State Auto Financial's Q4 Earnings Cap Profitable Year
24 February 2000
State Auto Financial Corporation's Fourth Quarter Earnings Cap Profitable Year
COLUMBUS, Ohio--Feb. 24, 2000--State Auto Financial Corporation announced net reported earnings per share of $0.33 ($0.32 diluted) for the fourth quarter ending December 31, 1999, compared to $0.30 ($0.29 diluted) per share for same period last year. Net earnings for the 1999 fourth quarter were $13,035,000, compared to $12,634,000 for the 1998 fourth quarter. STFC's fourth quarter 1999 GAAP combined loss and expense ratio was 91.2 compared to 92.2 for the fourth quarter 1998.For the year ending December 31, 1999, STFC's GAAP combined ratio was 96.0 compared to 97.3 for the year ending December 31, 1998. Total net earnings for 1999 were $42,816,000, or $1.05 ($1.03 diluted) per share, compared to $37,497,000, or $0.89 ($0.87 diluted) per share for 1998. The company's total revenue for 1999 was $440,871,000, a 9.7% increase over 1998's $402,059,000 total.
1999 marked the fifth consecutive year that the insurer has reported a statutory combined ratio of 100.0 or better. "In this very competitive business, we are gratified that our underwriting and growth strategies have resulted in sustained profitable growth," said STFC chairman Bob Bailey. "Given the history of weather-related catastrophes and the industry's attempt to achieve growth at the expense of sensible pricing, STFC's record is extraordinary."
Effective January 1, 2000, State Auto Financial Corporation's share of the State Auto Group's pooled premium increased to 53% when STFC's newly created subsidiary, State Auto Insurance Company (SAIC), was assigned 1% and subsidiary State Auto P&C was assigned two more points. Under the January 1, 2000 pooling arrangement, the participants' pooling percentages are as follows: State Automobile Mutual Insurance, 46%; State Auto P&C, 39%; Milbank, 10%; Farmers Casualty, 3%; Midwest Security, 1% and State Auto Insurance Company, 1%.
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 12,500 agents associated with approximately 2,200 agencies in 26 states. Products are marketed primarily in the Midwest and Eastern United States, excluding New York, New Jersey and the New England states.
STFC has scheduled a conference call with industry analysts for Thursday, February 24, 10 AM to discuss the company's 1999 fourth quarter performance. A replay of this conversation, in its entirety, can be heard beginning at noon today by dialing 800-570-8790, pass code 8840. The replay will be available through March 9, 2000.
STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Figures in thousands, except per-share amounts)
(unaudited)
Quarter Ended Year Ended
December 31 December 31
1999 1998 1999 1998
---- ---- ---- ----
Net premiums written $ 92,308 $ 86,796 $394,316(a) $366,450(a)
--------- --------- -------- --------
Earned premiums 96,501 89,087 392,058 356,210
Net investment income 8,887 8,042 34,262 32,506
Management services income 2,169 2,000 8,727 7,945
Net realized gains
(losses) on investments (105) 761 2,555 2,925
Other income 842 773 3,269 2,473
--------- --------- -------- --------
Total revenue 108,294 100,663 440,871 402,059
--------- --------- -------- --------
Income before federal
income taxes 17,891 16,967 56,985 49,605
Federal income taxes 4,856 4,333 14,169 12,108
--------- --------- -------- --------
Net income $ 13,035 $ 12,634 $ 42,816 $ 37,497
--------- --------- -------- --------
--------- --------- -------- --------
Net earnings per share:
- basic $ 0.33 $ 0.30 $ 1.05 $ 0.89
- diluted $ 0.32 $ 0.29 $ 1.03 $ 0.87
Net earnings per share
from operations(b):
- basic $ 0.33 $ 0.29 $ 1.01 $ 0.85
- diluted $ 0.32 $ 0.28 $ 0.99 $ 0.83
Weighted average shares
outstanding:
- basic 39,120 41,954 40,780 41,887
- diluted 39,775 42,855 41,526 42,901
Book value per share $ 8.29 $ 8.11
Dividends paid per share $ 0.028 $ 0.025 $ 0.105 $ 0.100
Total shares outstanding 38,321 42,027
GAAP ratios:
Loss ratio 63.4 64.4 67.5 68.0
Expense ratio 27.8 27.8 28.5 29.3
--------- --------- -------- --------
Combined ratio 91.2 92.2 96.0 97.3
--------- --------- -------- --------
--------- --------- -------- --------
(a) Net premiums written for the year ended December 31, 1999 and
1998 includes $5,816,000 and $8,183,000 of unearned premiums
transferred in connection with the 1/1/99 and 1/1/98 pooling
changes, respectively.
(b) Excludes net realized gains on investments, less applicable
federal income taxes.