Ohio | 000-19289 | 31-1324304 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
518 East Broad Street, Columbus, Ohio | 43215-3976 | |
(Address of principal executive offices) | (Zip Code) | |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | ¨ |
Section 2. | Financial Information |
Item 2.02. | Results of Operations and Financial Condition. |
Section 9. | Financial Statements and Exhibits |
Item 9.01. | Financial Statements and Exhibits |
(c) | Exhibits. |
Exhibit No. | Description of Exhibit | ||
99.1 | Press release issued by State Auto Financial Corporation on May 2, 2019 regarding results of operations for the three month period ended March 31, 2019 |
STATE AUTO FINANCIAL CORPORATION | |
Date: May 2, 2019 | /s/ Steven E. English |
Senior Vice President and Chief Financial Officer |
State Auto Financial Corporation |
Media contact: |
Kyle Anderson, 614-917-5497 |
Kyle.Anderson@StateAuto.com |
or |
Investor contact: |
Natalie Schoolcraft, 614-917-4341 |
Natalie.Schoolcraft@StateAuto.com |
Selected Consolidated Financial Data | ||||||||
($ in millions, except per share amounts) | ||||||||
(unaudited) | Three months ended March 31 | |||||||
2019 | 2018 | |||||||
Net premiums written | $ | 306.0 | $ | 292.2 | ||||
Earned premiums | 302.7 | 314.9 | ||||||
Net investment income | 19.4 | 19.9 | ||||||
Net investment gain | 44.9 | (11.7 | ) | |||||
Other income | 0.6 | 0.6 | ||||||
Total revenue | 367.6 | 323.7 | ||||||
Income (loss) before federal income taxes | 61.6 | (3.3 | ) | |||||
Federal income tax expense (benefit) | 12.2 | (1.2 | ) | |||||
Net income (loss) | $ | 49.4 | $ | (2.1 | ) | |||
Earnings (loss) per common share: | ||||||||
- basic | $ | 1.14 | $ | (0.05 | ) | |||
- diluted | $ | 1.12 | $ | (0.05 | ) | |||
Earnings (loss) per share from operations (A): | ||||||||
- basic | $ | 0.32 | $ | 0.17 | ||||
- diluted | $ | 0.31 | $ | 0.17 | ||||
Weighted average shares outstanding: | ||||||||
- basic | 43.3 | 42.6 | ||||||
- diluted | 43.9 | 42.6 | ||||||
Return on average equity (LTM) | 7.5 | % | (1.1 | )% | ||||
Book value per share | $ | 20.67 | $ | 18.97 | ||||
Dividends paid per share | $ | 0.10 | $ | 0.10 | ||||
Total shares outstanding | 43.3 | 42.7 | ||||||
GAAP ratios: | ||||||||
Cat loss and ALAE ratio | 5.9 | 3.1 | ||||||
Non-cat loss and LAE ratio | 58.3 | 64.3 | ||||||
Loss and LAE ratio | 64.2 | 67.4 | ||||||
Expense ratio | 35.5 | 35.2 | ||||||
Combined ratio | 99.7 | 102.6 | ||||||
(A) Reconciliation of non-GAAP financial measure: | ||||||||
Net income from operations: | ||||||||
Net income (loss) | $ | 49.4 | $ | (2.1 | ) | |||
Net investment gain (loss), net of tax | 35.8 | (9.2 | ) | |||||
Net income from operations | $ | 13.6 | $ | 7.1 | ||||
Condensed Consolidated Balance Sheets | ||||||||
($ and shares in millions, except per share amounts) | ||||||||
(unaudited) | March 31 | December 31 | ||||||
2019 | 2018 | |||||||
ASSETS | ||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost $2,130.9 and $2,188.2, respectively) | $ | 2,136.6 | $ | 2,159.5 | ||||
Equity securities | 363.9 | 315.0 | ||||||
Other invested assets | 53.5 | 48.8 | ||||||
Other invested assets, at cost | 5.6 | 5.6 | ||||||
Notes receivable from affiliate | 70.0 | 70.0 | ||||||
Total investments | 2,629.6 | 2,598.9 | ||||||
Cash and cash equivalents | 72.3 | 59.8 | ||||||
Accrued investment income and other assets | 36.6 | 32.4 | ||||||
Deferred policy acquisition costs | 104.3 | 101.9 | ||||||
Reinsurance recoverable on losses and loss expenses payable | 4.6 | 5.5 | ||||||
Prepaid reinsurance premiums | 6.7 | 6.6 | ||||||
Current federal income taxes | 6.3 | 5.9 | ||||||
Net deferred federal income taxes | 57.7 | 77.8 | ||||||
Property and equipment, net | 6.0 | 7.1 | ||||||
Total assets | $ | 2,924.1 | $ | 2,895.9 | ||||
LIABILITIES | ||||||||
Losses and loss expenses payable | $ | 1,128.9 | $ | 1,146.8 | ||||
Unearned premiums | 587.5 | 584.2 | ||||||
Notes payable (affiliates $15.2 and $15.2, respectively) | 122.0 | 122.0 | ||||||
Pension and postretirement benefits | 82.4 | 83.0 | ||||||
Due to affiliate | 18.4 | 22.4 | ||||||
Other liabilities | 89.6 | 119.0 | ||||||
Total liabilities | 2,028.8 | 2,077.4 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, without par value. Authorized 100.0 shares; 50.1 and 50.0 shares issued, respectively, at stated value of $2.50 per share | 125.3 | 125.0 | ||||||
Treasury stock, 6.8 and 6.8 shares, respectively, at cost | (117.5 | ) | (117.0 | ) | ||||
Additional paid-in capital | 198.4 | 194.2 | ||||||
Accumulated other comprehensive loss | (68.6 | ) | (96.4 | ) | ||||
Retained earnings | 757.7 | 712.7 | ||||||
Total stockholders' equity | 895.3 | 818.5 | ||||||
Total liabilities and stockholders' equity | $ | 2,924.1 | $ | 2,895.9 | ||||
Condensed Consolidated Statements of Income | ||||||||
($ in millions, except per share amounts) | ||||||||
(unaudited) | Three months ended March 31 | |||||||
2019 | 2018 | |||||||
Earned premiums | $ | 302.7 | $ | 314.9 | ||||
Net investment income | 19.4 | 19.9 | ||||||
Net investment gain (loss) | 44.9 | (11.7 | ) | |||||
Other income from affiliates | 0.6 | 0.6 | ||||||
Total revenues | 367.6 | 323.7 | ||||||
Losses and loss expenses | 194.3 | 212.3 | ||||||
Acquisition and operating expenses | 107.6 | 110.8 | ||||||
Interest expense | 1.2 | 1.6 | ||||||
Other expenses | 2.9 | 2.3 | ||||||
Total expenses | 306.0 | 327.0 | ||||||
Income (loss) before federal income taxes | 61.6 | (3.3 | ) | |||||
Federal income tax expense (benefit): | ||||||||
Current | (0.4 | ) | (1.0 | ) | ||||
Deferred | 12.6 | (0.2 | ) | |||||
Federal income tax expense (benefit) | 12.2 | (1.2 | ) | |||||
Net income (loss) | $ | 49.4 | $ | (2.1 | ) | |||
Earnings (loss) per common share: | ||||||||
Basic | $ | 1.14 | $ | (0.05 | ) | |||
Diluted | $ | 1.12 | $ | (0.05 | ) | |||
Dividends paid per common share | $ | 0.10 | $ | 0.10 | ||||
Consolidated Statements of Comprehensive Income | |||||||
($ in millions) | |||||||
(unaudited) | Three months ended March 31 | ||||||
2019 | 2018 | ||||||
Net income (loss) | $ | 49.4 | $ | (2.1 | ) | ||
Other comprehensive income (loss), net of tax: | |||||||
Net unrealized holding gain (loss) on available-for-sale investments: | |||||||
Unrealized holding gain (loss) | 34.5 | (36.7 | ) | ||||
Reclassification adjustments for gains realized in net income | (0.1 | ) | (0.4 | ) | |||
Income tax (expense) benefit | (7.2 | ) | 7.8 | ||||
Total net unrealized holding gain (loss) on available- for-sale investments | 27.2 | (29.3 | ) | ||||
Net unrecognized benefit plan obligations: | |||||||
Reclassification adjustments for amortization to statements of income: | |||||||
Prior service credit | (1.6 | ) | (1.6 | ) | |||
Net actuarial loss | 2.4 | 3.3 | |||||
Income tax expense | (0.2 | ) | (0.4 | ) | |||
Total net unrecognized benefit plan obligations | 0.6 | 1.3 | |||||
Other comprehensive income (loss) | 27.8 | (28.0 | ) | ||||
Comprehensive income (loss) | $ | 77.2 | $ | (30.1 | ) | ||
Condensed Consolidated Statement of Stockholders' Equity | ||||||||
($ and shares in millions) | ||||||||
(unaudited) | Three Months Ended | Year Ended | ||||||
March 31 | December 31 | |||||||
2019 | 2018 | |||||||
Common shares: | ||||||||
Balance at beginning of year | 50.0 | 49.2 | ||||||
Issuance of shares | 0.1 | 0.8 | ||||||
Balance at period ended | 50.1 | 50.0 | ||||||
Treasury shares: | ||||||||
Balance at beginning of year | (6.8 | ) | (6.8 | ) | ||||
Balance at period ended | (6.8 | ) | (6.8 | ) | ||||
Common stock: | ||||||||
Balance at beginning of year | $ | 125.0 | $ | 123.0 | ||||
Issuance of shares | 0.3 | 2.0 | ||||||
Balance at period ended | 125.3 | 125.0 | ||||||
Treasury stock: | ||||||||
Balance at beginning of year | $ | (117.0 | ) | $ | (116.8 | ) | ||
Shares acquired on stock award exercises and vested restricted shares | (0.5 | ) | (0.2 | ) | ||||
Balance at beginning of year and period ended | (117.5 | ) | (117.0 | ) | ||||
Additional paid-in capital: | ||||||||
Balance at beginning of year | $ | 194.2 | $ | 171.8 | ||||
Issuance of common stock | 0.7 | 13.3 | ||||||
Stock awards granted | 3.5 | 9.1 | ||||||
Balance at period ended | 198.4 | 194.2 | ||||||
Accumulated other comprehensive income: | ||||||||
Balance at beginning of the year | $ | (96.4 | ) | $ | 3.8 | |||
Cumulative effect of change in accounting for equity securities and other invested assets and reclassification of stranded tax effects as of January 1, 2018 | — | (63.9 | ) | |||||
Change in unrealized losses on available-for-sale investments, net of tax | 27.2 | (38.3 | ) | |||||
Change in unrecognized benefit plan obligations, net of tax | 0.6 | 2.0 | ||||||
Balance at period ended | (68.6 | ) | (96.4 | ) | ||||
Retained earnings: | ||||||||
Balance at beginning of year | $ | 712.7 | $ | 653.2 | ||||
Cumulative effect of change in accounting for equity securities and other invested assets and reclassification of stranded tax effects as of January 1, 2018 | — | 63.9 | ||||||
Net income | 49.4 | 12.8 | ||||||
Cash dividends paid | (4.4 | ) | (17.2 | ) | ||||
Balance at period ended | 757.7 | 712.7 | ||||||
Total stockholders' equity at period ended | $ | 895.3 | $ | 818.5 | ||||
Condensed Consolidated Statements of Cash Flow | ||||||||
($ in millions) | ||||||||
(unaudited) | Three months ended | |||||||
March 31 | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 49.4 | $ | (2.1 | ) | |||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization, net | 3.1 | 2.9 | ||||||
Share-based compensation | 3.8 | 2.3 | ||||||
Net investment (gain) loss | (44.9 | ) | 11.8 | |||||
Changes in operating assets and liabilities: | ||||||||
Deferred policy acquisition costs | (2.5 | ) | 5.2 | |||||
Accrued investment income and other assets | (4.1 | ) | (3.8 | ) | ||||
Postretirement and pension benefits | (0.1 | ) | (0.3 | ) | ||||
Other liabilities and due to/from affiliates, net | (33.7 | ) | 6.3 | |||||
Reinsurance recoverable on losses and loss expenses payable and prepaid reinsurance premiums | 0.8 | (1.2 | ) | |||||
Losses and loss expenses payable | (17.9 | ) | (8.0 | ) | ||||
Unearned premiums | 3.3 | (22.6 | ) | |||||
Deferred tax expense on share-based awards | 0.2 | — | ||||||
Federal income taxes | 12.2 | (1.2 | ) | |||||
Net cash used in operating activities | (30.4 | ) | (10.7 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of fixed maturities available-for-sale | (137.2 | ) | (99.0 | ) | ||||
Purchases of equity securities | (19.5 | ) | (61.5 | ) | ||||
Purchases of other invested assets | (1.0 | ) | (0.5 | ) | ||||
Maturities, calls and pay downs of fixed maturities available-for-sale | 125.9 | 55.5 | ||||||
Sales of fixed maturities available-for-sale | 65.6 | 15.3 | ||||||
Sales of equity securities | 12.7 | 65.1 | ||||||
Sales of other invested assets | 0.3 | 0.3 | ||||||
Net cash provided by (used in) investing activities | 46.8 | (24.8 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 1.0 | 9.3 | ||||||
Payments to acquire treasury stock | (0.5 | ) | (0.1 | ) | ||||
Payment of dividends | (4.4 | ) | (4.3 | ) | ||||
Payment of prepayment fee | — | — | ||||||
Net cash (used in) provided by financing activities | (3.9 | ) | 4.9 | |||||
Net increase (decrease) in cash and cash equivalents | 12.5 | (30.6 | ) | |||||
Cash and cash equivalents at beginning of period | 59.8 | 91.5 | ||||||
Cash and cash equivalents at end of period | $ | 72.3 | $ | 60.9 | ||||
Supplemental disclosures: | ||||||||
Interest paid (affiliates $0.2 and $0.2, respectively) | $ | 1.7 | $ | 1.6 | ||||
Net Investment Income | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
3/31/2018 | 6/30/2018 | 9/30/2018 | 12/31/2018 | 3/31/2019 | ||||||||||||||||
Quarter to Date | ||||||||||||||||||||
Gross investment income: | ||||||||||||||||||||
Fixed maturities | $ | 15.0 | $ | 14.9 | $ | 15.1 | $ | 15.0 | $ | 15.4 | ||||||||||
TIPS | 1.1 | 2.0 | 1.3 | 0.9 | (0.3 | ) | ||||||||||||||
Total fixed maturities | 16.1 | 16.9 | 16.4 | 15.9 | 15.1 | |||||||||||||||
Equity securities | 2.5 | 3.1 | 3.0 | 4.8 | 2.8 | |||||||||||||||
Other | 1.7 | 1.8 | 1.7 | 2.0 | 1.7 | |||||||||||||||
Total gross investment income | 20.3 | 21.8 | 21.1 | 22.7 | 19.6 | |||||||||||||||
Less: Investment expenses | 0.4 | 0.3 | 0.3 | — | 0.2 | |||||||||||||||
Net investment income | $ | 19.9 | $ | 21.5 | $ | 20.8 | $ | 22.7 | $ | 19.4 | ||||||||||
Year to Date | ||||||||||||||||||||
Gross investment income: | ||||||||||||||||||||
Fixed maturities | $ | 15.0 | $ | 29.9 | $ | 45.0 | $ | 60.0 | $ | 15.4 | ||||||||||
TIPS | 1.1 | 3.1 | 4.4 | 5.3 | (0.3 | ) | ||||||||||||||
Total fixed maturities | 16.1 | 33.0 | 49.4 | 65.3 | 15.1 | |||||||||||||||
Equity securities | 2.5 | 5.6 | 8.6 | 13.4 | 2.8 | |||||||||||||||
Other | 1.7 | 3.5 | 5.2 | 7.2 | 1.7 | |||||||||||||||
Total gross investment income | 20.3 | 42.1 | 63.2 | 85.9 | 19.6 | |||||||||||||||
Less: Investment expenses | 0.4 | 0.7 | 1.0 | 1.0 | 0.2 | |||||||||||||||
Net investment income | $ | 19.9 | $ | 41.4 | $ | 62.2 | $ | 84.9 | $ | 19.4 | ||||||||||
3/31/2018 | 6/30/2018 | 9/30/2018 | 12/31/2018 | 3/31/2019 | ||||||||||||||||
TIPS, fair value | $ | 147.4 | $ | 156.5 | $ | 143.8 | $ | 142.3 | $ | 147.0 | ||||||||||
TIPS, book value | $ | 140.7 | $ | 150.6 | $ | 140.8 | $ | 141.2 | $ | 140.5 | ||||||||||
Net Investment Gain (Loss) | |||||||
($ in millions) | |||||||
unaudited | Three months ended March 31 | ||||||
2019 | 2018 | ||||||
Realized gains on sales of securities: | |||||||
Fixed maturities | $ | 0.1 | $ | 0.4 | |||
Equity securities | 0.3 | 3.3 | |||||
Other invested assets | — | 0.1 | |||||
Total realized gains | 0.4 | 3.8 | |||||
Realized losses on sales of securities: | |||||||
Sales of equity securities | (2.2 | ) | (0.2 | ) | |||
Total realized losses | (2.2 | ) | (0.2 | ) | |||
Net realized (loss) gain on investments | $ | (1.8 | ) | $ | 3.6 | ||
Net unrealized gain (loss) on investments(1): | |||||||
Equity securities | 44.1 | (14.6 | ) | ||||
Other invested assets | 3.9 | (0.7 | ) | ||||
Net unrealized gain (loss) on investments | 48.0 | (15.3 | ) | ||||
Other net realized loss | $ | (1.3 | ) | $ | — | ||
Net investment gain (loss) | $ | 44.9 | $ | (11.7 | ) | ||
(1) Unrealized holding losses recognized during the period on securities held at the reporting date | |||||||
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: | ||||||||
March 31 | December 31 | |||||||
2019 | 2018 | |||||||
Deferred tax assets: | ||||||||
Unearned premiums not currently deductible | $ | 24.4 | $ | 24.3 | ||||
Losses and loss expenses payable discounting | 19.5 | 19.9 | ||||||
Postretirement and pension benefits | 21.3 | 21.4 | ||||||
Net unrealized holding losses on investments | — | 6.2 | ||||||
Realized loss on other-than-temporary impairment | 2.0 | 1.9 | ||||||
Other liabilities | 12.3 | 14.8 | ||||||
Net operating loss carryforward | 15.2 | 15.1 | ||||||
Tax credit carryforwards | 2.3 | 2.7 | ||||||
Other | 2.0 | 1.6 | ||||||
Total deferred tax assets | 99.0 | 107.9 | ||||||
Deferred tax liabilities: | ||||||||
Deferral of policy acquisition costs | 21.9 | 21.4 | ||||||
Net unrealized holding gains on investments | 11.0 | — | ||||||
Losses and loss expenses payable discounting (transition rule) | 8.4 | 8.7 | ||||||
Total deferred tax liabilities | 41.3 | 30.1 | ||||||
Net deferred federal income taxes | $ | 57.7 | $ | 77.8 | ||||
The following table sets forth the components of federal income tax expense (benefit): | ||||||||
Three months ended March 31 | ||||||||
2019 | 2018 | |||||||
Income (loss) before federal income taxes | $ | 61.6 | $ | (3.3 | ) | |||
Federal income tax expense (benefit): | ||||||||
Current | (0.4 | ) | (1.0 | ) | ||||
Deferred | 12.6 | (0.2 | ) | |||||
Total federal income tax expense (benefit) | 12.2 | (1.2 | ) | |||||
Net income (loss) | $ | 49.4 | $ | (2.1 | ) | |||
SAP Personal Insurance Segment Results | ||||||||||||||||
($ in millions) | ||||||||||||||||
Three Months Ended March 31, 2019 | Personal Auto | Homeowners | Other Personal | Total | ||||||||||||
Net written premiums | $ | 107.7 | $ | 64.4 | $ | 8.4 | $ | 180.5 | ||||||||
Net earned premiums | 105.4 | 68.7 | 7.4 | 181.5 | ||||||||||||
Losses and LAE incurred: | ||||||||||||||||
Cat loss and ALAE | 0.9 | 12.4 | 0.7 | 14.0 | ||||||||||||
Non-cat loss and ALAE | ||||||||||||||||
Prior accident years non-cat loss and ALAE | (6.8 | ) | 0.6 | (0.7 | ) | (6.9 | ) | |||||||||
Current accident year non-cat loss and ALAE | 65.8 | 29.9 | 4.4 | 100.1 | ||||||||||||
Total non-cat loss and ALAE | 59.0 | 30.5 | 3.7 | 93.2 | ||||||||||||
Total Loss and ALAE | 59.9 | 42.9 | 4.4 | 107.2 | ||||||||||||
ULAE | 7.2 | 5.2 | 0.3 | 12.7 | ||||||||||||
Total Loss and LAE | 67.1 | 48.1 | 4.7 | 119.9 | ||||||||||||
Underwriting expenses | 32.7 | 21.8 | 2.9 | 57.4 | ||||||||||||
Net underwriting gain (loss) | $ | 5.6 | $ | (1.2 | ) | $ | (0.2 | ) | $ | 4.2 | ||||||
Cat loss and ALAE ratio | 0.8 | % | 18.1 | % | 9.6 | % | 7.7 | % | ||||||||
Non-cat loss and ALAE ratio | ||||||||||||||||
Prior accident years non-cat loss and ALAE ratio | (6.5 | )% | 0.9 | % | (8.9 | )% | (3.8 | )% | ||||||||
Current accident year non-cat loss and ALAE ratio | 62.4 | % | 43.6 | % | 58.6 | % | 55.2 | % | ||||||||
Total non-cat loss and ALAE ratio | 55.9 | % | 44.5 | % | 49.7 | % | 51.4 | % | ||||||||
Total Loss and ALAE ratio | 56.7 | % | 62.6 | % | 59.3 | % | 59.1 | % | ||||||||
ULAE ratio | 6.8 | % | 7.5 | % | 4.1 | % | 7.0 | % | ||||||||
Total Loss and LAE ratio | 63.5 | % | 70.1 | % | 63.4 | % | 66.1 | % | ||||||||
Expense ratio | 30.4 | % | 33.7 | % | 34.6 | % | 31.8 | % | ||||||||
Combined ratio | 93.9 | % | 103.8 | % | 98.0 | % | 97.9 | % |
($ in millions) | ||||||||||||||||
Three Months Ended March 31, 2018 | Personal Auto | Homeowners | Other Personal | Total | ||||||||||||
Net written premiums | $ | 101.9 | $ | 54.3 | $ | 5.5 | $ | 161.7 | ||||||||
Net earned premiums | 93.5 | 57.9 | 4.9 | 156.3 | ||||||||||||
Losses and LAE incurred: | ||||||||||||||||
Cat loss and ALAE | 0.1 | 4.7 | 0.4 | 5.2 | ||||||||||||
Non-cat loss and ALAE | ||||||||||||||||
Prior accident years non-cat loss and ALAE | (4.0 | ) | (2.8 | ) | 0.2 | (6.6 | ) | |||||||||
Current accident year non-cat loss and ALAE | 66.9 | 28.4 | 2.0 | 97.3 | ||||||||||||
Total non-cat loss and ALAE | 62.9 | 25.6 | 2.2 | 90.7 | ||||||||||||
Total Loss and ALAE | 63.0 | 30.3 | 2.6 | 95.9 | ||||||||||||
ULAE | 5.0 | 4.0 | 0.3 | 9.3 | ||||||||||||
Total Loss and LAE | 68.0 | 34.3 | 2.9 | 105.2 | ||||||||||||
Underwriting expenses | 28.9 | 18.2 | 2.3 | 49.4 | ||||||||||||
Net underwriting (loss) gain | $ | (3.4 | ) | $ | 5.4 | $ | (0.3 | ) | $ | 1.7 | ||||||
Cat loss and ALAE ratio | 0.1 | % | 8.2 | % | 7.9 | % | 3.4 | % | ||||||||
Non-cat loss and ALAE ratio | ||||||||||||||||
Prior accident years non-cat loss and ALAE ratio | (4.3 | )% | (4.8 | )% | 4.8 | % | (4.2 | )% | ||||||||
Current accident year non-cat loss and ALAE ratio | 71.6 | % | 49.0 | % | 40.9 | % | 62.2 | % | ||||||||
Total non-cat loss and ALAE ratio | 67.3 | % | 44.2 | % | 45.7 | % | 58.0 | % | ||||||||
Total Loss and ALAE ratio | 67.4 | % | 52.4 | % | 53.6 | % | 61.4 | % | ||||||||
ULAE ratio | 5.2 | % | 6.9 | % | 5.2 | % | 5.9 | % | ||||||||
Total Loss and LAE ratio | 72.6 | % | 59.3 | % | 58.8 | % | 67.3 | % | ||||||||
Expense ratio | 28.4 | % | 33.6 | % | 42.5 | % | 30.6 | % | ||||||||
Combined ratio | 101.0 | % | 92.9 | % | 101.3 | % | 97.9 | % |
SAP Commercial Insurance Segment Results | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Three months ended March 31, 2019 | Commercial Auto | Small Commercial Package | Middle Market Commercial | Workers' Comp | Farm & Ranch | Other Commercial | Total | |||||||||||||||||||||
Net written premiums | $ | 24.0 | $ | 30.5 | $ | 34.2 | $ | 19.5 | $ | 12.4 | $ | 4.5 | $ | 125.1 | ||||||||||||||
Net earned premiums | 19.7 | 29.6 | 30.7 | 20.5 | 11.8 | 4.1 | 116.4 | |||||||||||||||||||||
Losses and LAE incurred: | ||||||||||||||||||||||||||||
Cat loss and ALAE | 0.1 | 1.5 | 1.3 | — | 0.3 | — | 3.2 | |||||||||||||||||||||
Non-cat loss and ALAE | ||||||||||||||||||||||||||||
Prior accident years non-cat loss and ALAE | (1.5 | ) | (4.8 | ) | (3.1 | ) | (4.5 | ) | (0.4 | ) | (1.0 | ) | (15.3 | ) | ||||||||||||||
Current accident year non-cat loss and ALAE | 11.9 | 15.9 | 26.0 | 13.6 | 5.1 | 2.1 | 74.6 | |||||||||||||||||||||
Total non-cat loss and ALAE | 10.4 | 11.1 | 22.9 | 9.1 | 4.7 | 1.1 | 59.3 | |||||||||||||||||||||
Total Loss and ALAE | 10.5 | 12.6 | 24.2 | 9.1 | 5.0 | 1.1 | 62.5 | |||||||||||||||||||||
ULAE | 1.3 | 1.8 | 1.3 | 1.6 | 0.6 | 0.2 | 6.8 | |||||||||||||||||||||
Total Loss and LAE | 11.8 | 14.4 | 25.5 | 10.7 | 5.6 | 1.3 | 69.3 | |||||||||||||||||||||
Underwriting expenses | 10.7 | 12.5 | 14.2 | 7.4 | 6.2 | 2.0 | 53.0 | |||||||||||||||||||||
Net underwriting (loss) gain | $ | (2.8 | ) | $ | 2.7 | $ | (9.0 | ) | $ | 2.4 | $ | — | $ | 0.8 | $ | (5.9 | ) | |||||||||||
Cat loss and ALAE ratio | 0.4 | % | 5.1 | % | 4.3 | % | — | % | 2.2 | % | — | % | 2.7 | % | ||||||||||||||
Non-cat loss and ALAE ratio | ||||||||||||||||||||||||||||
Prior accident years non-cat loss and ALAE ratio | (7.3 | )% | (16.2 | )% | (10.2 | )% | (22.0 | )% | (3.7 | )% | (23.5 | )% | (13.1 | )% | ||||||||||||||
Current accident year non-cat loss and ALAE ratio | 60.2 | % | 53.8 | % | 84.7 | % | 66.4 | % | 43.0 | % | 52.6 | % | 64.1 | % | ||||||||||||||
Total non-cat loss and ALAE ratio | 52.9 | % | 37.6 | % | 74.5 | % | 44.4 | % | 39.3 | % | 29.1 | % | 51.0 | % | ||||||||||||||
Total Loss and ALAE ratio | 53.3 | % | 42.7 | % | 78.8 | % | 44.4 | % | 41.5 | % | 29.1 | % | 53.7 | % | ||||||||||||||
ULAE ratio | 6.6 | % | 6.1 | % | 4.2 | % | 8.1 | % | 5.0 | % | 4.4 | % | 5.9 | % | ||||||||||||||
Total Loss and LAE ratio | 59.9 | % | 48.8 | % | 83.0 | % | 52.5 | % | 46.5 | % | 33.5 | % | 59.6 | % | ||||||||||||||
Expense ratio | 44.8 | % | 41.0 | % | 41.5 | % | 37.9 | % | 50.0 | % | 44.6 | % | 42.4 | % | ||||||||||||||
Combined ratio | 104.7 | % | 89.8 | % | 124.5 | % | 90.4 | % | 96.5 | % | 78.1 | % | 102.0 | % | ||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Three months ended March 31, 2018 | Commercial Auto | Small Commercial Package | Middle Market Commercial | Workers' Comp | Farm & Ranch | Other Commercial | Total | |||||||||||||||||||||
Net written premiums | $ | 18.6 | $ | 30.4 | $ | 29.1 | $ | 24.4 | $ | 11.5 | $ | 4.1 | $ | 118.1 | ||||||||||||||
Net earned premiums | 18.4 | 30.4 | 28.6 | 22.8 | 11.0 | 3.7 | 114.9 | |||||||||||||||||||||
Losses and LAE incurred: | ||||||||||||||||||||||||||||
Cat loss and ALAE | — | 3.2 | 1.5 | — | (0.1 | ) | — | 4.6 | ||||||||||||||||||||
Non-cat loss and ALAE | ||||||||||||||||||||||||||||
Prior accident years non-cat loss and ALAE | (3.5 | ) | (0.5 | ) | (2.5 | ) | (2.3 | ) | 0.3 | (1.2 | ) | (9.7 | ) | |||||||||||||||
Current accident year non-cat loss and ALAE | 12.4 | 18.2 | 21.5 | 15.1 | 4.2 | 2.0 | 73.4 | |||||||||||||||||||||
Total non-cat loss and ALAE | 8.9 | 17.7 | 19.0 | 12.8 | 4.5 | 0.8 | 63.7 | |||||||||||||||||||||
Total Loss and ALAE | 8.9 | 20.9 | 20.5 | 12.8 | 4.4 | 0.8 | 68.3 | |||||||||||||||||||||
ULAE | 1.2 | 1.3 | 1.5 | 2.3 | 0.3 | 0.3 | 6.9 | |||||||||||||||||||||
Total Loss and LAE | 10.1 | 22.2 | 22.0 | 15.1 | 4.7 | 1.1 | 75.2 | |||||||||||||||||||||
Underwriting expenses | 8.1 | 13.8 | 11.3 | 8.0 | 4.8 | 2.0 | 48.0 | |||||||||||||||||||||
Net underwriting (loss) gain | $ | 0.2 | $ | (5.6 | ) | $ | (4.7 | ) | $ | (0.3 | ) | $ | 1.5 | $ | 0.6 | $ | (8.3 | ) | ||||||||||
Cat loss and ALAE ratio | — | % | 10.7 | % | 5.1 | % | — | % | (0.5 | )% | (0.2 | )% | 4.1 | % | ||||||||||||||
Non-cat loss and ALAE ratio | ||||||||||||||||||||||||||||
Prior accident years non-cat loss and ALAE ratio | (18.9 | )% | (1.5 | )% | (8.8 | )% | (10.0 | )% | 2.9 | % | (33.8 | )% | (8.4 | )% | ||||||||||||||
Current accident year non-cat loss and ALAE ratio | 67.2 | % | 59.4 | % | 75.7 | % | 66.2 | % | 37.4 | % | 55.7 | % | 63.7 | % | ||||||||||||||
Total non-cat loss and ALAE ratio | 48.3 | % | 57.9 | % | 66.9 | % | 56.2 | % | 40.3 | % | 21.9 | % | 55.3 | % | ||||||||||||||
Total Loss and ALAE ratio | 48.3 | % | 68.6 | % | 72.0 | % | 56.2 | % | 39.8 | % | 21.7 | % | 59.4 | % | ||||||||||||||
ULAE ratio | 6.3 | % | 4.2 | % | 5.3 | % | 9.8 | % | 3.0 | % | 8.0 | % | 6.0 | % | ||||||||||||||
Total Loss and LAE ratio | 54.6 | % | 72.8 | % | 77.3 | % | 66.0 | % | 42.8 | % | 29.7 | % | 65.4 | % | ||||||||||||||
Expense ratio | 43.8 | % | 45.4 | % | 39.0 | % | 33.1 | % | 41.7 | % | 47.2 | % | 40.7 | % | ||||||||||||||
Combined ratio | 98.4 | % | 118.2 | % | 116.3 | % | 99.1 | % | 84.5 | % | 76.9 | % | 106.1 | % | ||||||||||||||
SAP Insurance Segment Results | ||||||||||||
($ in millions) | ||||||||||||
(unaudited) | ||||||||||||
Three months ended March 31, 2019 | Personal & Commercial | Specialty run-off | Total | |||||||||
Net written premiums | $ | 305.6 | $ | 0.4 | $ | 306.0 | ||||||
Net earned premiums | 297.9 | 4.8 | 302.7 | |||||||||
Losses and LAE incurred: | ||||||||||||
Cat loss and ALAE | 17.2 | 0.5 | 17.7 | |||||||||
Non-cat loss and ALAE | ||||||||||||
Prior accident years non-cat loss and ALAE | (22.2 | ) | 1.3 | (20.9 | ) | |||||||
Current accident year non-cat loss and ALAE | 174.7 | 4.0 | 178.7 | |||||||||
Total non-cat loss and ALAE | 152.5 | 5.3 | 157.8 | |||||||||
Total Loss and ALAE | 169.7 | 5.8 | 175.5 | |||||||||
ULAE | 19.5 | (0.4 | ) | 19.1 | ||||||||
Total Loss and LAE | 189.2 | 5.4 | 194.6 | |||||||||
Underwriting expenses | 110.4 | 0.8 | 111.2 | |||||||||
Net underwriting loss | $ | (1.7 | ) | $ | (1.4 | ) | $ | (3.1 | ) | |||
Cat loss and ALAE ratio | 5.8 | % | N/M(1) | 5.9 | % | |||||||
Non-cat loss and ALAE ratio | ||||||||||||
Prior accident years non-cat loss and ALAE ratio | (7.4 | )% | N/M | (6.9 | )% | |||||||
Current accident year non-cat loss and ALAE ratio | 58.6 | % | N/M | 59.0 | % | |||||||
Total non-cat loss and ALAE ratio | 51.2 | % | N/M | 52.1 | % | |||||||
Total Loss and ALAE ratio | 57.0 | % | N/M | 58.0 | % | |||||||
ULAE ratio | 6.6 | % | N/M | 6.3 | % | |||||||
Total Loss and LAE ratio | 63.6 | % | N/M | 64.3 | % | |||||||
Expense ratio | 36.1 | % | N/M | 36.4 | % | |||||||
Combined ratio | 99.7 | % | N/M | 100.7 | % | |||||||
(1) N/M = Not Meaningful |
($ in millions) | ||||||||||||
Three months ended March 31, 2018 | Personal & Commercial | Specialty run-off | Total | |||||||||
Net written premiums | $ | 279.8 | $ | 12.4 | $ | 292.2 | ||||||
Net earned premiums | 271.2 | 43.7 | 314.9 | |||||||||
Losses and LAE incurred: | ||||||||||||
Cat loss and ALAE | 9.8 | — | 9.8 | |||||||||
Non-cat loss and ALAE | ||||||||||||
Prior accident years non-cat loss and ALAE | (16.3 | ) | 0.3 | (16.0 | ) | |||||||
Current accident year non-cat loss and ALAE | 170.7 | 30.0 | 200.7 | |||||||||
Total non-cat loss and ALAE | 154.4 | 30.3 | 184.7 | |||||||||
Total Loss and ALAE | 164.2 | 30.3 | 194.5 | |||||||||
ULAE | 16.2 | 2.2 | 18.4 | |||||||||
Total Loss and LAE | 180.4 | 32.5 | 212.9 | |||||||||
Underwriting expenses | 97.4 | 9.6 | 107.0 | |||||||||
Net underwriting (loss) gain | $ | (6.6 | ) | $ | 1.6 | $ | (5.0 | ) | ||||
Cat loss and ALAE ratio | 3.7 | % | (0.1 | )% | 3.1 | % | ||||||
Non-cat loss and ALAE ratio | ||||||||||||
Prior accident years non-cat loss and ALAE ratio | (6.0 | )% | 0.7 | % | (5.1 | )% | ||||||
Current accident year non-cat loss and ALAE ratio | 62.9 | % | 68.7 | % | 63.8 | % | ||||||
Total non-cat loss and ALAE ratio | 56.9 | % | 69.4 | % | 58.7 | % | ||||||
Total Loss and ALAE ratio | 60.6 | % | 69.3 | % | 61.8 | % | ||||||
ULAE ratio | 5.9 | % | 5.0 | % | 5.8 | % | ||||||
Total Loss and LAE ratio | 66.5 | % | 74.3 | % | 67.6 | % | ||||||
Expense ratio | 34.9 | % | 77.2 | % | 36.7 | % | ||||||
Combined ratio | 101.4 | % | 151.5 | % | 104.3 | % | ||||||
($ millions) | YTD 2019 | YTD 2018 | ||||||
Segment income before federal income taxes: | ||||||||
Insurance operations: | ||||||||
Personal insurance SAP underwriting gain | $ | 4.2 | $ | 1.7 | ||||
Commercial insurance SAP underwriting loss | (5.9 | ) | (8.3 | ) | ||||
Specialty run-off | (1.4 | ) | 1.6 | |||||
Total insurance operations | (3.1 | ) | (5.0 | ) | ||||
Investment operations: | ||||||||
Net investment income | 19.4 | 19.9 | ||||||
Net investment gain (loss) | 44.9 | (11.7 | ) | |||||
Total investment operations | 64.3 | 8.2 | ||||||
All other segments income | 0.1 | 0.1 | ||||||
Reconciling items: | ||||||||
GAAP adjustments | 4.1 | (4.0 | ) | |||||
Interest expense on corporate debt | 1.2 | 1.6 | ||||||
Corporate expenses | (5.0 | ) | (4.2 | ) | ||||
Total reconciling items | 0.3 | (6.6 | ) | |||||
Total consolidated income (loss) before federal income taxes | $ | 61.6 | $ | (3.3 | ) | |||
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