Stockholders' Equity

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Note [Abstract]

Stockholders' Equity

13. Stockholders’ Equity

a. Dividend Restrictions and Statutory Financial Information

State Auto P&C, Milbank and SA Ohio are subject to regulations and restrictions under which payment of dividends from statutory surplus can be made to State Auto Financial during the year without prior approval of regulatory authorities. Under the insurance regulations of Iowa and Ohio (the states of domicile), the maximum amount of dividends that the Company may pay out of earned surplus to shareholders within a twelve month period without prior approval of the Department is limited to the greater of 10% of the most recent year-end policyholders’ surplus or net income for the twelve month period ending the 31st day of December of the previous year-end. Pursuant to these rules, approximately $87.2 million is available for payment to State Auto Financial from its insurance subsidiaries in 2019 without prior approval. State Auto Financial received dividends from its insurance subsidiaries in the amount of $10.0 million, $15.0 million and $10.0 million in 2018, 2017 and 2016, respectively.

The Company’s insurance subsidiaries are subject to risk-based capital (“RBC”) requirements that have been adopted by individual states. These requirements subject insurers having statutory capital less than that required by the RBC calculation to varying degrees of regulatory action, depending on the level of capital inadequacy. The RBC formulas specify various weighting factors to be applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital to authorized control level RBC. Generally no remedial action is required by an insurance company if its adjusted statutory surplus exceeds 200% of the authorized level RBC. As of December 31, 2018, each of the Company’s insurance subsidiaries maintained adjusted statutory surplus in excess of 400% of the authorized control level RBC.

The following tables set forth reconciliations of statutory capital and surplus and net income, as determined using SAP, to the amounts included in the accompanying consolidated financial statements:

($ millions)	2018		2017
Statutory capital and surplus of insurance subsidiaries	$	871.9	$	858.5
Net liabilities of non-insurance parent and affiliates	(86.8)		(89.8)
	785.1		768.6
Increases (decreases):
Deferred acquisition costs	101.9		110.3
Postretirement and pension benefits	(21.4)		(19.6)
Deferred federal income taxes	(2.8)		(34.8)
Fixed maturities, at fair value	(28.7)		19.7
Other, net	(15.6)		(9.2)
Stockholders’ equity per accompanying consolidated financial statements	$	818.5	$	835.0

($ millions)	Year ended December 31
	2018		2017		2016
Statutory net income of insurance subsidiaries	$	65.1	$	43.5	$	22.2
Net loss of non-insurance parent and affiliates	(4.9)		(13.1)		(3.0)
	60.2		30.4		19.2
Increases (decreases):
Deferred acquisition costs	(8.4)		(12.6)		0.4
Postretirement and pension benefits	4.2		4.3		4.4
Deferred federal income taxes	(1.9)		(41.8)		(6.4)
Net investment loss	(44.4)		—		—
Other, net	3.1		1.9		1.6
Net income (loss) per accompanying consolidated financial statements	$	12.8	$	(17.8)	$	19.2