EXHIBIT 99.1
STATE AUTO FINANCIAL CONTINUES RECORD PERFORMANCES
o RECORD SECOND QUARTER EARNINGS OF $0.94
o QUARTERLY GAAP COMBINED RATIO OF 85.0
o BOOK VALUE UP 24.8% FROM SECOND QUARTER 2004
CONTACT:
Terrence Bowshier
VP - Director of Investor Relations
(614) 464-5078
COLUMBUS, OHIO -- JULY 26, 2005 -- State Auto Financial Corporation (NASDAQ:
STFC) today reported record second quarter net income of $38.8 million, or $0.94
per diluted share, versus $34.6 million or $0.85 per diluted share for the same
period in 2004. Net operating earnings* per diluted share were also a second
quarter record, $0.94 versus $0.83 for the same period in 2004.
STFC's GAAP combined ratio for the second quarter of 2005 was 85.0, versus 87.0
for the second quarter of 2004. Catastrophe losses accounted for only 1.2 points
of the loss ratio during the second quarter of 2005 compared to 5.1 points for
the same period in 2004. STFC's second quarter 2005 revenue was $284.2 million,
up from $273.1 million for the same period in 2004.
Revenue for the first six months of 2005 was $570.1 million, up 4.4% from $546.2
million for the same 2004 period. For the first six months of 2005, net income
was $79.6 million, or $1.94 per diluted share, compared to $67.0 million or
$1.65 per diluted share for the same 2004 period, an increase of 17.6%. The GAAP
combined ratio for the first six months of 2005 was 84.8, as compared to 88.3
for the same period in 2004. STFC shareholders' book value per share increased
24.8%, from the second quarter of 2004, to $18.34 per share as of June 30, 2005.
"We are very pleased to announce continued outstanding performance for STFC. The
strength of our relationships with our independent agency force is fundamental
in allowing us to produce another quarter of record results. While the overall
insurance market has become more competitive, we believe our long-term emphasis
on sound underwriting, fostering agency loyalty and responsible cost-based
pricing continues to set us apart," said STFC Chairman and CEO Bob Moone.
"Although catastrophe losses moderately impacted our second quarter results,
they were less severe than during the comparable quarter of 2004. This milder
than average weather related loss experience, coupled with a continuation of
strong core loss ratios, allowed us to produce these outstanding results," added
Moone.
State Auto Financial Corporation, headquartered in Columbus, Ohio, is a regional
property and casualty insurance holding company engaged primarily in writing
both personal and commercial
lines of insurance. The company markets its products through more than 22,000
independent insurance agents associated with nearly 3,200 agencies in 26 central
and eastern states, excluding New York, New Jersey and the New England states.
The company is included in the 2005 Forbes Magazine's Platinum 400 list of the
best-managed companies in America and is one of only 314 publicly traded
companies to earn the Mergent Award for having increased its dividends for ten
or more years in succession. The State Auto Insurance Companies are rated A+
(Superior) by the A.M. Best Company.
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*Net operating earnings, a non-GAAP financial measure which management believes
is informative to Company management and investors, differ from GAAP net
earnings only by the exclusion of realized capital gains or losses, net of
applicable taxes, on investment activity for the periods being reported. For
STFC, this amounts to $0.00 for the quarter and $0.04 for 2005 year to date
compared to $0.02 and $0.11 for the same periods in 2004.
* * * * * *
STFC has scheduled a conference call with interested investors for Tuesday, July
26, 10:00 a.m. Eastern Time to discuss the company's second quarter 2005
performance. Live and archived broadcasts of the call can be accessed via links
on www.STFC.com. A replay of the call can be heard beginning at noon July 26, by
calling 1-800-756-6160. Supplemental schedules detailing the company's second
quarter 2005 financial, sales and underwriting results are made available on
www.STFC.com prior to the conference call.
* * * * * * *
Except for historical information, all other information in this news release
consists of forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied. The most significant of
these uncertainties are described in State Auto Financial's Form 10-K and Form
10-Q reports and exhibits to those reports, and include (but are not limited to)
legislative changes at both the state and federal level, state and federal
regulatory rule making promulgations and adjudications, class action litigation
involving the insurance industry and judicial decisions affecting claims, policy
coverages and the general costs of doing business, the impact of competition on
products and pricing, inflation in the costs of the products and services
insurance pays for, product development, geographic spread of risk,
weather-related events, and other types of catastrophic events. State Auto
Financial undertakes no obligation to update or revise any forward-looking
statements.
STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
($ millions, except per share amounts) 2005 2004 2005 2004
---- ---- ---- ----
Net premiums written $ 274.2 $ 262.4 $ 556.2(1) $ 515.4
Earned premiums 263.7 252.4 526.8 501.1
Net investment income 19.3 17.8 38.3 35.3
Net realized gain on investments 0.0 1.3 2.4 6.7
Other income 1.2 1.6 2.6 3.1
Total revenue 284.2 273.1 570.1 546.2
Income before federal income taxes 54.4 49.2 112.2 95.2
Federal income tax expense 15.6 14.6 32.6 28.2
Net income $ 38.8 $ 34.6 $ 79.6 $ 67.0
Earnings per share:
- basic $ 0.96 $ 0.87 $ 1.98 $ 1.69
- diluted $ 0.94 $ 0.85 $ 1.94 $ 1.65
Earnings per share from operations *:
- basic $ 0.96 $ 0.85 $ 1.94 $ 1.58
- diluted $ 0.94 $ 0.83 $ 1.90 $ 1.54
Weighted average shares outstanding:
- basic 40.3 39.8 40.2 39.7
- diluted 41.0 40.8 40.9 40.7
Book value per share $ 18.34 $ 14.69
Dividends paid per share $ 0.045 $ 0.040 $ 0.090 $ 0.080
Total shares outstanding 40.4 39.9
GAAP ratios:
Loss and LAE ratio 53.3 57.9 53.0 58.6
Expense ratio 31.7 29.1 31.8 29.7
---------------- ---------------- ----------------- -----------------
Combined ratio 85.0 87.0 84.8 88.3
================ ================ ================= =================
* Net income from operations:
Net income $ 38.8 $ 34.6 $ 79.6 $ 67.0
Less net realized gains on investments,
less applicable federal income taxes 0.0 0.8 1.5 4.4
---------------- ---------------- ----------------- -----------------
Net income from operations $ 38.8 $ 33.8 $ 78.1 $ 62.6
================ ================ ================= =================
(1) Net premiums written for the six months ended June 30, 2005, includes $23.9
million of unearned premiums transferred to STFC in connection with the
addition of Meridian Security Insurance Company and Meridian Citizens
Mutual Insurance Company to the State Auto Pool, effective January 1, 2005.