State Auto Financial Reports First Quarter 2004 Results
COLUMBUS, Ohio--April 27, 2004--State Auto Financial Corporation-- Record quarterly earnings of $0.80
-- GAAP combined ratio improved to 89.6
-- Book value increased to $14.82, up 20% from 3/31/2003
State Auto Financial Corporation today reported record first quarter 2004 net income of $32,400,000 or $0.80 per diluted share, versus $21,100,000 or $0.53 per diluted share for the same period 2003. Net operating earnings(a) per diluted share were $0.71 for the first quarter of 2004, versus $0.47 for the same period in 2003.
STFC's GAAP combined ratio for the first quarter was 89.6, versus 95.2 for the first quarter of 2003. Catastrophe losses were light, contributing only 1.0 point to the loss ratio in the first quarter 2004, versus 2.6 points in the first quarter 2003. STFC's first quarter revenue was $273,100,000, up from $253,300,000 for the same period in 2003. STFC shareholders' book value per share increased 20% to $14.82 from March 31, 2003.
STFC Chairman and CEO Bob Moone stated, "The first quarter of 2004 continued the trend of profitable results for State Auto Financial with both the standard and nonstandard business segments contributing nicely to our success. The quarterly combined ratios of 89.0 and 96.1, respectively, for those segments bear this out. We have now achieved record net operating earnings per share for five of the last six quarters.
"Another satisfying development is the continued improvement in the loss ratio of our homeowners line to 53.6 from 67.7 for the first quarter of 2003. This improved result for homeowners arises from relatively light catastrophe loss experience, a reduction in large loss frequency and improvement in the core loss ratio due to continuing underwriting diligence and greater rate adequacy.
"A number of us recently completed a tour of our regional and branch offices as well as visits with our independent agents in many states. I believe that State Auto has the proper focus and dedication to details needed to be successful in this very competitive industry. Our commitment to sound underwriting and cost-based pricing should, absent unusual catastrophe experience, allow for solid results throughout 2004 and continued enhancement of shareholder value," added Moone.
State Auto Financial Corporation, headquartered in Columbus, Ohio, is a regional property and casualty insurance holding company engaged primarily in writing both personal and commercial lines of insurance. The company markets its policies through more than 22,500 independent insurance agents associated with over 3,300 agencies in 26 central and eastern states, excluding New York, New Jersey and the New England states. The State Auto Insurance Companies' pool carries an A+ (Superior) rating from A.M. Best Co.
(a) Net operating earnings, a non-GAAP financial measure which management believes is informative to Company management and investors, differ from GAAP net earnings 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 amounts to $0.09 per diluted share for the first quarter 2004 versus $0.06 for the same 2003 period.
STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(figures in millions, except per-share amounts)
(unaudited)
Quarter Ended
March 31
2004 2003
----------- -----------
Net premiums written $252.8 $236.5
----------- -----------
Earned premiums 248.8 232.4
Net investment income 17.5 15.7
Net realized gains on investments 5.4 3.8
Other income 1.4 1.4
----------- -----------
Total revenue 273.1 253.3
----------- -----------
Income before federal income taxes 46.0 28.6
Federal income taxes 13.6 7.5
----------- -----------
Net income $32.4 21.1
=========== ===========
Earnings per share:
- basic $0.82 $0.54
- diluted $0.80 $0.53
Earnings per share from operations(a):
- basic $0.73 $0.48
- diluted $0.71 $0.47
Weighted average shares outstanding:
- basic 39.6 39.1
- diluted 40.5 39.7
Book value per share $14.82 $12.36
Dividends paid per share $0.040 $0.035
Total shares outstanding 39.7 39.2
GAAP ratios:
Loss and LAE ratio 59.4 64.4
Expense ratio 30.2 30.8
----------- -----------
Combined ratio 89.6 95.2
=========== ===========
(a)Net income from operations:
Net income $32.4 $21.1
Less net realized gains on investments,
less applicable federal income taxes 3.5 2.5
----------- -----------
Net income from operations $28.9 18.6
=========== ===========
