FOR IMMEDIATE RELEASE
CONTACT: Terrence Bowshier
Vice President
Director of Investor Relations
(614) 464-5078
STATE AUTO FINANCIAL ANNOUNCES FIRST QUARTER EARNINGS
o NET INCOME UP 60% OVER 1Q 2002
o SOLID IMPROVEMENT IN MERIDIAN SEGMENT
o COMBINED RATIO OF 95.2
COLUMBUS, OHIO (APRIL 30, 2003) - State Auto Financial Corporation (NASDAQ:
STFC) today announced record GAAP net earnings of $21,064,000 for the first
quarter ended March 31, 2003. GAAP net earnings were $0.53, per diluted share,
versus $0.33 for the same period last year. Net operational earnings* for the
quarter were $0.47 per diluted share, compared to $0.31 for the same period
2002.
STFC's first quarter revenue was $253,353,000, up 10.2% from $229,959,000 a year
earlier. Quarterly written premium increased 6.4% over the first quarter 2002.
The Company's GAAP combined ratio for the first quarter was 95.2 versus 98.5 for
the first quarter 2002. The improvement in the combined ratio this quarter over
the first quarter of 2002 can be attributed mainly to the continued improvements
in the Meridian segment of the business. The Meridian segment produced a
combined ratio of 91.0 for this quarter versus 105.1 a year ago.
"We are enormously proud of our second straight quarter of record earnings. This
achievement is a direct result of the efforts of associates throughout the
Company who have focused on the reformation of the Meridian segment, while
continuing to fine tune the State Auto segment of the business," said STFC
Chairman and CEO Bob Moone.
"Nevertheless, underwriting work is never done. We believe the implementation of
double-digit homeowners rate increases, coupled with our focus on new and
renewal underwriting guidelines, will lead to sustainable profit in this line.
Our decision to remain extremely conservative writers of workers' compensation
has served us well, but continued attention to commercial casualty pricing is in
order.
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"We are convinced that every constituency, particularly our shareholders and
agency partners, enjoy tremendous value from profitable operations. Therefore,
we will continue to be unrelenting in our drive to maintain both targeted growth
and sound underwriting results," concluded Moone.
At $12.36 per share, STFC shareholders' book value has increased by 17.4% since
March 31, 2002.
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, general liability, workers' compensation and
fire insurance. The company currently markets its products through more than
22,000 independent agents associated with approximately 3,500 agencies in 26
states. Products are marketed primarily in the Central and Eastern United
States, excluding New York, New Jersey and the New England states.
*Net operational earnings differ from net GAAP earnings only by the exclusion of
realized capital gains or losses, net of applicable taxes, on investment
activity for the period being reported. For STFC, in the first quarter 2003 this
amounts to $0.06 of such realized gains.
* * * * * *
STFC has scheduled a conference call with industry analysts for Wednesday, April
30, 10:00 A.M. to discuss the company's first quarter 2003 performance. A replay
of this conversation, in its entirety, can be heard beginning at noon today by
calling 1-800-925-4712. Live and archived broadcasts of the conference can be
accessed via links on www.STFC.com and www.StateAuto.com. Supplemental schedules
detailing the company's first quarter 2003 financial, sales and underwriting
results are made available on www.STFC.com prior to the above-mentioned
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.
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STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(figures in thousands, except per-share amounts)
(unaudited)
Quarter Ended
March 31
2003 2002
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Net premiums written $ 236,506 $ 222,286
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Earned premiums 232,375 212,836
Net investment income 15,709 14,611
Net realized gains on investments 3,845 1,310
Other income 1,424 1,202
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Total revenue 253,353 229,959
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Income before federal income taxes 28,563 17,301
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Federal income taxes 7,499 4,136
Net income $21,064 $ 13,165
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Earnings per share:
- basic $0.54 $0.34
- diluted $0.53 $0.33
Earnings per share from operations*:
- basic $0.48 $0.32
- diluted $0.47 $0.31
Weighted average shares outstanding:
- basic 39,073 38,966
- diluted 39,732 39,768
Book value per share $12.36 $10.53
Dividends paid per share $0.0350 $0.0325
Total shares outstanding 39,163 38,980
GAAP ratios:
Loss ratio 64.4 69.2
Expense ratio 30.8 29.3
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Combined ratio 95.2 98.5
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*Net income from operations:
Net income $21,064 $13,165
Less net realized gains on investments,
less applicable federal income taxes 2,499 852
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Net income from operations $18,565 $12,313
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