State Auto Financial Corporation Announces Q2 Earnings
29 July 1998
State Auto Financial Corporation Announces Second Quarter Earnings
COLUMBUS, Ohio--July 29, 1998--State Auto Financial Corporation announced net reported earnings of $0.08 per share ($0.08 per share diluted) for the second quarter, which ended June 30, 1998. This was down from $0.22 ($0.22) per share in the second quarter of 1997, primarily due to numerous storm-related catastrophe claims in nearly all operating states. Per share figures are adjusted for a two-for-one stock split, which was payable on July 8, 1998, to shareholders of record on June 18, 1998.For the three months that ended June 30, 1998, net earnings were $3,102,000 down from $8,118,000 during the same 1997 period. Net operating earnings per share were also $0.08 ($0.08) compared to $0.22 ($0.22) in the second quarter of 1997. The second quarter 1998 GAAP combined loss and expense ratio was 106.5, compared to 95.1 during the same period last year.
"Storm-related catastrophes have produced disappointing second quarter results for State Auto, as well as many other insurers," said Robert L. Bailey, Chairman and CEO. "Absent these catastrophes, results from our core business looked very much like our excellent first quarter. Given more normal weather patterns, we are optimistic about future results."
For the six months ended June 30, 1998, net reported earnings per share were $0.35 ($0.34) compared to $0.43 per share ($0.42) during the first half of the previous year. Net earnings in the 1998 first half were $12,865,000 compared to $15,650,000 the prior year. The GAAP combined loss and expense ratio was 99.7 in 1998 and 95.8 in 1997.
Total revenue for the 1998 second quarter was $80,790,000 and $160,872,000 for the first half, compared to $72,380,000 and $130,810,000 for the same 1997 periods. Contributing substantially to these increases was a change from 35% to 37% in State Auto P&C's pooling percentage within the State Auto Insurance Group, effective January 1, 1998.
State Auto Financial Corporation is a property and casualty insurance holding company. The Company's principal subsidiary, State Auto P&C, is a regional insurer engaged primarily in writing personal and commercial automobile, homeowners, commercial multi-peril, workers' compensation and fire insurance. The Company markets its products through more than 11,300 independent agents associated with approximately 2,000 agencies in 24 states. State Auto's 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 (Unaudited)
(Figures in thousands, except per-share amounts)
Quarter Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
Net premiums written $ 73,621 $ 66,219 $151,927(a) $129,876
-------- -------- -------- --------
Earned premiums 71,607 63,766 142,540 126,017
Net investment income 6,580 6,265 13,108 12,501
Management
services income 2,351 2,266 4,682 4,473
Net realized gains
on investments 252 83 542 321
-------- -------- -------- --------
Total revenue 80,790 72,380 160,872 143,312
-------- -------- -------- --------
Earnings before
income taxes 3,754 11,277 17,231 21,623
Income taxes 652 3,159 4,366 5,973
-------- -------- -------- --------
Net earnings $ 3,102 $ 8,118 $ 12,865 $ 15,650
-------- -------- -------- --------
-------- -------- -------- --------
Net earnings per share:
- basic $ 0.08 $ 0.22 $ 0.35 $ 0.43
- diluted $ 0.08 $ 0.22 $ 0.34 $ 0.42
Net earnings per share
from operations(b):
- basic $ 0.08 $ 0.22 $ 0.34 $ 0.42
- diluted $ 0.08 $ 0.22 $ 0.33 $ 0.42
Weighted average shares
outstanding:
- basic 36,722 36,348 36,706 36,319
- diluted 37,811 37,156 37,778 37,129
Book value per share $ 6.47 $ 5.55 $ 6.47 $ 5.55
Dividends paid per share $ 0.023 $ 0.020 $ 0.045 $ 0.040
Total shares outstanding 36,759 36,411 36,759 36,411
GAAP ratios:
Loss ratio 77.8 65.3 70.7 66.3
Expense ratio 28.7 29.8 29.0 29.5
-------- -------- -------- --------
Combined ratio 106.5 95.1 99.7 95.8
-------- -------- -------- --------
-------- -------- -------- --------
(a) Net premiums written for the six months ended June 30, 1998
includes $7,506,000 of unearned premiums transferred in
connection with the 1/1/98 pooling change.
(b) Excludes net realized gains on investments, less applicable
federal income taxes.