State Auto Financial Announces Record Third Quarter Profit
COLUMBUS, Ohio--Oct. 2, 20037, 2003--State Auto Financial Corporation-- Combined ratio of 97.6
-- Net income up 165%
-- Revenue increase of 7.3%
State Auto Financial Corporation today reported third quarter net income increased to $15,580,000, or $0.38 per diluted share, versus $5,885,000 or $0.15 per diluted share for the same period 2002. Net operating earnings* per share were $0.36 diluted, versus $0.14 diluted, for the same period 2002.
STFC's GAAP combined ratio for the third quarter was 97.6 versus 103.8 for the third quarter of 2002. Catastrophe losses contributed a total of 6.9 points to the loss ratio during the quarter. STFC's third quarter revenue was $265,110,000, up 7.3% from $246,962,000. Third quarter net premiums written increased 5.1% over the third quarter of 2002.
Revenue for the first nine months 2003 was $781,621,000, up 9.6% from $713,144,000. For the first nine months of 2003, net income was $44,945,000, or $1.12 per diluted share, compared with $17,664,000 or $0.44 per diluted share for the same 2002 period. Year to date GAAP combined ratio for 2003 stands at 98.9 compared to 103.7 for 2002. STFC shareholders' book value per share has increased by 10.3% during the first nine months of 2003 to $13.12 per share.
"We are quite pleased to report that the third quarter of 2003 was the fourth consecutive quarter of increasing profitability when comparing year over year results. This was the most profitable third quarter in our history. Our disciplined pricing and underwriting philosophies continue to generate consistently strong core results. While catastrophes, including hurricane Isabel, added 6.9 points to our combined ratio for the quarter, we were still able to produce an underwriting profit," said STFC Chairman and CEO Bob Moone.
State Auto Financial Corporation 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 22,000 independent agents associated with approximately 3,400 agencies in 26 central and eastern states, excluding New York, New Jersey and the New England states.
(a) Net operating earnings, a non-GAAP financial measure, differ from GAAP net earnings only by the exclusion of realized capital gains or losses, net of applicable taxes, on investment activity for the period being reported. For STFC, this amounts to $0.02 for the quarter and $0.15 for 2003 year to date.
STFC has scheduled a conference call with interested investors for Tuesday, October 28, 10:00 A.M. to discuss the company's third quarter 2003 performance. Live and archived broadcasts of the call can be accessed via links on www.STFC.com and www.StateAuto.com. A replay of the call can be heard beginning at noon today by calling 1-800-406-7490. Supplemental schedules detailing the company's third quarter 2003 financial, sales and underwriting results are made available on www.STFC.com prior to the above-mentioned conference call.
STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Figures in thousands, except per-share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
-------- -------- -------- --------
Net premiums written $261,598 $248,887 $752,585 $712,465
-------- -------- -------- --------
Earned premiums 246,056 230,059 720,124 664,238
Net investment income 16,047 14,766 47,587 44,214
Net realized gains on
investments 1,550 700 9,568 854
Other income 1,457 1,437 4,342 3,838
-------- -------- -------- --------
Total revenue 265,110 246,962 781,621 713,144
-------- -------- -------- --------
Income before federal
income taxes 20,804 5,128 58,277 15,678
Federal income tax expense
(benefit) 5,224 (757) 13,332 (1,986)
-------- -------- -------- --------
Net income $ 15,580 $ 5,885 $ 44,945 $ 17,664
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Earnings per share:
- basic $ 0.40 $ 0.15 $ 1.15 $ 0.45
- diluted $ 0.38 $ 0.15 $ 1.12 $ 0.44
Earnings per share from
operations (a):
- basic $ 0.37 $ 0.14 $ 0.99 $ 0.44
- diluted $ 0.36 $ 0.14 $ 0.97 $ 0.43
Weighted average shares
outstanding:
- basic 39,302 38,993 39,193 38,989
- diluted 40,333 39,722 40,037 39,776
Book value per share $ 13.12 $ 11.60
Dividends paid per share $ 0.040 $ 0.035 $ 0.110 $ 0.100
Total shares outstanding 39,337 38,968
GAAP ratios:
Loss ratio 69.5 73.9 69.9 74.3
Expense ratio 28.1 29.9 29.0 29.4
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Combined ratio 97.6 103.8 98.9 103.7
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(a) Net income from operations:
Net income $ 15,580 $ 5,885 $ 44,945 $ 17,664
Less net realized gains
on investments, less
applicable federal
income taxes 1,008 455 6,219 555
-------- -------- -------- --------
Net income from operations $ 14,572 $ 5,430 $ 38,726 $ 17,109
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