90.7

 

Accrued investment income and other assets

 

31.0

 

 

29.7

 

Premiums Receivable

 

12.3

 

 

14.0

 

Deferred policy acquisition costs

 

121.2

 

 

122.2

 

Reinsurance recoverable on losses and loss expenses payable

 

23.6

 

 

24.3

 

Prepaid reinsurance premiums

 

8.5

 

 

8.3

 

Current federal income taxes

 

1.7

 

 

1.7

 

Net deferred federal income taxes

 

37.1

 

 

27.3

 

Property and equipment, at cost

 

4.2

 

 

4.2

 

Total assets

 

$

3,065.5

 

 

$

3,102.5

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Losses and loss expenses payable

 

$

1,066.3

 

 

$

1,050.4

 

Unearned premiums

 

726.7

 

 

723.4

 

Notes payable (affiliates $15.3 and $15.3, respectively)

 

122.1

 

 

122.1

 

Pension and postretirement benefits

 

59.2

 

 

66.2

 

Due to affiliate

 

22.1

 

 

11.2

 

Other liabilities

 

97.1

 

 

119.2

 

Total liabilities

 

2,093.5

 

 

2,092.5

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

Common stock, without par value. Authorized 100.0 shares; 50.9 and 50.7 shares issued, respectively, at stated value of $2.50 per share

 

127.4

 

 

126.8

 

Treasury stock, 6.9 and 6.9 shares, respectively, at cost

 

(118.9

)

 

(118.4

)

Additional paid-in capital

 

220.1

 

 

213.3

 

Accumulated other comprehensive (loss) income

 

(30.1

)

 

13.9

 

Retained earnings

 

773.5

 

 

774.4

 

Total stockholders' equity

 

972.0

 

 

1,010.0

 

Total liabilities and stockholders' equity

 

$

3,065.5

 

 

$

3,102.5

 

 

 

 

 

 

Condensed Consolidated Statements of Income

($ in millions, except per share amounts)

(unaudited)

 

Three months ended March 31

 

 

2021

 

2020

Earned premiums

 

$

355.9

 

$

330.5

 

Net investment income

 

17.6

 

18.9

 

Net investment gain (loss)

 

38.2

 

(135.2

)

Other income from affiliates

 

0.5

 

0.6

 

Total revenues

 

412.2

 

214.8

 

 

 

 

 

 

Losses and loss expenses

 

280.8

 

239.4

 

Acquisition and operating expenses

 

121.0

 

114.9

 

Interest expense

 

1.1

 

1.2

 

Other expenses

 

3.7

 

3.3

 

Total expenses

 

406.6

 

358.8

 

 

 

 

 

 

Income (loss) before federal income taxes

 

5.6

 

(144.0

)

Federal income tax expense (benefit):

 

 

 

 

Deferred

 

2.0

 

(29.4

)

Federal income tax expense (benefit)

 

2.0

 

(29.4

)

Net income (loss)

 

$

3.6

 

$

(114.6

)

Earnings (loss) per common share:

 

 

 

 

Basic

 

$

0.08

 

$

(2.62

)

Diluted

 

$

0.08

 

$

(2.62

)

Dividends paid per common share

 

$

0.10

 

$

0.10

 

 

 

 

 

 

Consolidated Statements of Comprehensive Loss

($ in millions)

(unaudited)

Three months ended March 31

 

2021

 

2020

Net income (loss)

$

3.6

 

 

$

(114.6

)

Other comprehensive (loss) income, net of tax:

 

 

 

Net unrealized holding (loss) gain on available-for-sale investments:

 

 

 

Unrealized holding (loss) gain

(57.2

)

 

31.0

 

Reclassification adjustments for gains realized in net income

(1.5

)

 

(2.4

)

Income tax benefit (expense)

12.4

 

 

(6.0

)

Total net unrealized holding (loss) gain on available- for-sale investments

(46.3

)

 

22.6

 

Net unrecognized benefit plan obligations:

 

 

 

Reclassification adjustments for amortization to statements of income:

 

 

 

Prior service credit

(1.6

)

 

(1.6

)

Net actuarial loss

4.5

 

 

3.7

 

Income tax expense

(0.6

)

 

(0.5

)

Total net unrecognized benefit plan obligations

2.3

 

 

1.6

 

Other comprehensive (loss) income

(44.0

)

 

24.2

 

Comprehensive loss

$

(40.4

)

 

$

(90.4

)

 

 

 

 

Condensed Consolidated Statement of Stockholders' Equity

($ and shares in millions)

(unaudited)

 

Three Months Ended

 

Year Ended

 

 

March 31

 

December 31

 

 

2021

 

2020

Common shares:

 

 

 

 

 

 

Balance at beginning of year

 

50.7

 

 

50.4

 

Issuance of shares

 

0.2

 

 

0.3

 

Balance at period ended

 

50.9

 

 

50.7

 

 

 

 

 

 

 

 

Treasury shares:

 

 

 

 

 

 

Balance at beginning of year

 

(6.9

)

 

(6.9

)

Balance at period ended

 

(6.9

)

 

(6.9

)

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

Balance at beginning of year

 

$

126.8

 

 

$

125.9

 

Issuance of shares

 

0.6

 

 

0.9

 

Balance at period ended

 

127.4

 

 

126.8

 

 

 

 

 

 

 

 

Treasury stock:

 

 

 

 

 

 

Balance at beginning of year

 

$

(118.4

)

 

$

(117.5

)

Shares acquired on stock award exercises and vested restricted shares

 

(0.5

)

 

(0.9

)

Balance at beginning of year and period ended

 

(118.9

)

 

(118.4

)

 

 

 

 

 

 

 

Additional paid-in capital:

 

 

 

 

 

 

Balance at beginning of year

 

$

213.3

 

 

$

206.7

 

Issuance of common stock

 

0.6

 

 

3.0

 

Stock awards granted

 

6.2

 

 

3.6

 

Balance at period ended

 

220.1

 

 

213.3

 

 

 

 

 

 

 

 

Accumulated other comprehensive (loss) income:

 

 

 

 

 

 

Balance at beginning of the year

 

$

13.9

 

 

$

(26.9

)

Change in net unrealized holding gains on available-for-sale investments

 

(46.3

)

 

56.7

 

Change in net unrecognized benefit plan obligations

 

2.3

 

 

(15.9

)

Balance at period ended

 

(30.1

)

 

13.9

 

 

 

 

 

 

 

 

Retained earnings:

 

 

 

 

 

 

Balance at beginning of year

 

$

774.4

 

 

$

779.3

 

Cumulative effect of change in accounting to establish an allowance for expected credit losses at January 1, 2020

 

 

 

(0.5

)

Net income

 

3.6

 

 

13.1

 

Cash dividends paid

 

(4.5

)

 

(17.5

)

Balance at period ended

 

773.5

 

 

774.4

 

Total stockholders' equity at period ended

 

$

972.0

 

 

$

1,010.0

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flow

($ in millions)

(unaudited)

 

Three months ended

 

 

March 31

 

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$

3.6

 

 

$

(114.6

)

Adjustments to reconcile net income (loss) to net cash used in operating activities

 

 

 

 

Depreciation and amortization, net

 

1.8

 

 

1.6

 

Share-based compensation

 

6.7

 

 

0.5

 

Net investment (gain) loss

 

(38.2

)

 

135.2

 

Changes in operating assets and liabilities:

 

 

 

 

Deferred policy acquisition costs

 

1.0

 

 

(2.2

)

Accrued investment income and other assets

 

(1.3

)

 

(1.5

)

Premiums receivable

 

1.7

 

 

(1.4

)

Postretirement and pension benefits

 

(6.4

)

 

(0.9

)

Other liabilities and due to/from affiliates, net

 

(9.5

)

 

(24.8

)

Reinsurance recoverable on losses and loss expenses payable and prepaid reinsurance premiums

 

0.5

 

 

(26.5

)

Losses and loss expenses payable

 

15.9

 

 

19.5

 

Unearned premiums

 

3.3

 

 

16.5

 

Deferred tax on share-based awards

 

(0.4

)

 

(0.2

)

Federal income taxes

 

2.4

 

 

(29.2

)

Net cash used in operating activities

 

(18.9

)

 

(28.0

)

Cash flows from investing activities:

 

 

 

 

Purchases of fixed maturities available-for-sale

 

(239.7

)

 

(122.4

)

Purchases of equity securities

 

(9.4

)

 

(16.1

)

Purchases of other invested assets

 

(0.1

)

 

(6.6

)

Maturities, calls and pay downs of fixed maturities available-for-sale

 

102.8

 

 

67.9

 

Sales of fixed maturities available-for-sale

 

106.0

 

 

83.5

 

Sales of equity securities

 

31.1

 

 

13.2

 

Sales of other invested assets

 

0.3

 

 

0.4

 

Disposals of property and equipment

 

 

 

0.2

 

Net cash (used in) provided by investing activities

 

(9.0

)

 

20.1

 

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of common stock

 

1.2

 

 

1.8

 

Payments to acquire treasury stock

 

(0.4

)

 

(0.9

)

Payment of dividends

 

(4.5

)

 

(4.4

)

Proceeds from short-term debt

 

 

 

60.0

 

Net cash (used in) provided by financing activities

 

(3.7

)

 

56.5

 

Net (decrease) increase in cash and cash equivalents

 

(31.6

)

 

48.6

 

Cash and cash equivalents at beginning of period

 

90.7

 

 

78.0

 

Cash and cash equivalents at end of period

 

$

59.1

 

 

$

126.6

 

Supplemental disclosures:

 

 

 

 

Interest paid (affiliates $0.2 and $0.2, respectively)

 

$

1.1

 

 

$

1.2

 

 

Net Investment Income

($ in millions)

(unaudited)

 

 

3/31/2020

 

6/30/2020

 

9/30/2020

 

12/31/2020

 

3/31/2021

Quarter to Date

 

 

 

 

 

 

 

 

 

 

Gross investment income:

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

14.5

 

$

14.8

 

 

$

13.7

 

$

14.3

 

$

14.7

TIPS

 

0.6

 

(0.3

)

 

1.3

 

0.7

 

0.7

Total fixed maturities

 

15.1

 

14.5

 

 

15.0

 

15.0

 

15.4

Equity securities

 

3.1

 

2.6

 

 

2.1

 

1.5

 

1.6

Other

 

1.0

 

0.8

 

 

0.9

 

1.3

 

0.9

Total gross investment income

 

19.2

 

17.9

 

 

18.0

 

17.8

 

17.9

Less: Investment expenses

 

0.3

 

0.2

 

 

0.1

 

0.2

 

0.3

Net investment income

 

$

18.9

 

$

17.7

 

 

$

17.9

 

$

17.6

 

$

17.6

 

 

 

 

 

 

 

 

 

 

 

Year to Date

 

 

 

 

 

 

 

 

 

 

Gross investment income:

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

14.5

 

$

29.3

 

 

$

43.0

 

$

57.3

 

$

14.7

TIPS

 

0.6

 

0.3

 

 

1.6

 

2.3

 

0.7

Total fixed maturities

 

15.1

 

29.6

 

 

44.6

 

59.6

 

15.4

Equity securities

 

3.1

 

5.7

 

 

7.8

 

9.3

 

1.6

Other

 

1.0

 

1.8

 

 

2.7

 

4.0

 

0.9

Total gross investment income

 

19.2

 

37.1

 

 

55.1

 

72.9

 

17.9

Less: Investment expenses

 

0.3

 

0.5

 

 

0.6

 

0.8

 

0.3

Net investment income

 

$

18.9

 

$

36.6

 

 

$

54.5

 

$

72.1

 

$

17.6

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2020

 

6/30/2020

 

9/30/2020

 

12/31/2020

 

3/31/2021

TIPS, fair value

 

$

111.4

 

$

115.9

 

 

$

117.0

 

$

116.2

 

$

104.7

TIPS, book value

 

$

101.5

 

$

100.9

 

 

$

99.4

 

$

97.8

 

$

89.2

 

 

 

 

 

 

 

 

 

 

 

Net Investment Gain (Loss)

($ in millions)

unaudited

Three months ended March 31

 

2021

 

2020

Investment gain (loss), net:

 

 

 

Fixed maturities:

 

 

 

Realized gains on sales of securities

$

3.0

 

 

$

3.6

 

Realized losses on sales of securities

(1.5

)

 

(1.2

)

Net gain on fixed securities

1.5

 

 

2.4

 

Net gain (loss) on equity securities

31.5

 

 

(122.4

)

Net gain (loss) on other invested assets

5.2

 

 

(15.4

)

Other net realized gain

 

 

0.2

 

Net gain (loss) on investments

$

38.2

 

 

$

(135.2

)

 

 

 

 

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

 

 

2021

 

2020

Deferred tax assets:

 

 

 

 

Unearned premiums not currently deductible

 

$

30.2

 

 

$

30.1

 

Losses and loss expenses payable discounting

 

11.0

 

 

10.5

 

Postretirement and pension benefits

 

18.4

 

 

19.3

 

Other liabilities

 

13.5

 

 

12.2

 

Net operating loss carryforward

 

22.5

 

 

19.8

 

Capital loss carryforward

 

6.1

 

 

6.1

 

Tax credit carryforward

 

2.1

 

 

1.9

 

Other

 

0.5

 

 

1.1

 

Total deferred tax assets

 

104.3

 

 

101.0

 

Deferred tax liabilities:

 

 

 

 

Deferral of policy acquisition costs

 

25.4

 

 

25.7

 

Investments

 

41.5

 

 

48.0

 

Total deferred tax liabilities

 

66.9

 

 

73.7

 

Total net deferred tax assets before valuation allowance

 

37.4

 

 

27.3

 

Less valuation allowance

 

0.3

 

 

 

Net deferred federal income taxes

 

$

37.1

 

 

$

27.3

 

 

 

 

 

 

The following table sets forth the components of federal income tax expense (benefit):

 

 

Three months ended March 31

 

 

2021

 

2020

Income (loss) before federal income taxes

 

$

5.6

 

 

$

(144.0

)

Federal income tax expense (benefit)

 

 

 

 

Deferred

 

2.0

 

 

(29.4

)

Total federal income tax expense (benefit)

 

2.0

 

 

(29.4

)

Net income (loss)

 

$

3.6

 

 

$

(114.6

)

 

 

 

 

 

SAP Personal Insurance Segment Results 

(unaudited)

($ in millions)

Three months ended March 31, 2021

 

Personal Auto

 

Homeowners

 

Other Personal

 

Total

 

 

 

 

 

 

 

 

 

Net written premiums

 

$

89.1

 

 

$

86.2

 

 

$

17.9

 

 

$

193.2

 

Net earned premiums

 

95.7

 

 

96.3

 

 

15.8

 

 

207.8

 

Losses and LAE incurred:

 

 

 

 

 

 

 

 

Cat loss and ALAE

 

0.5

 

 

52.4

 

 

9.6

 

 

62.5

 

Non-cat loss and ALAE

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE

 

(0.8

)

 

(2.1

)

 

 

 

(2.9

)

Current accident year non-cat loss and ALAE

 

56.9

 

 

55.1

 

 

8.1

 

 

120.1

 

Total non-cat loss and ALAE

 

56.1

 

 

53.0

 

 

8.1

 

 

117.2

 

Total Loss and ALAE

 

56.6

 

 

105.4

 

 

17.7

 

 

179.7

 

ULAE

 

8.5

 

 

8.7

 

 

1.2

 

 

18.4

 

Total Loss and LAE

 

65.1

 

 

114.1

 

 

18.9

 

 

198.1

 

Underwriting expenses

 

27.5

 

 

26.5

 

 

5.1

 

 

59.1

 

Net underwriting gain (loss)

 

$

3.1

 

 

$

(44.3

)

 

$

(8.2

)

 

$

(49.4

)

Cat loss and ALAE ratio

 

0.6

%

 

54.4

%

 

60.6

%

 

30.1

%

Non-cat loss and ALAE ratio

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE ratio

 

(0.9

)%

 

(2.2

)%

 

0.2

%

 

(1.4

)%

Current accident year non-cat loss and ALAE ratio

 

59.5

%

 

57.3

%

 

51.6

%

 

57.7

%

Total non-cat loss and ALAE ratio

 

58.6

%

 

55.1

%

 

51.8

%

 

56.3

%

Total Loss and ALAE ratio

 

59.2

%

 

109.5

%

 

112.4

%

 

86.4

%

ULAE ratio

 

8.8

%

 

9.1

%

 

7.5

%

 

8.9

%

Total Loss and LAE ratio

 

68.0

%

 

118.6

%

 

119.9

%

 

95.3

%

Expense ratio

 

30.9

%

 

30.7

%

 

28.5

%

 

30.6

%

Combined ratio

 

98.9

%

 

149.3

%

 

148.4

%

 

125.9

%

($ in millions)

Three months ended March 31, 2020

 

Personal Auto

 

Homeowners

 

Other Personal

 

Total

 

 

 

 

 

 

 

 

 

Net written premiums

 

$

104.6

 

 

$

81.6

 

 

$

13.3

 

 

$

199.5

 

Net earned premiums

 

104.7

 

 

82.7

 

 

10.7

 

 

198.1

 

Losses and LAE incurred:

 

 

 

 

 

 

 

 

Cat loss and ALAE

 

0.5

 

 

10.7

 

 

1.5

 

 

12.7

 

Non-cat loss and ALAE

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE

 

5.2

 

 

2.2

 

 

(1.0

)

 

6.4

 

Current accident year non-cat loss and ALAE

 

62.0

 

 

37.6

 

 

4.3

 

 

103.9

 

Total non-cat loss and ALAE

 

67.2

 

 

39.8

 

 

3.3

 

 

110.3

 

Total Loss and ALAE

 

67.7

 

 

50.5

 

 

4.8

 

 

123.0

 

ULAE

 

7.3

 

 

5.3

 

 

0.4

 

 

13.0

 

Total Loss and LAE

 

75.0

 

 

55.8

 

 

5.2

 

 

136.0

 

Underwriting expenses

 

32.8

 

 

25.0

 

 

4.0

 

 

61.8

 

Net underwriting (loss) gain

 

$

(3.1

)

 

$

1.9

 

 

$

1.5

 

 

$

0.3

 

 

 

 

 

 

 

 

 

 

Cat loss and ALAE ratio

 

0.4

%

 

13.0

%

 

14.0

%

 

6.4

%

Non-cat loss and ALAE ratio

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE ratio

 

5.0

%

 

2.7

%

 

(9.2

)%

 

3.2

%

Current accident year non-cat loss and ALAE ratio

 

59.3

%

 

45.4

%

 

40.0

%

 

52.5

%

Total non-cat loss and ALAE ratio

 

64.3

%

 

48.1

%

 

30.8

%

 

55.7

%

Total Loss and ALAE ratio

 

64.7

%

 

61.1

%

 

44.8

%

 

62.1

%

ULAE ratio

 

6.9

%

 

6.4

%

 

4.0

%

 

6.5

%

Total Loss and LAE ratio

 

71.6

%

 

67.5

%

 

48.8

%

 

68.6

%

Expense ratio

 

31.4

%

 

30.6

%

 

30.0

%

 

31.0

%

Combined ratio

 

103.0

%

 

98.1

%

 

78.8

%

 

99.6

%

 

SAP Commercial Insurance Segment Results

(unaudited)

($ in millions)

Three months ended

March 31, 2021

 

Commercial

Auto

 

Small

Commercial

Package

 

Middle

Market

Commercial

 

Workers'

Comp

 

Farm &

Ranch

 

Other

Commercial

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net written premiums

 

$

51.3

 

 

$

35.0

 

 

$

39.3

 

 

$

16.0

 

 

$

19.9

 

 

$

4.7

 

 

$

166.2

 

Net earned premiums

 

40.9

 

 

31.7

 

 

39.6

 

 

15.2

 

 

16.5

 

 

4.8

 

 

148.7

 

Losses and LAE incurred:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cat loss and ALAE

 

0.2

 

 

5.2

 

 

3.0

 

 

 

 

3.2

 

 

 

 

11.6

 

Non-cat loss and ALAE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE

 

(0.6

)

 

(2.2

)

 

(8.1

)

 

(8.5

)

 

(1.4

)

 

(1.0

)

 

(21.8

)

Current accident year non-cat loss and ALAE

 

25.4

 

 

19.8

 

 

25.6

 

 

9.3

 

 

5.5

 

 

1.9

 

 

87.5

 

Total non-cat loss and ALAE

 

24.8

 

 

17.6

 

 

17.5

 

 

0.8

 

 

4.1

 

 

0.9

 

 

65.7

 

Total Loss and ALAE

 

25.0

 

 

22.8

 

 

20.5

 

 

0.8

 

 

7.3

 

 

0.9

 

 

77.3

 

ULAE

 

2.6

 

 

2.4

 

 

0.8

 

 

0.7

 

 

0.7

 

 

0.1

 

 

7.3

 

Total Loss and LAE

 

27.6

 

 

25.2

 

 

21.3

 

 

1.5

 

 

8.0

 

 

1.0

 

 

84.6

 

Underwriting expenses

 

16.1

 

 

11.5

 

 

16.2

 

 

7.5

 

 

8.0

 

 

1.8

 

 

61.1

 

Net underwriting (loss) gain

 

$

(2.8

)

 

$

(5.0

)

 

$

2.1

 

 

$

6.2

 

 

$

0.5

 

 

$

2.0

 

 

$

3.0

 

Cat loss and ALAE ratio

 

0.3

%

 

16.5

%

 

7.6

%

 

%

 

19.7

%

 

%

 

7.8

%

Non-cat loss and ALAE ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE ratio

 

(1.5

)%

 

(7.0

)%

 

(20.3

)%

 

(55.8

)%

 

(8.3

)%

 

(20.8

)%

 

(14.6

)%

Current accident year non-cat loss and ALAE ratio

 

62.1

%

 

62.6

%

 

64.6

%

 

60.7

%

 

33.4

%

 

38.7

%

 

58.8

%

Total non-cat loss and ALAE ratio

 

60.6

%

 

55.6

%

 

44.3

%

 

4.9

%

 

25.1

%

 

17.9

%

 

44.2

%

Total Loss and ALAE ratio

 

60.9

%

 

72.1

%

 

51.9

%

 

4.9

%

 

44.8

%

 

17.9

%

 

52.0

%

ULAE ratio

 

6.3

%

 

7.4

%

 

2.0

%

 

4.9

%

 

4.1

%

 

2.8

%

 

4.9

%

Total Loss and LAE ratio

 

67.2

%

 

79.5

%

 

53.9

%

 

9.8

%

 

48.9

%

 

20.7

%

 

56.9

%

Expense ratio

 

31.6

%

 

32.8

%

 

41.2

%

 

46.9

%

 

39.9

%

 

39.0

%

 

36.8

%

Combined ratio

 

98.8

%

 

112.3

%

 

95.1

%

 

56.7

%

 

88.8

%

 

59.7

%

 

93.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

Three months ended

March 31, 2020

 

Commercial

Auto

 

Small

Commercial

Package

 

Middle

Market

Commercial

 

Workers'

Comp

 

Farm &

Ranch

 

Other

Commercial

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net written premiums

 

$

36.4

 

 

$

31.9

 

 

$

40.3

 

 

$

18.8

 

 

$

14.8

 

 

$

4.9

 

 

$

147.1

 

Net earned premiums

 

29.0

 

 

30.3

 

 

36.1

 

 

19.7

 

 

12.6

 

 

4.7

 

 

132.4

 

Losses and LAE incurred:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cat loss and ALAE

 

0.3

 

 

3.6

 

 

24.1

 

 

 

 

0.9

 

 

0.2

 

 

29.1

 

Non-cat loss and ALAE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE

 

(0.1

)

 

(5.4

)

 

(5.1

)

 

(4.0

)

 

(0.8

)

 

(1.4

)

 

(16.8

)

Current accident year non-cat loss and ALAE

 

16.6

 

 

19.1

 

 

27.5

 

 

13.4

 

 

4.0

 

 

3.0

 

 

83.6

 

Total non-cat loss and ALAE

 

16.5

 

 

13.7

 

 

22.4

 

 

9.4

 

 

3.2

 

 

1.6

 

 

66.8

 

Total Loss and ALAE

 

16.8

 

 

17.3

 

 

46.5

 

 

9.4

 

 

4.1

 

 

1.8

 

 

95.9

 

ULAE

 

1.5

 

 

1.6

 

 

2.1

 

 

1.7

 

 

0.5

 

 

0.2

 

 

7.6

 

Total Loss and LAE

 

18.3

 

 

18.9

 

 

48.6

 

 

11.1

 

 

4.6

 

 

2.0

 

 

103.5

 

Underwriting expenses

 

12.7

 

 

11.8

 

 

16.7

 

 

8.9

 

 

6.7

 

 

2.1

 

 

58.9

 

Net underwriting (loss) gain

 

$

(2.0

)

 

$

(0.4

)

 

$

(29.2

)

 

$

(0.3

)

 

$

1.3

 

 

$

0.6

 

 

$

(30.0

)

Cat loss and ALAE ratio

 

1.1

%

 

12.0

%

 

66.7

%

 

%

 

7.3

%

 

3.8

%

 

22.0

%

Non-cat loss and ALAE ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE ratio

 

(0.3

)%

 

(17.8

)%

 

(14.2

)%

 

(20.5

)%

 

(6.4

)%

 

(29.9

)%

 

(12.7

)%

Current accident year non-cat loss and ALAE ratio

 

57.2

%

 

62.8

%

 

76.4

%

 

68.2

%

 

31.6

%

 

63.9

%

 

63.1

%

Total non-cat loss and ALAE ratio

 

56.9

%

 

45.0

%

 

62.2

%

 

47.7

%

 

25.2

%

 

34.0

%

 

50.4

%

Total Loss and ALAE ratio

 

58.0

%

 

57.0

%

 

128.9

%

 

47.7

%

 

32.5

%

 

37.8

%

 

72.4

%

ULAE ratio

 

5.2

%

 

5.3

%

 

5.8

%

 

8.9

%

 

3.9

%

 

4.0

%

 

5.8

%

Total Loss and LAE ratio

 

63.2

%

 

62.3

%

 

134.7

%

 

56.6

%

 

36.4

%

 

41.8

%

 

78.2

%

Expense ratio

 

35.0

%

 

37.0

%

 

41.4

%

 

47.7

%

 

45.5

%

 

41.7

%

 

40.1

%

Combined ratio

 

98.2

%

 

99.3

%

 

176.1

%

 

104.3

%

 

81.9

%

 

83.5

%

 

118.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SAP Insurance Segment Results

 

 

(unaudited)

($ in millions)

 

2021

 

2020

 

2021

 

2020

Three months ended March 31

 

Personal &

Commercial

 

Personal &

Commercial

 

Total(1)

 

Total(1)

 

 

 

 

 

 

 

 

 

Net written premiums

 

$

359.4

 

 

$

346.6

 

 

$

358.7

 

 

$

346.5

 

Net earned premiums

 

356.5

 

 

330.5

 

 

355.9

 

 

330.5

 

Losses and LAE incurred:

 

 

 

 

 

 

 

 

Cat loss and ALAE

 

74.1

 

 

41.8

 

 

71.6

 

 

41.9

 

Non-cat loss and ALAE

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE

 

(24.7

)

 

(10.4

)

 

(24.6

)

 

(10.5

)

Current accident year non-cat loss and ALAE

 

207.6

 

 

187.5

 

 

207.7

 

 

187.6

 

Total non-cat loss and ALAE

 

182.9

 

 

177.1

 

 

183.1

 

 

177.1

 

Total Loss and ALAE

 

257.0

 

 

218.9

 

 

254.7

 

 

219.0

 

ULAE

 

25.7

 

 

20.6

 

 

25.7

 

 

20.6

 

Total Loss and LAE

 

282.7

 

 

239.5

 

 

280.4

 

 

239.6

 

Underwriting expenses

 

120.2

 

 

120.7

 

 

120.3

 

 

121.0

 

Net underwriting loss

 

$

(46.4

)

 

$

(29.7

)

 

$

(44.8

)

 

$

(30.1

)

Cat loss and ALAE ratio

 

20.8

%

 

12.7

%

 

20.1

%

 

12.7

%

Non-cat loss and ALAE ratio

 

 

 

 

 

 

 

 

Prior accident years non-cat loss and ALAE ratio

 

(6.9

)%

 

(3.2

)%

 

(6.9

)%

 

(3.2

)%

Current accident year non-cat loss and ALAE ratio

 

58.2

%

 

56.8

%

 

58.4

%

 

56.8

%

Total non-cat loss and ALAE ratio

 

51.3

%

 

53.6

%

 

51.5

%

 

53.6

%

Total Loss and ALAE ratio

 

72.1

%

 

66.3

%

 

71.6

%

 

66.3

%

ULAE ratio

 

7.2

%

 

6.2

%

 

7.2

%

 

6.2

%

Total Loss and LAE ratio

 

79.3

%

 

72.5

%

 

78.8

%

 

72.5

%

Expense ratio

 

33.5

%

 

34.8

%

 

33.5

%

 

34.9

%

Combined ratio

 

112.8

%

 

107.3

%

 

112.3

%

 

107.4

%

 

 

 

 

 

 

 

 

 

(1)Includes specialty run-off

The following table provides a reconciliation of our statutory underwriting results to GAAP consolidated income (loss) before federal income taxes for the three months ended March 31, 2021 and 2020:

($ millions)

1Q 2021

 

1Q 2020

Segment income (loss) before federal income taxes:

 

 

 

Insurance operations:

 

 

 

Personal insurance SAP underwriting (loss) gain

$

(49.4

)

 

$

0.3

 

Commercial insurance SAP underwriting gain (loss)

3.0

 

 

(30.0

)

Specialty run-off

1.6

 

 

(0.4

)

Total insurance operations

(44.8

)

 

(30.1

)

Investment operations:

 

 

 

Net investment income

17.6

 

 

18.9

 

Net investment gain (loss)

38.2

 

 

(135.2

)

Total investment operations

55.8

 

 

(116.3

)

All other segments income

 

 

0.1

 

Reconciling items:

 

 

 

GAAP adjustments

(1.3

)

 

5.9

 

Interest expense on corporate debt

(1.1

)

 

(1.2

)

Corporate expenses

(3.0

)

 

(2.4

)

Total reconciling items

(5.4

)

 

2.3

 

Total consolidated income (loss) before federal income taxes

$

5.6

 

 

$

(144.0

)

 

 

 

 

 

Contacts

State Auto Financial Corporation

Media contact:
Kyle Anderson, 614-917-5497
Kyle.Anderson@StateAuto.com
or
Investor contact:
Natalie Schoolcraft, 614-917-4341
Natalie.Schoolcraft@StateAuto.com

Release Summary

State Auto Financial reports first quarter 2021 results

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Contacts

State Auto Financial Corporation

Media contact:
Kyle Anderson, 614-917-5497
Kyle.Anderson@StateAuto.com
or
Investor contact:
Natalie Schoolcraft, 614-917-4341
Natalie.Schoolcraft@StateAuto.com