State Auto Financial Corporation Announces First Quarter Earnings
29 April 1999
State Auto Financial Corporation Announces First Quarter Earnings
COLUMBUS, Ohio--April 29, 1999--State Auto Financial Corporation reported net earnings per share of $0.25 ($0.25 diluted) for the first quarter ending March 31, 1999, compared to $0.27 per share ($0.27 diluted) for the same 1998 period. Net operating earnings per share were $0.24 ($0.24 diluted), compared to $0.26 per share ($0.26 diluted) for the same 1998 period.1998 results have been restated to include the financial position and operations of Milbank Insurance Company, which was acquired by STFC from an affiliated company in July 1998. Accounting for this transaction was handled similarly to the pooling of interests method.
For the quarter ending March 31, 1999, net earnings were $10,880,000, compared to $11,531,000, for same period last year. The company's total revenue for the first quarter was $110,931,000, an increase of 11.6% over the previous year's revenue of $99,361,000. First quarter 1999 marked the first time that Farmers Casualty Insurance Company's results have been included in STFC's results of operations. Farmers Casualty was acquired January 1, 1999. Concurrent with the acquisition of Farmers Casualty, STFC's share of the State Auto Insurance Companies' reinsurance pool increased from 47% to 50%.
"We continue to hold steadfast on responsible underwriting and pricing as the proven method of sustaining profitability. This allowed us to produce a GAAP combined loss and expense ratio of 96.1, despite absorbing almost $7,500,000 in catastrophe losses during the first quarter," said Robert L. Bailey, Chairman and CEO.
STFC 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 12,500 agents associated with approximately 2,200 agencies in 26 states. Products are marketed primarily in the Midwest and eastern United States, excluding New York, New Jersey and the New England states.
Consolidated Statements of Earnings (Figures in thousands, except per-share amounts) (unaudited) Quarter Ended March 31 1999 1998 ---- ---- (Restated see Note) Net premiums written $102,377(a) $95,870(a) -------- -------- Earned premiums 98,477 88,142 Net investment income 8,451 8,011 Management services income 2,184 1,972 Net realized gains on investments 1,054 726 Other income 765 510 -------- -------- Total revenue 110,931 99,361 -------- -------- Earnings before income taxes 14,661 15,874 Income taxes 3,781 4,343 -------- -------- Net earnings $10,880 $11,531 -------- -------- -------- -------- Net earnings per share: -basic $0.25 $0.27 -diluted $0.25 $0.27 Net earnings per share from operations(b): -basic $0.24 $0.26 -diluted $0.24 $0.26 Weighted average shares outstanding: -basic 42,054 41,828 -diluted 42,850 42,887 Book value per share $8.30 $7.40 Dividends paid per share $0.025 $0.023 Total shares outstanding 42,058 41,838 GAAP ratios: Loss ratio 67.5 63.5 Expense ratio 28.6 29.7 -------- -------- Combined ratio 96.1 93.2 -------- -------- -------- -------- Note: In July 1998, STFC acquired Milbank Insurance Company from an affiliated company. This transaction was accounted for similar to a pooling of interests. Prior year's financial information has been restated to include the financial position and operations of Milbank. (a) Net premiums written for the three months ended March 31, 1999 and 1998 includes $5,816,000 and $8,183,000 of unearned premiums transferred in connection with the 1/1/99 and 1/1/98 pooling changes, respectively. (b) Excludes net realized gains on Investments, less applicable federal income taxes.