STFC - Earnings call transcript Q2 2020 | State Auto Financial CORP

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Operator

Welcome, and thank you for standing by. At this time, all parties are in a listen-only mode. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] Today's call is being recorded.

If you have any objections, please disconnect at this time. to Director call Schoolcraft. of like Auto to now Corporation's, Financial Investor would turn over the State I Relations, Natalie

Natalie Schoolcraft

Actuarial you, Steve Today, everyone. XXXX morning Mike and LaRocco; Chairman, Jason. Commercial our President CEO, Vice Senior Officer, Thank quarter and Director President we'll Vice second Personal of questions. CFO, President Welcome Mrozek and our Jason earnings State Vice Garland; Senior President Managing joined Kim Analytics, After I'm to of call. Senior by and English; Investment our Lines Berkey; conference open Chief Good of Labs, Chief Matt and Jones. for Officer, and Data Auto the Scott lines remarks, prepared

a future projections risk may statements. differ number uncertainties of which today results performance. cause contained financial and in of our or the end which comments Our include involve forward-looking factors affect may risk from those to statements, factors actual at forward-looking factors Such materially are in information may discussed types of nature Commission. by These and stateauto.com along release filings and on Securities of our reconciliations the with as included the supplemental well under Exchange release section. quarterly and our schedules other financial our certain as Investors non-GAAP annual with of our containing measures website press are part Financial press available as their our

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

Mike LaRocco

are you year. up Nat, the the and Thanks, half both and everyone. quarter all Weather, safe second first that morning hope I much our and healthy. pretty sums good of

we activity second higher large was historical and in far business, excess unusually our averages. amounts had our we for amount cat related the expect in received year quarter. in the weather activity of mix As our on we this the shared we of of an of But prerelease, quarter. plan in Based amount

with fast the our customers' during and usual, events is team our fair business. course needs Of these nature our met challenging service. that of And as

said of times not I more before, many I've could be proud As our associates.

overshadowed a commercial combined non-cat ratio, what statutory our course, losses was excessive Of excellent. otherwise activity performance demonstrates quarter the XXX.X loss of good cat was XX.X cat given points the the personal

strong In delivering in growth double-digit commercial compensation. expectation. and and It's excluding our XX% Of to is our see growth note nearly continue addition, growth. meeting homeowners rebuilt clear and digital our in are products we XX% workers' platform that

customers commercial partner While COVID created the has Today, our need that who in capacity work Auto like meet overall a and platform limited team agent clearly than those with digital a face has the customers for full delivering a to the assets. continue expected. has of Having COVID the State and seamless. partners been more of to personal our remotely we originally impact challenges, to continued pandemic of makes needs at even protect

general amount compensation I'm reasonable pleased economic face pre-COVID receive did due results. Now of and virus. to as heading levels, at direction. workers' impacts saw there commercial claims impact lines. the in less in miles clearly lines in the in things continuous in Also a we while claims, those there our We and of personal there more been drop much not a driven with that were across has and a workers' claims Since with increase April, a April clear commercial. was across and a miles in in are compensation reduction March driven activity Even was sharp our

have a That the combined said, team requirement our comp our interruption the handled exclusion. with with requirement physical the workers' physical fairness. business COVID with damage is speed cat claims, empathy, either claims biggest or unknown as and virus policies The importantly, More regarding damage claims.

in these not damage requirement matters claims. confident believe physical the very our party the that we're are of positive President. litigation to regarding and the decision position that sanctity for seeing were industry early So in We're we some

tampered occur interruption a is Of funds and undesire both our President businesses again. industry course, direction. when to go on will argument provide the more Kim should But point, claims there always our this Public do details industry has small and for business COVID even and together monitor that and the as is for government no or an so landscape quarter. and dollar entire insurance with simply optimism Policy for in help my create physical damage. to not working backstop try caution owe this we the shift impact to Steve unintended carriers for From changes vantage in continue the

Our of own ratio that. was overall and we XXX.X combined poor

large an unusual are is However, and by business how of driven it proud of we performing. amount cat claims was this

I the industry downturn Finally, in while In the in assisting and the I've we've half years catastrophic economic proud I'm our all of of date that turn I level can and can is like murder and do like unrest accomplished better, seen the work creating well ongoing George believe social I've as financial we the in of months. to six can of I going at following must middle this needs unprecedented weather families. of while their I'd the safe permit tend over the Steve, been industry security we and events home do to An first so flexibility, before year for environment what this policyholders protecting on of those as our industry comment stay Floyd. the policyholders what that forward. in pandemic, it resulting to say last industry has we XX to the anything never and performed and the of how

shows on honoring are in the coverage during we women charges credits. against virus. the COVID, including In from workers' and we've to the up the the to tornadoes, to line insufficient that obligations front cat the their face customers men of this our industry our tragic our in We again we We the help to economic provided fight writing on of paid claims premium with on hurricanes, need. quickly is comp insidious customers and activities the deliver funds it space this lane we hail, worked time the can properties, often In the from the this based brave During off handle pay damage as when social on but again, claims claims hardship, in needed face much to more. owed unrest, and providing promise payments, such do the we most. of

racism, individual as and transparent As critical is this recognize open, industry, the must in cannot moment. away we strength reality have real have then us done we of and say already State at dialog and These have candid the conversations the turn which It action of racism must must we from enough. and reality to of about We this sustained all country. Auto. an companies lead that to

we Auto no as we and diversity need you something, to success our sexual to industry of we beliefs. or companies. believes and but and fight do customers. beyond ability If ensure against industry our something our of State succeed. orientation to that industry our has as to It related saying have but religious conclusion critical in or only the more country, perspectives this is race to place the not something, This say future reflect an and talent that our into bias gender, to our the and our worse an that lack track country the hear see to lead us extends

More right to importantly, thing the it is simply do.

the and we over how and can up we With do. can We difficult are turn Steve. up do Auto speak help an It's to is can stand good I'll do, It's to difficult, industry the our when part. committed be mark. and companies things in As to easy State more time be most how we we better. many an doing not target we insurance that, about call

Steve English

This driven $XX.X the lows net the good Earlier per and today, equity investment ago March. of second of XX.X impacted gain loss significantly of ratio, combined in XX.X share as an the GAAP higher in share the markets reported million to as $XX.X of second to compared of to loss XXXX. points compares for adding XXXX losses to catastrophe diluted of $X.XX. net produced of quarter net we points operating were as a $X.XX. compared the from of everyone. by quarter same year fully a Mike, Underwriting XXXX, XXXX results the quarter per Thanks, On second quarter the of million morning, operating rebounded tax by basis, quarter income second

weather. by when catastrophe Second caused greatest impact quarter losses is experienced typically we the from

as points, loss in Our our year-over-year. losses increased XXXX to the improved and On $X.XX, for compared ratio ratio Catastrophe the loss drove ratio is improved flat. share loss fully was and diluted X.X a expense the ratio while the operating loss XXXX. per period a non-cat $X.XX non-cat basis, year-to-date loss LAE same expense

results quarterly Some the additional the include following. detail on

from during civil include remaining First, hail of the cat XXXX unrest. riots Midwest quarter and result losses the and $X.X were storms The catastrophe South. wind the second of losses in results million estimated

compensation for and and claim associated of business impacts approximately interruption negative commercial Second, estimated activity with market lines offsetting had by million exposure costs our has in on driven, the have effect miles said were COVID-XX respectively. well. our workers' defense others middle there as reduced country. established operations claim economic lines were small like lower $X.X been of reduced frequency auto many the Having impacted Reserves and with that, along Fewer resulted from in litigation.

As for a nursing we closed homes totaled basis related book lawsuits, the relates interruption million of received. review of which have in quarter, hospitals. these case-by-case the such of our or medical losses yesterday, of XX% facilities and other on business have COVID-XX approximately four are We claims. class $X.X XX% Approximately XX as to workers' we claims actions. compensation approximately claims

with In greater was prepared and QX not of points to the and points second are QX relating product damage included in driving non-cat $X.X the any quarter runoff it the results commercial specialty first and our in the second estimate worked product develop overall by approvals commercial auto premiums, COVID year the somewhere. that ago. QX equity a rebound in in overall quarter, considerations. loss to adversely, will ratio XXX.X by in previously bad asset operation. personal casualty income driven personal favorable, but material what specifically one the XXXX COVID. compared was line. XXXX. Plan Reserve XXXX the was and primarily XX.X our quarter ratio mentioned. and the upon the based course, as less We respect. Year-to-date frequency Net intention to further impact Garland quarter driven of of are have this of those it claim was in quarter, related are quarter class. in far Catastrophe the insureds XXX.X ALAE from the quarter, catastrophe year property to of commercial XXXX At quarter all former efforts and I our as third year the our In will in we we out confident last varies the of second impacted our make was material remarks. disclosed product compared Kim provide QX was bad the bodily debts the quarter the line regulatory As XXXX reserves was and his adversely Personal E&S were adjustments factors. phase for claims quarter, primary for the debt to expense to remain injury in favorable In improved personal of for specialty ratio combined TIPS. second allowance contributing by for additional MLP reserves to or development investment primarily as a for the experiencing, markets the trends losses position an accident quarter obtain as details we our have to begin flat. million development in increased needed states of Investment we for end in the negatively XX.X while to our on necessary This Throughout from To impact to as develops less than Together The the and adequate XXXX.

As the catastrophe we change call most of result Group limit our And and property to limit to of remains We June the And $XX for in top turn and reinsurance State XX significant businesses. treaty I'll $XX and retention million the to Auto finally, group million commercial on million $XXX treaties. end million over property from with that we treaty. growth from of million continued in our portfolio. raised the casualty $XXX XXXX, as raised renew at and our was to the homeowner our our our cat a Kim. did reinsurance The retention the $XX recently

Kim Garland

good Steve, and morning, Thanks, everyone.

commercial and the are lines personal overall Our following. results lines

second The second combined quarter XXX.X, quarter to was XXXX. ratio compared for XXXX XXX.X statutory

XXX.X, XXXX XXXX The XXXX compared and was through year-to-date XXX.X% second quarter to second quarter XX.X% second year-to-date. combined Written quarter XXXX. second premium compared XX.X% year-to-date versus ratio quarter XXXX year-to-date is growth to XXXX

on The For higher two our XXX the business second loss following. non-cat commercial The ratio the impact impacts had negative premium the commercial five-year personal quarter line. had volumes. than lines five-year a the 'XX our product of the higher combined quarter positive had our Catastrophes loss written Starting and was the loss of a events average. and following lines combined results growth both historical ratio ratio quarter, of catastrophe to lines lines was COVID the major personal negative eight The and by lines and and personal COVID our of ratio XX was and written than weather were but catastrophes historical and and a of XX%. points varied loss were with had impacts ratio XX.X% premium The impacts average. growth points XXX.X ratio new our catastrophe business. catastrophe

Our ratio X.X% policies declined in premium legacy close. combined and we the results of which decided Written personal are X.X%, books to for XX.X%. declined X.X%, decline force Georgia a our excluding Michigan auto quarter

in driven compared produced in of levels. declined with personal carriers' to in like XXXX saw a combined We a premium of in up decline resulted in driven where and trend April, business auto and XX% reduction level drop in then at which in reduction claims the year-to-date In claims the in auto and back June is pre-COVID the point. as pre-COVID and personal discount New next this with below low increased dramatically claims This are a below auto written responded entire XX.X% March July This provides most Together Program, for our data We auto In recent auto our June, claims other drop have The renewal a effective around Year-to-date, ratio to this the date policyholders reduction XX. counts policy of volume personal drop of earliest to X%. discount XX% XX.X% increased XX% term. XX% around personal and X% we state retention and May auto XX.X%. now May they collision gradually levels. personal a collision driven claims personal miles shows miles around just miles

with In So of fourth the financial our did to address results. I issues on 'XX have personal shared not Together second our quarter plans in This quarter our Recall Program you in XXXX, action the auto. impact an

progress the actions. on update an is of Here these

These XX%. shifted In limit business more as March, model comparative the X.X our by X.X ultrapreferred spectrum. dates in our The business implementation rates been the implemented we personal X.X pricing June effective with model. model, updated early mix Connect old quoting XX in version ratios auto XX introduced these have and Connect reduced higher lowers also. the the at risks for prior. filters in as Connect new We for on about rates version not states promising business filters version has closure version new new Connect end and Early business personal preferred nonstandard to under where in increases pricing new X.X the seeing removed auto being or states of we implemented, are the had State. of are raters risks filters nonstandard and improved risks results preferred more the the our are launches risk preferred

quarters, and we like in down previous premium changes leakage discussed to carrier implementing verification began reduce pay of prior I XXX% operational information. double As

We recognize are operational a rate these auto seeing on immediate of changes that impact have and benefit our on can types from these personal faster changes changes results.

new quarter In the been smartphone of 'XX program dongle Early has selecting telematics a second the Our now option. option. telematics option. adoption encouraging tag a customers option plus quarter as first second of tag the XX% plug-in plus offered a 'XX smartphone are had until our first as we implemented only

combined for premium written are growth was XX.X%. new for compared homeowners. a growth combined homeowner and Year-to-date of business policies retention to where ratio level 'XX year-to-date a the in XX.X%, a X.X% XXX.X% of force of in XXX.X%, of XXXX, a rate Our quarter XX.X%. of XX.X%, ratio with rate of results quarter the count rate XXX.X% a of Catastrophe premium second story growth is written the growth

our which a than historical change in rate State With a XX%. I homeowners higher This XX% in that represented Last has total combination XXXX increasing. business. business XXXX, quarter, with of ratio the the points in ALAE in five-year Worth the new amount new same Auto's XX.X Dallas-Fort and cat our shared homeowners' the rate our by states We Dallas-Fort change in At been XX.X% of of Worth book Dallas-Fort average. homeowners' loss non-Texas change in is in rate has counties. our counties disproportionate May time, implemented Worth Texas December reduced business

So starting The quote make business volume COVID are Texas. been reducing and and negligible. our of homeowners personal impact we new in to our progress homeowners has levels percentage business of on auto the

is ratio with where quarter loss is which ratio Catastrophe the higher our story ALAE The market cat XXX.X% for XXX.X% to than and historical is of total lines, XX.X%, year-to-date ratio written market quarter retention for premium of a and our X.X% of XXX.X% results decline the are of growth business premium middle level a premium of XX.X%, compared a commercial of the XXXX. and For combined XX.X%. combined in middle rate a new average.

that a in loss seen better volumes middle on anticipated. has we ratio is Our about second have of new than XX.X% 'XX XX% decline market our biggest down middle XX% over The which about in impact second COVID was quarter second premium submissions ALAE COVID, being during 'XX market of business XXXX. quarter resulted business our and non-cat quarter

rolling reminder, eight results second a CPP the quarter are a As the Connect during for platform. total of of as states expected. out throughout states launched Seven we additional are we Connect Early were XXXX. 'XX on

growth small of a premium is XX.X% quarter of premium combined premium total growth level business The combined new rate of growth ratio for with XXX.X%, XXXX, XXX.X% compared and are points for than cat a ratio and commercial XX.X%. a is retention commercial the XX% story average. small ratio year-to-date XX.X quarter X.X%, XX.X%, a higher loss rate were to ALAE of in the results catastrophes Our X.X%. year-to-date is the historical of Again, our of five-year written which

non-cat small being commercial quarter was quarter ratio down is about a during small commercial XX% premium seen biggest we our business better quarter of loss our that X% submissions 'XX, quarter 'XX has XX.X% resulted and about 'XX decline COVID, in up COVID volumes second but which about Our XX% over over of have in on still anticipated. The ALAE than second second impact new first XXXX. business

there commercial small upside untapped believe business. of in to our continue We is lot still a that

retention commercial auto a Our results new rate premium of growth rate XX.X% a premium combined growth and XX.X%, total a this XX.X%, level quarter of of of XX%. premium are ratio business written

XXXX. XX.X% is ratio is to combined XXX.X% growth year-to-date Year-to-date Our compared XX.X%. in

XX%. and driven back and June of the auto to by less reduction miles saw collision total the For is driven saw the personal driven claims, a most at in in around road have on in auto. low significant auto industry our March commercial XX% impact shows May miles point. our miles commercial for increased by May miles it at claims of claims auto collision drop, trended auto now versus driven from and and in the reduction April from This different variation only levels. driven, with miles congestion commercial commercial up levels. driven Commercial the in combined commercial risks auto, XX% we auto June, pre-COVID miles dropped and The was miles increased personal resulted as miles auto and And than around recent In personal COVID driven driven in state. drop we auto overall data claims increased impact pre-COVID drop

written combination been ratio COVID premium our level that COVID positive XX.X% compensation for a in XXX.X%, has of otherwise XX.X%, on premium may has a compared ratio created The new additional not of is ratio these less of negative on combined fewer been has results a the of There total retention there impact has business is of X.X%. the compensation watch the on decline XXX.X% premium impact which impacts the of from to workers' are minus COVID a of XX%. has been ratio. loss workers' has impact a has occurred. loss XX.X% it claims There Our workers' ratio the that in growth product overall our claims. business in and Year-to-date our of in written Year-to-date, decline business compensation the generally loss quarter from on premium activity two that all resulted non-COVID been most XXXX. been have complicated lines. The combined

compensation XXXX workers' compared X.X quarter XX% comp new was impacted ratio quarter ALAE quarter of points the volume, improved second workers' loss new about COVID XXXX. has down second comp to second business workers' as XX.X%, business XXXX our over our XXXX. Our also and

to Systems State comp continue scheduled is first quarter and workers' to launched be on build We Connect Core in schedule the workers' with be XXXX. comp fourth Connect our

written average. Our XXX%, business of retention rate ranch premium growth five-year ranch our which XX.X%, written and Year-to-date historical ratio the is quarter is higher of XXXX. in growth business XX.X%, of compared results the of ALAE total farm our XX.X%. XX.X%. of new rate story combined and ratio farm is XX.X XXX.X% a a to growth ratio for for premium catastrophes loss combined with level points are a XXX.X%, quarter cat Year-to-date were a Again XXX.X% and of the the premium and than

we'll expansion, now of team Connect has The in anticipated. farm and sales been a XX with Farm states. ranch loss ratio and ranch non-cat just XX.X% the our was that XXXX ranch and ALAE Our farm has for and launched new new tripling State volume of our better impact farm open premium second and questions. than And line and result. resulted Connect quarter in a business ranch terrific of

Operator

Sandler. first comes [Operator question line Paul Instructions] from Piper of from the Your Newsome

open. Your is line

Paul Newsome

bit you’re are all press something here. seeing as Good read want well about to competitive your we I ask we're give higher. are morning. I where to of I auto. and particular of pricings on. sort Could environment you pricing reports sense little the just particularly how talk you Hopefully competitors reacting a both guys some the in competitive about – the environment us it basically think, actually In of are decreasing

Mike LaRocco

I'm I start Thanks. Yes. couple comments afterwards. Kim? a Paul. Kim let to of have going may and

Kim Garland

Thanks, And Paul couple the actions we take ways fortunate in a things. to us. up touch some of are for are pretty and going on probably I'll some planning end of to being

relative position sort information – access us allows doing most that the we or like we competitive a get of I rates. what carriers other gauge think get general around we within that in our of are sense many others to So and market

carriers seen are moving a competitive our in dramatic stuff, least don't some. think at become We lower seeing some like yet. channel market we've more I rates

loss segments about preferred the in and tilted cost that is, model the ultra-preferred I of the less curve think the of so – personal when became the for risk our Connect to more version pricing the what non-standard the end thing speak response based auto, I on on X.X want increase rates competitive spectrum. if we like we intentionally you and ask

cases in competitiveness on or of rate in were a competitive And as the preferred, of we the or so competitive this leaning becoming preferred, spectrum. stay ultra-preferred either more us actually in sort our of as end number like improve ultra-preferred helping

are with We becoming also we we seeing on non-standard, less that was is and fine both are that intentional. which are competitive

what we're that's seeing. So

Mike LaRocco

So money people on a a little mean always really they go don't bit. so go where profit going level, Thanks, where negative had just not to a feel first, to going be can going high Kim. we there. our I focus I'm into to make very is place just were add

going times Having we're I XX inefficient very a over of the said not certainly and So that market. last this chase business. lots to years, said it's

So State inefficiency make XX about just so meaning forth. get I when on think range a lot response. that you're you and and much a noise so activity now quotes you Farm rate could drops There is get rate right about do hear so quite seeing of of and

So companies in taken a what is sustainable then this we're in we've a getting look time exclusive of that phone and continued should world of better extraordinarily our and post-COVID benefit State aggressive. of miles they're technology of going driven, and thing based getting out other lot much is agencies. to to probably the that I be is most And during traditional to gets I'll Kim of is this through independent know very to thing created figure interesting commonsense that what then think a that thing to got agents the the in platform is I mean digitally getting and that the like difficult all and the coming do I better months agents of ranges I And they're telematics. have further have an to using about ultimately are comes your say to because and even and advantage and question like. final struggle Farm piece agency we us. tag how network more create mobile is it where but going investment that COVID pricing price kind the they companies you've better still going talked it's has is an still a this, weeks in the to so I a believe know advertising battling to critical going with responding little environment is to the of or for that is I who see overly think we're real through to where because less think it this continue agencies ton opportunity I going your side they're are inefficient going quite distribution situation I that competitors the how they're

spectrum we get to there through digital an change. our becomes we and coming is to price that, going of question critical. again at more platform already that have advantage right demonstrated of certainly COVID win is about and no much, a wide So and cover but opportunity Companies the first the have in out way business are much invested this have it you and

decisions pretty how the may but ongoing it's digital is say, and a world a that having last of sure part we don't know know is competitiveness question. it post-COVID. play made thing is luck years while going thing that the I we the going to auto was the five bit obvious like of One to those differentiation over and to of bigger for market, heavily think a is the I think look but I we're to little combination also we appreciate be investments good combat going what

Paul Newsome

sense. makes That

that even has the a by at, and happened the sort over help Second over amazingly last number that five of on changed us bit bit mix little the a cat either other level a insurers the range on quite of, of the is period appropriate the a could years business has it variable you question, or cat standards looking load same load time.

down this historic an on I'm Does number of help great. of kind annual useful, any is be basis going quarterly any historic basis. that it is not sort have a looking means going it up average. that the is would here that So the

Mike LaRocco

that Yes, one. Steve you take to want

Steve English

I'm stripping with few X, that out to I would probably like for have - from X% portion definitely is and think trending commercial taking total greater because back personal Sure. standard Hey, becoming statement Paul. of make to that's it's I that. discontinued, old specialty how business. you far the but Homeowners regards of product range, up and is the would I lines on company anything the segment years in shift up trending more a it that been but the mix it go X% ago X depending of percent think mix anything so say I

that the non-cat fund So results to to doubly us so appropriate for that. important products correctly we price get

Paul Newsome

it. Appreciate All right. much. very Thank you

Mike LaRocco

Thanks, Paul.

Operator

[Operator line Instructions] comes next KBW. the question Your of Reitenbach Sean from from

open. is line Your

Sean Reitenbach

incorporating tell I could Hello. for casualty frequency guys commercial about lower year guys us was you thought into you accident picks line? how hoping

Mike LaRocco

to want that. speak you Kim, Sure. to

Kim Garland

don't know this or want will to up. question. reserving Because think clean start if and I may I Matt Steve I So the is

we -- So a as part estimated normal of, of if were we our thought no what I process, there would think, COVID. quarter be sort

have of -- did we a looked difference we think or quarter regular frequencies the and in we try volumes versus combination would in then because year to or the what just, at the these accident I I Matt -- Steve frequencies the explanation. added based at then expected second on got I the of, that adjust pick sort that of but uncertainty and maybe then that a damage in of not to if this conservativeness know smidge that of environment, did

Steve English

quarter emerged on just pick. our factor of severity any don't the But frequency not coming we assessing in No, side, it that impact the pick. basis, was severity. said, I throughout looked that quarter-to-quarter tag a loss on good. but at think I to haven't pretty the on Kim yet we the would also a types We how as it on final seen just big was tremendous in certainly

Mrozek pick as to by want something add was Can do had that you from frequency do. influenced severity. So your please Matt our reserving more share than

Matt Mrozek

that the The Steve's Steve. Kim's additional description applies year-to-date. would Thanks, only comment be for and

year. current So that's accident how we looked at the

the quarter is through looking happen assess to be in we the going through at XX and go we whatever year-to-date QX. As would third September

the be the low a focused So return more activity to of volume business either were a decline or to QX normal continued year-to-date. level. just or reaction will we on

Mike LaRocco

on only claiming both that of tag I'll through as reserving the pricing for COVID I the talked the on thing impact site a questions this The is think auto in because on you little in behavior. and bit its challenges about one and

conservative I call both comes to approach functions. bit little But think more it's of these we for very to and important to mean probably it think, through appropriately try that consistently I does a changes. this type take reserving, when longer-term because as question. to conservatism -- it companies short-term I of to what your through there getting important or potentially short-term how we're navigate question I what's think the of and we unknown is that Thanks going versus impacts a is try for lot a

Sean Reitenbach

helpful. That's absolutely. very Yeah,

year-over-year a it specific is that had is anything question drove like ULAE looks handful of lines Second higher there that. and

Mike LaRocco

guess, Kim talk… to anything? what I or Steve

Steve English

particular. Mrozek think of I he can't my worked also mind I estimates other in if No, to a out. guess, I anything would particular that how issue can recall comes ask than that's Matt, Matt the

Matt Mrozek

number expenses. with to and loss some to vary going case-specific extent, Just that the is

higher put that than extent that to on higher history unallocated losses that catastrophe the would pressure this So, expense. and upward had some we year

Sean Reitenbach

much. you Thank very Okay.

Matt Mrozek

Thanks, Okay. Sean.

Operator

Your next the Backer from Marla of question comes from line Sidoti.

Your is open. line

Marla Backer

numbers, not – car just would provide using able some directional on on to Thank Could detailed the sense you you auto tools of but policyholders you. in necessarily percent digital are what be currently some now? color

Mike LaRocco

– call. speaking all, first welcome the you Are of to

Marla Backer

you. Thank

Mike LaRocco

you telematics? Are specifically the speaking

Marla Backer

Yes. Yeah,

Mike LaRocco

Okay. a that Kim, bit? to talk can you little

Kim Garland

in-force X% look the what's have telematics. on that auto Yeah, old at total auto telematics entire still personal still vehicles XX% system. is We Connector our policies options legacy our are I are do – on think, for you of personal or have if we around book. our system. book not a legacy our book, right policies the it's are called on We have that We now, new

of Connect Connect if So at book, on just look telematics. you is vehicles about the the it have XX%

Marla Backer

take that or any you telematics, adopt of driving you. for them to the the Are take upfront I'm with? their they up economic Thank begin to telematics record drivers just warrants obtain providing order that And incentives. obviously, in sure Great. once if kind incentives

Kim Garland

Mike. go may You

Mike LaRocco

go No, ahead.

Kim Garland

Yeah.

we personal so a and we commercial, business. question great in try – give we discount we a that's XX% how telematics, to almost we new do give lines, really this everybody because want to want at adopt it So participation

go you at their The give will who So we see for discounts you if up do XX% surcharge can and first An discount your a that. discount way for, go off general you the for to we choose a first for get do policy fact your policy to have scoring get to a up that or about term have range we and on their on of all you of interesting do do renewal. surcharges the XX% slide average, policyholders, then just the telematics, the we renewal, use renewal is buy in who that, and is qualify we first average, at at term. policyholders policyholders qualify can XX% do a XX% discount what and next policy

of that drivers it still safer discount, there So because self-selection, some sort of telematics. take the is use participation validates tend to the

Marla Backer

Okay. That's very one helpful. question on then Thank is which you. last interruption And business the clause.

that the might in how your little anything about bit you're that right that interruption upholding you're remarks a in seeing business you talk now nature the still Are is terms element obviously It seeing interruption. business positive of factors prepared you the test of seeing, physical another So the of specific early on provide horizon clause? causes days.

Mike LaRocco

about organization cases this, so watch I'm be is can that, still think is a going majority with comments being of mentioned but as is that watching carefully there in Governors can for part mention, approach specific is that, carefully. There after of of me. to ACTIA, number we this more I as are that through Board this group, well. to our to the others one cases coming of were it prudent I company our the on I Mike the going very in industry decisions my and is and we that, and be not to chime

of we the kind access get and across that's across to industry happening the everything So country.

around we a our see on, I we about litigation ones eyes number that of worry everything. keeping efforts that are So are

event is significant stuff to many issues of see want is is that there this. happening that I we're concerned in the Steve, not more to believe other I So this stage. than and about. challenges look at to But me on that that I've like and going you specific a add

Steve English

think I would that. No, I don't get

Marla Backer

All right.

Mike LaRocco

I'm good. That didn’t the that – question. Thanks. means,

Marla Backer

very Thank much. you

Mike LaRocco

All welcome. right. Thank and you

Operator

questions for comments. call There the turn at I'll are further back no closing this to time. presenter

Natalie Schoolcraft

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

Operator

call. you. second earnings your concludes XXXX today's Thank Thank you quarter participating. That to conference

You this time. may at disconnect

State Auto Financial (STFC) 9 Aug 202020 Q2 Earnings call transcript