STFC - Earnings call transcript Q2 2019 | State Auto Financial CORP

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome, and thank you for standing by. [Operator Instructions] Today's call is being recorded.

If you have any objections, please disconnect at this time.

I'd now like to turn the call over to Director of IR, Natalie Schoolcraft. Please go ahead.

Natalie Schoolcraft

Josh. you, Thank and Conference everyone, our Quarter Second Good welcome Earnings Call. XXXX morning, to

we'll joined our President State Mrozek; Senior Officer, Today LaRocco; our and Officer, Senior by I'm Chairman, Matt Commercial of Kim prepared President Personal Jason for Jones. questions. open Lines CFO, Scott Garland; Vice of Actuarial President Senior Director the and Investment and Steve Labs, lines President and English; of remarks, Chief Vice Managing Lines, After Berkey; Auto Vice Mike CEO, Chief

These Our their the risk as with discussed types comments of may of and in which actual contained quarterly today annual Exchange those may Such include differ which may factors factors forward-looking risk Commission. end as well our nature statements, statements. at by to press in release our affect uncertainties, Securities performance. from results number involve and filings and financial our cause future a projections materially the forward-looking of are or factors

Financial press reconciliations are of the supplemental section. part other included on as measures, financial our non-GAAP schedules Investors along of and website stateauto.com information available our under containing release with certain

the and Chairman, to over Mike LaRocco. CEO, turn STFC's I'll Now call President

Michael LaRocco

good and morning, Thanks, Nat, everyone.

commercial weather ratio quarter cats expected. Between and clearly the the was second and weather, had quarter volume worse we the obviously The combined an impacted was personal active XXX.X% of it than and our results. corresponding non-cat

most is tornados. of volatile and from primary our wind, since plenty quarter storms exposure second had convective typically course, XQ Of is quarter cat and our hail

customers normal. very We When in exceeded never and advance the an soon be proud catastrophe. our to of with again them promise quotes, After the XXXX, a care their performed sell were manner our than of am to challenges. to in them as help need in our critical the after out process possible, plan a safe to there I on as it's getting these face us, team While them lives for our more help we was promise. a reached begin to do events, promise, back expectations. we delivered once it in when prepare. we these say exceptional storms, to We weather that customers our

impact very to over It's results the always periods My focus any year-to-date from to and like help important smooth second. a times quarter, measure reserve volatile of weather good of especially year-to-date than longer feel numbers development results. quarter the the variation on the to our is Those basis, one one I underwriting about reality a On next. of of results. both amount the quarter

well not are models adequate Our product a and designed, and segmentation concentration levels concern. are are of rate exposures

More effectively. importantly, we claims are executing and operationally, technology, underwriting, across

loss to and year non-cat Our ratio, is good measure. which improve, allocated loss continues current accident a expense adjustment

growth Our in growth well with across performed both remains policies strong. story In and exceptionally personal force. homeowners premium lines,

well writers. of Our and continue have growing digital home products one we our be to been received the platform and new fastest

we remain weather, While that underwriting both and an the quarter grow optimistic due XXXX. make results the in the line quite for poor this were underwriting to will profit

even auto action, aggressive compensation, an quarter. fairly and competitors which in second write challenging has already seen Personal struggled We've both take market made so. the more

lowering in While am will. has get am happy too low opportunity changes improve. first the the growth, that still we'll with begun the to lines. in In growth we just and are exciting. by products absolutely made unwilling our being especially Those commercial I commercial rates auto while XX%. we improve to changes below we our and we retention, I profitability, but by leveraged simply a necessary feel where the back grown the our much can in to The is BOP. half we chase we new for to very compensation, combination be never knowingly numbers have workers' better, of levels. are That due now expect to does we've profitable commercial with improvement sacrifice feel do pleased are half, growth not platform agents, and include to new we lines profit auto and second growth our the

new potential have We tap for the begun small commercial. products to just our of platform and

growth launch through In XQ the year, the for while simply we've already have market we will middle commercial next the growth. writers year, Ranch continues our and insurance. without seen of solid a platform remarkable. of new true of the become changes changes. of the be as market is growing Once we next ranch. We're build expect on to Farm & We've in focus to achieved in early platform middle now What organizational, fastest market the space, benefit cultural a provider of current seen performer. and platform one launches farm the

year. Our market this in the new be will late platform

of access which launch also give to platform, With accelerate. growth new the our us expect fully we that states, to will current

The new the speak culture State Auto of success strategy and vision to hinges on products ratio. Finally, and a of go final expense change about expenses. our want competitive one I to piece, digital, build

you In to significant we've if cannot that products were and The made platform, You we've the to the competitive deliver were lower and see we've change a keep personal get possibilities. investments ratio. systems lines, investments the expense expense culture, designed begun a using simply products. legacy made, to -- necessary ratio old

expenses. labor has efficient growth an or and to paper, one us one other have a corresponding We platform, no without allows that postage that checks, in grow

lines. We commercial expect result from to the see same

deliver below pull fairly to the solid. our Auto. results or to now State on We need While of above ratio combined loss be our our to XXX, ratios all slightly from platform efficiency value continue are the overall truly

With over will English. that, the call I Steve to turn

Steven English

good Thanks, morning, Mike, and everyone.

an on STFC $X.XX of operating second share for a loss compares, with earnings share $X.XX XXXX. This For operating basis, diluted reported per quarter quarter, loss diluted with $X.XX. the diluted an to per per the of share, of $X.XX, loss of

a of diluted to reported, $X.XX loss on XXXX. a and On share of earnings compared for and an per basis month six operating operating the $X.XX basis, per share as earnings months $X STFC diluted X first of $X.XX

a loss. reminder, results exclude investment of operating gain net non-GAAP tax net or As

basis of gain in net comparable the investment 'XX, in of second gain gain investments, reflected includes the X was 'XX net month gain unrealized $XX.X loss investment the unrealized investments. of million while net of million XXXX net While of a the quarter relatively on on $XXX,XXX XXXX, on million of quarter the same compared basis, to during $X.X second $XX.X investment on net

of to second quarter The XXXX up the of compared year of declines quarterly last a to in from to experienced second quarter first XXX.X quarter ratio year, expense rebounded while and ratio were loss in the XXXX, Fair the combined relative was improved. equity ago. particularly Cat the compared XXX GAAP investments of the ratios higher values fourth quarter. non-cat

For year the to to The the same the reflecting first of XX.X for losses for XXX.X XX.X a X higher period, X.X ago. the GAAP was the ratio compared second of and cat first X months GAAP of expense with XX.X for point compared XXX.X XXXX, respectively ratios. expense and XXXX XX.X and ratio quarter months non-GAAP combined improved

to and and investments & quarter-over-quarter and commercial to Year-to-date, variable essentially of to made roll lines and estimates On in a technology The XXXX. during revised including driven for ago. for the Ranch. improvement have XXX to compared basis, products, final compensation. we We quarter second ratio discussed technology the quarter period out compared ratio personal statutory products, by the of and in being Farm same combined build associate was reported a combined commercial a XXXX commercial personal continue XXX.X reported a XXX.X XXX.X the of of year and

XXXX higher compared in year this of have ago. during losses been Catastrophe quarters both a to year

months, number While the events more and the cat quarter flat the down XXXX have severe. in was been X events of through

prior quarter estimates million of continue to compared $XX.X recorded loss year and develop was million second Our ALAE quarter, favorably the to In in overall. the to 'XX. non-catastrophe of $XX.X relating reserves

second quarter to million, in second XX.X% months Through loss ago. XX.X% The of of non-cat and months, up equal For to in points and ended the months quarter was compared to year 'XX the development favorable XX% X ratio for points: accident totaled loss current X June the ratio the of ALAE X XXXX. year XX, of the improved XXXX non-cat $XX.X has X.X quarter accident compared X XX.X% year first X.X ALAE a the for months current to the 'XX. first

previously, discussed estimates volatile quarter based on have reserve from As factors. to be many can we quarter

product quarters. detail of accident Jason more Additionally, by will their year can remarks. that booked quarters prepared ratios into specific get second, given and reassessment from relative to pick third Kim any fourth be earlier year's of impacted the the year in and

to X.X The compared personal of second the and quarter statutory points commercial expense 'XX. for ratio improved as

variable million offset $X.X million personal adverse commercial each reserves. timing mentioned As the becoming before, settlement estimates ratio slightly within individually variable claims I of the On losses, the and is offset as is claims costs. items activity compensation which not for development casualty of Quarterly the the less and only note material. which are this of compensation quarter estimates, other cat passes. by than are include of other development of driven XXXX was specialty as represents by down $X.X expense Items flat partially of for year-over-year, year-to-date X and months, statutory a basis, through technology quarter Irma by E&S numerous of favorable less

renewal which the property on X, to basis. treaty. we July past this catastrophe Finally, completed group or programs retention a reinsurance are were our of placed No our made changes and limits of the

of million. retention a with On basis, limits a remains and co-participation. remains retention $XX at per-risk at property group $X million million, Our X% $XXX

Our excess million. treaty remains of retention casualty at loss $X

growth on costs experienced any commercial and not basis, are up but the amount given percent an premium. in significant reinsurance lines, of have we dollar absolute personal Our or

I'll to And that, turn over the Jason. call with

Jason Berkey

good and morning, Steve, everyone. Thanks,

quarter losses. ratio personal quarter year. and the quarter ratio XX.X% loss and second of development The favorable due XXX.X% non-catastrophe our the weather levels The challenging in quarter, compared second that catastrophe lower is second to for with for typically quarter of combined compared the quarter a all in losses, of the and finished XXXX. the certainly in was XXXX. levels to to both higher lines' LAE The case in was lines weather-related lines the ratio Personal most and homeowner loss same XX.X% of last XXX.X% is increase

is a further of lines' moment. auto, for retention new counts levels Net lines business up personal offset counts, which quarter in personal XX.X% reflecting will 'XX, speak to second personal I lower written in versus homeowners by and other business and higher premium new

in respectively ratio auto of of auto LAE XX.X% compared at XXX.X% non-cat with the specifically current in personal loss and impacted the ratio quarter combined to XXXX. a quarter statutory loss by Looking was second LAE ratio were point by in personal accident The the XX.X%, and X.X points X.X of XX% to compared loss auto, in statutory a LAE results ratio year and decrease offset development, favorable prior the year. the improvement and

premium the lost increasing level We faster continue our rate see than increase costs. of of to rate

now The to earned improved Connect our our auto our loss with ratio book along Care be product. from premium trend improvements organization. business, product addition, auto and to In injury product the our legacy of favorable the on rate due premium the bodily both actions, from earned frequency in claims earn-in digital continued product of The on in Connect legacy our our operational personal legacy exceeds the quarter.

result, a the book to the overall see Connect that on percentage of product. increasing loss on the new expect with business As is ratio, our pressure we

forward, As trends now the auto being we calls, in and personal reflecting actions will been have previous have more our be seen. moderating going targeted rate mentioned

legacy have mostly in As our increases actions retention have book, our our see auto aggressive Connect prior our rate and non-Georgia both begun we to now retention. renewed into

roughly in previously, this quarter seek tough Connect non-renewal policies our XX% entire as of the those Overall, decision unprofitable retention we and conversion second auto Georgia April book we auto the made year process Georgia in began to of mentioned As that product. was onto 'XX. of the book our legacy exit

chase was as renewal greater with versus 'XX. X.X% quarter have We competitors quarter system and the with for with up decreases our by rate level, business be not Policies experienced auto and continue see rate we X.X% changes. or finished 'XX expect retention on 'XX. favorable our not down improve we advancements stability to quarter second with we not increase 'XX, in in to auto incentives. business over product to fewer written quarter rate-tiering In satisfied the have quickly we were second net we counts of personal the the growth, second premium to close our second new our rate market force competitive on same I'm quarter new and costs use time, increase XX% more buying seen soften books the We've to below subsidizing will are to seen rapidly where supported ease Connect pursue our out Connect. loss At business of risk loss ratio. slowdown enhancements unsustainable for rolling

by homeowners quarter levels driven of to LAE The was non-cat LAE the results; favorable were homeowners on the Texas, development Kansas, The South than driven catastrophes. in of 'XX year impacted loss to 'XX. quarter, The ratio quarter the a second points higher Maryland. Virginia loss homeowners product by same and and and increase Moving XX.X second this Dakota, remaining by increase quarter West in ratio was results lower during also compared weather especially levels higher quarter ago. was

Our homeowners cat higher was quarter points combined in loss quarter ratio XX.X%. 'XX XXX.X% ratio and respectively second the LAE ratio which for The XX.X 'XX was than and is quarter XXX.X% ratio X second loss 'XX. and second cat XX.X% homeowners quarter a loss ALAE with points, to ALAE compared XXX.X%, second and of homeowners of

'XX, XXXX. non-cat XXXX non-cat was quarter than the second XX.X% of the ALAE second XX.X again, The higher weather loss quarter ratio and in in losses higher by driven XX.X% points

homeowners we loss business our we see experience historically we ratio in pressure growth over ratio XX.X% penalty 'XX. increased new seen growth less In 'XX, reduction new than policies opportunity and in our legacy Connect our policies new ramp-up homeowners to forward, in business second profitable force, product digital on homeowners with homeowners on in for Going our have new new to loss lower from homeowners our business quarter book. allows our business This quarter production continue second with terrific business. a a in as our force in continue

in counts second net the homeowners XX.X% New over versus XX.X% written and business quarter quarter 'XX. 'XX, up premium increased second were quarter

retention, stability, in homeowners changes improvements improve expect Connect our quarter of see home of business. the actions roughly renewal with We've terms product and XX%. our those homeowners retention into rate renew In we book to ended retention to taken on our at Connect rate as

Homeowners targeted but quarter in by 'XX, was 'XX. actions policies pursued weather our for by aggressive to Personal rate summarized in quarter, more rate auto in our XXXX. in X.X% of force business as, the premium conclusion, can and first, increased loss In personal lines prior has our in the story versus personal in continued moderation quarter in second second actions versus to quarter being quotes trends for the relative our resulted second, higher XX.X% recent increase be taken auto auto auto the by rate new personal ratio the are activity personal increased growth. X.X% combined by impacted than written quarter losses declined quarter targeted years; auto net

love and proud team we growth. what the has accomplish, to for are of how profitable I positioned able been I'm

continue with responding our We of X to but years we've great to Connect our room digital experience to in of strong with have place foundation and plenty product, our improve, made nimbly strides. nearly

have beyond. We achieve can in and confidence XXXX what we in

I'll discuss that, who lines' will over Kim commercial results. turn to With our the call Garland,

Kim Garland

a 'XX XQ combined ratio versus as increase versus Jason. 'XX The The 'XX XXX.X% XX.X% follows. premium results XQ commercial of XQ are 'XX. XXX.X% in XQ Thanks, and written of

is workers' written XX.X% Excluding 'XX. lines commercial versus XQ up compensation, premium

XX.X% positive higher expense out due on the large 'XX. lower be the ratios was versus the due this to for profitability. product points ALAE non-cat quarter expected be generally commercial we the in XQ commercial signs statutory variable inhibitor compensation to Worker's line platform. our than 'XX statutory and first need the are XQ to whole, For quarter associates that XQ as and impact single XQ loss a they a and X.X the X.X both a not, lower and ratio overall more ratio continue of expense was commercial expense are story non-cat them stood the of ratios loss higher to point with compensation efficient from loss commercial biggest 'XX to The ratio 'XX the ratio than in loss. business is where was Commercial

is lines to business. is versus strengthen XQ Connect, 'XX new business up commercial 'XX premium products. versus Growth 'XX auto 'XX. commercial for record XQ up auto auto and for 'XX. commercial XQ was XQ premium versus our total new and of continues new was 'XX XQ premium another BOP business XXX% counts our quarter XX% XX% commercial XQ BOP Commercial 'XX to XX% business up new 'XX. were up compared XQ XQ business BOP

with As Connect XX% flat intensify. middle growth This our BOP or and market continues were XQ 'XX record was middle in consecutive are new versus 'XX in total Workers' as up downward of a quarter Farm the Ranch had XX% & total business written up of at written reminder, commercial versus growth down average what comp premium XX% XQ 'XX. BOP sixth was X%. new 'XX. and rate and quarter XQ around premium XX% versus of is market written versus premium market pre-Connect, growth premium competition 'XX middle struggle premium 'XX. of XX.X% higher, XQ XQ was Middle written business pressure premiums to had a continues they growth XQ to market quarter. solid

ratio the As promised, path for update to expense here on improved significantly an lines. is commercial

are in through business. 'XX done a discussed more achieving in of get this and written written the expense improved economics direct within better it Connect ratio percentage. unit gains, things: X our require more Improved the different versus need through we XX% commercial as that manually Pre-Connect with In on associates commercial and piece auto new straight every XQ more XX% processing the significantly a business the touched previously With is percentage new efficient more for platform. these 'XX. commercial are have us better to to premium had new commercial will direct straight Connect economics. lines We fewer scale. XX% get giving is economics. across business premium tasks commercial of and Connect products that Commercial a other handling premium total BOP efficiency X% unit division XQ world, processing business around We to more and unit

of of 'XX, premium of was: percentage For commercial for 'XX, lines, Connect was X.X%. XQ it on for all was is for all XQ it X.X%; 'XX, X.X%; it

Scale.

As up previously this premium as issue written mentioned, rate; launch Middle commercial for impact be this market, the order time risks. is to second Commercial Farm impact we of still underwriters early see to is Connect freed scale growth is & from Connect XX% Ranch written has solved. premium are in rate. premium XXXX Connect middle the the starting auto, growth the middle driver. on XX% growth our The market X% rate. a to come. is focus market written

state & The states total scheduled Connect enter and throughout in 'XX Connect launch to Farm in XQ is & first to new Ranch Farm X Ranch allow will XXXX.

will rate, LAE growth on this items. we written acquisition XX.X% has compensation, effective product as XX% focus workers' the become more not X% larger ratios the loss [Indecipherable] box. to premium Workers' Significant I'll written commercial but provides on the growth and these line are poor and operating to rate. not compensation for likely plan results occur ratios expense to as us business line every we a business loss that by to continue both to key be and Connect premium until the commercial will increase have growth previously new line ensure results for are The but work platform deteriorate do follows. rate. each grow, as Small product launches Connect product for XXXX, and as unit in counts noted. count minus an growth

acceptable XX.X%, is level. auto which at the 'XX, commercial in a auto; XQ X.X versus still ratio 'XX Commercial and deterioration generally point is loss a but LAE XQ

commercial flat since XQ the written point ratio versus Commercial high. than X.X in Middle in an the loss auto growth statutory XQ XX%, and keeping package; the 'XX. XQ which rate on is 'XX. in up commercial commercial; 'XX LAE so statutory 'XX are middle watch versus 'XX. written XX market ratio commercial package XQ extra is close is a LAE XX.X% versus loss is 'XX and in XX.X%, market small is loss XQ We lower Small commercial improvement auto package which XQ XQ was was 'XX XQ ratios points 'XX. premium premium Small

in down by adequacy higher Workers' the a ratio XQ As premium more of in The growth with remain with quarter. which was XQ loss extra written an in versus we than versus comp decline premium, driven new down decline compensation; XX.X% single by commercial in high. written workers' premium 'XX renewal rates our was Workers' 'XX. 'XX XX%, ratios down was up premium, decline comfortable business is XQ written keeping premium statutory so loss close XX.X% the watch written the middle than market loss is XQ a by Middle large rate and a We in auto, X%. compensation XX.X comp levels. are XQ since on 'XX, LAE in are 'XX workers' XX.X%, points market 'XX. XQ driven

adequate discipline business to this and rates competition. just We have continue but to finding the to of better underwriting of during during to get this be write cycle, part intense maintaining at committed period good we rate at

XQ The ratio XQ Farm points in in than which XX.X% X.X is higher and loss XX.X%, 'XX. & Ranch statutory is LAE the 'XX

high are X% building the future Ranch lines records business should and technology as XX.X% in in these during impact XQ success was X our XQ 'XX We at the starting of Ranch both occurred will next and of proud team. some the worth launch accelerant buildout versus the be Farm we Auto. expense every cost see current to which for for businesses, to points Farm this several 'XX, in Connect. core the for & the also & the in You as small XX.X expense a is will we for work states ratio Connect in of continue month. and expense straight Farm that optimism up the includes from total, commercial over This the XQ and step lines be for ratio of couple Farm state of last second quarter. The on each work commercial and it another be expense new & quarter commercial ratio in see -- new 'XX. to product ratios of better years. Ranch increase the vibe middle new first State spend, Ranch reflects growth commercial this The Connect 'XX & continues incredibly important of our line a set enter points business Ranch market I lines quarter. was our XQ and written years. Farm in premium the in & And

we'll the line that, with for And open questions.

Operator

[Operator Instructions] comes Your Christopher from first Campbell KBW. with question

Christopher Campbell

I Kim. guess, extra thanks expense commercial for good quite and the lines the Hey, on ratio progress color first, there,

So should we I forward be And think about can to and going then do get year-end modeling you XXXX? just in by where guess thinking XXXX? that XXXX how you

Michael LaRocco

the standpoint. and everything piece really come this done we've this specific difficult number the insurance final date, of together, investment is, kind you, more give I've is for it's progress expense the expense And XXX-year-old is feel And journey, and made startup it this to people vision I have next in of Mike. at part we've together this Chris, and a a are mean, ratio I'll the the now, platform of But for as kind to to the because strategy, about of the a talked all bullish company. It's very year. Yes, led certainly from is same about. tell this so bringing products we we where each reason this company of than it piece and whole and us our has the you the today. the remember, and is heavy an look thing

pretty this the So, in kind that of look will think be we're we've that low directional at mid-XXs. work been a Homeowners if more would auto, doing you clear line. XXs we in product be our personal

the difficult middle it'll -- on of risk market look lot homeowners. a lot think premiums, significantly to risk. but side, the is always these the little course of higher complexity more get the you're of a a the BOP I of because the like touching And more bit benefit of

So on our still XX, the based with are that probably or of is expense bad bad ratios nowhere today, which we're XX completely challenges near be and so running processes. north historical technology

and So, more that's kind as but as that, turned far I ability don't of that we direction, to timeframe. not specific since corner for can't giving driving our be time we bullish those I'm the frames how we're obviously, we've thinking about very start it. feel give about towards numbers. But

Christopher Campbell

guess And it. like the quarters. core loss X at got helpful. was the just commercial Okay, up very past That's XXX auto, I year-over-year bps looking after ratio

guess, increase? market getting like more is was pretty that what Is I there? just it seeing now, I that guess, drove that are I Before just improvement. strong you -- mean, year-over-year competitive? what

Kim Garland

I go places. -- I'll think of a couple

journey to sort XXs. actions the in for So lot auto a high, been XXXX, ratios them team of commercial or took 'XX, of in think XXs XXs get has into XXs and the I the -- our were the back loss really and

of in had we were and sort start and and the adequate think could growing. point of So now, right we things -- we kind place so rate at where a we're

-- a books. world, We a putting the we're are in business Connect lot of new on

-- seen is are different that we a part type of seeing risks. little have slightly think I of bit

look we business, conservative. that make ones written think is write a When to premium stay at driven. fleets. the guess bunch whole is right, philosophy on of do is Mike -- sure consistent and I of some I So smaller where bounds. new in About this through and the XX% go me, I Steve think straight have Connect of be I I and our telematics our reserve

are lines. being just evaluate on what other careful so we maybe think And so are how more commercial than auto we doing I we in

the the So I stuff uncomfortable sort other adequacy what standpoint than of from trying normal is we manage. there rate think nothing to you you're with see and line that see, business of a we're we see

up is really standing nothing us. So to

Steven English

Steve. would still lose fact is of X is sight a points. the this Chris, million on book of I This is very don't a $X also basis. add, quarterly business. small Hey,

would kind pick I slightly month X you just so year of accident is you which And so point the smooth that down, out. of to year-over-year, some

this get total parse in a these little buckets, lot quarter. commercial into of you to volatility book when quarter So, you

Christopher Campbell

Got then the premium, we're that in like XQ versus How it. looking rates up exposures? at XX% if of much XQ. business XX% of increased written was in new kind then just and it And is

Kim Garland

I it would counts. say is unit most of

this premium would of headcount we've inside new back sort that's ratio not the months, additional last the that. all the new of to in XX been on one We sort spend gains sort is theory, we right? So the commercial do lines, use that, platform expense whole commercial And of the the models we able actually kept our agents market investment big easy over of of this efficiency adopting then we -- to made without of to flat, a on which a to lot have is -- so writing levers that thrilled this and put of with updated auto platform. are and conversation the is,

rate. -- unit majority your to specifically is to get it's not count, So question,

Christopher Campbell

just do the are are Got against book auto? broader growing growing in this And given with, just protect being this business? still you or selected shaking guys like that line, aggressively with lose so concerned -- happening Then you lines with of under-priced a dynamic given that's lot how commercial commercial adversely competitors guys how it.

Kim Garland

few it. think things, a absolute So, I first as on in folks ourselves, right? our one, high we sort value So, of the tell tell volume of basis percentages much isn't low that an and

get So, comfortable we or we're the is percentage number too to great too get plowing don't while like on. want that high, doing like like afraid we're

we look first So thing the at. that's

would so make earlier the still would be their did so we house 'XX, we our in back are we a to argument, we 'XX, of took when is, second order actions may The some work we ready house go. be in others, others believe -- the of we we in lot that than getting 'XX, sort order, got that bigger

that the that And cycle. part is so of we think

about happy sorts -- last the not new that. put just it's is, So it segmentation, then those And thing, technology -- we a of sort pricing models, things. we're part is this, but of actually not Connect pricing is a

auto. auto. And on more in confident our And does we did lines, work from pricing so, think we -- auto we really big into of really but we telematics are XX% sort were it -- have our a than never we've and think drivers may think we And a commercial models impact than you'll -- the a we that's ago. is that's both in today mention for years are in deal of deal commercial get several personal premium you in that Connect, then it about the commercial big done perfect, think telematics, the for that -- insight bigger fleet of I

that I make comfortable. think are the things us So those

Michael LaRocco

is this Chris, And Mike.

tag on to a Just of couple things.

auto, First not the in inherently forth. the of kind kind pendulum we're play, of -- back commercial we bad space in huge more dealing general, particularly we're think is dealing with fly -- about -- not not with an which fleets. and the that industry all, of generally That's I swings

that lot and -- that And more kind ago. expect in writing the the a had having ability exposures is recently small we This lot I of commercial this type not lot difference X are do is, things of and is based more our as of lot confidence certainly the claims a sure the organization follow it. we than up then that a with we of getting to risk, [Indecipherable] makes of on we're the to model claims confidence but that really the not is do trucking thing as two risk years important pricing well. reduces We second larger dealing big we lot we in the -- just although that have we're risk exposures. loss think leakage are what make ones But work And of manages difference. out, vehicles, part a a piece, write is, a as what today

a to -- -- and of question. bases quite have percentages on would degree do our we the lines because they high are pretty lot Kim I I would So frankly touched a confidence. it already But small. the but like appreciate a percentage see also of suggest basis than are on the higher in not business now, lower

Christopher Campbell

comp. the I I quick happening then they up ratios just flat out? question is bit. there? should driving the take And spiked any just like a mean, loss Core I kind Anything is last workers' at numbers look but one quite premiums of special look are on it. mean, losses, Got that what's it? losses of Or we kind one-off down. year-over-year, like there

Kim Garland

had We one loss. Yes. big

Michael LaRocco

Yes, about profitability and we -- was workers' is quarter. it it very a and it standpoint. where the Chris, -- that impacted large comp single from loss, really what a was feel good is We're

Christopher Campbell

do have what And how of terms big been Got losses? have that of would you in it. -- like an idea

Michael LaRocco

here to They're scrambling to that. try answer

Steven English

I was it in points the the script, think XX quarter. effect of in

I'd re-engineer to the you like math. So

Christopher Campbell

Okay, it. got

ratio On -- one the loss from from -- that that

Michael LaRocco

Yes.

Christopher Campbell

got the the all for Best third thanks answers. Well, in luck quarter. Okay, of it.

Operator

Janney from Montgomery Greenberg Your Scott. comes next Larry with question

Larry Greenberg

are But of in And noise lot at the the deterioration. a ago, a least from know guess you the there I or ratios, even there the and think clear of personal was first on I about. even loss lines, both quarter, a touched the of was just we points deterioration loss are are I when I a in some generally qualitatively, was compare with with we But the or really that. in could you lines or loss competitive what it's there things? just wondering any underlying changes or that there -- or think factors here swing just loss So driven and talking on mean, segments in big your that aren't -- about comments a where things. been has whether ratio, trends by case I curious personal, overall commercial underlying year various there in quarter business

Michael LaRocco

of Jason want that line answering auto add got that's the overall Jason... commercial something view Yes. and single Kim then I'll kind of and let address But question. just to largest then on some I've may since

Jason Berkey

feel I favorable slightly, improved are we where about The development. profitability-wise. -- the good ratio favorable out in auto, we underlying actually mean, take On loss when change Yes. you

rate we're to to So targeted going continuing activity. be take

very relatively So a an perspective, about our we quarter. be taken level. taking indications rate what we homeowners, actuarial But the adequacy rates we've had weather in On when overall feel from going to at lot good where we're of we the years digit are modest have similar increases, with the been looking activity rate single we of past. to in

When results the in that we've seen and come good Connect we look second a 'XX be feel loss us level helps forms half 'XX owners' ratio, on profitable how basis owners' about it -- then ultimately we into book, see on in and of our growing full the the we portion of because profit. overall. quarter at underwriting Connect performance the second really book, year year performance of can this So the

Kim Garland

have out like the middle percentages types monitoring auto of the our is in quality is so are the the comfortable in, general they concerning. stuff overall same. lines, like -- is how are really it you rate changing, just risk market Across in commercial the coming growth we in spend and and the that Yes. this, just overly with think time mean sticks cells coming normal of as different, answer nothing The of cells always commercial we extra are I and time little that those if commercial a to keep in think risk risk thing, right? -- are is are a I adequacy mentioned we coming rate is bit watch are the I lines -- or good, the either most and in probably quality this spending high -- commercial the thing on, from in the adequacy

So an our those the thing looking thing are sort that's X the of there is lot nice sort a work to based all like, the a being so internal years, rate is to overall lines this there. growth for adequacy here time in where more that at good, are generally get of and and probably spending on say, we across everything things. most But of

Michael LaRocco

everything Yes. And I first obviously, that Jason love Kim Larry, the I and said, of question because all, endorse.

launched sure are model, is territory always think adequacy. every that indications now said products, things, -- we we us Those is on we've enough and good our new I detailed growth and the enough and every everything always will by-line the the just I it you've it launched overall, the underlying at the look of system been. everything concern a those homeowners. I that's it's and rate have adequacies models, a far can't tweak it and that been in your Auto and be, same company, keep loss now really business The you hygiene of again, where enough we at basis, better. have, I about rate emphasize it's where with company and that get the and get level, auto the the rebuilt when our things -- organization State I got the rate very want that he great to should start-up rate -- required products Kim's validating to looks to when very But see ratios time as And making and know that should feel new as in thing a have, I volume at watching people validating. way thinking be. just models, Same that adequacy enough we've as has But better, it us good. time just cell checking is where had the --

do the where are better? we I can get states There better, we better now all we're this models but we answered is ratios quality you the of we've just And scale and in in managing be and, confidence my to operational that segments expenses get to about ratio can loss going around us to have the the that abilities done course generally core the have allow your Now, team data, leverage confidence opportunity confidence finesse the volume expense that's comments that you and we is driving the I start of continue of in and business. can the well. see real individual to now have of idea better. one mean, made also that in Chris' and is I there that to that better. where get be Absolutely. of work, the and questions our why as because But that's speaking,

Larry Greenberg

Steve. expense GAAP decent expense for in always The But was was the the unusual there I And then ratio. stat numbers a than in know one variability. higher ratio anything quarter is one bit there? there some

Steven English

No.

might I fact, In you figured ask question. that Larry,

at an costs smaller a and extra versus that's of look side written Fixed and the -- a side being it, the between function are the earned difference premium. on into in special really took stat I base the GAAP written. So divided

the nothing weird GAAP. difference in stat the how calculate there's It's just versus there. and you So,

Operator

for Instructions] turn closing [Operator are the questions this to There time. I'll remarks. no further audio back Schoolcraft at Natalie call

Natalie Schoolcraft

which conference Thursday, your wonderful you XX, currently for Thank you, look October third our quarter earnings our and interest a support scheduled is call for participating of speaking with on and State your everyone, again in have continued day. Thanks, questions, XXXX. Financial for for Corporation. We forward to in Auto call, and

Operator

today's concludes XXXX may conference Thank for you call. at second participating, this earnings That quarter you disconnect time.

State Auto Financial (STFC) 4 Aug 192019 Q2 Earnings call transcript