0000874977-21-000074.txt : 20210805 0000874977-21-000074.hdr.sgml : 20210805 20210805082041 ACCESSION NUMBER: 0000874977-21-000074 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20210805 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20210805 DATE AS OF CHANGE: 20210805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: State Auto Financial CORP CENTRAL INDEX KEY: 0000874977 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 311324304 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19289 FILM NUMBER: 211146452 BUSINESS ADDRESS: STREET 1: 518 EAST BROAD STREET CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6144645000 MAIL ADDRESS: STREET 1: 518 EAST BROAD STREET CITY: COLUMBUS STATE: OH ZIP: 43215 FORMER COMPANY: FORMER CONFORMED NAME: STATE AUTO FINANCIAL CORP DATE OF NAME CHANGE: 19930328 8-K 1 stfc-20210805.htm CURRENT REPORT stfc-20210805
0000874977FALSE00008749772021-08-052021-08-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2021 (August 5, 2021)
STATE AUTO FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Ohio000-1928931-1324304
(State or other jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer
Identification No.)
518 East Broad StreetColumbusOhio43215-3976
(Address of principal executive offices) (Zip Code)
(614464-5000
Registrant’s telephone number, including area code

Not Applicable
(Former name or former address, if changed since last report.)  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common shares, without par valueSTFCThe NASDAQ Global Select Market
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2)
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨



Section 2.Financial Information
Item 2.02.Results of Operations and Financial Condition.
On August 5, 2021, State Auto Financial Corporation (the "Company") issued a press release disclosing the Company’s results of operations for the three and six month periods ended June 30, 2021 (the “Release"). The full text of the Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
The Release included a non-GAAP financial measure, net income (loss) from operations per diluted share. The Company uses net income (loss) from operations because it believes this calculation better indicates the Company’s operating performance than GAAP net income (loss) in that net income (loss) from operations excludes the sometimes volatile investment gains/losses, net of applicable federal income taxes, that can produce inconsistent results.

The Release included a non-GAAP financial measure, net income (loss) from operations per diluted share. Net income (loss) from operations differs from GAAP net income (loss) only by the exclusion of net investment gains (losses), net of applicable taxes, on investment activity for the periods being reported. For the three and six month periods ended June 30, 2021, GAAP net loss from operations was $(0.47) and $(1.07) per diluted share, respectively, while net loss per share from operations was $(0.59) and $(0.76) per diluted share, respectively, for the same 2020 periods. For the three and six month periods ended June 30, 2021, net investment gain, net of applicable taxes, impacted the GAAP net loss per diluted share by $0.48 and $1.16, while net investment gain (loss), net of applicable taxes, impacted the GAAP net loss per diluted share by $1.35 and $(1.07), respectively for the same 2020 periods.
Management uses net income (loss) from operations because it believes this calculation better indicates the Company’s operating performance than GAAP net income (loss) in that net income (loss) from operations excludes the sometimes volatile realized capital gains/losses, net of applicable federal income taxes, that can produce inconsistent results.
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 August 5, 2021 regarding results of operations for the three and six month periods ended June 30, 2021
104 The cover page from this Current Report on Form 8-K, formatted as Inline XBRL



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
STATE AUTO FINANCIAL CORPORATION
Date: August 5, 2021/s/ Steven E. English
Senior Vice President and Chief Financial Officer



EXHIBIT INDEX
Exhibit No.Description of Exhibit
99.1 
104 The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

EX-99.01 2 a2q2021pressrelease.htm PRESS RELEASE Document

EXHIBIT 99.1
newsrelease2a10a.jpg
stfclogo2a09a.jpg
State Auto Financial reports second quarter 2021 results
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 5, 2021 - 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.”
Page 2 of 19


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.
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
Page 3 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Selected Consolidated Financial Data
($ in millions, except per share amounts)
(unaudited)Three months ended June 30Six months ended June 30
2021202020212020
Net premiums written$412.3 $381.6 $771.0 $728.1 
Earned premiums369.9 340.7 725.8 671.2 
Net investment income17.7 17.7 35.3 36.6 
Net investment gain (loss)26.7 75.9 64.9 (59.3)
Other income0.4 0.5 0.9 1.1 
Total revenue414.7 434.8 826.9 649.6 
Income (loss) before federal income taxes4.2 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:
- basic44.0 43.8 44.0 43.7 
- diluted44.8 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 outstanding44.1 43.8 
GAAP ratios:
Cat loss and ALAE ratio21.6 26.5 20.9 19.7 
Non-cat loss and LAE ratio59.4 53.1 59.1 56.4 
Loss and LAE ratio81.0 79.6 80.0 76.1 
Expense ratio29.0 35.1 31.4 34.9 
Combined ratio110.0 114.7 111.4 111.0 
(A) Reconciliation of non-GAAP financial measure:
Net loss from operations:
Net income (loss)$0.6 $34.3 $4.2 $(80.3)
Net investment gain (loss), net of tax21.1 59.9 51.3 (46.9)
Net loss from operations$(20.5)$(25.6)$(47.1)$(33.4)
Page 4 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ and shares in millions, except per share amounts)
(unaudited)June 30December 31
20212020
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 securities375.5 389.7 
Other invested assets79.6 71.1 
Other invested assets, at cost11.1 12.1 
Notes receivable from affiliate70.0 70.0 
Total investments2,751.1 2,780.1 
Cash and cash equivalents108.7 90.7 
Accrued investment income and other assets26.4 29.7 
Premiums Receivable17.6 14.0 
Deferred policy acquisition costs127.2 122.2 
Reinsurance recoverable on losses and loss expenses payable19.7 24.3 
Prepaid reinsurance premiums8.8 8.3 
Current federal income taxes1.7 1.7 
Net deferred federal income taxes29.0 27.3 
Property and equipment, at cost3.8 4.2 
Total assets$3,094.0 $3,102.5 
LIABILITIES
Losses and loss expenses payable$1,060.9 $1,050.4 
Unearned premiums769.1 723.4 
Notes payable (affiliates $15.3 and $15.3, respectively)122.1 122.1 
Pension and postretirement benefits52.2 66.2 
Due to affiliate16.2 11.2 
Other liabilities95.2 119.2 
Total liabilities2,115.7 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 share127.5 126.8 
Treasury stock, 6.9 and 6.9 shares, respectively, at cost(118.8)(118.4)
Additional paid-in capital213.1 213.3 
Accumulated other comprehensive (loss) income(13.3)13.9 
Retained earnings769.8 774.4 
Total stockholders' equity978.3 1,010.0 
Total liabilities and stockholders' equity$3,094.0 $3,102.5 
Page 5 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
($ in millions, except per share amounts)
(unaudited)Three months ended June 30Six months ended June 30
2021202020212020
Earned premiums$369.9 $340.7 $725.8 $671.2 
Net investment income17.7 17.7 35.3 36.6 
Net investment gain (loss)26.7 75.9 64.9 (59.3)
Other income from affiliates0.4 0.5 0.9 1.1 
Total revenues414.7 434.8 826.9 649.6 
Losses and loss expenses299.8 271.2 580.6 510.6 
Acquisition and operating expenses107.2 119.5 228.2 234.4 
Interest expense1.1 1.3 2.2 2.5 
Other expenses2.4 1.2 6.1 4.5 
Total expenses410.5 393.2 817.1 752.0 
Income (loss) before federal income taxes4.2 41.6 9.8 (102.4)
Federal income tax expense (benefit):
Current (0.4) (0.4)
Deferred3.6 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 
Page 6 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
($ in millions)
(unaudited)Three months ended June 30Six months ended June 30
2021202020212020
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 income0.8 (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 investments14.6 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 loss4.4 3.6 8.9 7.3 
Income tax expense(0.6)(0.4)(1.2)(0.9)
Total net unrecognized benefit plan obligations2.2 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)
Page 7 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
($ and shares in millions)
(unaudited)Six months endedYear Ended
June 30December 31
20212020
Common shares:
Balance at beginning of year50.7 50.4 
Issuance of shares0.3 0.3 
Balance at period ended51.0 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 $125.9 
Issuance of shares0.7 0.9 
Balance at period ended127.5 126.8 
Treasury stock:
Balance at beginning of year$(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 stock1.4 3.0 
Stock awards granted(1.6)3.6 
Balance at period ended213.1 213.3 
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 obligations4.5 (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 income4.2 13.1 
Cash dividends paid(8.8)(17.5)
Balance at period ended769.8 774.4 
Total stockholders' equity at period ended$978.3 $1,010.0 
Page 8 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
($ in millions)
(unaudited)Six months ended
June 30
20212020
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, net3.8 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 assets3.3 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 premiums4.1 (23.8)
Other liabilities and due to/from affiliates, net(15.8)(42.0)
Losses and loss expenses payable10.5 38.2 
Unearned premiums45.7 56.6 
Deferred tax on share-based awards(0.4)(0.2)
Federal income taxes6.0 (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-sale203.3 186.7 
Sales of fixed maturities available-for-sale135.5 188.3 
Sales of equity securities83.5 30.0 
Sales of other invested assets1.3 0.6 
Disposals of property and equipment 0.2 
Net cash provided by investing activities50.8 75.4 
Cash flows from financing activities:
Proceeds from issuance of common stock2.1 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 equivalents18.0 96.6 
Cash and cash equivalents at beginning of period90.7 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 
Page 9 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
Net Investment Income
($ in millions)
(unaudited)
6/30/20209/30/202012/31/20203/31/20216/30/2021
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 maturities14.5 15.0 15.0 15.4 15.4 
Equity securities2.6 2.1 1.5 1.6 1.2 
Other0.8 0.9 1.3 0.9 1.1 
Total gross investment income17.9 18.0 17.8 17.9 17.7 
Less: Investment expenses0.2 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 
   TIPS0.3 1.6 2.3 0.7 2.7 
Total fixed maturities29.6 44.6 59.6 15.4 30.8 
Equity securities5.7 7.8 9.3 1.6 2.8 
Other1.8 2.7 4.0 0.9 2.0 
Total gross investment income37.1 55.1 72.9 17.9 35.6 
Less: Investment expenses0.5 0.6 0.8 0.3 0.3 
Net investment income$36.6 $54.5 $72.1 $17.6 $35.3 
6/30/20209/30/202012/31/20203/31/20216/30/2021
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)
unauditedThree months ended June 30Six months ended June 30
2021202020212020
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 securities24.9 69.1 56.4 (53.3)
Net gain (loss) on other invested assets3.0 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)
Page 10 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
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 30December 31
20212020
Deferred tax assets:
Unearned premiums not currently deductible$32.0 $30.1 
Losses and loss expenses payable discounting11.3 10.5 
Postretirement and pension benefits17.3 19.3 
Other liabilities10.7 12.2 
Net operating loss carryforward28.3 19.8 
Capital loss carryforward6.1 6.1 
Tax credit carryforward2.3 1.9 
Other 1.1 
Total deferred tax assets108.0 101.0 
Deferred tax liabilities:
Deferral of policy acquisition costs26.7 25.7 
Investments48.7 48.0 
Other3.3 — 
Total deferred tax liabilities78.7 73.7 
Total net deferred tax assets before valuation allowance29.3 27.3 
Less valuation allowance0.3 — 
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 30Six months ended June 30
2021202020212020
Income (loss) before federal income taxes$4.2 $41.6 $9.8 $(102.4)
Federal income tax expense (benefit)
Current (0.4) (0.4)
Deferred3.6 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)
Page 11 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
SAP Personal Insurance Segment Results
(unaudited)
($ in millions)
Three months ended June 30, 2021Personal AutoHomeownersOther PersonalTotal
Net written premiums$92.0 $116.2 $20.3 $228.5 
Net earned premiums93.6 102.1 17.4 213.1 
Losses and LAE incurred:
Cat loss and ALAE4.5 55.2 9.5 69.2 
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE(1.3)2.5 (0.2)1.0 
Current accident year non-cat loss and ALAE62.6 46.0 9.4 118.0 
Total non-cat loss and ALAE61.3 48.5 9.2 119.0 
Total Loss and ALAE65.8 103.7 18.7 188.2 
ULAE6.2 5.2 0.7 12.1 
Total Loss and LAE72.0 108.9 19.4 200.3 
Underwriting expenses23.8 28.3 4.9 57.0 
Net underwriting loss$(2.2)$(35.1)$(6.9)$(44.2)
Cat loss and ALAE ratio4.8 %54.1 %54.5 %32.5 %
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio(1.4)%2.5 %(1.4)%0.5 %
Current accident year non-cat loss and ALAE ratio66.9 %45.0 %54.0 %55.3 %
Total non-cat loss and ALAE ratio65.5 %47.5 %52.6 %55.8 %
Total Loss and ALAE ratio70.3 %101.6 %107.1 %88.3 %
ULAE ratio6.7 %5.0 %3.9 %5.7 %
Total Loss and LAE ratio77.0 %106.6 %111.0 %94.0 %
Expense ratio25.8 %24.4 %24.1 %24.9 %
Combined ratio102.8 %131.0 %135.1 %118.9 %
($ in millions)
Three months ended June 30, 2020Personal AutoHomeownersOther PersonalTotal
Net written premiums$104.3 $106.1 $15.0 $225.4 
Net earned premiums103.3 87.7 11.8 202.8 
Losses and LAE incurred:
Cat loss and ALAE4.1 54.6 7.6 66.3 
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE5.9 (0.1)(0.1)5.7 
Current accident year non-cat loss and ALAE45.5 36.7 3.9 86.1 
Total non-cat loss and ALAE51.4 36.6 3.8 91.8 
Total Loss and ALAE55.5 91.2 11.4 158.1 
ULAE8.3 6.5 0.6 15.4 
Total Loss and LAE63.8 97.7 12.0 173.5 
Underwriting expenses33.7 31.5 4.5 69.7 
Net underwriting gain (loss)$5.8 $(41.5)$(4.7)$(40.4)
Cat loss and ALAE ratio4.0 %62.3 %64.3 %32.7 %
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio5.7 %(0.2)%(0.8)%2.8 %
Current accident year non-cat loss and ALAE ratio44.0 %41.8 %33.2 %42.4 %
Total non-cat loss and ALAE ratio49.7 %41.6 %32.4 %45.2 %
Total Loss and ALAE ratio53.7 %103.9 %96.7 %77.9 %
ULAE ratio8.1 %7.5 %4.8 %7.6 %
Total Loss and LAE ratio61.8 %111.4 %101.5 %85.5 %
Expense ratio32.3 %29.7 %30.6 %31.0 %
Combined ratio94.1 %141.1 %132.1 %116.5 %

Page 12 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
($ in millions)
Six months ended June 30, 2021Personal AutoHomeownersOther PersonalTotal
Net written premiums$181.1 $202.4 $38.2 $421.7 
Net earned premiums189.3 198.4 33.2 420.9 
Losses and LAE incurred:
Cat loss and ALAE5.0 107.6 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 ALAE119.5 101.1 17.5 238.1 
Total non-cat loss and ALAE117.4 101.5 17.3 236.2 
Total Loss and ALAE122.4 209.1 36.4 367.9 
ULAE14.7 13.9 1.9 30.5 
Total Loss and LAE137.1 223.0 38.3 398.4 
Underwriting expenses51.3 54.8 10.0 116.1 
Net underwriting gain (loss)$0.9 $(79.4)$(15.1)$(93.6)
Cat loss and ALAE ratio2.6 %54.2 %57.4 %31.3 %
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio(1.1)%0.2 %(0.6)%(0.4)%
Current accident year non-cat loss and ALAE ratio63.1 %51.0 %52.8 %56.6 %
Total non-cat loss and ALAE ratio62.0 %51.2 %52.2 %56.2 %
Total Loss and ALAE ratio64.6 %105.4 %109.6 %87.5 %
ULAE ratio7.8 %7.0 %5.6 %7.2 %
Total Loss and LAE ratio72.4 %112.4 %115.2 %94.7 %
Expense ratio28.3 %27.1 %26.2 %27.5 %
Combined ratio100.7 %139.5 %141.4 %122.2 %
($ in millions)
Six months ended June 30, 2020Personal AutoHomeownersOther PersonalTotal
Net written premiums$208.9 $187.7 $28.3 $424.9 
Net earned premiums208.0 170.4 22.5 400.9 
Losses and LAE incurred:
Cat loss and ALAE4.6 65.3 9.1 79.0 
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE11.1 2.1 (1.1)12.1 
Current accident year non-cat loss and ALAE107.5 74.3 8.2 190.0 
Total non-cat loss and ALAE118.6 76.4 7.1 202.1 
Total Loss and ALAE123.2 141.7 16.2 281.1 
ULAE15.6 11.8 1.0 28.4 
Total Loss and LAE138.8 153.5 17.2 309.5 
Underwriting expenses66.5 56.5 8.5 131.5 
Net underwriting gain (loss)$2.7 $(39.6)$(3.2)$(40.1)
Cat loss and ALAE ratio2.2 %38.3 %40.4 %19.7 %
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio5.4 %1.2 %(4.8)%3.0 %
Current accident year non-cat loss and ALAE ratio51.6 %43.7 %36.4 %47.4 %
Total non-cat loss and ALAE ratio57.0 %44.9 %31.6 %50.4 %
Total Loss and ALAE ratio59.2 %83.2 %72.0 %70.1 %
ULAE ratio7.5 %6.9 %4.4 %7.1 %
Total Loss and LAE ratio66.7 %90.1 %76.4 %77.2 %
Expense ratio31.9 %30.1 %30.3 %31.0 %
Combined ratio98.6 %120.2 %106.7 %108.2 %
Page 13 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
SAP Commercial Insurance Segment Results
(unaudited)
($ in millions)
Three months ended
June 30, 2021
Commercial AutoSmall Commercial PackageMiddle Market CommercialWorkers' CompFarm & RanchOther CommercialTotal
Net written premiums$57.4 $34.9 $50.4 $11.8 $22.5 $7.5 $184.5 
Net earned premiums45.0 33.1 41.3 14.5 17.8 5.9 157.6 
Losses and LAE incurred:
Cat loss and ALAE1.9 3.2 2.0  2.9  10.0 
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE(0.3)(2.3)(5.4)(6.9)(0.1)(1.7)(16.7)
Current accident year non-cat loss and ALAE29.9 23.3 22.9 12.6 9.8 1.6 100.1 
Total non-cat loss and ALAE29.6 21.0 17.5 5.7 9.7 (0.1)83.4 
Total Loss and ALAE31.5 24.2 19.5 5.7 12.6 (0.1)93.4 
ULAE2.1 1.1 0.7 0.7 0.4 0.1 5.1 
Total Loss and LAE33.6 25.3 20.2 6.4 13.0  98.5 
Underwriting expenses15.8 10.0 15.6 5.5 7.0 2.4 56.3 
Net underwriting (loss) gain$(4.4)$(2.2)$5.5 $2.6 $(2.2)$3.5 $2.8 
Cat loss and ALAE ratio4.3 %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 ratio66.5 %70.2 %55.5 %87.4 %54.3 %28.0 %63.5 %
Total non-cat loss and ALAE ratio65.9 %63.3 %42.3 %39.9 %53.4 %(0.8)%52.9 %
Total Loss and ALAE ratio70.2 %72.9 %47.2 %39.9 %69.4 %(0.3)%59.3 %
ULAE ratio4.7 %3.5 %1.7 %4.7 %2.6 %1.0 %3.3 %
Total Loss and LAE ratio74.9 %76.4 %48.9 %44.6 %72.0 %0.7 %62.6 %
Expense ratio27.3 %28.9 %30.8 %46.4 %32.1 %30.9 %30.5 %
Combined ratio102.2 %105.3 %79.7 %91.0 %104.1 %31.6 %93.1 %
Page 14 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
($ in millions)
Three months ended
June 30, 2020
Commercial AutoSmall Commercial PackageMiddle Market CommercialWorkers' CompFarm & RanchOther CommercialTotal
Net written premiums$41.4 $32.5 $46.5 $13.0 $17.5 $5.4 $156.3 
Net earned premiums31.6 31.1 39.6 17.2 13.7 4.7 137.9 
Losses and LAE incurred:
Cat loss and ALAE0.7 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 ALAE15.0 17.2 22.0 12.8 6.1 1.3 74.4 
Total non-cat loss and ALAE14.8 13.6 19.1 8.0 5.8 (0.8)60.5 
Total Loss and ALAE15.5 25.5 26.0 8.0 10.4 (0.8)84.6 
ULAE1.7 2.1 1.1 1.7 0.6 0.1 7.3 
Total Loss and LAE17.2 27.6 27.1 9.7 11.0 (0.7)91.9 
Underwriting expenses13.7 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 ratio2.0 %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 ratio47.7 %55.3 %55.4 %74.3 %45.2 %27.5 %54.0 %
Total non-cat loss and ALAE ratio47.1 %43.6 %48.1 %46.3 %43.2 %(16.4)%43.9 %
Total Loss and ALAE ratio49.1 %82.0 %65.7 %46.3 %76.6 %(16.5)%61.4 %
ULAE ratio5.3 %6.7 %2.8 %9.9 %4.5 %1.8 %5.3 %
Total Loss and LAE ratio54.4 %88.7 %68.5 %56.2 %81.1 %(14.7)%66.7 %
Expense ratio33.1 %34.8 %38.1 %45.5 %43.4 %37.6 %37.3 %
Combined ratio87.5 %123.5 %106.6 %101.7 %124.5 %22.9 %104.0 %

Page 15 of 19

STATE AUTO FINANCIAL CORPORATION AND SUBSIDIARIES
($ in millions)
Six months ended
June 30, 2021
Commercial AutoSmall Commercial PackageMiddle Market CommercialWorkers' CompFarm & RanchOther CommercialTotal
Net written premiums$108.7 $69.9 $89.7 $27.8 $42.4 $12.2 $350.7 
Net earned premiums85.9 64.8 80.9 29.7 34.3 10.7 306.3 
Losses and LAE incurred:
Cat loss and ALAE2.1 8.4 5.0  6.1  21.6 
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE(0.9)(4.5)(13.5)(15.4)(1.5)(2.7)(38.5)
Current accident year non-cat loss and ALAE55.3 43.1 48.5 21.9 15.3 3.5 187.6 
Total non-cat loss and ALAE54.4 38.6 35.0 6.5 13.8 0.8 149.1 
Total Loss and ALAE56.5 47.0 40.0 6.5 19.9 0.8 170.7 
ULAE4.7 3.5 1.5 1.4 1.1 0.2 12.4 
Total Loss and LAE61.2 50.5 41.5 7.9 21.0 1.0 183.1 
Underwriting expenses31.9 21.5 31.8 13.0 15.0 4.2 117.4 
Net underwriting (loss) gain$(7.2)$(7.2)$7.6 $8.8 $(1.7)$5.5 $5.8 
Cat loss and ALAE ratio2.4 %12.9 %6.2 % %17.8 %0.3 %7.1 %
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio(1.0)%(7.0)%(16.7)%(51.8)%(4.5)%(25.1)%(12.6)%
Current accident year non-cat loss and ALAE ratio64.4 %66.6 %60.0 %73.7 %44.3 %32.9 %61.2 %
Total non-cat loss and
ALAE ratio
63.4 %59.6 %43.3 %21.9 %39.8 %7.8 %48.6 %
Total Loss and ALAE ratio65.8 %72.5 %49.5 %