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Rule 424(b)(2)
File No. 333-41849
PROSPECTUS
STATE AUTO FINANCIAL CORPORATION
518 EAST BROAD STREET
COLUMBUS, OHIO 43215-3976
(614) 464-5000
MONTHLY STOCK PURCHASE PLAN FOR INDEPENDENT AGENTS
300,000 COMMON SHARES
Throughout this prospectus the term "State Auto" refers to State Auto
Financial Corporation. The terms "Eligible Independent Agents," "Agents," and
"you" refer generally to independent agents of State Auto's property and
casualty insurance company subsidiaries and independent agents of State
Automobile Mutual Insurance Company and its property and casualty insurance
company subsidiaries. To determine if you are eligible to participate in the
Plan, see "Monthly Stock Purchase Plan--Eligibility" on page 4 of this
prospectus.
State Auto is offering Eligible Independent Agents an opportunity to
acquire a proprietary interest in State Auto by purchasing common shares,
without par value, of State Auto (the "Common Shares") pursuant to State Auto's
Monthly Stock Purchase Plan for Independent Agents (the "Plan"). The Plan offers
a convenient and inexpensive method for Agents to have a portion of their
commissions automatically deducted and used to purchase State Auto's Common
Shares on the open market at current market prices. In addition, if an Agent is
an "Inner Circle Agent," as designated by State Auto, State Auto will contribute
an amount equal to 5% of the commissions deducted by the Agent toward the
purchase of additional Common Shares. Participation in the Plan is voluntary.
Agents may enroll in the Plan or withdraw from the Plan at any time, subject to
the terms of the Plan. State Auto will pay all brokerage commissions, service
charges, and other costs incurred in connection with the purchase of Common
Shares under the Plan. State Auto has designated National City Bank as its agent
to administer the Plan.
State Auto's Common Shares are traded on the Nasdaq National Market
system under the symbol "STFC." On November 27, 2000, the last reported sale
price of State Auto's Common Shares on the Nasdaq National Market system was
$13.88 per share.
State Auto will not receive any of the proceeds from the sale of Common
Shares under the Plan but will pay all costs relating to registering the Common
Shares subject to the Plan under the Securities Act of 1933, as amended (the
"1933 Act"). These costs are estimated to be approximately $8,601.
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 13, 2000.
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THE COMPANY
State Auto is an insurance holding company engaged through its
subsidiaries in the property and casualty insurance business. Approximately 70%
of State Auto is owned by State Automobile Mutual Insurance Company, a property
and casualty insurance company formed in 1921. State Auto's principal operating
subsidiaries and their businesses are:
- State Auto Property and Casualty Insurance Company, Milbank
Insurance Company, and Farmers Casualty Insurance Company,
which are regional standard insurers, write personal and
commercial automobile, homeowners, commercial multi-peril,
workers' compensation and fire insurance.
- State Auto National Insurance Company writes personal
non-standard automobile insurance in 18 states.
- Mid-Plains Insurance Company writes personal non-standard
automobile insurance in Iowa and Kansas.
- Stateco Financial Services, Inc. provides investment
management services to affiliated companies and insurance
premium finance services to customers of State Auto Property
and Casualty Insurance Company, State Automobile Mutual
Insurance Company, and Milbank Insurance Company.
- State Auto Insurance Company writes personal standard lines of
insurance in Ohio utilizing leading edge technology to the
maximum effect feasible.
- Strategic Insurance Software, Inc. develops and sells software
for the processing of insurance transactions, the management
of insurance policy data, and the electronic interfacing of
insurance policy information between insurance companies and
agencies.
In addition, State Auto manages Midwest Security Insurance Company,
which is owned by State Automobile Mutual Insurance Company. Midwest Security
Insurance Company writes personal standard lines of property and casualty
insurance in Wisconsin.
As of the date of this prospectus, State Auto markets its insurance
products through approximately 13,000 independent insurance agents associated
with approximately 2,200 agencies in 26 states. State Auto's insurance products
are marketed primarily in the central and eastern part of the United States,
excluding New York, New Jersey and the New England States.
State Auto's principal executive office is located at 518 East Broad
St., Columbus, Ohio 43215. Its telephone number is (614) 464-5000. Additional
information concerning State Auto and its business activities has been
incorporated in this prospectus by reference to other documents filed with the
SEC by State Auto.
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements contained in this prospectus (including those incorporated
by reference) that express the beliefs of management or that are not historical
facts are known as forward-looking statements. Forward-looking statements
involve a number of risks and uncertainties, including, for example, the
following:
- adverse state and federal legislative changes or judicial or
regulatory decisions;
- competitive products and pricing;
- weather and weather-related events or other types of
catastrophic events;
- geographic spread of risk;
- fluctuations of securities markets;
- general economic and business conditions that are less
favorable than expected;
- changes in technology or industry standards;
- shortages of labor or materials in storm hit areas;
- late reported claims and previously undisclosed damage;
- disruptions of utilities or financial institutions;
- shortage of skilled personnel;
- regulatory or governmental systems breakdown; and
- other risk factors or uncertainties listed from time to time
in this prospectus or any document incorporated by reference
in this prospectus.
MONTHLY STOCK PURCHASE PLAN
INTRODUCTION TO THE PLAN
The Plan provides Agents with a convenient and inexpensive method to
acquire ownership in State Auto by offering them an opportunity to purchase
State Auto's Common Shares through automatic deductions from their commissions.
State Auto will pay all costs and service charges incurred in connection with
the purchase of Common Shares through the Plan. Participation is voluntary.
Agents who elect to participate may enroll in the Plan or withdraw from the Plan
at any time, subject to the terms of the Plan. State Auto has designated
National City Bank to serve as its agent to administer the Plan.
A unique feature of the Plan relates to "Inner Circle Agents." For
Inner Circle Agents, State Auto will add an amount equal to 5% of the
commissions deducted by such Agents (the "Bonus Commission"). The Bonus
Commission will then be used to purchase additional Common Shares pursuant to
the Plan for such Agents.
Each participating Agent (a "Participant") should understand that the
relationship between the Participant and National City Bank is that of client
and broker/agent. Neither State Auto, State Automobile Mutual Insurance Company,
nor any of their affiliates assume any responsibility for this relationship or
serve in any capacity in this relationship. In seeking the benefits of ownership
of Common Shares of State Auto, each Participant must also accept all of the
risks associated with an investment in common stock. The market value of State
Auto's Common Shares is subject to fluctuations caused by any number of factors,
both internal and external. Consequently, you may lose money under the Plan.
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ELIGIBILITY
All principals of active agencies who are entitled to receive
commissions from any of the following companies are eligible to participate in
the Plan:
- State Automobile Mutual Insurance Company
- State Auto Property and Casualty Insurance Company
- Milbank Insurance Company
- State Auto National Insurance Company
- Farmers Casualty Insurance Company
- Mid-Plains Insurance Company
- State Auto Insurance Company
- Midwest Security Insurance Company
HOW THE PLAN WORKS
OPENING OF ACCOUNT. National City Bank will open and maintain an
account in the name of each Agent who elects to participate in the Plan.
PURCHASE OF COMMON SHARES. Participants may purchase Common Shares by
having commissions deducted (including Bonus Commissions for Inner Circle
Agents) and by making additional voluntary cash payments of up to $10,000 per
month. All voluntary cash payments must be made by a check or money order made
payable to "National City Bank." Commission deductions and cash payments from
all Participants will be commingled and used by National City Bank to purchase
Common Shares on the 10th day of each month, or the next business day if the
10th day is not a business day. (Participants should keep this in mind when
making cash payments, because no interest will be paid on cash in a
Participant's account.) National City Bank will credit all Common Shares
purchased under the Plan, including fractional Common Shares carried to three
decimal places, to each Participant's account. All purchases of Common Shares
will be made at current market prices.
SALE OF COMMON SHARES. Participants may sell Common Shares purchased
under the Plan in either of two ways. The Participant may ask National City Bank
for a certificate for the Common Shares, which will allow the Participant to
sell the Common Shares through a broker or dealer. Alternatively, the
Participant may ask National City Bank to arrange the sale of the Common Shares.
National City Bank will provide the Participant with a form to provide
instructions to National City Bank regarding the sale of Common Shares. All
sales of Common Shares will be made at current market prices.
BROKERAGE COMMISSIONS AND OTHER EXPENSES. State Auto will pay all
brokerage commissions, service charges, and other costs and expenses related to
the purchase of Common Shares under the Plan. However, regardless of the method
of sale, the Participant must pay all brokerage commissions, service charges,
and other costs and expenses associated with the sale of Common Shares.
STATEMENT OF ACCOUNT. Each time Common Shares are purchased for a
Participant's account, National City Bank will send the Participant a detailed
statement of his or her account. The statement will show the amount of funds
invested from commission deductions (including Bonus Commissions for Inner
Circle Agents) and direct cash payments, the number of Common Shares purchased,
the price per Common Share, and the total number of Common Shares held in the
Participant's account. The statement will include a detachable form to be used
to give
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National City Bank notice of a change of address, instructions for the
sale or withdrawal of Common Shares, or to deposit cash payments.
CUSTODY OF COMMON SHARES. National City Bank will hold all Common
Shares in safekeeping until a Participant terminates his or her participation in
the Plan. This convenience provides protection against any loss, theft, or
destruction of share certificates. However, upon a Participant's written
request, the Participant may obtain a certificate for any full Common Shares in
his or her Account.
VOTING AND RECEIPT OF REPORTS FROM STATE AUTO. Each Participant in the
Plan will direct the voting of all full and fractional Common Shares in his or
her account and will receive all literature sent to State Auto's shareholders.
HOW TO PARTICIPATE
To participate in the Plan, an Agent must:
1. Complete and sign a (1) Commission Deduction Authorization and
(2) Purchase Order. To obtain these forms, call State Auto's
Manager, Investor Relations, at (800) 444-9950 (extension
5373).
2. Return the completed and signed forms to:
Manager, Investor Relations
State Auto Financial Corporation
518 East Broad Street, Columbus, Ohio 43215-3976
After State Auto receives the Commission Deduction Authorization and
the Purchase Order, it will send both forms to National City Bank. National City
Bank will then open the Participant's account.
Each Participant must specify on the Commission Deduction Authorization
form the amount to be withheld from his or her commission disbursements.
Participants must deduct a minimum of $50 per month. The amount deducted will
remain in effect until it is revised or terminated. To change the amount of the
deduction or terminate the deduction, Participants must submit a written request
to State Auto on a form that State Auto will provide upon request. The request
must be made using State Auto's form. All requests to enroll in the Plan or to
terminate deductions will become effective as soon as practicable after State
Auto receives the request.
For Inner Circle Agent Participants, State Auto will automatically
cause the Bonus Commission (5% of the amount of the commission that the Inner
Circle Agent Participant has authorized to be deducted) to be added to the
amount forwarded to National City Bank on behalf of the Inner Circle Agent. The
Bonus Commission will continue for the period of time the Participant remains an
Inner Circle Agent and the Plan remains in effect.
All amounts deducted from commission disbursements pursuant to the
Commission Deduction Authorization will be commingled and forwarded monthly by
State Auto to National City Bank together with a list of the amounts deducted
for each Participant's Account. State Auto has reserved the right to terminate
the Plan and to discontinue the use of its commission deduction facilities for
this purpose at any time.
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DIVIDEND DISBURSEMENTS
Dividends earned on Common Shares in the Participant's account, as they
become payable by State Auto, will be remitted by National City Bank to each
Participant by check. Checks will be sent as soon as practicable following each
dividend payment date.
TAX INFORMATION
Bonus Commissions are taxable to the Inner Circle Agents as having been
received in cash even though they are used to purchase Common Shares under the
Plan. In addition, the Internal Revenue Service has ruled that the amount of
brokerage commissions paid by State Auto for Common Shares purchased on a
Participant's behalf must be treated as a distribution to the Participant
subject to income tax in the same manner as dividends.
TERMINATION OF PLAN PARTICIPATION
A Participant may terminate his or her participation in the Plan at any
time by sending written notice to National City Bank at the following address:
National City Bank
P.O. Box 92301
Cleveland, Ohio 44193-0900
Participants should also send copy of the termination notice to State
Auto at the following address:
Manager, Investor Relations
State Auto Financial Corporation
518 East Broad Street, Columbus, Ohio 43215-3976
PLAN INFORMATION
Any questions or correspondence about the Plan should be addressed to:
National City Bank
P.O. Box 92301
Cleveland, Ohio 44193-0900
Participants may also call national City Bank at (216) 575-2658 or
1-800-622-8100 (extension 2658).
USE OF PROCEEDS
State Auto will not receive any of the proceeds from the offer and sale
of the Common Shares under the Plan.
ANTI-TAKEOVER PROVISIONS
State Auto's Amended and Restated Code of Regulations (the "Code of
Regulations") contains certain provisions that could have an anti-takeover
effect. Pursuant to the Code of Regulations, the Board of Directors is divided
into three classes each with a term of three years,
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with the term of one class expiring each year. As part of such provisions, the
Code of Regulations (a) provide that directors may not be removed from office by
the shareholders without cause except by the affirmative vote of holders of
Common Shares entitling them to exercise at least two-thirds of the voting power
on such proposal, (b) provide that any vacancy on the Board may be filled by the
remaining directors then in office even though less than a quorum, and (c)
provide that a vote of holders of Common Shares entitling them to exercise at
least two-thirds of the voting power on such proposal is required to alter,
amend, or repeal the foregoing provisions or the corresponding and implementing
provisions of the Code of Regulations or to adopt any inconsistent provision.
State Auto's Board of Directors, without shareholder approval, could
issue Common Shares with voting and conversion rights that could adversely
affect the voting power of the holders of Common Shares and the issuance of
which could be used by the Board of Directors in defense of a hostile takeover.
In addition, certain provisions of State Auto's management agreement
with State Automobile Mutual Insurance Company, which permit State Automobile
Mutual Insurance Company to terminate such agreement upon a change in control or
potential change in control of State Auto, could have an anti-takeover effect.
LEGAL MATTERS
The validity of the Common Shares has been passed upon for State Auto
by Baker & Hostetler LLP, Columbus, Ohio.
EXPERTS
The consolidated financial statements and schedules of State Auto
Financial Corporation as of December 31, 1999 and 1998, and for each of the
three years in the period ended December 31, 1999, incorporated by reference in
this Prospectus and Post-Effective Amendment No. 1 to the Registration Statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon and incorporated by reference herein, and are included in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
State Auto is required by the Securities Exchange Act of 1934, as
amended, to file annual reports, quarterly reports, current reports, proxy
statements and other documents with the Securities and Exchange Commission (the
"SEC") on a regular basis. These documents are available to the public. You may
read and copy any document that State Auto has filed with the SEC as follows
(some of these locations may charge a prescribed fee or modest fee for copies):
- in person at the Public Reference Room of the SEC's main
office in Washington, D.C. (Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549) (for information,
please call the SEC at 1-800-SEC-0330);
- in person at the Public Reference Room of the SEC's regional
offices in New York or Chicago (New York--Seven World Trade
Center, Suite 1300, New York, New York
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10048; Chicago--Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661);
- by writing the SEC (Public Reference Section, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549);
- in person at the offices of the National Association of
Securities Dealers, Inc. (Reports Section,1735 K Street, N.W.,
Washington, D.C. 20006);
- by visiting the SEC's web site (www.sec.gov); or
- by using commercial document retrieval services or visiting
commercial web sites.
State Auto has filed with the SEC a registration statement and related
exhibits under the 1933 Act regarding the Common Shares offered and sold under
the Plan. As permitted by the SEC, this prospectus, which constitutes a part of
the registration statement, does not contain all of the information included in
the registration statement. You may obtain such additional information from the
locations listed above. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily complete. You
should refer to the contract or other document for all of the details.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows companies such as State Auto to incorporate information
from one document filed with the SEC into another separately filed document, a
practice known as "incorporating by reference." As a result, State Auto is
permitted to disclose important information in this prospectus to you by
incorporating information from other documents filed with the SEC into this
prospectus and referring you to these other documents. This prospectus
incorporates by reference information from the documents described in the table
below and in the paragraph following the table. These documents contain
important information about State Auto and its finances; the information in
these documents is deemed to be included in this prospectus.
DOCUMENT FILED WITH THE SEC PERIOD COVERED BY DOCUMENT
BY STATE AUTO (FILE NO. 0-19289) OR DATE FILED
- Annual Report on Form 10-K - Year ended December 31, 1999
- Quarterly Report on Form 10-Q - Quarter ended March 31, 2000
- Quarterly Report on Form 10-Q - Quarter ended June 30, 2000
- Quarterly Report on Form 10-Q - Quarter ended September 30, 2000
- Proxy Statement for the Annual Meeting of - Filed April 21, 2000
Shareholders held on May 26, 2000
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State Auto is also incorporating by reference all documents filed with
the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 after the date of this prospectus and before the completion
of the offer and sale of its Common Shares under the Plan (other than portions
of the documents described in paragraphs (i), (k) and (l) of Item 402 of
Regulation S-K promulgated by the SEC).
The documents described above either are or will be available for
inspection or copying at the locations listed under the caption "Where You Can
Find More Information." In addition, if State Auto delivers this prospectus to
you, it will also provide you without charge, upon your written or oral request,
a copy of any or all of the documents that have been incorporated by reference
in this prospectus (other than the exhibits to these documents, unless an
exhibit is specifically incorporated by reference). Requests for such documents
should be directed to:
Manager, Investor Relations
State Auto Financial Corporation
518 East Broad Street
Columbus, Ohio 43215-3976
1-800-444-9950 (ext. 5373)
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. STATE AUTO HAS NOT AUTHORIZED ANYONE TO PROVIDE
INFORMATION OTHER THAN THAT WHICH IS CONTAINED IN THIS PROSPECTUS
AND IN THE DOCUMENTS REFERRED TO IN THIS PROSPECTUS AND WHICH
ARE MADE AVAILABLE TO THE PUBLIC. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT.
YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS, AS WELL AS
ALL INFORMATION PREVIOUSLY FILED BY STATE AUTO WITH THE SECURITIES AND EXCHANGE
COMMISSION AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IS ACCURATE ONLY AS
OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS. STATE AUTO'S BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE
THAT DATE. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON SHARES, AND STATE AUTO
IS NOT SOLICITING OFFERS TO BUY COMMON SHARES, IN ANY STATE IN WHICH SUCH AN
OFFER OR SALE IS NOT PERMITTED.
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TABLE OF CONTENTS
PAGE
The Company..................................................................2
Monthly Stock Purchase Plan..................................................3
Use of Proceeds..............................................................6
Anti-Takeover Provisions.....................................................6
Legal Matters................................................................7
Experts......................................................................7
Where You Can Find More
Information..................................................................7
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STATE AUTO
FINANCIAL CORPORATION
MONTHLY STOCK
PURCHASE PLAN
FOR INDEPENDENT AGENTS
300,000
COMMON SHARES
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PROSPECTUS
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December 13, 2000
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