State Auto Financial Reports Second Quarter 2021 Results

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  • Quarterly income of $0.01 per share

  • Quarterly net loss from operations1 of $0.47 per share

  • Quarterly GAAP combined ratio of 110.0

  • Quarterly SAP combined ratio of 108.4

  • Return on equity of 10.2%

  • Book value per share of $22.18

COLUMBUS, Ohio, August 05, 2021--(BUSINESS WIRE)--State Auto Financial Corporation (NASDAQ:STFC) today reported second quarter 2021 net income of $0.6 million, or $0.01 per diluted share, compared to $34.3 million, or $0.74 per diluted share, for the same 2020 period. Net loss from operations1 per diluted share for the second quarter of 2021 was $0.47 versus $0.59 for the same 2020 period. STFC’s GAAP combined ratio for the second quarter 2021 was 110.0 compared to 114.7 for the same 2020 period.

For the first six months of 2021, STFC had net income of $4.2 million, or $0.09 per diluted share, compared to a net loss of $80.3 million, or $1.83 per diluted share, for the same 2020 period. Net loss from operations1 per diluted share for the first six months of 2021 was $1.07 versus $0.76 for the same 2020 period. STFC’s GAAP combined ratio for the first six months of 2021 was 111.4 compared to 111.0 for the same 2020 period.

SAP Operating Results

STFC's SAP combined ratio for the second quarter 2021 was 108.4 compared to 113.3 for the same 2020 period. Catastrophe losses and ALAE during the second quarter 2021 accounted for 21.6 points of the 80.9 total loss ratio points, or $80.0 million, versus 26.5 points of the 79.7 total loss ratio points, or $90.4 million, for the same period in 2020. The second quarter 2021 was impacted by wind and hail events in Texas. Approximately 70% of the second quarter 2021 catastrophe losses occurred within homeowners. Non-catastrophe losses and ALAE during the second quarter 2021 included 4.3 points of favorable development relating to prior years, or $15.9 million, versus 0.6 points of favorable development, or $2.0 million, for the same period in 2020.

STFC's SAP combined ratio for the first six months of 2021 was 110.2 compared to 110.4 for the same 2020 period. Catastrophe losses and ALAE during the second quarter 2021 accounted for 20.9 points of the 74.0 total loss ratio points, or $151.6 million, versus 19.7 points of the 76.2 total loss ratio points, or $132.3 million, for the same period in 2020. The first six months of 2021 were impacted by winter storms Uri and Viola in Texas, which added 8.5 points to the loss and ALAE ratio. Approximately 70% of the year to date 2021 catastrophe losses occurred within homeowners. Non-catastrophe losses and ALAE during the second quarter 2021 included 5.6 points of favorable development relating to prior years, or $40.5 million, versus 1.9 points of favorable development, or $12.5 million, for the same period in 2020.

Net written premium for the second quarter 2021 increased 8.0% compared to the same period in 2020. By insurance segment, net written premium for the commercial insurance segment increased 18.0% and the personal insurance segment increased 1.4%. The increase in the commercial segment was primarily driven by new business growth and rate increases in commercial auto and farm & ranch. The net written premium growth was partially offset by a decrease in net written premiums in workers’ compensation due to our 2020 decision to not renew and no longer write nursing home business. The increase in the personal segment was primarily due to increased rates in homeowners and other personal and new business growth in other personal. The net written premium growth was partially offset by a decline in new business in personal auto.

Net written premium for the first six months of 2021 increased 5.9% compared to the same period in 2020. By insurance segment, net written premium for the commercial insurance segment increased 15.6% and the personal insurance segment decreased 0.8%. The trends in the personal and commercial net written premiums are due to the same factors discussed above for the second quarter.

Book Value and Return on Equity

STFC’s book value increased to $22.18 per share as of June 30, 2021, compared to $22.07 on March 31, 2021. The increase in book value was primarily driven by an increase in the fair market value of fixed income investments attributable to lower interest rates.

Return on stockholders’ equity for the 12 months ended June 30, 2021, was 10.2% compared to (3.9)% for the 12 months ended June 30, 2020.

STFC’s Chairman, President and CEO Mike LaRocco commented on the quarter as follows:

"On July 12, we announced our plans to be acquired by Liberty Mutual, whose domestic personal lines and small commercial insurance is an ideal complement to our capabilities and product expertise. This transaction, which we expect to close in 2022 pending the appropriate member, shareholder, and regulatory approvals, furthers our commitment to independent agents and will contribute to the collective success of our agents, policyholders, shareholders and associates.

"The second quarter statutory combined ratio for our ongoing lines of business of 108.0 included catastrophe losses, primarily in homeowners, in excess of what was expected in the quarter that typically produces the highest amount of catastrophe losses each year. In commercial lines, overall growth and profitability continued, with net written premium growing 18.0% and a quarterly statutory combined ratio of 93.1%. The State Auto Group has now written in excess of $1.0 billion of commercial lines net written premiums in the twelve months ended June 30, 2021.

"Over the past six years, we’ve clearly demonstrated our ability to build the teams, technology and products required to deliver sustained profitable growth. In the months ahead, our focus will remain to make progress toward that goal throughout all our lines of business."

About State Auto Financial Corporation

State Auto Financial Corporation, headquartered in Columbus, Ohio, is a super regional property and casualty insurance holding company. STFC stock is traded on the Nasdaq Global Select Market, which represents the top fourth of all Nasdaq listed companies.

The insurance subsidiaries of State Auto Financial Corporation are part of the State Auto Group. The State Auto Group markets its insurance products throughout the United States, through independent insurance agencies. The State Auto Group is rated A- (Excellent) by the A.M. Best Company and includes State Automobile Mutual, State Auto Property & Casualty, State Auto Ohio, State Auto Wisconsin, Milbank, Meridian Security, Patrons Mutual, Rockhill Insurance, Plaza Insurance, American Compensation and Bloomington Compensation. Additional information on State Auto Financial Corporation and the State Auto Insurance Companies can be found online at http://www.StateAuto.com/STFC.

1 Net earnings (loss) from operations, a non-GAAP financial measure which management believes is informative to Company management and investors, differs from GAAP net income (loss) only by the exclusion of net investment gain (loss), net of applicable taxes, on investment activity for the periods being reported. For STFC, this amounted to income of $0.48 and $1.16 per diluted share for the second quarter and year to date 2021, respectively, versus income of $1.35 per diluted share for the second quarter 2020 and a loss of $1.07 year to date 2020.

* * * * *

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.

Selected Consolidated Financial Data

($ in millions, except per share amounts)

(unaudited)

Three months ended June 30

Six months ended June 30

2021

2020

2021

2020

Net premiums written

$

412.3

$

381.6

$

771.0

$

728.1

Earned premiums

369.9

340.7

725.8

671.2

Net investment income

17.7

17.7

35.3

36.6

Net investment gain (loss)

26.7

75.9

64.9

(59.3

)

Other income

0.4

0.5

0.9

1.1

Total revenue

414.7

434.8

826.9

649.6

Income (loss) before federal income taxes

4.2

41.6

9.8

(102.4

)

Federal tax expense (benefit)

3.6

7.3

5.6

(22.1

)

Net income (loss)

$

0.6

$

34.3

$

4.2

$

(80.3

)

Earnings (loss) per common share:

- basic

$

0.01

$

0.78

$

0.10

$

(1.83

)

- diluted

$

0.01

$

0.74

$

0.09

$

(1.83

)

Loss per share from operations(A):

- basic

$

(0.47

)

$

(0.59

)

$

(1.07

)

$

(0.76

)

- diluted

$

(0.47

)

$

(0.59

)

$

(1.07

)

$

(0.76

)

Weighted average shares outstanding:

- basic

44.0

43.8

44.0

43.7

- diluted

44.8

44.1

44.6

43.7

Return on average equity (LTM)

10.2

%

(3.9

)%

Book value per share

$

22.18

$

21.26

Dividends paid per share

$

0.10

$

0.10

$

0.20

$

0.20

Total shares outstanding

44.1

43.8

GAAP ratios:

Cat loss and ALAE ratio

21.6

26.5

20.9

19.7

Non-cat loss and LAE ratio

59.4

53.1

59.1

56.4

Loss and LAE ratio

81.0

79.6

80.0

76.1

Expense ratio

29.0

35.1

31.4

34.9

Combined ratio

110.0

114.7

111.4

111.0

(A) Reconciliation of non-GAAP financial measure:

Net loss from operations:

Net income (loss)

$

0.6

$

34.3

$

4.2

$

(80.3

)

Net investment gain (loss), net of tax

21.1

59.9

51.3

(46.9

)

Net loss from operations

$

(20.5

)

$

(25.6

)

$

(47.1

)

$

(33.4

)

Condensed Consolidated Balance Sheets

($ and shares in millions, except per share amounts)

(unaudited)

June 30

December 31

2021

2020

ASSETS

Fixed maturities, available-for-sale, at fair value (amortized cost $2,134.9 and $2,117.0, respectively)

$

2,214.9

$

2,237.2

Equity securities

375.5

389.7

Other invested assets

79.6

71.1

Other invested assets, at cost

11.1

12.1

Notes receivable from affiliate

70.0

70.0

Total investments

2,751.1

2,780.1

Cash and cash equivalents

108.7

90.7

Accrued investment income and other assets

26.4

29.7

Premiums Receivable

17.6

14.0

Deferred policy acquisition costs

127.2

122.2

Reinsurance recoverable on losses and loss expenses payable

19.7

24.3

Prepaid reinsurance premiums

8.8

8.3

Current federal income taxes

1.7

1.7

Net deferred federal income taxes

29.0

27.3

Property and equipment, at cost

3.8

4.2

Total assets

$

3,094.0

$

3,102.5

LIABILITIES

Losses and loss expenses payable

$

1,060.9

$

1,050.4

Unearned premiums

769.1

723.4

Notes payable (affiliates $15.3 and $15.3, respectively)

122.1

122.1

Pension and postretirement benefits

52.2

66.2

Due to affiliate

16.2

11.2

Other liabilities

95.2

119.2

Total liabilities

2,115.7

2,092.5

STOCKHOLDERS' EQUITY

Common stock, without par value. Authorized 100.0 shares; 51.0 and 50.7 shares issued, respectively, at stated value of $2.50 per share

127.5

126.8

Treasury stock, 6.9 and 6.9 shares, respectively, at cost

(118.8

)

(118.4

)

Additional paid-in capital

213.1

213.3

Accumulated other comprehensive (loss) income

(13.3

)

13.9

Retained earnings

769.8

774.4

Total stockholders' equity

978.3

1,010.0

Total liabilities and stockholders' equity

$

3,094.0

$

3,102.5

Condensed Consolidated Statements of Income

($ in millions, except per share amounts)

(unaudited)

Three months ended June 30

Six months ended June 30

2021

2020

2021

2020

Earned premiums

$

369.9

$

340.7

$

725.8

$

671.2

Net investment income

17.7

17.7

35.3

36.6

Net investment gain (loss)

26.7

75.9

64.9

(59.3

)

Other income from affiliates

0.4

0.5

0.9

1.1

Total revenues

414.7

434.8

826.9

649.6

Losses and loss expenses

299.8

...

271.2

580.6

510.6

Acquisition and operating expenses

107.2

119.5

228.2

234.4

Interest expense

1.1

1.3

2.2

2.5

Other expenses

2.4

1.2

6.1

4.5

Total expenses

410.5

393.2

817.1

752.0

Income (loss) before federal income taxes

4.2

41.6

9.8

(102.4

)

Federal income tax expense (benefit):

Current

(0.4

)

(0.4

)

Deferred

3.6

7.7

5.6

(21.7

)

Federal income tax expense (benefit)

3.6

7.3

5.6

(22.1

)

Net income (loss)

$

0.6

$

34.3

$

4.2

$

(80.3

)

Earnings (loss) per common share:

Basic

$

0.01

$

0.78

$

0.10

$

(1.83

)

Diluted

$

0.01

$

0.74

$

0.09

$

(1.83

)

Dividends paid per common share

$

0.10

$

0.10

$

0.20

$

0.20

Consolidated Statements of Comprehensive Income (Loss)

($ in millions)

(unaudited)

Three months ended June 30

Six months ended June 30

2021

2020

2021

2020

Net income (loss)

$

0.6

$

34.3

$

4.2

$

(80.3

)

Other comprehensive income (loss), net of tax:

Net unrealized holding gain (loss) on available-for-sale investments:

Unrealized holding gains (losses)

17.7

38.9

(39.5

)

69.9

Reclassification adjustments for losses (gains) realized in net income

0.8

(1.0

)

(0.7

)

(3.4

)

Income tax (expense) benefit

(3.9

)

(7.9

)

8.5

(13.9

)

Total net unrealized holding gains (losses) on available- for-sale investments

14.6

30.0

(31.7

)

52.6

Net unrecognized benefit plan obligations:

Reclassification adjustments for amortization to statements of income:

Prior service credit

(1.6

)

(1.6

)

(3.2

)

(3.2

)

Net actuarial loss

4.4

3.6

8.9

7.3

Income tax expense

(0.6

)

(0.4

)

(1.2

)

(0.9

)

Total net unrecognized benefit plan obligations

2.2

1.6

4.5

3.2

Other comprehensive income (loss)

16.8

31.6

(27.2

)

55.8

Comprehensive income (loss)

$

17.4

$

65.9

$

(23.0

)

$

(24.5

)

Condensed Consolidated Statement of Stockholders' Equity

($ and shares in millions)

(unaudited)

Six months ended

Year Ended

June 30

December 31

2021

2020

Common shares:

Balance at beginning of year

50.7

50.4

Issuance of shares

0.3

0.3

Balance at period ended

51.0

50.7

Treasury shares:

Balance at beginning of year

(6.9

)

(6.9

)

Balance at period ended

(6.9

)

(6.9

)

Common stock:

Balance at beginning of year

$

126.8

$

125.9

Issuance of shares

0.7

0.9

Balance at period ended

127.5

126.8

Treasury stock:

Balance at beginning of year

$

(118.4

)

$

(117.5

)

Shares acquired on stock award exercises and vested restricted shares

(0.4

)

(0.9

)

Balance at beginning of year and period ended

(118.8

)

(118.4

)

Additional paid-in capital:

Balance at beginning of year

$

213.3

$

206.7

Issuance of common stock

1.4

3.0

Stock awards granted

(1.6

)

3.6

Balance at period ended

213.1

213.3

Accumulated other comprehensive (loss) income:

Balance at beginning of the year

$

13.9

$

(26.9

)

Change in net unrealized holding (losses) gains on available-for-sale investments

(31.7

)

56.7

Change in net unrecognized benefit plan obligations

4.5

(15.9

)

Balance at period ended

(13.3

)

13.9

Retained earnings:

Balance at beginning of year

$

774.4

$

779.3

Cumulative effect of change in accounting to establish an allowance for expected credit losses at January 1, 2020

(0.5

)

Net income

4.2

13.1

Cash dividends paid

(8.8

)

(17.5

)

Balance at period ended

769.8

774.4

Total stockholders' equity at period ended

$

978.3

$

1,010.0

Condensed Consolidated Statements of Cash Flow

($ in millions)

(unaudited)

Six months ended

June 30

2021

2020

Cash flows from operating activities:

Net income (loss)

$

4.2

$

(80.3

)

Adjustments to reconcile net income (loss) to net cash used in operating activities

Depreciation and amortization, net

3.8

5.7

Share-based compensation

(1.5

)

(0.5

)

Net investment (gain) loss

(65.3

)

59.3

Changes in operating assets and liabilities:

Deferred policy acquisition costs

(5.0

)

(8.9

)

Accrued investment income and other assets

3.3

0.6

Premiums receivable

(3.6

)

(4.5

)

Postretirement and pension benefits

(11.7

)

(10.5

)

Reinsurance recoverable on losses and loss expenses payable and prepaid reinsurance premiums

4.1

(23.8

)

Other liabilities and due to/from affiliates, net

(15.8

)

(42.0

)

Losses and loss expenses payable

10.5

38.2

Unearned premiums

45.7

56.6

Deferred tax on share-based awards

(0.4

)

(0.2

)

Federal income taxes

6.0

(21.9

)

Net cash used in operating activities

(25.7

)

(32.2

)

Cash flows from investing activities:

Purchases of fixed maturities available-for-sale

(359.4

)

(280.8

)

Purchases of equity securities

(12.9

)

(42.7

)

Purchases of other invested assets

(0.5

)

(6.9

)

Maturities, calls and pay downs of fixed maturities available-for-sale

203.3

186.7

Sales of fixed maturities available-for-sale

135.5

188.3

Sales of equity securities

83.5

30.0

Sales of other invested assets

1.3

0.6

Disposals of property and equipment

0.2

Net cash provided by investing activities

50.8

75.4

Cash flows from financing activities:

Proceeds from issuance of common stock

2.1

3.0

Payments to acquire treasury stock

(0.4

)

(0.9

)

Payment of dividends

(8.8

)

(8.7

)

Proceeds from short-term debt

60.0

Net cash (used in) provided by financing activities

(7.1

)

53.4

Net increase in cash and cash equivalents

18.0

96.6

Cash and cash equivalents at beginning of period

90.7

78.0

Cash and cash equivalents at end of period

$

108.7

$

174.6

Supplemental disclosures:

Interest paid (affiliates $0.3 and $0.5, respectively)

$

2.2

$

2.3

Net Investment Income

($ in millions)

(unaudited)

6/30/2020

9/30/2020

12/31/2020

3/31/2021

6/30/2021

Quarter to Date

Gross investment income:

Fixed maturities

$

14.8

$

13.7

$

14.3

$

14.7

$

13.4

TIPS

(0.3

)

1.3

0.7

0.7

2.0

Total fixed maturities

14.5

15.0

15.0

15.4

15.4

Equity securities

2.6

2.1

1.5

1.6

1.2

Other

0.8

0.9

1.3

0.9

1.1

Total gross investment income

17.9

18.0

17.8

17.9

17.7

Less: Investment expenses

0.2

0.1

0.2

0.3

Net investment income

$

17.7

$

17.9

$

17.6

$

17.6

$

17.7

Year to Date

Gross investment income:

Fixed maturities

$

29.3

$

43.0

$

57.3

$

14.7

$

28.1

TIPS

0.3

1.6

2.3

0.7

2.7

Total fixed maturities

29.6

44.6

59.6

15.4

30.8

Equity securities

5.7

7.8

9.3

1.6

2.8

Other

1.8

2.7

4.0

0.9

2.0

Total gross investment income

37.1

55.1

72.9

17.9

35.6

Less: Investment expenses

0.5

0.6

0.8

0.3

0.3

Net investment income

$

36.6

$

54.5

$

72.1

$

17.6

$

35.3

6/30/2020

9/30/2020

12/31/2020

3/31/2021

6/30/2021

TIPS, fair value

$

115.9

$

117.0

$

116.2

$

104.7

$

108.2

TIPS, book value

$

100.9

$

99.4

$

97.8

$

89.2

$

90.9

Net Investment Gain (Loss)

($ in millions)

unaudited

Three months ended June 30

Six months ended June 30

2021

2020

2021

2020

Investment gain (loss), net:

Fixed maturities:

Realized gains on sales of securities

$

0.9

$

1.9

$

3.9

$

5.5

Realized losses on sales of securities

(1.7

)

(0.9

)

(3.2

)

(2.1

)

Net (loss) gain on fixed securities

(0.8

)

1.0

0.7

3.4

Net gain (loss) on equity securities

24.9

69.1

56.4

(53.3

)

Net gain (loss) on other invested assets

3.0

5.8

8.2

(9.6

)

Other net realized (loss) gain

(0.4

)

(0.4

)

0.2

Net gain (loss) on investments

$

26.7

$

75.9

$

64.9

$

(59.3

)

Income Taxes

($ in millions)

(unaudited)

The following table sets forth the tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities:

June 30

December 31

2021

2020

Deferred tax assets:

Unearned premiums not currently deductible

$

32.0

$

30.1

Losses and loss expenses payable discounting

11.3

10.5

Postretirement and pension benefits

17.3

19.3

Other liabilities

10.7

12.2

Net operating loss carryforward

28.3

19.8

Capital loss carryforward

6.1

6.1

Tax credit carryforward

2.3

1.9

Other

1.1

Total deferred tax assets

108.0

101.0

Deferred tax liabilities:

Deferral of policy acquisition costs

26.7

25.7

Investments

48.7

48.0

Other

3.3

Total deferred tax liabilities

78.7

73.7

Total net deferred tax assets before valuation allowance

29.3

27.3

Less valuation allowance

0.3

Net deferred federal income taxes

$

29.0

$

27.3

The following table sets forth the components of federal income tax expense (benefit):

Three months ended June 30

Six months ended June 30

2021

2020

2021

2020

Income (loss) before federal income taxes

$

4.2

$

41.6

$

9.8

$

(102.4

)

Federal income tax expense (benefit)

Current

(0.4

)

(0.4

)

Deferred

3.6

7.7

5.6

(21.7

)

Total federal income tax expense (benefit)

3.6

7.3

5.6

(22.1

)

Net income (loss)

$

0.6

$

34.3

$

4.2

$

(80.3

)

SAP Personal Insurance Segment Results

(unaudited)

($ in millions)

Three months ended June 30, 2021

Personal Auto

Homeowners

Other Personal

Total

Net written premiums

$

92.0

$

116.2

$

20.3

$

228.5

Net earned premiums

93.6

102.1

17.4

213.1

Losses and LAE incurred:

Cat loss and ALAE

4.5

55.2

9.5

69.2

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

(1.3

)

2.5

(0.2

)

1.0

Current accident year non-cat loss and ALAE

62.6

46.0

9.4

118.0

Total non-cat loss and ALAE

61.3

48.5

9.2

119.0

Total Loss and ALAE

65.8

103.7

18.7

188.2

ULAE

6.2

5.2

0.7

12.1

Total Loss and LAE

72.0

108.9

19.4

200.3

Underwriting expenses

23.8

28.3

4.9

57.0

Net underwriting loss

$

(2.2

)

$

(35.1

)

$

(6.9

)

$

(44.2

)

Cat loss and ALAE ratio

4.8

%

54.1

%

54.5

%

32.5

%

Non-cat loss and ALAE ratio

Prior accident years non-cat loss and ALAE ratio

(1.4

)%

2.5

%

(1.4

)%

0.5

%

Current accident year non-cat loss and ALAE ratio

66.9

%

45.0

%

54.0

%

55.3

%

Total non-cat loss and ALAE ratio

65.5

%

47.5

%

52.6

%

55.8

%

Total Loss and ALAE ratio

70.3

%

101.6

%

107.1

%

88.3

%

ULAE ratio

6.7

%

5.0

%

3.9

%

5.7

%

Total Loss and LAE ratio

77.0

%

106.6

%

111.0

%

94.0

%

Expense ratio

25.8

%

24.4

%

24.1

%

24.9

%

Combined ratio

102.8

%

131.0

%

135.1

%

118.9

%

($ in millions)

Three months ended June 30, 2020

Personal Auto

Homeowners

Other Personal

Total

Net written premiums

$

104.3

$

106.1

$

15.0

$

225.4

Net earned premiums

103.3

87.7

11.8

202.8

Losses and LAE incurred:

Cat loss and ALAE

4.1

54.6

7.6

66.3

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

5.9

(0.1

)

(0.1

)

5.7

Current accident year non-cat loss and ALAE

45.5

36.7

3.9

86.1

Total non-cat loss and ALAE

51.4

36.6

3.8

91.8

Total Loss and ALAE

55.5

91.2

11.4

158.1

ULAE

8.3

6.5

0.6

15.4

Total Loss and LAE

63.8

97.7

12.0

173.5

Underwriting expenses

33.7

31.5

4.5

69.7

Net underwriting gain (loss)

$

5.8

$

(41.5

)

$

(4.7

)

$

(40.4

)

Cat loss and ALAE ratio

4.0

%

62.3

%

64.3

%

32.7

%

Non-cat loss and ALAE ratio

Prior accident years non-cat loss and ALAE ratio

5.7

%

(0.2

)%

(0.8

)%

2.8

%

Current accident year non-cat loss and ALAE ratio

44.0

%

41.8

%

33.2

%

42.4

%

Total non-cat loss and ALAE ratio

49.7

%

41.6

%

32.4

%

45.2

%

Total Loss and ALAE ratio

53.7

%

103.9

%

96.7

%

77.9

%

ULAE ratio

8.1

%

7.5

%

4.8

%

7.6

%

Total Loss and LAE ratio

61.8

%

111.4

%

101.5

%

85.5

%

Expense ratio

32.3

%

29.7

%

30.6

%

31.0

%

Combined ratio

94.1

%

141.1

%

132.1

%

116.5

%

($ in millions)

Six months ended June 30, 2021

Personal Auto

Homeowners

Other Personal

Total

Net written premiums

$

181.1

$

202.4

$

38.2

$

421.7

Net earned premiums

189.3

198.4

33.2

420.9

Losses and LAE incurred:

Cat loss and ALAE

5.0

107.6

19.1

131.7

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

(2.1

)

0.4

(0.2

)

(1.9

)

Current accident year non-cat loss and ALAE

119.5

101.1

17.5

238.1

Total non-cat loss and ALAE

117.4

101.5

17.3

236.2

Total Loss and ALAE

122.4

209.1

36.4

367.9

ULAE

14.7

13.9

1.9

30.5

Total Loss and LAE

137.1

223.0

38.3

398.4

Underwriting expenses

51.3

54.8

10.0

116.1

Net underwriting gain (loss)

$

0.9

$

(79.4

)

$

(15.1

)

$

(93.6

)

Cat loss and ALAE ratio

2.6

%

54.2

%

57.4

%

31.3

%

Non-cat loss and ALAE ratio

Prior accident years non-cat loss and ALAE ratio

(1.1

)%

0.2

%

(0.6

)%

(0.4

)%

Current accident year non-cat loss and ALAE ratio

63.1

%

51.0

%

52.8

%

56.6

%

Total non-cat loss and ALAE ratio

62.0

%

51.2

%

52.2

%

56.2

%

Total Loss and ALAE ratio

64.6

%

105.4

%

109.6

%

87.5

%

ULAE ratio

7.8

%

7.0

%

5.6

%

7.2

%

Total Loss and LAE ratio

72.4

%

112.4

%

115.2

%

94.7

%

Expense ratio

28.3

%

27.1

%

26.2

%

27.5

%

Combined ratio

100.7

%

139.5

%

141.4

%

122.2

%

($ in millions)

Six months ended June 30, 2020

Personal Auto

Homeowners

Other Personal

Total

Net written premiums

$

208.9

$

187.7

$

28.3

$

424.9

Net earned premiums

208.0

170.4

22.5

400.9

Losses and LAE incurred:

Cat loss and ALAE

4.6

65.3

9.1

79.0

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

11.1

2.1

(1.1

)

12.1

Current accident year non-cat loss and ALAE

107.5

74.3

8.2

190.0

Total non-cat loss and ALAE

118.6

76.4

7.1

202.1

Total Loss and ALAE

123.2

141.7

16.2

281.1

ULAE

15.6

11.8

1.0

28.4

Total Loss and LAE

138.8

153.5

17.2

309.5

Underwriting expenses

66.5

56.5

8.5

131.5

Net underwriting gain (loss)

$

2.7

$

(39.6

)

$

(3.2

)

$

(40.1

)

Cat loss and ALAE ratio

2.2

%

38.3

%

40.4

%

19.7

%

Non-cat loss and ALAE ratio

Prior accident years non-cat loss and ALAE ratio

5.4

%

1.2

%

(4.8

)%

3.0

%

Current accident year non-cat loss and ALAE ratio

51.6

%

43.7

%

36.4

%

47.4

%

Total non-cat loss and ALAE ratio

57.0

%

44.9

%

31.6

%

50.4

%

Total Loss and ALAE ratio

59.2

%

83.2

%

72.0

%

70.1

%

ULAE ratio

7.5

%

6.9

%

4.4

%

7.1

%

Total Loss and LAE ratio

66.7

%

90.1

%

76.4

%

77.2

%

Expense ratio

31.9

%

30.1

%

30.3

%

31.0

%

Combined ratio

98.6

%

120.2

%

106.7

%

108.2

%

SAP Commercial Insurance Segment Results

(unaudited)

($ in millions)

Three months ended

June 30, 2021

Commercial
Auto

Small
Commercial
Package

Middle
Market
Commercial

Workers'
Comp

Farm &
Ranch

Other
Commercial

Total

Net written premiums

$

57.4

$

34.9

$

50.4

$

11.8

$

22.5

$

7.5

$

184.5

Net earned premiums

45.0

33.1

41.3

14.5

17.8

5.9

157.6

Losses and LAE incurred:

Cat loss and ALAE

1.9

3.2

2.0

2.9

10.0

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

(0.3

)

(2.3

)

(5.4

)

(6.9

)

(0.1

)

(1.7

)

(16.7

)

Current accident year non-cat loss and ALAE

29.9

23.3

22.9

12.6

9.8

1.6

100.1

Total non-cat loss and ALAE

29.6

21.0

17.5

5.7

9.7

(0.1

)

83.4

Total Loss and ALAE

31.5

24.2

19.5

5.7

12.6

(0.1

)

93.4

ULAE

2.1

1.1

0.7

0.7

0.4

0.1

5.1

Total Loss and LAE

33.6

25.3

20.2

6.4

13.0

98.5

Underwriting expenses

15.8

10.0

15.6

5.5

7.0

2.4

56.3

Net underwriting (loss) gain

$

(4.4

)

$

(2.2

)

$

5.5

$

2.6

$

(2.2

)

$

3.5

$

2.8

Cat loss and ALAE ratio

4.3

%

9.6

%

4.9

%

%

16.0

%

0.5

%

6.4

%

Non-cat loss and ALAE ratio

Prior accident years non-cat loss and ALAE ratio

(0.6

)%

(6.9

)%

(13.2

)%

(47.5

)%

(0.9

)%

(28.8

)%

(10.6

)%

Current accident year non-cat loss and ALAE ratio

66.5

%

70.2

%

55.5

%

87.4

%

54.3

%

28.0

%

63.5

%

Total non-cat loss and ALAE ratio

65.9

%

63.3

%

42.3

%

39.9

%

53.4

%

(0.8

)%

52.9

%

Total Loss and ALAE ratio

70.2

%

72.9

%

47.2

%

39.9

%

69.4

%

(0.3

)%

59.3

%

ULAE ratio

4.7

%

3.5

%

1.7

%

4.7

%

2.6

%

1.0

%

3.3

%

Total Loss and LAE ratio

74.9

%

76.4

%

48.9

%

44.6

%

72.0

%

0.7

%

62.6

%

Expense ratio

27.3

%

28.9

%

30.8

%

46.4

%

32.1

%

30.9

%

30.5

%

Combined ratio

102.2

%

105.3

%

79.7

%

91.0

%

104.1

%

31.6

%

93.1

%

($ in millions)

Three months ended

June 30, 2020

Commercial
Auto

Small
Commercial
Package

Middle
Market
Commercial

Workers'
Comp

Farm &
Ranch

Other
Commercial

Total

Net written premiums

$

41.4

$

32.5

$

46.5

$

13.0

$

17.5

$

5.4

$

156.3

Net earned premiums

31.6

31.1

39.6

17.2

13.7

4.7

137.9

Losses and LAE incurred:

Cat loss and ALAE

0.7

11.9

6.9

4.6

24.1

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

(0.2

)

(3.6

)

(2.9

)

(4.8

)

(0.3

)

(2.1

)

(13.9

)

Current accident year non-cat loss and ALAE

15.0

17.2

22.0

12.8

6.1

1.3

74.4

Total non-cat loss and ALAE

14.8

13.6

19.1

8.0

5.8

(0.8

)

60.5

Total Loss and ALAE

15.5

25.5

26.0

8.0

10.4

(0.8

)

84.6

ULAE

1.7

2.1

1.1

1.7

0.6

0.1

7.3

Total Loss and LAE

17.2

27.6

27.1

9.7

11.0

(0.7

)

91.9

Underwriting expenses

13.7

11.3

17.7

6.0

7.7

2.0

58.4

Net underwriting gain (loss)

$

0.7

$

(7.8

)

$

(5.2

)

$

1.5

$

(5.0

)

$

3.4

$

(12.4

)

Cat loss and ALAE ratio

2.0

%

38.4

%

17.6

%

%

33.4

%

(0.1

)%

17.5

%

Non-cat loss and ALAE ratio

Prior accident years non-cat loss and ALAE ratio

(0.6

)%

(11.7

)%

(7.3

)%

(28.0

)%

(2.0

)%

(43.9

)%

(10.1

)%

Current accident year non-cat loss and ALAE ratio

47.7

%

55.3

%

55.4

%

74.3

%

45.2

%

27.5

%

54.0

%

Total non-cat loss and ALAE ratio

47.1

%

43.6

%

48.1

%

46.3

%

43.2

%

(16.4

)%

43.9

%

Total Loss and ALAE ratio

49.1

%

82.0

%

65.7

%

46.3

%

76.6

%

(16.5

)%

61.4

%

ULAE ratio

5.3

%

6.7

%

2.8

%

9.9

%

4.5

%

1.8

%

5.3

%

Total Loss and LAE ratio

54.4

%

88.7

%

68.5

%

56.2

%

81.1

%

(14.7

)%

66.7

%

Expense ratio

33.1

%

34.8

%

38.1

%

45.5

%

43.4

%

37.6

%

37.3

%

Combined ratio

87.5

%

123.5

%

106.6

%

101.7

%

124.5

%

22.9

%

104.0

%

($ in millions)

Six months ended

June 30, 2021

Commercial
Auto

Small
Commercial
Package

Middle
Market
Commercial

Workers'
Comp

Farm &
Ranch

Other
Commercial

Total

Net written premiums

$

108.7

$

69.9

$

89.7

$

27.8

$

42.4

$

12.2

$

350.7

Net earned premiums

85.9

64.8

80.9

29.7

34.3

10.7

306.3

Losses and LAE incurred:

Cat loss and ALAE

2.1

8.4

5.0

6.1

21.6

Non-cat loss and ALAE

Prior accident years non-cat loss and ALAE

(0.9

)

(4.5

)

(13.5

)

(15.4

)

(1.5

)

(2.7

)

(38.5

)

Current accident year non-cat loss and ALAE

55.3

43.1

48.5

21.9

15.3

3.5

187.6

Total non-cat loss and ALAE

54.4

38.6

35.0

6.5

13.8

0.8

149.1

Total Loss and ALAE

56.5

47.0

40.0

6.5

19.9

0.8

170.7

ULAE

4.7

3.5

1.5

1.4

1.1

0.2

12.4

Total Loss and LAE

61.2

50.5

41.5

7.9

21.0

1.0

183.1

Underwriting expenses

31.9

21.5