State Auto Financial to Sell Non-Standard Auto Subsidiary
August 09 2010 - 4:30PM
Business Wire
State Auto Financial Corporation (NASDAQ:STFC) today announced
that it has agreed to sell its non-standard automobile insurance
subsidiary, State Auto National, to Hallmark Insurance Company of
Fort Worth, Texas. Closing is expected to occur later this year,
subject to approval by regulatory authorities and satisfaction of
other customary closing contingencies.
State Auto National writes approximately $37 million in
non-standard automobile insurance coverage through independent
agents in 21 states, approximately 80% (or $30 million) of which is
retained by STFC under its intercompany reinsurance pooling
agreement with its parent, State Automobile Mutual Insurance
Company. STFC will retain liability for the pre-closing book of
business and will continue to provide policy and claims service to
State Auto National policyholders until the policies are renewed
with Hallmark following a six-month transition period, under a
Quota Share Reinsurance Agreement and Loss Portfolio Transfer
Agreement that will be effective at closing.
“We’re continually looking for opportunities to redeploy capital
into businesses that are core to our business strategy, and the
non-standard auto market is no longer a good strategic fit for
State Auto,” said STFC Chairman and CEO Bob Restrepo. “Enabling
State Auto National to effectively compete in the non-standard
market would require a significant investment that couldn’t be
leveraged elsewhere within the State Auto Group. In the end, we’re
focused on doing what’s right for our policyholders and
shareholders.”
Willis Capital Markets & Advisory acted as exclusive
financial advisor to State Auto Financial Corporation.
State Auto Financial Corporation, headquartered in Columbus,
Ohio, is a super regional property and casualty insurance holding
company. The company markets its personal and business insurance
products through independent insurance agencies in 34 states and
the District of Columbia and is proud to be a Trusted Choice®
company partner. STFC stock is traded on the NASDAQ Global Select
Market, which represents the top third of all NASDAQ listed
companies.
The insurance subsidiaries of State Auto Financial Corporation
are part of the State Auto Group. The State Auto Group is rated A+
(Superior) by the A.M. Best Company and includes State Automobile
Mutual, State Auto Property & Casualty, State Auto National,
State Auto Ohio, State Auto Wisconsin, State Auto Florida, Milbank,
Farmers Casualty, Meridian Security, Meridian Citizens Mutual,
Beacon National, Beacon Lloyds, Patrons Mutual and Litchfield
Mutual Fire. Additional information on State Auto Financial
Corporation and the State Auto Insurance Companies can be found
online at www.StateAuto.com.
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