State Auto Financial Announces Second Quarter Results
COLUMBUS, Ohio--July 31, 2002--State Auto Financial Corporation announced a net reported loss per share of $0.04 (basic and diluted) for the quarter ending June 30, 2002, compared with net reported earnings per share of $0.24 for the same period last year. The 2002 second quarter net operating loss per share was $0.02 (basic and diluted) compared with net operating earnings of $0.21 per share for the same 2001 period. The net loss for the second quarter was $1,385,000, compared with net earnings of $9,433,000 for the same 2001 period. STFC's second quarter 2002 GAAP combined loss and expense ratio was 108.6, compared with 103.5 for the second quarter 2001.For the first six months of 2002, net reported earnings were $11,779,000 or $0.30 per share, $0.29 diluted, compared with $23,973,000 or $0.61 per share, $0.60 diluted, for the same 2001 period. Second quarter 2002 total revenue was $236,223,000 versus $123,032,000 for the second quarter 2001. Total revenue for the first half 2002 was $466,182,000, a 93% increase over the $241,033,000 total revenue for the first half 2001.
Storm losses for the second quarter 2002 added 13.5 points to the STFC's GAAP combined ratio. "Our performance in the second quarter was heavily influenced by the largest dollar catastrophe loss in our companies' history," said STFC Chairman and CEO Robert Moone. "Between April 27 and May 1, tornados, hail and high winds plowed through 13 states in which we have substantial market share." The communities of La Plata, MD and Providence, KY, were hit especially hard. "We are proud of the role we are playing in the rebuilding of La Plata and Providence. My special thanks to our claims catastrophe team for their long hours and exceptional effort." STFC's second quarter storm losses exceeded $29.8 million.
"When the quarter's performance is so greatly influenced by one or two events, it's important to step back and analyze the underlying business and other factors that typically define our performance," added Moone. "What I see confirms our continuing adherence to the principles of sound underwriting, pricing and operating efficiency. Adjusting for the storm losses, the Meridian book reflects improvement from its performance in the comparable period last year. Our non-standard auto segment had a GAAP combined ratio of 92.5. In addition, STFC's expense ratio has improved by 0.8 points from the same period in 2001. And total revenue for the quarter was up 92% over the same period 2001."
State Auto Financial Corporation is a regional property and casualty insurance holding company engaged primarily in writing personal and commercial automobile, homeowners, commercial multi-peril, workers' compensation and fire insurance. The company currently markets its products through more than 22,000 independent agents associated with approximately 3,800 agencies in 26 states. Products are marketed primarily in the central and eastern United States, excluding New York, New Jersey and the New England states.
STFC has scheduled a conference call with industry analysts for Wednesday, July 31, 10:00 A.M. to discuss the company's 2002 second quarter performance. A replay of this conversation, in its entirety, can be heard beginning at noon today by calling 1-888-562-3873. Live and archived broadcasts of the conference can be accessed via links on www.STFC.com and www.StateAuto.com. Documents detailing the company's second quarter 2002 financial, sales and underwriting results are distributed to investment analysts prior to the above-mentioned conference call. These documents can be found as attachments to this release on www.STFC.com.
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
Consolidated Statements of Income
(Figures in thousands, except per-share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
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Net premiums written $ 241,291 $ 113,794 $ 463,577 $ 218,844
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Earned premiums 221,342 105,316 434,179 206,877
Net investment income 14,837 10,431 29,448 20,735
Management services
income 586 4,964 1,174 9,884
Net realized gains
(loss) on investments (1,156) 1,416 154 1,817
Other income 614 905 1,227 1,720
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Total revenue 236,223 123,032 466,182 241,033
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Income (loss) before
federal income taxes (6,751) 12,028 10,549 31,226
Federal income taxes (5,366) 2,595 (1,230) 7,253
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Net income (loss) $ (1,385) $ 9,433 $ 11,779 $ 23,973
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Earnings (loss) per share:
- basic ($0.04) $0.24 $0.30 $0.61
- diluted ($0.04) $0.24 $0.29 $0.60
Earnings (loss) per
share from operations(1):
- basic ($0.02) $0.21 $0.30 $0.58
- diluted ($0.02) $0.21 $0.29 $0.57
Weighted average shares
outstanding:
- basic 39,007 38,744 38,987 38,682
- diluted 39,007 39,661 39,803 39,635
Book value per share $10.84 $10.71
Dividends paid per share $0.0325 $0.030 $0.065 $0.060
Total shares outstanding 39,025 38,812
GAAP ratios:
Loss ratio 79.7 73.8 74.6 69.4
Expense ratio 28.9 29.7 29.1 29.9
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Combined ratio 108.6 103.5 103.7 99.3
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(1) Excludes net realized gains on investments, less applicable
federal income taxes.
