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State Auto Financial Announces Strong Earnings and Sales Results for Q1

    COLUMBUS, Ohio--April 26, 2001--State Auto Financial Corporation announced net reported earnings per share of $0.37 ($0.36 diluted) for the first quarter ending March 31, 2001, compared to $0.35 ($0.35 diluted) per share for the same period last year.
    Net operating earnings per share were $0.37 ($0.36 diluted), compared to $0.30 per share ($0.30 diluted) for the same 2000 period. The service fee paid by State Automobile Mutual Insurance Company (Mutual) contributed $0.07 per share and, as discussed in STFC's April 2, 2001 press announcement, the fee remains subject to review by the Ohio Department of Insurance (ODI). The company intends to deliver its justification to the ODI, which will include input from independent experts, as soon as practicable.
    For the quarter ending March 31, 2001, net earnings were $14,540,000, an increase of 6.3% over the $13,683,000 reported for the same period last year. The company's total revenue for the first quarter was $118,001,000, an increase of 1.3% over the previous year's first quarter total revenue of $116,461,000. The company's GAAP combined ratio for the period ending March 31, 2001 was 94.9, compared to 96.3 for the quarter ending March 31, 2000.
    STFC's net written premium for the first quarter 2001 was $105,050,000, an increase of 11.0% over the same period last year. "Producing an underwriting profit is our primary objective," said Robert H. Moone, chairman, president and C.E.O. "And, as the current quarter demonstrates, profit and growth are not mutually exclusive in a rational market environment. We are very pleased with the outstanding quarter and committed to sustaining our performance."


           STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
                   Consolidated Statements of Income
           (Figures in thousands, except per-share amounts)
                              (unaudited)

                                             Quarter Ended
                                                March 31
                                          2001            2000
                                          ----            ----



Net premiums written                     $105,050        $101,925  (a)
                                       -----------     -----------

Earned premiums                           101,561          98,811
Net investment income                      10,304           9,374
Management services income                  4,920           4,404
Net realized gains (losses) on
 investments                                  401           3,139
Other income                                  815             733
                                       -----------     -----------
  Total revenue                           118,001         116,461
                                       -----------     -----------

Income before federal income taxes         19,199          18,584

Federal income taxes                        4,659           4,901
                                       -----------     -----------
Net income                                $14,540         $13,683
                                       ===========     ===========

Net earnings per share:
     - basic                                $0.37           $0.35
     - diluted                              $0.36           $0.35

Net earnings per share from
 operations (b):
     - basic                                $0.37           $0.30
     - diluted                              $0.36           $0.30

Weighted average shares outstanding:
     - basic                               38,619          38,352
     - diluted                             39,608          38,837

Book value per share                       $10.38           $8.72

Dividends paid per share                   $0.030          $0.028

Total shares outstanding                   38,696          38,369

GAAP ratios:
     Loss ratio                              64.8            65.0
     Expense ratio                           30.1            31.3
                                       -----------     -----------
     Combined ratio                          94.9            96.3
                                       ===========     ===========

(a) Net premiums written for the three months ended March 31, 2000
includes $7,289,000 of unearned premiums transferred in connection
with the with the 1/1/00 pooling change, respectively.

(b) Excludes net realized gains on investments, less applicable
federal income taxes.