- Quarterly income of $0.01 per share
- Quarterly net loss from operations1 of $0.47 per share
- Quarterly GAAP combined ratio of 110.0
- Quarterly SAP combined ratio of 108.4
- Return on equity of 10.2%
- Book value per share of $22.18
State Auto Financial Corporation (NASDAQ:STFC) today reported
second quarter 2021 net income of $0.6 million, or $0.01 per
diluted share, compared to $34.3 million, or $0.74 per diluted
share, for the same 2020 period. Net loss from operations1 per
diluted share for the second quarter of 2021 was $0.47 versus $0.59
for the same 2020 period. STFC’s GAAP combined ratio for the second
quarter 2021 was 110.0 compared to 114.7 for the same 2020
period.
For the first six months of 2021, STFC had net income of $4.2
million, or $0.09 per diluted share, compared to a net loss of
$80.3 million, or $1.83 per diluted share, for the same 2020
period. Net loss from operations1 per diluted share for the first
six months of 2021 was $1.07 versus $0.76 for the same 2020 period.
STFC’s GAAP combined ratio for the first six months of 2021 was
111.4 compared to 111.0 for the same 2020 period.
SAP Operating Results
STFC's SAP combined ratio for the second quarter 2021 was 108.4
compared to 113.3 for the same 2020 period. Catastrophe losses and
ALAE during the second quarter 2021 accounted for 21.6 points of
the 80.9 total loss ratio points, or $80.0 million, versus 26.5
points of the 79.7 total loss ratio points, or $90.4 million, for
the same period in 2020. The second quarter 2021 was impacted by
wind and hail events in Texas. Approximately 70% of the second
quarter 2021 catastrophe losses occurred within homeowners.
Non-catastrophe losses and ALAE during the second quarter 2021
included 4.3 points of favorable development relating to prior
years, or $15.9 million, versus 0.6 points of favorable
development, or $2.0 million, for the same period in 2020.
STFC's SAP combined ratio for the first six months of 2021 was
110.2 compared to 110.4 for the same 2020 period. Catastrophe
losses and ALAE during the second quarter 2021 accounted for 20.9
points of the 74.0 total loss ratio points, or $151.6 million,
versus 19.7 points of the 76.2 total loss ratio points, or $132.3
million, for the same period in 2020. The first six months of 2021
were impacted by winter storms Uri and Viola in Texas, which added
8.5 points to the loss and ALAE ratio. Approximately 70% of the
year to date 2021 catastrophe losses occurred within homeowners.
Non-catastrophe losses and ALAE during the second quarter 2021
included 5.6 points of favorable development relating to prior
years, or $40.5 million, versus 1.9 points of favorable
development, or $12.5 million, for the same period in 2020.
Net written premium for the second quarter 2021 increased 8.0%
compared to the same period in 2020. By insurance segment, net
written premium for the commercial insurance segment increased
18.0% and the personal insurance segment increased 1.4%. The
increase in the commercial segment was primarily driven by new
business growth and rate increases in commercial auto and 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. The increase in the personal segment was primarily due to
increased rates in homeowners and other personal and new business
growth in other personal. The net written premium growth was
partially offset by a decline in new business in personal auto.
Net written premium for the first six months of 2021 increased
5.9% compared to the same period in 2020. By insurance segment, net
written premium for the commercial insurance segment increased
15.6% and the personal insurance segment decreased 0.8%. The trends
in the personal and commercial net written premiums are due to the
same factors discussed above for the second quarter.
Book Value and Return on Equity
STFC’s book value increased to $22.18 per share as of June 30,
2021, compared to $22.07 on March 31, 2021. The increase in book
value was primarily driven by an increase in the fair market value
of fixed income investments attributable to lower interest
rates.
Return on stockholders’ equity for the 12 months ended June 30,
2021, was 10.2% compared to (3.9)% for the 12 months ended June 30,
2020.
STFC’s Chairman, President and CEO Mike LaRocco commented on the
quarter as follows:
“On July 12, we announced our plans to be acquired by Liberty
Mutual, whose domestic personal lines and small commercial
insurance is an ideal complement to our capabilities and product
expertise. This transaction, which we expect to close in 2022
pending the appropriate member, shareholder, and regulatory
approvals, furthers our commitment to independent agents and will
contribute to the collective success of our agents, policyholders,
shareholders and associates.
“The second quarter statutory combined ratio for our ongoing
lines of business of 108.0 included catastrophe losses, primarily
in homeowners, in excess of what was expected in the quarter that
typically produces the highest amount of catastrophe losses each
year. In commercial lines, overall growth and profitability
continued, with net written premium growing 18.0% and a quarterly
statutory combined ratio of 93.1%. The State Auto Group has now
written in excess of $1.0 billion of commercial lines net written
premiums in the twelve months ended June 30, 2021.
“Over the past six years, we’ve clearly demonstrated our ability
to build the teams, technology and products required to deliver
sustained profitable growth. In the months ahead, our focus will
remain to make progress toward that goal throughout all our lines
of business.”
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.
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 $0.48 and $1.16 per diluted share
for the second quarter and year to date 2021, respectively, versus
income of $1.35 per diluted share for the second quarter 2020 and a
loss of $1.07 year to date 2020.
* * * * *
Except for historical information, all other information in this
news release consists of forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated or implied. The most significant
of these uncertainties are described in State Auto Financial's Form
10-K and Form 10-Q reports and exhibits to those reports, and
include (but are not limited to) legislative changes at both the
state and federal level, state and federal regulatory rule making
promulgations and adjudications, class action litigation involving
the insurance industry and judicial decisions affecting claims,
policy coverages and the general costs of doing business, the
impact of competition on products and pricing, inflation in the
costs of the products and services insurance pays for, product
development, geographic spread of risk, weather and weather-related
events, and other types of catastrophic events. State Auto
Financial undertakes no obligation to update or revise any
forward-looking statements.
Selected Consolidated Financial
Data
($ in millions, except per share
amounts)
(unaudited)
Three months ended June 30
Six months ended June 30
2021
2020
2021
2020
Net premiums written
$
412.3
$
381.6
$
771.0
$
728.1
Earned premiums
369.9
340.7
725.8
671.2
Net investment income
17.7
17.7
35.3
36.6
Net investment gain (loss)
26.7
75.9
64.9
(59.3
)
Other income
0.4
0.5
0.9
1.1
Total revenue
414.7
434.8
826.9
649.6
Income (loss) before federal income
taxes
4.2
41.6
9.8
(102.4
)
Federal tax expense (benefit)
3.6
7.3
5.6
(22.1
)
Net income (loss)
$
0.6
$
34.3
$
4.2
$
(80.3
)
Earnings (loss) per common share:
- basic
$
0.01
$
0.78
$
0.10
$
(1.83
)
- diluted
$
0.01
$
0.74
$
0.09
$
(1.83
)
Loss per share from operations(A):
- basic
$
(0.47
)
$
(0.59
)
$
(1.07
)
$
(0.76
)
- diluted
$
(0.47
)
$
(0.59
)
$
(1.07
)
$
(0.76
)
Weighted average shares outstanding:
- basic
44.0
43.8
44.0
43.7
- diluted
44.8
44.1
44.6
43.7
Return on average equity (LTM)
10.2
%
(3.9
)%
Book value per share
$
22.18
$
21.26
Dividends paid per share
$
0.10
$
0.10
$
0.20
$
0.20
Total shares outstanding
44.1
43.8
GAAP ratios:
Cat loss and ALAE ratio
21.6
26.5
20.9
19.7
Non-cat loss and LAE ratio
59.4
53.1
59.1
56.4
Loss and LAE ratio
81.0
79.6
80.0
76.1
Expense ratio
29.0
35.1
31.4
34.9
Combined ratio
110.0
114.7
111.4
111.0
(A) Reconciliation of non-GAAP financial
measure:
Net loss from operations:
Net income (loss)
$
0.6
$
34.3
$
4.2
$
(80.3
)
Net investment gain (loss), net of tax
21.1
59.9
51.3
(46.9
)
Net loss from operations
$
(20.5
)
$
(25.6
)
$
(47.1
)
$
(33.4
)
Condensed Consolidated Balance
Sheets
($ and shares in millions, except per
share amounts)
(unaudited)
June 30
December 31
2021
2020
ASSETS
Fixed maturities, available-for-sale, at
fair value (amortized cost $2,134.9 and $2,117.0, respectively)
$
2,214.9
$
2,237.2
Equity securities
375.5
389.7
Other invested assets
79.6
71.1
Other invested assets, at cost
11.1
12.1
Notes receivable from affiliate
70.0
70.0
Total investments
2,751.1
2,780.1
Cash and cash equivalents
108.7
90.7
Accrued investment income and other
assets
26.4
29.7
Premiums Receivable
17.6
14.0
Deferred policy acquisition costs
127.2
122.2
Reinsurance recoverable on losses and loss
expenses payable
19.7
24.3
Prepaid reinsurance premiums
8.8
8.3
Current federal income taxes
1.7
1.7
Net deferred federal income taxes
29.0
27.3
Property and equipment, at cost
3.8
4.2
Total assets
$
3,094.0
$
3,102.5
LIABILITIES
Losses and loss expenses payable
$
1,060.9
$
1,050.4
Unearned premiums
769.1
723.4
Notes payable (affiliates $15.3 and $15.3,
respectively)
122.1
122.1
Pension and postretirement benefits
52.2
66.2
Due to affiliate
16.2
11.2
Other liabilities
95.2
119.2
Total liabilities
2,115.7
2,092.5
STOCKHOLDERS' EQUITY
Common stock, without par value.
Authorized 100.0 shares; 51.0 and 50.7 shares issued, respectively,
at stated value of $2.50 per share
127.5
126.8
Treasury stock, 6.9 and 6.9 shares,
respectively, at cost
(118.8
)
(118.4
)
Additional paid-in capital
213.1
213.3
Accumulated other comprehensive (loss)
income
(13.3
)
13.9
Retained earnings
769.8
774.4
Total stockholders' equity
978.3
1,010.0
Total liabilities and stockholders'
equity
$
3,094.0
$
3,102.5
Condensed Consolidated Statements of
Income
($ in millions, except per share
amounts)
(unaudited)
Three months ended June 30
Six months ended June 30
2021
2020
2021
2020
Earned premiums
$
369.9
$
340.7
$
725.8
$
671.2
Net investment income
17.7
17.7
35.3
36.6
Net investment gain (loss)
26.7
75.9
64.9
(59.3
)
Other income from affiliates
0.4
0.5
0.9
1.1
Total revenues
414.7
434.8
826.9
649.6
Losses and loss expenses
299.8
271.2
580.6
510.6
Acquisition and operating expenses
107.2
119.5
228.2
234.4
Interest expense
1.1
1.3
2.2
2.5
Other expenses
2.4
1.2
6.1
4.5
Total expenses
410.5
393.2
817.1
752.0
Income (loss) before federal income
taxes
4.2
41.6
9.8
(102.4
)
Federal income tax expense (benefit):
Current
—
(0.4
)
—
(0.4
)
Deferred
3.6
7.7
5.6
(21.7
)
Federal income tax expense (benefit)
3.6
7.3
5.6
(22.1
)
Net income (loss)
$
0.6
$
34.3
$
4.2
$
(80.3
)
Earnings (loss) per common share:
Basic
$
0.01
$
0.78
$
0.10
$
(1.83
)
Diluted
$
0.01
$
0.74
$
0.09
$
(1.83
)
Dividends paid per common share
$
0.10
$
0.10
$
0.20
$
0.20
Consolidated Statements of
Comprehensive Income (Loss)
($ in millions)
(unaudited)
Three months ended June 30
Six months ended June 30
2021
2020
2021
2020
Net income (loss)
$
0.6
$
34.3
$
4.2
$
(80.3
)
Other comprehensive income (loss), net
of tax:
Net unrealized holding gain (loss) on
available-for-sale investments:
Unrealized holding gains (losses)
17.7
38.9
(39.5
)
69.9
Reclassification adjustments for losses
(gains) realized in net income
0.8
(1.0
)
(0.7
)
(3.4
)
Income tax (expense) benefit
(3.9
)
(7.9
)
8.5
(13.9
)
Total net unrealized holding gains
(losses) on available- for-sale investments
14.6
30.0
(31.7
)
52.6
Net unrecognized benefit plan
obligations:
Reclassification adjustments for
amortization to statements of income:
Prior service credit
(1.6
)
(1.6
)
(3.2
)
(3.2
)
Net actuarial loss
4.4
3.6
8.9
7.3
Income tax expense
(0.6
)
(0.4
)
(1.2
)
(0.9
)
Total net unrecognized benefit plan
obligations
2.2
1.6
4.5
3.2
Other comprehensive income (loss)
16.8
31.6
(27.2
)
55.8
Comprehensive income (loss)
$
17.4
$
65.9
$
(23.0
)
$
(24.5
)
Condensed Consolidated Statement of
Stockholders' Equity
($ and shares in millions)
(unaudited)
Six months ended
Year Ended
June 30
December 31
2021
2020
Common shares:
Balance at beginning of year
50.7
50.4
Issuance of shares
0.3
0.3
Balance at period ended
51.0
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
0.7
0.9
Balance at period ended
127.5
126.8
Treasury stock:
Balance at beginning of year
$
(118.4
)
$
(117.5
)
Shares acquired on stock award exercises
and vested restricted shares
(0.4
)
(0.9
)
Balance at beginning of year and period
ended
(118.8
)
(118.4
)
Additional paid-in capital:
Balance at beginning of year
$
213.3
$
206.7
Issuance of common stock
1.4
3.0
Stock awards granted
(1.6
)
3.6
Balance at period ended
213.1
213.3
Accumulated other comprehensive (loss)
income:
Balance at beginning of the year
$
13.9
$
(26.9
)
Change in net unrealized holding (losses)
gains on available-for-sale investments
(31.7
)
56.7
Change in net unrecognized benefit plan
obligations
4.5
(15.9
)
Balance at period ended
(13.3
)
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
4.2
13.1
Cash dividends paid
(8.8
)
(17.5
)
Balance at period ended
769.8
774.4
Total stockholders' equity at period
ended
$
978.3
$
1,010.0
Condensed Consolidated Statements of
Cash Flow
($ in millions)
(unaudited)
Six months ended
June 30
2021
2020
Cash flows from operating
activities:
Net income (loss)
$
4.2
$
(80.3
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities
Depreciation and amortization, net
3.8
5.7
Share-based compensation
(1.5
)
(0.5
)
Net investment (gain) loss
(65.3
)
59.3
Changes in operating assets and
liabilities:
Deferred policy acquisition costs
(5.0
)
(8.9
)
Accrued investment income and other
assets
3.3
0.6
Premiums receivable
(3.6
)
(4.5
)
Postretirement and pension benefits
(11.7
)
(10.5
)
Reinsurance recoverable on losses and loss
expenses payable and prepaid reinsurance premiums
4.1
(23.8
)
Other liabilities and due to/from
affiliates, net
(15.8
)
(42.0
)
Losses and loss expenses payable
10.5
38.2
Unearned premiums
45.7
56.6
Deferred tax on share-based awards
(0.4
)
(0.2
)
Federal income taxes
6.0
(21.9
)
Net cash used in operating
activities
(25.7
)
(32.2
)
Cash flows from investing
activities:
Purchases of fixed maturities
available-for-sale
(359.4
)
(280.8
)
Purchases of equity securities
(12.9
)
(42.7
)
Purchases of other invested assets
(0.5
)
(6.9
)
Maturities, calls and pay downs of fixed
maturities available-for-sale
203.3
186.7
Sales of fixed maturities
available-for-sale
135.5
188.3
Sales of equity securities
83.5
30.0
Sales of other invested assets
1.3
0.6
Disposals of property and equipment
—
0.2
Net cash provided by investing
activities
50.8
75.4
Cash flows from financing
activities:
Proceeds from issuance of common stock
2.1
3.0
Payments to acquire treasury stock
(0.4
)
(0.9
)
Payment of dividends
(8.8
)
(8.7
)
Proceeds from short-term debt
—
60.0
Net cash (used in) provided by
financing activities
(7.1
)
53.4
Net increase in cash and cash
equivalents
18.0
96.6
Cash and cash equivalents at beginning of
period
90.7
78.0
Cash and cash equivalents at end of
period
$
108.7
$
174.6
Supplemental disclosures:
Interest paid (affiliates $0.3 and $0.5,
respectively)
$
2.2
$
2.3
Net Investment Income
($ in millions)
(unaudited)
6/30/2020
9/30/2020
12/31/2020
3/31/2021
6/30/2021
Quarter to Date
Gross investment income:
Fixed maturities
$
14.8
$
13.7
$
14.3
$
14.7
$
13.4
TIPS
(0.3
)
1.3
0.7
0.7
2.0
Total fixed maturities
14.5
15.0
15.0
15.4
15.4
Equity securities
2.6
2.1
1.5
1.6
1.2
Other
0.8
0.9
1.3
0.9
1.1
Total gross investment income
17.9
18.0
17.8
17.9
17.7
Less: Investment expenses
0.2
0.1
0.2
0.3
—
Net investment income
$
17.7
$
17.9
$
17.6
$
17.6
$
17.7
Year to Date
Gross investment income:
Fixed maturities
$
29.3
$
43.0
$
57.3
$
14.7
$
28.1
TIPS
0.3
1.6
2.3
0.7
2.7
Total fixed maturities
29.6
44.6
59.6
15.4
30.8
Equity securities
5.7
7.8
9.3
1.6
2.8
Other
1.8
2.7
4.0
0.9
2.0
Total gross investment income
37.1
55.1
72.9
17.9
35.6
Less: Investment expenses
0.5
0.6
0.8
0.3
0.3
Net investment income
$
36.6
$
54.5
$
72.1
$
17.6
$
35.3
6/30/2020
9/30/2020
12/31/2020
3/31/2021
6/30/2021
TIPS, fair value
$
115.9
$
117.0
$
116.2
$
104.7
$
108.2
TIPS, book value
$
100.9
$
99.4
$
97.8
$
89.2
$
90.9
Net Investment Gain (Loss)
($ in millions)
unaudited
Three months ended June 30
Six months ended June 30
2021
2020
2021
2020
Investment gain (loss), net:
Fixed maturities:
Realized gains on sales of securities
$
0.9
$
1.9
$
3.9
$
5.5
Realized losses on sales of securities
(1.7
)
(0.9
)
(3.2
)
(2.1
)
Net (loss) gain on fixed securities
(0.8
)
1.0
0.7
3.4
Net gain (loss) on equity securities
24.9
69.1
56.4
(53.3
)
Net gain (loss) on other invested
assets
3.0
5.8
8.2
(9.6
)
Other net realized (loss) gain
(0.4
)
—
(0.4
)
0.2
Net gain (loss) on investments
$
26.7
$
75.9
$
64.9
$
(59.3
)
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:
June 30
December 31
2021
2020
Deferred tax assets:
Unearned premiums not currently
deductible
$
32.0
$
30.1
Losses and loss expenses payable
discounting
11.3
10.5
Postretirement and pension benefits
17.3
19.3
Other liabilities
10.7
12.2
Net operating loss carryforward
28.3
19.8
Capital loss carryforward
6.1
6.1
Tax credit carryforward
2.3
1.9
Other
—
1.1
Total deferred tax assets
108.0
101.0
Deferred tax liabilities:
Deferral of policy acquisition costs
26.7
25.7
Investments
48.7
48.0
Other
3.3
—
Total deferred tax liabilities
78.7
73.7
Total net deferred tax assets before
valuation allowance
29.3
27.3
Less valuation allowance
0.3
—
Net deferred federal income taxes
$
29.0
$
27.3
The following table sets forth the
components of federal income tax expense (benefit):
Three months ended June 30
Six months ended June 30
2021
2020
2021
2020
Income (loss) before federal income
taxes
$
4.2
$
41.6
$
9.8
$
(102.4
)
Federal income tax expense (benefit)
Current
—
(0.4
)
—
(0.4
)
Deferred
3.6
7.7
5.6
(21.7
)
Total federal income tax expense
(benefit)
3.6
7.3
5.6
(22.1
)
Net income (loss)
$
0.6
$
34.3
$
4.2
$
(80.3
)
SAP Personal Insurance Segment
Results
(unaudited)
($ in millions)
Three months ended June 30,
2021
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
92.0
$
116.2
$
20.3
$
228.5
Net earned premiums
93.6
102.1
17.4
213.1
Losses and LAE incurred:
Cat loss and ALAE
4.5
55.2
9.5
69.2
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(1.3
)
2.5
(0.2
)
1.0
Current accident year non-cat loss and
ALAE
62.6
46.0
9.4
118.0
Total non-cat loss and ALAE
61.3
48.5
9.2
119.0
Total Loss and ALAE
65.8
103.7
18.7
188.2
ULAE
6.2
5.2
0.7
12.1
Total Loss and LAE
72.0
108.9
19.4
200.3
Underwriting expenses
23.8
28.3
4.9
57.0
Net underwriting loss
$
(2.2
)
$
(35.1
)
$
(6.9
)
$
(44.2
)
Cat loss and ALAE ratio
4.8
%
54.1
%
54.5
%
32.5
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(1.4
)%
2.5
%
(1.4
)%
0.5
%
Current accident year non-cat loss and
ALAE ratio
66.9
%
45.0
%
54.0
%
55.3
%
Total non-cat loss and ALAE ratio
65.5
%
47.5
%
52.6
%
55.8
%
Total Loss and ALAE ratio
70.3
%
101.6
%
107.1
%
88.3
%
ULAE ratio
6.7
%
5.0
%
3.9
%
5.7
%
Total Loss and LAE ratio
77.0
%
106.6
%
111.0
%
94.0
%
Expense ratio
25.8
%
24.4
%
24.1
%
24.9
%
Combined ratio
102.8
%
131.0
%
135.1
%
118.9
%
($ in millions)
Three months ended June 30, 2020
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
104.3
$
106.1
$
15.0
$
225.4
Net earned premiums
103.3
87.7
11.8
202.8
Losses and LAE incurred:
Cat loss and ALAE
4.1
54.6
7.6
66.3
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
5.9
(0.1
)
(0.1
)
5.7
Current accident year non-cat loss and
ALAE
45.5
36.7
3.9
86.1
Total non-cat loss and ALAE
51.4
36.6
3.8
91.8
Total Loss and ALAE
55.5
91.2
11.4
158.1
ULAE
8.3
6.5
0.6
15.4
Total Loss and LAE
63.8
97.7
12.0
173.5
Underwriting expenses
33.7
31.5
4.5
69.7
Net underwriting gain (loss)
$
5.8
$
(41.5
)
$
(4.7
)
$
(40.4
)
Cat loss and ALAE ratio
4.0
%
62.3
%
64.3
%
32.7
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
5.7
%
(0.2
)%
(0.8
)%
2.8
%
Current accident year non-cat loss and
ALAE ratio
44.0
%
41.8
%
33.2
%
42.4
%
Total non-cat loss and ALAE ratio
49.7
%
41.6
%
32.4
%
45.2
%
Total Loss and ALAE ratio
53.7
%
103.9
%
96.7
%
77.9
%
ULAE ratio
8.1
%
7.5
%
4.8
%
7.6
%
Total Loss and LAE ratio
61.8
%
111.4
%
101.5
%
85.5
%
Expense ratio
32.3
%
29.7
%
30.6
%
31.0
%
Combined ratio
94.1
%
141.1
%
132.1
%
116.5
%
($ in millions)
Six months ended June 30, 2021
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
181.1
$
202.4
$
38.2
$
421.7
Net earned premiums
189.3
198.4
33.2
420.9
Losses and LAE incurred:
Cat loss and ALAE
5.0
107.6
19.1
131.7
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(2.1
)
0.4
(0.2
)
(1.9
)
Current accident year non-cat loss and
ALAE
119.5
101.1
17.5
238.1
Total non-cat loss and ALAE
117.4
101.5
17.3
236.2
Total Loss and ALAE
122.4
209.1
36.4
367.9
ULAE
14.7
13.9
1.9
30.5
Total Loss and LAE
137.1
223.0
38.3
398.4
Underwriting expenses
51.3
54.8
10.0
116.1
Net underwriting gain (loss)
$
0.9
$
(79.4
)
$
(15.1
)
$
(93.6
)
Cat loss and ALAE ratio
2.6
%
54.2
%
57.4
%
31.3
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(1.1
)%
0.2
%
(0.6
)%
(0.4
)%
Current accident year non-cat loss and
ALAE ratio
63.1
%
51.0
%
52.8
%
56.6
%
Total non-cat loss and ALAE ratio
62.0
%
51.2
%
52.2
%
56.2
%
Total Loss and ALAE ratio
64.6
%
105.4
%
109.6
%
87.5
%
ULAE ratio
7.8
%
7.0
%
5.6
%
7.2
%
Total Loss and LAE ratio
72.4
%
112.4
%
115.2
%
94.7
%
Expense ratio
28.3
%
27.1
%
26.2
%
27.5
%
Combined ratio
100.7
%
139.5
%
141.4
%
122.2
%
($ in millions)
Six months ended June 30, 2020
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
208.9
$
187.7
$
28.3
$
424.9
Net earned premiums
208.0
170.4
22.5
400.9
Losses and LAE incurred:
Cat loss and ALAE
4.6
65.3
9.1
79.0
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
11.1
2.1
(1.1
)
12.1
Current accident year non-cat loss and
ALAE
107.5
74.3
8.2
190.0
Total non-cat loss and ALAE
118.6
76.4
7.1
202.1
Total Loss and ALAE
123.2
141.7
16.2
281.1
ULAE
15.6
11.8
1.0
28.4
Total Loss and LAE
138.8
153.5
17.2
309.5
Underwriting expenses
66.5
56.5
8.5
131.5
Net underwriting gain (loss)
$
2.7
$
(39.6
)
$
(3.2
)
$
(40.1
)
Cat loss and ALAE ratio
2.2
%
38.3
%
40.4
%
19.7
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
5.4
%
1.2
%
(4.8
)%
3.0
%
Current accident year non-cat loss and
ALAE ratio
51.6
%
43.7
%
36.4
%
47.4
%
Total non-cat loss and ALAE ratio
57.0
%
44.9
%
31.6
%
50.4
%
Total Loss and ALAE ratio
59.2
%
83.2
%
72.0
%
70.1
%
ULAE ratio
7.5
%
6.9
%
4.4
%
7.1
%
Total Loss and LAE ratio
66.7
%
90.1
%
76.4
%
77.2
%
Expense ratio
31.9
%
30.1
%
30.3
%
31.0
%
Combined ratio
98.6
%
120.2
%
106.7
%
108.2
%
SAP Commercial Insurance Segment
Results
(unaudited)
($ in millions)
Three months ended
June 30, 2021
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
57.4
$
34.9
$
50.4
$
11.8
$
22.5
$
7.5
$
184.5
Net earned premiums
45.0
33.1
41.3
14.5
17.8
5.9
157.6
Losses and LAE incurred:
Cat loss and ALAE
1.9
3.2
2.0
—
2.9
—
10.0
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(0.3
)
(2.3
)
(5.4
)
(6.9
)
(0.1
)
(1.7
)
(16.7
)
Current accident year non-cat loss and
ALAE
29.9
23.3
22.9
12.6
9.8
1.6
100.1
Total non-cat loss and ALAE
29.6
21.0
17.5
5.7
9.7
(0.1
)
83.4
Total Loss and ALAE
31.5
24.2
19.5
5.7
12.6
(0.1
)
93.4
ULAE
2.1
1.1
0.7
0.7
0.4
0.1
5.1
Total Loss and LAE
33.6
25.3
20.2
6.4
13.0
—
98.5
Underwriting expenses
15.8
10.0
15.6
5.5
7.0
2.4
56.3
Net underwriting (loss) gain
$
(4.4
)
$
(2.2
)
$
5.5
$
2.6
$
(2.2
)
$
3.5
$
2.8
Cat loss and ALAE ratio
4.3
%
9.6
%
4.9
%
—
%
16.0
%
0.5
%
6.4
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(0.6
)%
(6.9
)%
(13.2
)%
(47.5
)%
(0.9
)%
(28.8
)%
(10.6
)%
Current accident year non-cat loss and
ALAE ratio
66.5
%
70.2
%
55.5
%
87.4
%
54.3
%
28.0
%
63.5
%
Total non-cat loss and ALAE ratio
65.9
%
63.3
%
42.3
%
39.9
%
53.4
%
(0.8
)%
52.9
%
Total Loss and ALAE ratio
70.2
%
72.9
%
47.2
%
39.9
%
69.4
%
(0.3
)%
59.3
%
ULAE ratio
4.7
%
3.5
%
1.7
%
4.7
%
2.6
%
1.0
%
3.3
%
Total Loss and LAE ratio
74.9
%
76.4
%
48.9
%
44.6
%
72.0
%
0.7
%
62.6
%
Expense ratio
27.3
%
28.9
%
30.8
%
46.4
%
32.1
%
30.9
%
30.5
%
Combined ratio
102.2
%
105.3
%
79.7
%
91.0
%
104.1
%
31.6
%
93.1
%
($ in millions)
Three months ended
June 30, 2020
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
41.4
$
32.5
$
46.5
$
13.0
$
17.5
$
5.4
$
156.3
Net earned premiums
31.6
31.1
39.6
17.2
13.7
4.7
137.9
Losses and LAE incurred:
Cat loss and ALAE
0.7
11.9
6.9
—
4.6
—
24.1
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(0.2
)
(3.6
)
(2.9
)
(4.8
)
(0.3
)
(2.1
)
(13.9
)
Current accident year non-cat loss and
ALAE
15.0
17.2
22.0
12.8
6.1
1.3
74.4
Total non-cat loss and ALAE
14.8
13.6
19.1
8.0
5.8
(0.8
)
60.5
Total Loss and ALAE
15.5
25.5
26.0
8.0
10.4
(0.8
)
84.6
ULAE
1.7
2.1
1.1
1.7
0.6
0.1
7.3
Total Loss and LAE
17.2
27.6
27.1
9.7
11.0
(0.7
)
91.9
Underwriting expenses
13.7
11.3
17.7
6.0
7.7
2.0
58.4
Net underwriting gain (loss)
$
0.7
$
(7.8
)
$
(5.2
)
$
1.5
$
(5.0
)
$
3.4
$
(12.4
)
Cat loss and ALAE ratio
2.0
%
38.4
%
17.6
%
—
%
33.4
%
(0.1
)%
17.5
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(0.6
)%
(11.7
)%
(7.3
)%
(28.0
)%
(2.0
)%
(43.9
)%
(10.1
)%
Current accident year non-cat loss and
ALAE ratio
47.7
%
55.3
%
55.4
%
74.3
%
45.2
%
27.5
%
54.0
%
Total non-cat loss and ALAE ratio
47.1
%
43.6
%
48.1
%
46.3
%
43.2
%
(16.4
)%
43.9
%
Total Loss and ALAE ratio
49.1
%
82.0
%
65.7
%
46.3
%
76.6
%
(16.5
)%
61.4
%
ULAE ratio
5.3
%
6.7
%
2.8
%
9.9
%
4.5
%
1.8
%
5.3
%
Total Loss and LAE ratio
54.4
%
88.7
%
68.5
%
56.2
%
81.1
%
(14.7
)%
66.7
%
Expense ratio
33.1
%
34.8
%
38.1
%
45.5
%
43.4
%
37.6
%
37.3
%
Combined ratio
87.5
%
123.5
%
106.6
%
101.7
%
124.5
%
22.9
%
104.0
%
($ in millions)
Six months ended
June 30, 2021
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
108.7
$
69.9
$
89.7
$
27.8
$
42.4
$
12.2
$
350.7
Net earned premiums
85.9
64.8
80.9
29.7
34.3
10.7
306.3
Losses and LAE incurred:
Cat loss and ALAE
2.1
8.4
5.0
—
6.1
—
21.6
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(0.9
)
(4.5
)
(13.5
)
(15.4
)
(1.5
)
(2.7
)
(38.5
)
Current accident year non-cat loss and
ALAE
55.3
43.1
48.5
21.9
15.3
3.5
187.6
Total non-cat loss and ALAE
54.4
38.6
35.0
6.5
13.8
0.8
149.1
Total Loss and ALAE
56.5
47.0
40.0
6.5
19.9
0.8
170.7
ULAE
4.7
3.5
1.5
1.4
1.1
0.2
12.4
Total Loss and LAE
61.2
50.5
41.5
7.9
21.0
1.0
183.1
Underwriting expenses
31.9
21.5
31.8
13.0
15.0
4.2
117.4
Net underwriting (loss) gain
$
(7.2
)
$
(7.2
)
$
7.6
$
8.8
$
(1.7
)
$
5.5
$
5.8
Cat loss and ALAE ratio
2.4
%
12.9
%
6.2
%
—
%
17.8
%
0.3
%
7.1
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(1.0
)%
(7.0
)%
(16.7
)%
(51.8
)%
(4.5
)%
(25.1
)%
(12.6
)%
Current accident year non-cat loss and
ALAE ratio
64.4
%
66.6
%
60.0
%
73.7
%
44.3
%
32.9
%
61.2
%
Total non-cat loss and ALAE ratio
63.4
%
59.6
%
43.3
%
21.9
%
39.8
%
7.8
%
48.6
%
Total Loss and ALAE ratio
65.8
%
72.5
%
49.5
%
21.9
%
57.6
%
8.1
%
55.7
%
ULAE ratio
5.4
%
5.4
%
1.8
%
4.8
%
3.3
%
1.7
%
4.1
%
Total Loss and LAE ratio
71.2
%
77.9
%
51.3
%
26.7
%
60.9
%
9.8
%
59.8
%
Expense ratio
29.3
%
30.8
%
35.4
%
46.7
%
35.7
%
34.0
%
33.5
%
Combined ratio
100.5
%
108.7
%
86.7
%
73.4
%
96.6
%
43.8
%
93.3
%
($ in millions)
Six months ended
June 30, 2020
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
77.8
$
64.4
$
86.8
$
31.8
$
32.3
$
10.3
$
303.4
Net earned premiums
60.6
61.4
75.7
36.9
26.3
9.4
270.3
Losses and LAE incurred:
Cat loss and ALAE
1.0
15.5
31.0
—
5.5
0.2
53.2
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(0.3
)
(9.0
)
(8.0
)
(8.8
)
(1.1
)
(3.5
)
(30.7
)
Current accident year non-cat loss and
ALAE
31.6
36.3
49.5
26.2
10.1
4.3
158.0
Total non-cat loss and ALAE
31.3
27.3
41.5
17.4
9.0
0.8
127.3
Total Loss and ALAE
32.3
42.8
72.5
17.4
14.5
1.0
180.5
ULAE
3.2
3.7
3.2
3.4
1.1
0.3
14.9
Total Loss and LAE
35.5
46.5
75.7
20.8
15.6
1.3
195.4
Underwriting expenses
26.4
23.1
34.4
14.9
14.4
4.1
117.3
Net underwriting (loss) gain
$
(1.3
)
$
(8.2
)
$
(34.4
)
$
1.2
$
(3.7
)
$
4.0
$
(42.4
)
Cat loss and ALAE ratio
1.6
%
25.3
%
41.0
%
—
%
20.8
%
1.9
%
19.7
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(0.4
)%
(14.7
)%
(10.6
)%
(24.0
)%
(4.1
)%
(36.9
)%
(11.4
)%
Current accident year non-cat loss and
ALAE ratio
52.2
%
59.1
%
65.4
%
71.1
%
38.7
%
45.5
%
58.5
%
Total non-cat loss and ALAE ratio
51.8
%
44.4
%
54.8
%
47.1
%
34.6
%
8.6
%
47.1
%
Total Loss and ALAE ratio
53.4
%
69.7
%
95.8
%
47.1
%
55.4
%
10.5
%
66.8
%
ULAE ratio
5.2
%
6.0
%
4.2
%
9.3
%
4.2
%
2.9
%
5.5
%
Total Loss and LAE ratio
58.6
%
75.7
%
100.0
%
56.4
%
59.6
%
13.4
%
72.3
%
Expense ratio
34.0
%
35.9
%
39.6
%
46.8
%
44.4
%
39.6
%
38.6
%
Combined ratio
92.6
%
111.6
%
139.6
%
103.2
%
104.0
%
53.0
%
110.9
%
SAP Insurance Segment Results
(unaudited)
($ in millions)
2021
2020
2021
2020
Three months ended June 30
Personal & Commercial
Personal & Commercial
Total(1)
Total(1)
Net written premiums
$
413.0
$
381.7
$
412.3
$
381.6
Net earned premiums
370.7
340.7
369.9
340.7
Losses and LAE incurred:
Cat loss and ALAE
79.2
90.4
80.0
90.4
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(15.7
)
(8.2
)
(15.9
)
(2.0
)
Current accident year non-cat loss and
ALAE
218.1
160.5
218.0
160.5
Total non-cat loss and ALAE
202.4
152.3
202.1
158.5
Total Loss and ALAE
281.6
242.7
282.1
248.9
ULAE
17.2
22.7
17.1
22.7
Total Loss and LAE
298.8
265.4
299.2
271.6
Underwriting expenses
113.3
128.1
113.5
128.2
Net underwriting loss
$
(41.4
)
$
(52.8
)
$
(42.8
)
$
(59.1
)
Cat loss and ALAE ratio
21.4
%
26.5
%
21.6
%
26.5
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(4.2
)%
(2.4
)%
(4.3
)%
(0.6
)%
Current accident year non-cat loss and
ALAE ratio
58.8
%
47.1
%
59.0
%
47.1
%
Total non-cat loss and ALAE ratio
54.6
%
44.7
%
54.7
%
46.5
%
Total Loss and ALAE ratio
76.0
%
71.2
%
76.3
%
73.0
%
ULAE ratio
4.6
%
6.7
%
4.6
%
6.7
%
Total Loss and LAE ratio
80.6
%
77.9
%
80.9
%
79.7
%
Expense ratio
27.4
%
33.6
%
27.5
%
33.6
%
Combined ratio
108.0
%
111.5
%
108.4
%
113.3
%
(1)Includes specialty run-off
(unaudited)
($ in millions)
2021
2020
2021
2020
Six months ended June 30
Personal & Commercial
Personal & Commercial
Total(1)
Total(1)
Net written premiums
$
772.4
$
728.3
$
771.0
$
728.1
Net earned premiums
727.2
671.2
725.8
671.2
Losses and LAE incurred:
Cat loss and ALAE
153.3
132.2
151.6
132.3
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(40.4
)
(18.6
)
(40.5
)
(12.5
)
Current accident year non-cat loss and
ALAE
425.7
348.0
425.7
348.1
Total non-cat loss and ALAE
385.3
329.4
385.2
335.6
Total Loss and ALAE
538.6
461.6
536.8
467.9
ULAE
42.9
43.3
42.8
43.3
Total Loss and LAE
581.5
504.9
579.6
511.2
Underwriting expenses
233.5
248.8
233.8
249.2
Net underwriting loss
$
(87.8
)
$
(82.5
)
$
(87.6
)
$
(89.2
)
Cat loss and ALAE ratio
21.1
%
19.7
%
20.9
%
19.7
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(5.6
)%
(2.8
)%
(5.6
)%
(1.9
)%
Current accident year non-cat loss and
ALAE ratio
58.6
%
51.8
%
58.7
%
52.0
%
Total non-cat loss and ALAE ratio
53.0
%
49.0
%
53.1
%
50.1
%
Total Loss and ALAE ratio
74.1
%
68.7
%
74.0
%
69.8
%
ULAE ratio
5.9
%
6.5
%
5.9
%
6.4
%
Total Loss and LAE ratio
80.0
%
75.2
%
79.9
%
76.2
%
Expense ratio
30.2
%
34.2
%
30.3
%
34.2
%
Combined ratio
110.2
%
109.4
%
110.2
%
110.4
%
(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 and six months ended June 30,
2021 and 2020:
($ millions)
2Q 2021
2Q 2020
YTD 2021
YTD 2020
Segment income (loss) before federal
income taxes:
Insurance operations:
Personal insurance SAP underwriting
loss
$
(44.2
)
$
(40.4
)
$
(93.6
)
$
(40.1
)
Commercial insurance SAP underwriting gain
(loss)
2.8
(12.4
)
5.8
(42.4
)
Specialty run-off
(1.4
)
(6.3
)
0.2
(6.7
)
Total insurance operations
(42.8
)
(59.1
)
(87.6
)
(89.2
)
Investment operations:
Net investment income
17.7
17.7
35.3
36.6
Net investment gain (loss)
26.7
75.9
64.9
(59.3
)
Total investment operations
44.4
93.6
100.2
(22.7
)
All other segments income
—
—
—
0.1
Reconciling items:
GAAP adjustments
5.7
8.7
4.4
14.6
Interest expense on corporate debt
(1.1
)
(1.3
)
(2.2
)
(2.5
)
Corporate expenses
(2.0
)
(0.3
)
(5.0
)
(2.7
)
Total reconciling items
2.6
7.1
(2.8
)
9.4
Total consolidated income (loss) before
federal income taxes
$
4.2
$
41.6
$
9.8
$
(102.4
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805005087/en/
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
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