State Auto Financial Announces Record Fourth Quarter Earnings
COLUMBUS, Ohio--Feb. 28, 2003--| -- | Record quarterly earnings of $19.3 million |
| -- | Strong revenue growth of 12.7% |
| -- | GAAP Combined Ratio of 98.5 |
State Auto Financial Corporation today reported record fourth quarter net earnings of $19,331,000. Net reported earnings were $0.49, per diluted share, versus $(0.27) for the same period last year. Net operating earnings for the quarter were $0.40 per diluted share, versus $(0.26) for the same period 2001.
STFC's fourth quarter revenue was $254,335,000, up 12.7% from $225,582,000 a year earlier. Quarterly written premium increased 10.5% over the fourth quarter 2001. The Company's GAAP combined ratio for the fourth quarter was 98.5 versus 115.8 for the fourth quarter 2001.
"We believe the strong fourth quarter financial results represent a validation of the traditional State Auto focus on profitable operations and discipline in executing our underwriting, pricing, growth and expense management strategies," said STFC Chairman and CEO Bob Moone. He added, "The historically profitable State Auto business segment continues to benefit from substantial rate nourishment and emphasis on adherence to our new and renewal risk selection guidelines. It is very gratifying to note that the underwriting profiles of the Meridian segment continue to improve, which has predictably, led to far better financial performance."
For 2002, net reported earnings were $36,995,000, or $0.93 per diluted share, up from the prior year's $20,615,000 or $0.52 per diluted share, a 79.5% increase. Revenue for the year 2002 was $967,479,000, up 55.2% from $623,287,000 for 2001. This year's GAAP combined ratio of 102.4 was a solid improvement over the 107.0 posted in 2001.
"We are pleased to be able to show significant growth along with improving underwriting results. As revenues approach $1 billion, our commitment is to continue to implement our proven corporate strategies to maximize shareholder value," said Mr. Moone. STFC shareholders' book value per share increased by a healthy 15.7% during 2002 to $11.89 per share.
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, general liability, workers' compensation and fire insurance. The company currently markets its products through more than 22,000 independent agents associated with approximately 3,500 agencies in 26 states and the District of Columbia. 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 Friday, February 28, 10:00 A.M. to discuss the company's 2002 fourth quarter performance. A replay of this conversation, in its entirety, can be heard beginning at noon today by calling 1-888-566-0698. 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 fourth 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)
(unaudited)
Quarter Ended Year Ended
December 31 December 31
2002 2001 2002 2001
--------- --------- --------- ---------
Net premiums written $230,379 $312,717 (a)$942,844 $726,822 (b)
--------- --------- --------- ---------
Earned premiums 232,357 209,667 896,595 555,207
Net investment income 15,477 15,017 59,691 47,375
Management services
income 771 710 2,638 15,586
Net realized gain (loss)
on investments 5,055 (444) 5,909 1,977
Other income 675 632 2,646 3,142
--------- --------- --------- ---------
Total revenue 254,335 225,582 967,479 623,287
--------- --------- --------- ---------
Income (loss) before
federal income taxes 22,112 (21,280) 37,790 17,976
Federal income tax
expense (benefit) 2,781 (10,645) 795 (2,639)
--------- --------- --------- ---------
Net income (loss) $19,331 $(10,635) $36,995 $20,615
========= ========= ========= =========
Earnings (loss) per
share:
- basic $0.50 ($0.27) $0.95 $0.53
- diluted $0.49 ($0.27) $0.93 $0.52
Earnings (loss) per share
from operations(1):
- basic $0.41 ($0.26) $0.85 $0.50
- diluted $0.40 ($0.26) $0.83 $0.49
Weighted average shares
outstanding:
- basic 38,968 38,887 38,984 38,775
- diluted 39,638 38,887 39,743 39,681
Book value per share $11.89 $10.28
Dividends paid per share $0.035 $0.0325 $0.135 $0.125
Total shares outstanding 39,001 38,937
GAAP ratios:
Loss ratio 68.7 84.8 72.9 76.9
Expense ratio 29.8 31.0 29.5 30.1
--------- --------- --------- ---------
Combined ratio 98.5 115.8 102.4 107.0
========= ========= ========= =========
(a) Net premiums written for the quarter ended December 31, 2001,
includes $104,239,000 of unearned premiums transferred to STFC in
connection with the 10/1/2001 pooling change.
(b) Net premiums written for the year ended December 31, 2001,
includes $152,881,000 of unearned premiums transferred to STFC in
connection with the addition of the business formerly written by
Meridian Mutual Insurance Company to the State Auto Pool,
effective July 1, 2001, as well as the unearned premium
transferred on the 10/1/2001 pooling change.
(1) Excludes net realized gains on investments, less applicable
federal income taxes.