State Auto Financial Corporation Announces Q3 Earnings
29 October 1998
State Auto Financial Corporation Announces Third Quarter Earnings
COLUMBUS, Ohio--Oct. 29, 1998--State Auto Financial Corporation announced net reported earnings of $0.25 per share ($0.25 per share diluted) for the third quarter which ended September 30, 1998, up from $0.23 ($0.23) per share in the third quarter of 1997.For the three months that ended September 30, 1998, net earnings were $10,552,000, up from $9,746,000 during the same 1997 period. Net operating earnings per share were $0.23 ($0.23), compared to $0.22 ($0.22) in the third quarter of 1997. The third quarter 1998 GAAP combined loss and expense ratio was 96.7, compared to 95.3 during the same period last year.
For the nine months ended September 30, 1998, net reported earnings per share were $0.59 ($0.58) compared to $0.68 ($0.67) per share during the first nine months of the previous year. Net earnings in the first nine months of 1998 were $24,683,000, compared to $28,298,000 the prior year. The nine month GAAP combined loss and expense ratio was 99.0 in 1998 and 95.8 in 1997.
Total revenue for the 1998 third quarter was $101,546,000 and $299,720,000 for the first nine months, compared to $90,701,000 and $269,499,000 for the same 1997 periods, up 12.0% and 11.2%, respectively. Contributing to these increases was a change from 45% to 47% in the Company's pooling percentage within the State Auto Insurance Group, effective January 1, 1998.
During the third quarter of 1998, the Company exercised its option to acquire Milbank Insurance Company (Milbank) from State Automobile Mutual Insurance Company, a majority shareholder. The transaction was effected through a transfer of 5,137,000 shares of the Company's common stock for all of the issued and outstanding stock of Milbank. The transaction has been accounted for under the pooling-of-interest method of accounting. All prior year's financial information has been restated to include the financial position and operations of Milbank.
"The Company's third quarter underwriting results were quite favorable despite the impact of several Midwest wind and hail storms," said Robert L. Bailey, Chairman and CEO. "Our personal auto results continue to be very positive and the Company's strategy relating to coastal exposures was once again validated by the absence of significant claims activity resulting from hurricanes Bonnie, Earl and Georges.
"We continue to focus our efforts on responsible underwriting and pricing as the proven method of sustaining profitability," Bailey added. "Our non-standard subsidiary, State Auto National, had a very profitable quarter with solid growth. National will begin operations in four new states in the fourth quarter: Indiana, Pennsylvania, Utah and Wisconsin."
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, workers' compensation and fire insurance. The Company currently markets its products through more than 11,300 agents associated with approximately 2,000 agencies in 24 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 (Unaudited)
(Figures in thousands, except per-share amounts)
Quarter Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
____ ____ ____ ____
Net premiums written $92,314 $82,373 $279,654(a) $245,197
________ ________ ________ ________
Earned premiums 90,096 80,257 267,122 238,748
Net investment income 8,349 7,696 24,488 23,118
Management services
income 1,986 1,846 5,945 5,542
Net realized gains on
investments 1,115 902 2,165 2,091
________ ________ ________ ________
Total revenue 101,546 90,701 299,720 269,499
________ ________ ________ ________
Earnings before
income taxes 13,468 13,629 32,638 39,056
Income taxes 2,916 3,883 7,775 10,758
________ ________ ________ ________
Net earnings $10,552 $9,746 $24,863 $28,298
________ ________ ________ ________
________ ________ ________ ________
Net earnings per share:
- basic $0.25 $0.23 $0.59 $0.68
- diluted $0.25 $0.23 $0.58 $0.67
Net earnings per share
from operations(b):
- basic $0.23 $0.22 $0.56 $0.65
- diluted $0.23 $0.22 $0.55 $0.64
Weighted average
shares outstanding:
- basic 41,906 41,560 41,865 41,491
- diluted 42,894 42,509 42,910 42,354
Book value per share $7.78 $6.76 $7.78 $6.76
Dividends paid per
share $0.025 $0.023 $0.070 $0.063
Total shares
outstanding 41,921 41,573 41,921 41,573
GAAP ratios:
Loss ratio 66.2 65.3 69.2 65.9
Expense ratio 30.5 30.0 29.8 29.9
________ ________ ________ ________
Combined ratio 96.7 95.3 99.0 95.8
________ ________ ________ ________
________ ________ ________ ________
(a) Net premiums written for the nine months ended September 30, 1998
includes $8,183,000 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.