- Quarterly income of $0.24 per
share
- Quarterly GAAP combined ratio of
105.0
- Return on equity of (0.9)%
- Book value per share of $21.82
State Auto Financial Corporation (NASDAQ:STFC) today reported
third quarter 2016 net income of $10.1 million, or $0.24 per
diluted share, versus net income of $20.7 million, or $0.50 per
diluted share, for the third quarter of 2015. Net income from
operations1 per diluted share for the third quarter 2016 was $0.10
versus net income from operations1 per diluted share of $0.33 for
the same 2015 period.
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Operating Results
STFC’s GAAP combined ratio for the third quarter 2016 was 105.0
versus 99.1 for the third quarter of 2015. Catastrophe losses
during the third quarter 2016 accounted for 2.5 points of the 71.3
total loss ratio points, or $8.1 million, versus 2.1 points of the
total 64.9 loss ratio points, or $6.8 million, for the same period
in 2015. Non-catastrophe losses during the third quarter 2016
included 1.1 points of adverse development relating to prior years,
or $3.5 million, versus 0.3 points of favorable development, or
$0.9 million, for the same period in 2015.
Net written premium for the third quarter of 2016 increased 3.5%
compared to the same period in 2015. By insurance segment, net
written premium increased for personal and specialty by 1.4% and
33.4%, respectively, and business decreased 6.2%. Personal auto and
homeowners new business premium and new policy counts were up,
while policies in force were lower, compared to the third quarter
of 2015. During the first half of 2016, the Company increased its
number of personal lines agency appointments, and conducted pricing
reviews designed to improve personal lines production. The growth
in the specialty insurance segment was driven by an increase in new
business for E&S casualty. The decline in the business
insurance segment was significantly driven by our decision to exit
our large account business and rate actions to improve
profitability in commercial auto.
For the first nine months of 2016, STFC had a net loss of $11.5
million, or $0.28 per diluted share, compared to net income of
$48.1 million, or $1.16 per diluted share, for the same 2015
period.
STFC’s GAAP combined ratio for the first nine months of 2016 was
107.9 compared to 100.0 for the same 2015 period. Catastrophe
losses increased the loss ratio for the first nine months of 2016
by 6.8 points, or $65.4 million, compared to 4.9 points, or $46.8
million for the first nine months of 2015. Non-catastrophe losses
for the first nine months of 2016 included 3.6 points of adverse
development relating to prior years, or $34.7 million, versus 1.2
points of favorable development, or $11.6 million, for the same
period in 2015.
Net written premium for the first nine months of 2016 increased
1.6% compared to the same 2015 period. By insurance segment, net
written premium was relatively flat for personal, decreased 6.3%
for business, and increased 25.0% for specialty. The trends in the
personal and business net written premiums are due to the same
factors discussed above for the third quarter. The growth in the
specialty insurance segment was driven by an increase in new
business for both E&S casualty and programs.
Book Value and Return on Equity
STFC’s book value was $21.82 per share as of Sept. 30, 2016, an
increase of $0.13 per share from STFC’s book value on June 30,
2016. The increase was due to net income offset by dividends on
STFC common shares. Return on stockholders’ equity for the twelve
months ended Sept. 30, 2016, was (0.9)% compared to 13.3% for the
twelve months ended Sept. 30, 2015.
STFC’s Chairman, President and CEO Mike LaRocco commented on the
quarter as follows:
“We're making real progress in our effort to return State Auto
to profitable growth, as we continue to work to address the drivers
of our poor overall results.
“I'm not pleased with our third quarter results, which were
driven by our auto lines. This caused our overall results, while
improved, to remain unacceptable. During the quarter, following an
evaluation, we decided to stop writing Program business.
Termination of those partnerships is underway and will continue
through mid-2017.
“At the same time, my confidence in our future success and
profitability is based on the continued progress being made across
the company. We achieved a number of key objectives, most notably
the launch of our new digital platform. The new platform represents
a major milestone in our company's history, and is transformative
within the independent insurance industry. Our independent agents
are engaged and supportive, as we rollout the new platform to
support their businesses and customers.
“Our foundation is solid and I am confident of improvement going
forward.”
About State Auto Financial Corporation
State Auto Financial Corporation, headquartered in Columbus,
Ohio, is a super regional property and casualty insurance holding
company and is proud to be a Trusted Choice® company partner. 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, which include retail agencies and
wholesale brokers. 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 income (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 realized capital gains and (losses), net of
applicable taxes, on investment activity for the periods being
reported. For STFC, this amounted to income of $0.14 per diluted
share for the third quarter 2016 and income of $0.26 year to date
2016 versus income of $0.17 per diluted share for the third quarter
2015 and income of $0.31 year to date 2015.
STFC has scheduled a conference call with interested investors
for Thursday, Nov. 3, at 11 a.m. ET to discuss the company’s third
quarter 2016 performance. Live and archived broadcasts of the call
can be accessed at http://www.StateAuto.com/STFC. A replay of the
call can be heard beginning at 2 p.m. ET, Nov. 3, by calling
855-859-2056, conference ID 96704012. Supplemental schedules
detailing the company’s third quarter 2016 financial, sales and
underwriting results are made available on
http://www.StateAuto.com/STFC prior to the conference call.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161103005712/en/
State Auto Financial CorporationMedia contact:Kyle Anderson,
614-917-5497Kyle.Anderson@StateAuto.comorInvestor contact:Tara
Shull, 614-917-4478Tara.Shull@StateAuto.com
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