State Auto Financial Reports Third Quarter Storm Losses, Negligible Direct Credit Exposures
COLUMBUS, Ohio, Oct. 6, 2008 - State Auto Financial Corporation today announced its preliminary estimates of catastrophe losses to be reported for its third quarter 2008, including those related to Hurricane Ike. In addition, the company reported that it had negligible direct exposure with respect to certain credit-impacted securities.
The company expects that its third quarter 2008 results will include between $55 and $60 million in pre-tax catastrophe losses related to storm activity, compared to $5.6 million in pre-tax catastrophe losses for its third quarter 2007. Third quarter pre-tax catastrophe losses have averaged $11.8 million for the prior five years.
Hurricane Ike was widely reported to have caused serious damage in Texas. State Auto’s most significant losses, however, occurred in Ohio, Indiana and Kentucky, as Ike delivered tropical storm-force winds to parts of the Midwest.
“We dispatched members of our Catastrophe Claims Team to Texas days before Hurricane Ike made landfall,” said STFC Chairman and CEO Bob Restrepo. “Our adjusters remain in that region and the Midwest, working to provide policyholders the high level of service they expect from State Auto. What no one could have anticipated was that an even greater number of our Midwest policyholders would be affected by that storm. State Auto’s 24-hour Claims Contact Center has remained on overdrive, assisting policyholders whose properties were damaged by high winds.”
“We are also very proud of the outstanding service being delivered by our independent agents,” added Restrepo. “Their prompt, professional response to our customers in their time of need once again demonstrates the value of a local, independent agent.”
Additionally, STFC reported that it had no direct exposure to Lehman Brothers Holdings Inc. or its subsidiaries (“Lehman”), American International Group Inc. (“AIG”), and no exposure to the common or preferred shares of Federal Home Loan Mortgage Corp. (“Freddie Mac”) or Federal National Mortgage Association (“Fannie Mae”). STFC’s exposure to Freddie Mac and Fannie Mae is limited to senior debt issues and mortgage-backed pools, which amount to less than four percent of invested assets, with no impairments anticipated as a result.
STFC plans to release final third quarter 2008 financial results on Thursday, October 23, 2008, followed by a conference call at 10:00 Eastern time to discuss the company’s third quarter performance.