- Quarterly loss of $0.32 per share
- Quarterly net loss from operations1 of $0.18 per share
- Quarterly GAAP combined ratio of 105.3
- Quarterly SAP combined ratio of 103.5
- Return on equity of 7.5%
- Book value per share of $21.49
State Auto Financial Corporation (NASDAQ:STFC) today reported a
third quarter 2021 net loss of $14.3 million, or $0.32 per diluted
share, compared to net income of $11.6 million, or $0.26 per
diluted share, for the same 2020 period. Net loss from operations1
per diluted share for the third quarter of 2021 was $0.18 versus
$0.10 for the same 2020 period. STFC’s GAAP combined ratio for the
third quarter 2021 was 105.3 compared to 106.0 for the same 2020
period.
For the first nine months of 2021, STFC had a net loss of $10.1
million, or $0.23 per diluted share, compared to $68.7 million, or
$1.57 per diluted share, for the same 2020 period. Net loss from
operations1 per diluted share for the first nine months of 2021 was
$1.25 versus $0.86 for the same 2020 period. STFC’s GAAP combined
ratio for the first nine months of 2021 was 109.4 compared to 109.3
for the same 2020 period.
SAP Operating Results
STFC's SAP combined ratio for the third quarter 2021 was 103.5
compared to 105.1 for the same 2020 period. Catastrophe losses and
ALAE during the third quarter 2021 accounted for 10.3 points of the
75.1 total loss ratio points, or $39.4 million, versus 16.6 points
of the 71.3 total loss ratio points, or $58.7 million, for the same
period in 2020. The third quarter 2021 was impacted by severe
weather events in the Midwest and Texas. Approximately 60% of the
third quarter 2021 catastrophe losses occurred within homeowners.
The current accident year non-catastrophe loss and ALAE ratio
accounted for 60.5 points of the total loss ratio points, or $231.1
million, versus 55.0 points of the total loss ratio points, or
$194.3 million, for the same 2020 period. The third quarter 2021
was impacted by elevated claim frequency and severity in personal
auto and commercial auto. Non-catastrophe losses and ALAE during
the third quarter 2021 included 1.3 points of favorable development
relating to prior years, or $5.0 million, versus 5.5 points of
favorable development, or $19.3 million, for the same period in
2020. Underwriting expenses during the third quarter 2021 accounted
for 28.4 points of the total combined ratio points, or $118.6
million, versus 33.8 points of the total combined ratio points, or
$127.9 million for the same 2020 period. The third quarter 2021 was
impacted by decreases in estimated variable agent compensation and
IT development costs when compared to the same 2020 period.
STFC's SAP combined ratio for the first nine months of 2021 was
107.8 compared to 108.6 for the same 2020 period. Catastrophe
losses and ALAE during the first nine months of 2021 accounted for
17.2 points of the 78.2 total loss ratio points, or $191.0 million,
versus 18.6 points of the 74.5 total loss ratio points, or $191.0
million, for the same period in 2020. The first nine months of 2021
were impacted by winter storms Uri and Viola in Texas, which added
5.6 points to the loss and ALAE ratio. Approximately 70% of the
year to date 2021 catastrophe losses occurred within homeowners.
The current accident year non-catastrophe loss and ALAE ratio
accounted for 59.3 points of the total loss ratio points, or $656.8
million, versus 53.0 points of the total loss ratio points, or
$542.4 million, for the same 2020 period. In addition to the
factors discussed above, the first nine months of 2021 were
impacted by elevated frequency and severity of property losses in
homeowners. Non-catastrophe losses and ALAE during the third
quarter 2021 included 4.1 points of favorable development relating
to prior years, or $45.5 million, versus 3.1 points of favorable
development, or $31.8 million, for the same period in 2020.
Underwriting expenses during the first nine months of 2021
accounted for 29.6 points of the total combined ratio points, or
$352.4 million, versus 34.1 points of the total combined ratio
points, or $377.1 million for the same 2020 period. In addition to
the factors discussed above, the first nine months of 2021 were
impacted by a decrease in associate benefit costs when compared to
the same 2020 period.
Net written premium for the third quarter 2021 increased 10.2%
compared to the same period in 2020. By insurance segment, net
written premium for the commercial insurance segment increased
17.1% and the personal insurance segment increased 5.7%. The
increase in the commercial segment was primarily driven by (i) new
business growth and rate increases in commercial auto and farm
& ranch, (ii) rate increases in middle market commercial, and
(iii) new business growth in workers' compensation driven by its
launch on State Auto Connect. The increase in the personal segment
was primarily due to increased rates in homeowners and other
personal and new business growth in other personal. The net written
premium growth was partially offset by a decline in new business in
personal auto.
Net written premium for the first nine months of 2021 increased
7.4% compared to the same period in 2020. By insurance segment, net
written premium for the commercial insurance segment increased
16.1% and the personal insurance segment increased 1.5%. Net
written premiums for the first nine months of 2021 were impacted by
the same factors discussed above for the third quarter.
The third quarter and first nine months of 2021 were also
impacted by the following expenses incurred as a result of the
pending Liberty Mutual merger: (i) a $9.3 million increase in the
valuation of the Director RSU awards as a result of the increase in
our stock price; and (ii) $2.9 million of legal and investment
banking fees and expenses. These expenses were included in "other
expenses" on the condensed consolidated statements of income.
Book Value and Return on Equity
STFC’s book value decreased to $21.49 per share as of September
30, 2021, compared to $22.18 on June 30, 2021. The decrease in book
value was primarily driven by a decrease in the fair market value
of fixed income investments attributable to higher interest
rates.
Return on stockholders’ equity for the 12 months ended September
30, 2021, was 7.5% compared to (3.8)% for the 12 months ended
September 30, 2020.
STFC’s Chairman, President and CEO Mike LaRocco commented on the
quarter as follows:
"The third quarter statutory combined ratio of 103.5 was
impacted by higher claim frequency and severity in both personal
and commercial auto and wind and hail events in the Midwest and
Texas.
"Overall net written premium growth of 10.2% included a 17.1%
increase in commercial lines with a 99.7% statutory combined ratio
in the segment. In personal lines, net written premium increased
5.7% with a 106.6% statutory combined ratio. Expense ratio
improvement continued, with a 28.4% result compared to 33.8% for
third quarter 2020.
"We remain focused on continuing our progress toward consistent
profitable growth. At the same time, efforts continue toward our
planned acquisition by Liberty Mutual, which remains on track to
close in 2022, pending appropriate member and regulatory approvals.
This transaction furthers our commitment to independent agents and
will contribute to the collective success of our agents,
policyholders and associates."
About State Auto Financial Corporation
State Auto Financial Corporation, headquartered in Columbus,
Ohio, is a super regional property and casualty insurance holding
company. STFC stock is traded on the Nasdaq Global Select Market,
which represents the top fourth of all Nasdaq listed companies.
The insurance subsidiaries of State Auto Financial Corporation
are part of the State Auto Group. The State Auto Group markets its
insurance products throughout the United States, through
independent insurance agencies. The State Auto Group is rated A-
(Excellent) by the A.M. Best Company and includes State Automobile
Mutual, State Auto Property & Casualty, State Auto Ohio, State
Auto Wisconsin, Milbank, Meridian Security, Patrons Mutual,
Rockhill Insurance, Plaza Insurance, American Compensation and
Bloomington Compensation. Additional information on State Auto
Financial Corporation and the State Auto Insurance Companies can be
found online at http://www.StateAuto.com/STFC.
1 Net earnings (loss) from operations, a non-GAAP financial
measure which management believes is informative to Company
management and investors, differs from GAAP net income (loss) only
by the exclusion of net investment gain (loss), net of applicable
taxes, on investment activity for the periods being reported. For
STFC, this amounted to a loss of $0.14 per diluted share and income
of $1.02 per diluted share for the third quarter and year to date
2021, respectively, versus income of $0.36 per diluted share and a
loss of $0.71 per diluted share for the third quarter and year to
date 2020, respectively.
Except for historical information, all other information in this
news release consists of forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated or implied. The most significant
of these uncertainties are described in State Auto Financial's Form
10-K and Form 10-Q reports and exhibits to those reports, and
include (but are not limited to) legislative changes at both the
state and federal level, state and federal regulatory rule making
promulgations and adjudications, class action litigation involving
the insurance industry and judicial decisions affecting claims,
policy coverages and the general costs of doing business, the
impact of competition on products and pricing, inflation in the
costs of the products and services insurance pays for, product
development, geographic spread of risk, weather and weather-related
events, and other types of catastrophic events. State Auto
Financial undertakes no obligation to update or revise any
forward-looking statements.
Selected Consolidated Financial
Data
($ in millions, except per share
amounts)
(unaudited)
Three months ended September
30
Nine months ended September
30
2021
2020
2021
2020
Net premiums written
$
417.7
$
379.1
$
1,188.7
$
1,107.2
Earned premiums
381.8
353.2
1,107.6
1,024.4
Net investment income
17.0
17.9
52.3
54.5
Net investment (loss) gain
(8.1
)
20.0
56.8
(39.3
)
Other income
0.4
0.5
1.3
1.6
Total revenue
391.1
391.6
1,218.0
1,041.2
(Loss) income before federal income
taxes
(25.7
)
14.8
(15.9
)
(87.6
)
Federal tax (benefit) expense
(11.4
)
3.2
(5.8
)
(18.9
)
Net (loss) income
$
(14.3
)
$
11.6
$
(10.1
)
$
(68.7
)
(Loss) earnings per common share:
- basic
$
(0.32
)
$
0.26
$
(0.23
)
$
(1.57
)
- diluted
$
(0.32
)
$
0.26
$
(0.23
)
$
(1.57
)
Loss per share from operations(A):
- basic
$
(0.18
)
$
(0.10
)
$
(1.25
)
$
(0.86
)
- diluted
$
(0.18
)
$
(0.10
)
$
(1.25
)
$
(0.86
)
Weighted average shares outstanding:
- basic
44.3
43.8
44.1
43.7
- diluted
44.3
44.3
44.1
43.7
Return on average equity (LTM)
7.5
%
(3.8
)%
Book value per share
$
21.49
$
21.57
Dividends paid per share
$
0.10
$
0.10
$
0.30
$
0.30
Total shares outstanding
44.4
43.8
GAAP ratios:
Cat loss and ALAE ratio
10.3
16.6
17.2
18.6
Non-cat loss and LAE ratio
64.9
54.6
61.2
55.8
Loss and LAE ratio
75.2
71.2
78.4
74.4
Expense ratio
30.1
34.8
31.0
34.9
Combined ratio
105.3
106.0
109.4
109.3
(A) Reconciliation of non-GAAP financial
measure:
Net loss from operations:
Net (loss) income
$
(14.3
)
$
11.6
$
(10.1
)
$
(68.7
)
Net investment (loss) gain, net of tax
(6.4
)
15.8
44.9
(31.0
)
Net loss from operations
$
(7.9
)
$
(4.2
)
$
(55.0
)
$
(37.7
)
Condensed Consolidated Balance
Sheets
($ and shares in millions, except per
share amounts)
(unaudited)
September 30
December 31
2021
2020
ASSETS
Fixed maturities, available-for-sale, at
fair value (amortized cost $2,159.6 and $2,117.0, respectively)
$
2,223.5
$
2,237.2
Equity securities
376.0
389.7
Other invested assets
79.3
71.1
Other invested assets, at cost
10.4
12.1
Notes receivable from affiliate
70.0
70.0
Total investments
2,759.2
2,780.1
Cash and cash equivalents
46.1
90.7
Accrued investment income and other
assets
30.7
29.7
Premiums Receivable
14.1
14.0
Deferred policy acquisition costs
131.5
122.2
Reinsurance recoverable on losses and loss
expenses payable
19.6
24.3
Prepaid reinsurance premiums
8.7
8.3
Due from affiliate
28.7
—
Current federal income taxes
1.8
1.7
Net deferred federal income taxes
43.1
27.3
Property and equipment, at cost
3.8
4.2
Total assets
$
3,087.3
$
3,102.5
LIABILITIES
Losses and loss expenses payable
$
1,059.7
$
1,050.4
Unearned premiums
805.0
723.4
Notes payable (affiliates $15.3 and $15.3,
respectively)
122.1
122.1
Pension and postretirement benefits
45.0
66.2
Due to affiliate
—
11.2
Other liabilities
100.6
119.2
Total liabilities
2,132.4
2,092.5
STOCKHOLDERS' EQUITY
Common stock, without par value.
Authorized 100.0 shares; 51.3 and 50.7 shares issued, respectively,
at stated value of $2.50 per share
128.4
126.8
Treasury stock, 6.9 and 6.9 shares,
respectively, at cost
(118.8
)
(118.4
)
Additional paid-in capital
218.1
213.3
Accumulated other comprehensive (loss)
income
(23.8
)
13.9
Retained earnings
751.0
774.4
Total stockholders' equity
954.9
1,010.0
Total liabilities and stockholders'
equity
$
3,087.3
$
3,102.5
Condensed Consolidated Statements of
Income
($ in millions, except per share
amounts)
(unaudited)
Three months ended September
30
Nine months ended September
30
2021
2020
2021
2020
Earned premiums
$
381.8
$
353.2
$
1,107.6
$
1,024.4
Net investment income
17.0
17.9
52.3
54.5
Net investment (loss) gain
(8.1
)
20.0
56.8
(39.3
)
Other income from affiliates
0.4
0.5
1.3
1.6
Total revenues
391.1
391.6
1,218.0
1,041.2
Losses and loss expenses
287.2
251.6
867.8
762.2
Acquisition and operating expenses
115.0
123.0
343.2
357.4
Interest expense
1.1
1.1
3.3
3.6
Other expenses
13.5
1.1
19.6
5.6
Total expenses
416.8
376.8
1,233.9
1,128.8
(Loss) income before federal income
taxes
(25.7
)
14.8
(15.9
)
(87.6
)
Federal income tax (benefit) expense:
Current
(0.1
)
—
(0.1
)
(0.4
)
Deferred
(11.3
)
3.2
(5.7
)
(18.5
)
Federal income tax (benefit) expense
(11.4
)
3.2
(5.8
)
(18.9
)
Net (loss) income
$
(14.3
)
$
11.6
$
(10.1
)
$
(68.7
)
(Loss) earnings per common share:
Basic
$
(0.32
)
$
0.26
$
(0.23
)
$
(1.57
)
Diluted
$
(0.32
)
$
0.26
$
(0.23
)
$
(1.57
)
Dividends paid per common share
$
0.10
$
0.10
$
0.30
$
0.30
Consolidated Statements of
Comprehensive (Loss) Income
($ in millions)
(unaudited)
Three months ended September
30
Nine months ended September
30
2021
2020
2021
2020
Net (loss) income
$
(14.3
)
$
11.6
$
(10.1
)
$
(68.7
)
Other comprehensive income (loss), net
of tax:
Net unrealized holding (loss) gain on
available-for-sale investments:
Unrealized holding (loss) gain
(17.1
)
4.6
(56.6
)
74.5
Reclassification adjustments for losses
(gains) realized in net income
1.0
0.2
0.3
(3.2
)
Income tax benefit (expense)
3.3
(1.1
)
11.8
(15.0
)
Total net unrealized holding (loss) gain
on available- for-sale investments
(12.8
)
3.7
(44.5
)
56.3
Net unrecognized benefit plan
obligations:
Reclassification adjustments for
amortization to statements of income:
Prior service credit
(1.6
)
(1.6
)
(4.8
)
(4.8
)
Net actuarial loss
4.5
3.7
13.4
11.0
Income tax expense
(0.6
)
(0.4
)
(1.8
)
(1.3
)
Total net unrecognized benefit plan
obligations
2.3
1.7
6.8
4.9
Other comprehensive (loss) income
(10.5
)
5.4
(37.7
)
61.2
Comprehensive (loss) income
$
(24.8
)
$
17.0
$
(47.8
)
$
(7.5
)
Condensed Consolidated Statement of
Stockholders' Equity
($ and shares in millions)
(unaudited)
Nine Months Ended
Year Ended
September 30
December 31
2021
2020
Common shares:
Balance at beginning of year
50.7
50.4
Issuance of shares
0.6
0.3
Balance at period ended
51.3
50.7
Treasury shares:
Balance at beginning of year
(6.9
)
(6.9
)
Balance at period ended
(6.9
)
(6.9
)
Common stock:
Balance at beginning of year
$
126.8
$
125.9
Issuance of shares
1.6
0.9
Balance at period ended
128.4
126.8
Treasury stock:
Balance at beginning of year
$
(118.4
)
$
(117.5
)
Shares acquired on stock award exercises
and vested restricted shares
(0.4
)
(0.9
)
Balance at beginning of year and period
ended
(118.8
)
(118.4
)
Additional paid-in capital:
Balance at beginning of year
$
213.3
$
206.7
Issuance of common stock
6.9
3.0
Stock awards granted
(2.1
)
3.6
Balance at period ended
218.1
213.3
Accumulated other comprehensive (loss)
income:
Balance at beginning of the year
$
13.9
$
(26.9
)
Change in net unrealized holding (losses)
gains on available-for-sale investments
(44.5
)
56.7
Change in net unrecognized benefit plan
obligations
6.8
(15.9
)
Balance at period ended
(23.8
)
13.9
Retained earnings:
Balance at beginning of year
$
774.4
$
779.3
Cumulative effect of change in accounting
to establish an allowance for expected credit losses at January 1,
2020
—
(0.5
)
Net (loss) income
(10.1
)
13.1
Cash dividends paid
(13.3
)
(17.5
)
Balance at period ended
751.0
774.4
Total stockholders' equity at period
ended
$
954.9
$
1,010.0
Condensed Consolidated Statements of
Cash Flow
($ in millions)
(unaudited)
Nine months ended
September 30
2021
2020
Cash flows from operating
activities:
Net loss
$
(10.1
)
$
(68.7
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities
Depreciation and amortization, net
4.7
7.6
Share-based compensation
9.5
—
Net investment (gain) loss
(57.2
)
39.3
Changes in operating assets and
liabilities:
Deferred policy acquisition costs
(9.3
)
(12.6
)
Accrued investment income and other
assets
(1.0
)
0.6
Premiums receivable
(0.1
)
(0.5
)
Postretirement and pension benefits
(17.5
)
(17.0
)
Reinsurance recoverable on losses and loss
expenses payable and prepaid reinsurance premiums
4.3
(22.5
)
Other liabilities and due to/from
affiliates, net
(63.0
)
8.5
Losses and loss expenses payable
9.3
24.2
Unearned premiums
81.6
81.8
Deferred tax on share-based awards
1.4
(0.1
)
Federal income taxes
(7.2
)
(18.8
)
Net cash (used in) provided by
operating activities
(54.6
)
21.8
Cash flows from investing
activities:
Purchases of fixed maturities
available-for-sale
(570.4
)
(462.6
)
Purchases of equity securities
(24.0
)
(65.6
)
Purchases of other invested assets
(0.9
)
(7.3
)
Maturities, calls and pay downs of fixed
maturities available-for-sale
327.5
274.9
Sales of fixed maturities
available-for-sale
195.6
216.1
Sales of equity securities
87.4
86.2
Sales of other invested assets
2.3
0.9
Disposals of property and equipment
—
0.2
Net cash provided by investing
activities
17.5
42.8
Cash flows from financing
activities:
Proceeds from issuance of common stock
6.2
2.8
Payments to acquire treasury stock
(0.4
)
(0.9
)
Payment of dividends
(13.3
)
(13.1
)
Proceeds from short-term debt
—
60.0
Repayment of short-term debt
—
(60.0
)
Proceeds from long-term debt
—
21.5
Repayment of long-term debt
—
(21.5
)
Net cash used in financing
activities
(7.5
)
(11.2
)
Net (decrease) increase in cash and cash
equivalents
(44.6
)
53.4
Cash and cash equivalents at beginning of
period
90.7
78.0
Cash and cash equivalents at end of
period
$
46.1
$
131.4
Supplemental disclosures:
Interest paid (affiliates $0.5 and $0.6,
respectively)
$
3.3
$
3.5
Net Investment Income
($ in millions)
(unaudited)
9/30/2020
12/31/2020
3/31/2021
6/30/2021
9/30/2021
Quarter to Date
Gross investment income:
Fixed maturities
$
13.7
$
14.3
$
14.7
$
13.4
$
12.9
TIPS
1.3
0.7
0.7
2.0
2.3
Total fixed maturities
15.0
15.0
15.4
15.4
15.2
Equity securities
2.1
1.5
1.6
1.2
1.2
Other
0.9
1.3
0.9
1.1
1.0
Total gross investment income
18.0
17.8
17.9
17.7
17.4
Less: Investment expenses
0.1
0.2
0.3
—
0.4
Net investment income
$
17.9
$
17.6
$
17.6
$
17.7
$
17.0
Year to Date
Gross investment income:
Fixed maturities
$
43.0
$
57.3
$
14.7
$
28.1
$
41.0
TIPS
1.6
2.3
0.7
2.7
5.0
Total fixed maturities
44.6
59.6
15.4
30.8
46.0
Equity securities
7.8
9.3
1.6
2.8
4.0
Other
2.7
4.0
0.9
2.0
3.0
Total gross investment income
55.1
72.9
17.9
35.6
53.0
Less: Investment expenses
0.6
0.8
0.3
0.3
0.7
Net investment income
$
54.5
$
72.1
$
17.6
$
35.3
$
52.3
9/30/2020
12/31/2020
3/31/2021
6/30/2021
9/30/2021
TIPS, fair value
$
117.0
$
116.2
$
104.7
$
108.2
$
109.8
TIPS, book value
$
99.4
$
97.8
$
89.2
$
90.9
$
92.8
Net Investment (Loss) Gain
($ in millions)
unaudited
Three months ended September
30
Nine months ended September
30
2021
2020
2021
2020
Investment gain (loss), net:
Fixed maturities:
Realized gains on sales of securities
$
0.4
$
1.3
$
4.3
$
6.8
Realized losses on sales of securities
(1.4
)
(1.5
)
(4.6
)
(3.6
)
Net (loss) gain on fixed securities
(1.0
)
(0.2
)
(0.3
)
3.2
Net (loss) gain on equity securities
(6.7
)
18.2
49.7
(35.1
)
Net (loss) gain on other invested
assets
(0.4
)
2.0
7.8
(7.6
)
Other net realized (loss) gain
—
—
(0.4
)
0.2
Net (loss) gain on investments
$
(8.1
)
$
20.0
$
56.8
$
(39.3
)
Income Taxes
($ in millions)
(unaudited)
The following table sets forth the tax
effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities:
September 30
December 31
2021
2020
Deferred tax assets:
Unearned premiums not currently
deductible
$
33.5
$
30.1
Losses and loss expenses payable
discounting
11.6
10.5
Postretirement and pension benefits
16.3
19.3
Other liabilities
11.8
12.2
Net operating loss carryforward
36.8
19.8
Capital loss carryforward
—
6.1
Tax credit carryforward
2.3
1.9
Other
1.7
1.1
Total deferred tax assets
114.0
101.0
Deferred tax liabilities:
Deferral of policy acquisition costs
27.6
25.7
Investments
42.6
48.0
Total deferred tax liabilities
70.2
73.7
Total net deferred tax assets before
valuation allowance
43.8
27.3
Less valuation allowance
0.7
—
Net deferred federal income taxes
$
43.1
$
27.3
The following table sets forth the
components of federal income tax (benefit) expense:
Three months ended September
30
Nine months ended September
30
2021
2020
2021
2020
(Loss) income before federal income
taxes
$
(25.7
)
$
14.8
$
(15.9
)
$
(87.6
)
Federal income tax (benefit) expense
Current
(0.1
)
—
(0.1
)
(0.4
)
Deferred
(11.3
)
3.2
(5.7
)
(18.5
)
Total federal income tax (benefit)
expense
(11.4
)
3.2
(5.8
)
(18.9
)
Net (loss) income
$
(14.3
)
$
11.6
$
(10.1
)
$
(68.7
)
SAP Personal Insurance Segment
Results
(unaudited)
($ in millions)
Three months ended September 30,
2021
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
92.4
$
127.2
$
23.7
$
243.3
Net earned premiums
91.8
106.5
18.9
217.2
Losses and LAE incurred:
Cat loss and ALAE
1.3
22.2
0.7
24.2
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
6.8
(2.5
)
—
4.3
Current accident year non-cat loss and
ALAE
67.2
55.8
9.4
132.4
Total non-cat loss and ALAE
74.0
53.3
9.4
136.7
Total Loss and ALAE
75.3
75.5
10.1
160.9
ULAE
7.9
5.3
1.0
14.2
Total Loss and LAE
83.2
80.8
11.1
175.1
Underwriting expenses
25.0
32.2
5.9
63.1
Net underwriting (loss) gain
$
(16.4
)
$
(6.5
)
$
1.9
$
(21.0
)
Cat loss and ALAE ratio
1.4
%
20.8
%
3.9
%
11.1
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
7.4
%
(2.4
)%
(0.1
)%
2.0
%
Current accident year non-cat loss and
ALAE ratio
73.2
%
52.4
%
49.5
%
60.9
%
Total non-cat loss and ALAE ratio
80.6
%
50.0
%
49.4
%
62.9
%
Total Loss and ALAE ratio
82.0
%
70.8
%
53.3
%
74.0
%
ULAE ratio
8.6
%
5.0
%
6.0
%
6.6
%
Total Loss and LAE ratio
90.6
%
75.8
%
59.3
%
80.6
%
Expense ratio
27.1
%
25.4
%
24.7
%
26.0
%
Combined ratio
117.7
%
101.2
%
84.0
%
106.6
%
($ in millions)
Three months ended September 30, 2020
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
101.4
$
111.4
$
17.4
$
230.2
Net earned premiums
103.0
92.5
13.3
208.8
Losses and LAE incurred:
Cat loss and ALAE
1.9
28.1
2.9
32.9
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
8.0
0.7
(0.6
)
8.1
Current accident year non-cat loss and
ALAE
58.2
50.7
4.8
113.7
Total non-cat loss and ALAE
66.2
51.4
4.2
121.8
Total Loss and ALAE
68.1
79.5
7.1
154.7
ULAE
7.4
6.8
0.2
14.4
Total Loss and LAE
75.5
86.3
7.3
169.1
Underwriting expenses
32.0
33.2
5.2
70.4
Net underwriting (loss) gain
$
(4.5
)
$
(27.0
)
$
0.8
$
(30.7
)
Cat loss and ALAE ratio
1.9
%
30.4
%
21.5
%
15.8
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
7.8
%
0.7
%
(4.1
)%
3.9
%
Current accident year non-cat loss and
ALAE ratio
56.4
%
54.9
%
36.2
%
54.4
%
Total non-cat loss and ALAE ratio
64.2
%
55.6
%
32.1
%
58.3
%
Total Loss and ALAE ratio
66.1
%
86.0
%
53.6
%
74.1
%
ULAE ratio
7.2
%
7.3
%
1.6
%
6.9
%
Total Loss and LAE ratio
73.3
%
93.3
%
55.2
%
81.0
%
Expense ratio
31.4
%
29.8
%
29.4
%
30.5
%
Combined ratio
104.7
%
123.1
%
84.6
%
111.5
%
($ in millions)
Nine months ended September 30,
2021
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
273.5
$
329.6
$
61.9
$
665.0
Net earned premiums
281.1
304.9
52.1
638.1
Losses and LAE incurred:
Cat loss and ALAE
6.3
129.8
19.8
155.9
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
4.7
(2.1
)
(0.2
)
2.4
Current accident year non-cat loss and
ALAE
186.7
156.9
26.9
370.5
Total non-cat loss and ALAE
191.4
154.8
26.7
372.9
Total Loss and ALAE
197.7
284.6
46.5
528.8
ULAE
22.6
19.2
2.9
44.7
Total Loss and LAE
220.3
303.8
49.4
573.5
Underwriting expenses
76.3
87.0
15.9
179.2
Net underwriting loss
$
(15.5
)
$
(85.9
)
$
(13.2
)
$
(114.6
)
Cat loss and ALAE ratio
2.3
%
42.6
%
38.0
%
24.4
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
1.7
%
(0.7
)%
(0.4
)%
0.4
%
Current accident year non-cat loss and
ALAE ratio
66.4
%
51.4
%
51.6
%
58.1
%
Total non-cat loss and ALAE ratio
68.1
%
50.7
%
51.2
%
58.5
%
Total Loss and ALAE ratio
70.4
%
93.3
%
89.2
%
82.9
%
ULAE ratio
8.0
%
6.3
%
5.8
%
7.0
%
Total Loss and LAE ratio
78.4
%
99.6
%
95.0
%
89.9
%
Expense ratio
27.9
%
26.4
%
25.6
%
26.9
%
Combined ratio
106.3
%
126.0
%
120.6
%
116.8
%
($ in millions)
Nine months ended September 30, 2020
Personal Auto
Homeowners
Other Personal
Total
Net written premiums
$
310.3
$
299.1
$
45.7
$
655.1
Net earned premiums
311.0
262.9
35.8
609.7
Losses and LAE incurred:
Cat loss and ALAE
6.5
93.4
12.0
111.9
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
19.1
2.8
(1.7
)
20.2
Current accident year non-cat loss and
ALAE
165.7
125.0
13.0
303.7
Total non-cat loss and ALAE
184.8
127.8
11.3
323.9
Total Loss and ALAE
191.3
221.2
23.3
435.8
ULAE
23.0
18.6
1.2
42.8
Total Loss and LAE
214.3
239.8
24.5
478.6
Underwriting expenses
98.5
89.7
13.7
201.9
Net underwriting loss
$
(1.8
)
$
(66.6
)
$
(2.4
)
$
(70.8
)
Cat loss and ALAE ratio
2.1
%
35.5
%
33.4
%
18.4
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
6.2
%
1.0
%
(4.5
)%
3.3
%
Current accident year non-cat loss and
ALAE ratio
53.2
%
47.6
%
36.2
%
49.8
%
Total non-cat loss and ALAE ratio
59.4
%
48.6
%
31.7
%
53.1
%
Total Loss and ALAE ratio
61.5
%
84.1
%
65.1
%
71.5
%
ULAE ratio
7.4
%
7.1
%
3.4
%
7.0
%
Total Loss and LAE ratio
68.9
%
91.2
%
68.5
%
78.5
%
Expense ratio
31.7
%
30.0
%
30.0
%
30.8
%
Combined ratio
100.6
%
121.2
%
98.5
%
109.3
%
SAP Commercial Insurance Segment
Results
(unaudited)
($ in millions)
Three months ended
September 30, 2021
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
51.9
$
33.6
$
44.0
$
20.8
$
18.6
$
5.4
$
174.3
Net earned premiums
48.7
33.8
41.7
15.9
19.0
5.3
164.4
Losses and LAE incurred:
Cat loss and ALAE
(0.2
)
3.6
9.2
—
2.7
—
15.3
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
3.7
(2.4
)
(1.2
)
(6.4
)
(0.5
)
(2.4
)
(9.2
)
Current accident year non-cat loss and
ALAE
42.2
16.3
17.8
11.7
6.6
3.9
98.5
Total non-cat loss and ALAE
45.9
13.9
16.6
5.3
6.1
1.5
89.3
Total Loss and ALAE
45.7
17.5
25.8
5.3
8.8
1.5
104.6
ULAE
2.9
1.2
1.3
1.0
0.6
0.1
7.1
Total Loss and LAE
48.6
18.7
27.1
6.3
9.4
1.6
111.7
Underwriting expenses
15.1
10.7
14.7
7.1
6.1
1.7
55.4
Net underwriting (loss) gain
$
(15.0
)
$
4.4
$
(0.1
)
$
2.5
$
3.5
$
2.0
$
(2.7
)
Cat loss and ALAE ratio
(0.4
)%
10.7
%
22.0
%
—
%
14.1
%
(0.4
)%
9.3
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
7.6
%
(7.0
)%
(2.9
)%
(40.3
)%
(2.4
)%
(46.1
)%
(5.6
)%
Current accident year non-cat loss and
ALAE ratio
86.6
%
48.0
%
42.9
%
73.9
%
35.5
%
72.8
%
60.0
%
Total non-cat loss and ALAE ratio
94.2
%
41.0
%
40.0
%
33.6
%
33.1
%
26.7
%
54.4
%
Total Loss and ALAE ratio
93.8
%
51.7
%
62.0
%
33.6
%
47.2
%
26.3
%
63.7
%
ULAE ratio
6.0
%
3.5
%
3.1
%
6.0
%
2.7
%
1.6
%
4.2
%
Total Loss and LAE ratio
99.8
%
55.2
%
65.1
%
39.6
%
49.9
%
27.9
%
67.9
%
Expense ratio
29.2
%
31.7
%
33.4
%
34.3
%
32.2
%
32.2
%
31.8
%
Combined ratio
129.0
%
86.9
%
98.5
%
73.9
%
82.1
%
60.1
%
99.7
%
($ in millions)
Three months ended
September 30, 2020
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
40.0
$
31.4
$
40.0
$
17.4
$
15.0
$
5.0
$
148.8
Net earned premiums
35.6
31.4
40.3
17.5
14.5
5.1
144.4
Losses and LAE incurred:
Cat loss and ALAE
0.1
5.5
4.7
—
3.2
—
13.5
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(1.2
)
(7.5
)
(6.3
)
(7.3
)
(0.6
)
(3.6
)
(26.5
)
Current accident year non-cat loss and
ALAE
20.8
17.0
20.1
14.4
5.1
3.0
80.4
Total non-cat loss and ALAE
19.6
9.5
13.8
7.1
4.5
(0.6
)
53.9
Total Loss and ALAE
19.7
15.0
18.5
7.1
7.7
(0.6
)
67.4
ULAE
1.7
0.5
1.3
1.1
0.5
0.1
5.2
Total Loss and LAE
21.4
15.5
19.8
8.2
8.2
(0.5
)
72.6
Underwriting expenses
13.7
10.9
16.4
7.8
6.7
1.9
57.4
Net underwriting gain (loss)
$
0.5
$
5.0
$
4.1
$
1.5
$
(0.4
)
$
3.7
$
14.4
Cat loss and ALAE ratio
0.4
%
17.3
%
11.6
%
—
%
22.1
%
—
%
9.3
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(3.4
)%
(23.8
)%
(15.5
)%
(41.6
)%
(4.2
)%
(72.6
)%
(18.3
)%
Current accident year non-cat loss and
ALAE ratio
58.3
%
54.3
%
49.7
%
82.2
%
35.0
%
60.4
%
55.7
%
Total non-cat loss and ALAE ratio
54.9
%
30.5
%
34.2
%
40.6
%
30.8
%
(12.2
)%
37.4
%
Total Loss and ALAE ratio
55.3
%
47.8
%
45.8
%
40.6
%
52.9
%
(12.2
)%
46.7
%
ULAE ratio
4.8
%
1.5
%
3.3
%
6.4
%
3.4
%
1.9
%
3.6
%
Total Loss and LAE ratio
60.1
%
49.3
%
49.1
%
47.0
%
56.3
%
(10.3
)%
50.3
%
Expense ratio
34.2
%
34.7
%
41.0
%
45.1
%
45.1
%
38.6
%
38.6
%
Combined ratio
94.3
%
84.0
%
90.1
%
92.1
%
101.4
%
28.3
%
88.9
%
($ in millions)
Nine months ended
September 30, 2021
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
160.6
$
103.5
$
133.7
$
48.6
$
61.0
$
17.6
$
525.0
Net earned premiums
134.6
98.6
122.6
45.6
53.3
16.0
470.7
Losses and LAE incurred:
Cat loss and ALAE
1.9
12.0
14.2
—
8.8
—
36.9
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
2.8
(6.9
)
(14.7
)
(21.8
)
(2.0
)
(5.1
)
(47.7
)
Current accident year non-cat loss and
ALAE
97.5
59.4
66.3
33.6
21.9
7.4
286.1
Total non-cat loss and ALAE
100.3
52.5
51.6
11.8
19.9
2.3
238.4
Total Loss and ALAE
102.2
64.5
65.8
11.8
28.7
2.3
275.3
ULAE
7.6
4.7
2.8
2.4
1.7
0.3
19.5
Total Loss and LAE
109.8
69.2
68.6
14.2
30.4
2.6
294.8
Underwriting expenses
47.0
32.2
46.5
20.1
21.1
5.9
172.8
Net underwriting (loss) gain
$
(22.2
)
$
(2.8
)
$
7.5
$
11.3
$
1.8
$
7.5
$
3.1
Cat loss and ALAE ratio
1.4
%
12.2
%
11.6
%
—
%
16.5
%
0.1
%
7.8
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
2.1
%
(7.0
)%
(12.0
)%
(47.8
)%
(3.7
)%
(32.1
)%
(10.1
)%
Current accident year non-cat loss and
ALAE ratio
72.4
%
60.2
%
54.1
%
73.8
%
41.1
%
46.1
%
60.8
%
Total non-cat loss and
ALAE ratio
74.5
%
53.2
%
42.1
%
26.0
%
37.4
%
14.0
%
50.7
%
Total Loss and ALAE ratio
75.9
%
65.4
%
53.7
%
26.0
%
53.9
%
14.1
%
58.5
%
ULAE ratio
5.6
%
4.7
%
2.3
%
5.2
%
3.1
%
1.7
%
4.1
%
Total Loss and LAE ratio
81.5
%
70.1
%
56.0
%
31.2
%
57.0
%
15.8
%
62.6
%
Expense ratio
29.3
%
31.1
%
34.7
%
41.4
%
34.7
%
33.5
%
32.9
%
Combined ratio
110.8
%
101.2
%
90.7
%
72.6
%
91.7
%
49.3
%
95.5
%
($ in millions)
Nine months ended
September 30, 2020
Commercial Auto
Small Commercial Package
Middle Market Commercial
Workers' Comp
Farm & Ranch
Other Commercial
Total
Net written premiums
$
117.8
$
95.8
$
126.8
$
49.2
$
47.3
$
15.3
$
452.2
Net earned premiums
96.2
92.8
116.0
54.4
40.8
14.5
414.7
Losses and LAE incurred:
Cat loss and ALAE
1.1
21.0
35.7
—
8.7
0.2
66.7
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(1.5
)
(16.5
)
(14.3
)
(16.1
)
(1.7
)
(7.1
)
(57.2
)
Current accident year non-cat loss and
ALAE
52.4
53.3
69.6
40.6
15.2
7.3
238.4
Total non-cat loss and ALAE
50.9
36.8
55.3
24.5
13.5
0.2
181.2
Total Loss and ALAE
52.0
57.8
91.0
24.5
22.2
0.4
247.9
ULAE
4.9
4.2
4.5
4.5
1.6
0.4
20.1
Total Loss and LAE
56.9
62.0
95.5
29.0
23.8
0.8
268.0
Underwriting expenses
40.1
34.0
50.8
22.7
21.1
6.0
174.7
Net underwriting (loss) gain
$
(0.8
)
$
(3.2
)
$
(30.3
)
$
2.7
$
(4.1
)
$
7.7
$
(28.0
)
Cat loss and ALAE ratio
1.2
%
22.6
%
30.7
%
—
%
21.3
%
1.2
%
16.1
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(1.5
)%
(17.8
)%
(12.3
)%
(29.6
)%
(4.1
)%
(49.3
)%
(13.8
)%
Current accident year non-cat loss and
ALAE ratio
54.3
%
57.5
%
60.1
%
74.6
%
37.3
%
50.7
%
57.4
%
Total non-cat loss and
ALAE ratio
52.8
%
39.7
%
47.8
%
45.0
%
33.2
%
1.4
%
43.6
%
Total Loss and ALAE ratio
54.0
%
62.3
%
78.5
%
45.0
%
54.5
%
2.6
%
59.7
%
ULAE ratio
5.1
%
4.5
%
3.9
%
8.4
%
3.9
%
2.6
%
4.9
%
Total Loss and LAE ratio
59.1
%
66.8
%
82.4
%
53.4
%
58.4
%
5.2
%
64.6
%
Expense ratio
34.1
%
35.5
%
40.0
%
46.2
%
44.6
%
39.3
%
38.6
%
Combined ratio
93.2
%
102.3
%
122.4
%
99.6
%
103.0
%
44.5
%
103.2
%
SAP Insurance Segment Results
(unaudited)
($ in millions)
2021
2020
2021
2020
Three months ended September 30
Personal & Commercial
Personal & Commercial
Total(1)
Total(1)
Net written premiums
$
417.6
$
379.0
$
417.7
$
379.1
Net earned premiums
381.6
353.2
381.8
353.2
Losses and LAE incurred:
Cat loss and ALAE
39.5
46.4
39.4
58.7
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(4.9
)
(18.4
)
(5.0
)
(19.3
)
Current accident year non-cat loss and
ALAE
230.9
194.1
231.1
194.3
Total non-cat loss and ALAE
226.0
175.7
226.1
175.0
Total Loss and ALAE
265.5
222.1
265.5
233.7
ULAE
21.3
19.6
21.4
18.3
Total Loss and LAE
286.8
241.7
286.9
252.0
Underwriting expenses
118.5
127.8
118.6
127.9
Net underwriting loss
$
(23.7
)
$
(16.3
)
$
(23.7
)
$
(26.7
)
Cat loss and ALAE ratio
10.3
%
13.1
%
10.3
%
16.6
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(1.3
)%
(5.2
)%
(1.3
)%
(5.5
)%
Current accident year non-cat loss and
ALAE ratio
60.5
%
55.1
%
60.5
%
55.0
%
Total non-cat loss and ALAE ratio
59.2
%
49.9
%
59.2
%
49.5
%
Total Loss and ALAE ratio
69.5
%
63.0
%
69.5
%
66.1
%
ULAE ratio
5.6
%
5.5
%
5.6
%
5.2
%
Total Loss and LAE ratio
75.1
%
68.5
%
75.1
%
71.3
%
Expense ratio
28.4
%
33.7
%
28.4
%
33.8
%
Combined ratio
103.5
%
102.2
%
103.5
%
105.1
%
(1)Includes specialty run-off
(unaudited)
($ in millions)
2021
2020
2021
2020
Nine months ended September 30
Personal & Commercial
Personal & Commercial
Total(1)
Total(1)
Net written premiums
$
1,190.0
$
1,107.3
$
1,188.7
$
1,107.2
Net earned premiums
1,108.8
1,024.4
1,107.6
1,024.4
Losses and LAE incurred:
Cat loss and ALAE
192.8
178.6
191.0
191.0
Non-cat loss and ALAE
Prior accident years non-cat loss and
ALAE
(45.3
)
(37.0
)
(45.5
)
(31.8
)
Current accident year non-cat loss and
ALAE
656.6
542.1
656.8
542.4
Total non-cat loss and ALAE
611.3
505.1
611.3
510.6
Total Loss and ALAE
804.1
683.7
802.3
701.6
ULAE
64.2
62.9
64.2
61.6
Total Loss and LAE
868.3
746.6
866.5
763.2
Underwriting expenses
352.0
376.6
352.4
377.1
Net underwriting loss
$
(111.5
)
$
(98.8
)
$
(111.3
)
$
(115.9
)
Cat loss and ALAE ratio
17.4
%
17.4
%
17.2
%
18.6
%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE
ratio
(4.1
)%
(3.6
)%
(4.1
)%
(3.1
)%
Current accident year non-cat loss and
ALAE ratio
59.2
%
53.0
%
59.3
%
53.0
%
Total non-cat loss and ALAE ratio
55.1
%
49.4
%
55.2
%
49.9
%
Total Loss and ALAE ratio
72.5
%
66.8
%
72.4
%
68.5
%
ULAE ratio
5.8
%
6.1
%
5.8
%
6.0
%
Total Loss and LAE ratio
78.3
%
72.9
%
78.2
%
74.5
%
Expense ratio
29.6
%
34.0
%
29.6
%
34.1
%
Combined ratio
107.9
%
106.9
%
107.8
%
108.6
%
(1)Includes specialty run-off
The following table provides a reconciliation of our statutory
underwriting results to GAAP consolidated (loss) income before
federal income taxes for the three and nine months ended September
30, 2021 and 2020:
($ millions)
3Q 2021
3Q 2020
YTD 2021
YTD 2020
Segment (loss) income before federal
income taxes:
Insurance operations:
Personal insurance SAP underwriting
loss
$
(21.0
)
$
(30.7
)
$
(114.6
)
$
(70.8
)
Commercial insurance SAP underwriting
(loss) gain
(2.7
)
14.4
3.1
(28.0
)
Specialty run-off
—
(10.4
)
0.2
(17.1
)
Total insurance operations
(23.7
)
(26.7
)
(111.3
)
(115.9
)
Investment operations:
Net investment income
17.0
17.9
52.3
54.5
Net investment (loss) gain
(8.1
)
20.0
56.8
(39.3
)
Total investment operations
8.9
37.9
109.1
15.2
All other segments income
—
—
—
0.1
Reconciling items:
GAAP adjustments
3.1
5.6
7.5
20.2
Interest expense on corporate debt
(1.1
)
(1.1
)
(3.3
)
(3.6
)
Corporate expenses
(12.9
)
(0.9
)
(17.9
)
(3.6
)
Total reconciling items
(10.9
)
3.6
(13.7
)
13.0
Total consolidated (loss) income before
federal income taxes
$
(25.7
)
$
14.8
$
(15.9
)
$
(87.6
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104005166/en/
State Auto Financial Corporation Media contact: Kyle Anderson,
614-917-5497 Kyle.Anderson@StateAuto.com or Investor contact:
Natalie Schoolcraft, 614-917-4341
Natalie.Schoolcraft@StateAuto.com
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