COLUMBUS, Ohio -- April 25, 2002 -- State Auto Financial Corporation (Nasdaq:STFC) announced net reported earnings of $0.34 ($0.33 diluted) per share for the first quarter ending March 31, 2002. This was down from $0.37 ($0.36 diluted) net reported earnings per share for the same period last year but substantially improved from the net loss of $0.27 per share reported for the fourth quarter 2001. Net operating earnings per share for the first quarter 2002 were $0.32 ($0.31 diluted), compared to $0.37 per share ($0.36 diluted) for the same 2001 period.
For the quarter ending March 31, 2002, net earnings were $13,165,000, versus $14,540,000 for the first quarter 2001. The company's total revenue for the first quarter was $229,959,000, an increase of 94.9% over the previous year's first quarter total revenue of $118,001,000. The company's GAAP combined ratio for the period ending March 31, 2002 was 98.5, compared to 94.9 for the quarter ending March 31, 2001 and 115.8 for the fourth quarter 2001. STFC's net written premium for the first quarter 2002 was $222,286,000, an increase of 111.6% over the same period last year.
First quarter 2002 results reinforce the company's belief that case reserve deficiencies attributable to the former Meridian Mutual (Meridian) business that plagued third and fourth quarter 2001 results are behind it. The company continues to seek adequate cost-based rates on the Meridian book and is reunderwriting much of it. Underwriting results for the "historic State Auto" book (the book excluding Meridian business) performed up to the company's high underwriting standards, posting a GAAP combined ratio of 96.8.
"The first quarter of 2002 produced tangible evidence that the Meridan portion of our business is beginning to improve as a result of our integration efforts," said STFC Chairman Bob Moone. "We have obtained, or are in the process of obtaining, appropriate rate increases in almost every line and we have seen strong improvement in our rate per exposure. While adhering to our traditional 'profit first' approach, we grew our core business by over 20%. Overall, the company's revenue grew by 111.6%."
STFC's storm losses for the first quarter, while relatively light, added 2.5 loss ratio points to the GAAP combined ratio noted above, versus 1.1 loss ratio points for the same quarter 2001.
State Auto Financial Corporation is a regional property and casualty insurance holding company engaged primarily in writing personal and commercial automobile, homeowners, commercial multi-peril, workers' compensation and fire insurance. The company currently markets its products through more than 22,000 agents associated with approximately 3,800 agencies in 26 states. Products are marketed primarily in the central and eastern United States, excluding New York, New Jersey and the New England states.
STFC has scheduled a conference call with industry analysts for Thursday, April 25, 10:00 A.M. to discuss the company's 2002 first quarter performance. A replay of this conversation, in its entirety, can be heard beginning at noon today by calling 1-800-839-5570. Live and archived broadcasts of the conference can be accessed via links on www.STFC.com and www.StateAuto.com. Documents detailing the company's first quarter 2002 financial, sales and underwriting results are distributed to investment analysts prior to the above-mentioned conference call. These documents can be found as attachments to this release on www.STFC.com.
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.