EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Terrence Bowshier
Vice President
Director of Investor Relations
(614) 464-5078
STATE AUTO FINANCIAL ANNOUNCES RECORD THIRD QUARTER PROFIT
- Combined Ratio of 97.6
- Net Income up 165%
- Revenue increase 7.3%
Columbus, Ohio (Oct 27, 2003) - State Auto Financial Corporation (NASDAQ: STFC)
today reported third quarter net income increased to $15,580,000, or $0.38 per
diluted share, versus $5,885,000 or $0.15 per diluted share for the same period
2002. Net operating earnings* per share were $0.36 diluted, versus $0.14
diluted, for the same period 2002.
STFC's GAAP combined ratio for the third quarter was 97.6 versus 103.8 for the
third quarter of 2002. Catastrophe losses contributed a total of 6.9 points to
the loss ratio during the quarter. STFC's third quarter revenue was
$265,110,000, up 7.3% from $246,962,000. Third quarter net premiums written
increased 5.1% over the third quarter of 2002.
Revenue for the first nine months 2003 was $781,621,000, up 9.6% from
$713,144,000. For the first nine months of 2003, net income was $44,945,000, or
$1.12 per diluted share, compared with $17,664,000 or $0.44 per diluted share
for the same 2002 period. Year to date GAAP combined ratio for 2003 stands at
98.9 compared to 103.7 for 2002. STFC shareholders' book value per share has
increased by 10.3% during the first nine months of 2003 to $13.12 per share.
"We are quite pleased to report that the third quarter of 2003 was the fourth
consecutive quarter of increasing profitability when comparing year over year
results. This was the most profitable third quarter in our history. Our
disciplined pricing and underwriting philosophies continue to generate
consistently strong core results. While catastrophes, including hurricane
Isabel, added 6.9 points to our combined ratio for the quarter, we were still
able to produce an underwriting profit," said STFC Chairman and CEO Bob Moone.
State Auto Financial Corporation is a regional property and casualty insurance
holding company engaged primarily in writing both personal and commercial lines
of insurance. The company markets its policies through more than 22,000
independent agents associated with approximately 3,400 agencies in 26 central
and eastern states, excluding New York, New Jersey and the New England states.
*Net operating earnings, a non-GAAP financial measure, differ from GAAP net
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, this amounts to $0.02 for the quarter and $0.15 for 2003 year to date.
* * * * * *
STFC has scheduled a conference call with interested investors for Tuesday,
October 28, 10:00 A.M. to discuss the company's third quarter 2003 performance.
Live and archived broadcasts of the call can be accessed via links on
www.STFC.com and www.StateAuto.com. A replay of the call can be heard beginning
at noon today by calling 1-800-406-7490. Supplemental schedules detailing the
company's third 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.
STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Figures in thousands, except per-share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
---- ---- ---- ----
Net premiums written $ 261,598 $ 248,887 $ 752,585 $ 712,465
--------- --------- --------- ---------
Earned premiums 246,056 230,059 720,124 664,238
Net investment income 16,047 14,766 47,587 44,214
Net realized gains on investments 1,550 700 9,568 854
Other income 1,457 1,437 4,342 3,838
--------- --------- --------- ---------
Total revenue 265,110 246,962 781,621 713,144
--------- --------- --------- ---------
Income before federal income taxes 20,804 5,128 58,277 15,678
Federal income tax expense (benefit) 5,224 (757) 13,332 (1,986)
Net income $ 15,580 $ 5,885 $ 44,945 $ 17,664
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Earnings per share:
- basic $0.40 $0.15 $1.15 $0.45
- diluted $0.38 $0.15 $1.12 $0.44
Earnings per share from operations*:
- basic $0.37 $0.14 $0.99 $0.44
- diluted $0.36 $0.14 $0.97 $0.43
Weighted average shares outstanding:
- basic 39,302 38,993 39,193 38,989
- diluted 40,333 39,722 40,037 39,776
Book value per share $13.12 $11.60
Dividends paid per share $0.040 $0.035 $0.110 $0.100
Total shares outstanding 39,337 38,968
GAAP ratios:
Loss ratio 69.5 73.9 69.9 74.3
Expense ratio 28.1 29.9 29.0 29.4
--------- --------- --------- ---------
Combined ratio 97.6 103.8 98.9 103.7
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* Net income from operations:
Net income $ 15,580 $ 5,885 $ 44,945 $ 17,664
Less net realized gains on
investments, less applicable
federal income taxes 1,008 455 6,219 555
--------- --------- --------- ---------
Net income from operations $ 14,572 $ 5,430 $ 38,726 $ 17,109
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