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  • Quarterly earnings of $0.72 per share
  • Quarterly net income from operations1 of $0.29 per share
  • Quarterly GAAP combined ratio of 100.4
  • Quarterly SAP personal and commercial segments’ combined ratio2 of 97.1
  • Return on equity of 9.8%
  • Book value per share of $22.01

COLUMBUS, Ohio–(BUSINESS WIRE)–$STFC #STFC–State Auto Financial Corporation (NASDAQ:STFC) today reported fourth quarter 2019 net income of $32.7 million, or $0.72 per diluted share versus a net loss of $24.5 million, or $0.57 per diluted share, for the same 2018 period. Net income from operations1 per diluted share for the fourth quarter of 2019 was $0.29 versus $0.67 for the same 2018 period.

For the year ended 2019, STFC had net income of $87.4 million, or $1.96 per diluted share, compared to net income of $12.8 million, or $0.29 per diluted share, for the same 2018 period. Net income from operations1 per diluted share for the year ended 2019 was $0.63 versus $1.20 for the same 2018 period.

GAAP Operating Results

STFC’s GAAP combined ratio for the fourth quarter 2019 was 100.4 compared to 94.6 for the same 2018 period. Catastrophe losses during the fourth quarter 2019 accounted for 7.7 points of the 64.2 total loss ratio points, or $24.8 million, versus 2.6 points of the total 56.8 loss ratio points, or $8.1 million, for the same period in 2018. Fourth quarter catastrophe losses included $6.6 million, or 2.1 loss ratio points, of adverse development relating to prior years from Hurricanes Irma and Harvey from the specialty run-off business. Non-catastrophe losses and ALAE during the fourth quarter 2019 included 5.7 points of favorable development relating to prior years, or $18.3 million, versus 7.9 points of favorable development, or $24.4 million, for the same period in 2018.

STFC’s GAAP combined ratio for the year ended 2019 was 102.7 compared to 100.6 for the same 2018 period. Catastrophe losses for the year ended 2019 accounted for 8.0 points of the 67.4 total loss ratio points, or $100.5 million, versus 5.8 points, or $71.7 million for the same period in 2018. Non-catastrophe losses and ALAE for the year ended 2019 included 5.8 points of favorable development relating to prior years, or $72.4 million, versus 6.2 points of favorable development, or $76.6 million, for the same period in 2018.

SAP Personal and Commercial Operating Results

The exit from our specialty insurance business resulted in the elimination of specialty insurance as a reportable segment as we stopped writing this business on a net basis in 2018. Specialty results, labeled as “specialty run-off,” are included in the SAP Insurance Segment Results tables below to enable reconciliation to total underwriting results.

Net written premium for the fourth quarter 2019 increased 9.0% compared to the same period in 2018. By segment, net written premium for personal and commercial increased 6.8% and 12.6%, respectively. The increase in the personal segment was primarily due to new business growth and rate increases in homeowners and other personal. Personal auto net written premium declined as a result of lower new business and retention. The increase in the commercial segment was led by new business growth in commercial auto, middle market commercial and small commercial package. Workers’ compensation net written premium declined due to continued intense competition in this market.

Net written premium for the year ended 2019 increased 10.2% compared to the same period in 2018. By insurance segment, net written premium for the personal and commercial segments increased 9.1% and 12.0%, respectively. The trends in the personal and commercial segments’ net written premium were due to the same factors discussed above for the fourth quarter.

The SAP personal and commercial segments’ combined ratio for the fourth quarter 2019 was 97.1 compared to 92.8 for the same 2018 period. Catastrophe losses during the fourth quarter 2019 accounted for 5.6 points of the total 61.9 loss ratio points, or $18.2 million, versus 2.3 points of the total 54.8 loss ratio points, or $6.9 million, for the same period in 2018. Non-catastrophe losses and ALAE during the fourth quarter 2019 included 6.1 points of favorable development relating to prior years, or $19.6 million, versus 7.8 points of favorable development, or $23.3 million, for the same period in 2018.

The SAP personal and commercial segments’ combined ratio for the year ended 2019 was 101.2 compared to 98.6 for the same 2018 period. Catastrophe losses for the year ended 2019 accounted for 7.2 points of the total 66.8 loss ratio points, or $89.9 million, versus 6.2 points of the total 63.0 loss ratio points, or $70.3 million for the same period in 2018. Non-catastrophe losses and ALAE for the year ended 2019 included 5.7 points of favorable development relating to prior years, or $71.3 million, versus 7.0 points of favorable development, or $79.7 million, for the same period in 2018.

Book Value and Return on Equity

STFC’s book value increased to $22.01 per share as of Dec. 31, 2019, compared to $21.68 on Sept. 30, 2019. The increase was driven by the market value of our investment portfolio.

Return on stockholders’ equity for the 12 months ended December 31, 2019, was 9.8% compared to 1.5% for the 12 months ended December 31, 2018.

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

“Our fourth quarter and year ended 2019 results reflected the challenges we faced during the year in addition to the considerable progress we made toward more consistent profitable performance. While our personal and commercial lines’ 101.2% SAP combined ratio and 10.2% net written premium growth for 2019 didn’t meet our expectations, we made important, significant progress in several areas including surpassing $2.0 billion in net written premium for the State Auto Group which includes all Pooled Companies.

“The lack of an underwriting profit was driven primarily by our personal lines business, where we identified and have closed product and technology gaps, mainly in our auto line. Higher weather losses also significantly impacted our property results. Our homeowners business grew nearly 20% in 2019, a testament to the powerful combination of our digital technology and new product design.

“2019 was an outstanding year for our commercial lines business, which was profitable with a SAP combined ratio of 97.0 and produced 12.0% net written premium growth. This was a remarkable achievement, the result of two years of rebuilding our commercial lines teams and products. At the same time, work continued toward 2020 launches of farm and ranch and middle market commercial on our digital-only platform, State Auto Connect.

“The foundation we’ve built remains strong. We enter 2020 with the products, pricing, technology and agent partners that will drive our success, and the State Auto team has the creativity, passion and persistence needed to win.”

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, which include retail agencies and wholesale brokers. 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 $0.43 per diluted share and $1.33 per diluted share for the fourth quarter and year ended Dec. 31, 2019, respectively, versus a loss of $1.25 per diluted share and $0.91 per diluted share for the fourth quarter and year ended Dec. 31, 2018, respectively.

2 Insurance industry regulators require STFC’s insurance subsidiaries to report their financial condition and results of operations using Statutory Accounting Practices (“SAP”). The SAP personal and commercial segments’ combined ratio is a measure used by management to evaluate STFC’s operating performance for its ongoing operations.

STFC has scheduled a conference call with interested investors for Thursday, Feb. 20, at 11 a.m. ET to discuss the Company’s fourth quarter 2019 performance. Live and archived broadcasts of the call can be accessed at http://www.StateAuto.com/STFC. A replay of the call can be heard beginning at 2 p.m., Feb. 20, by calling 855-859-2056, conference ID 9569194. Supplemental schedules detailing the Company’s fourth quarter 2019 financial, sales and underwriting results are made available on http://www.StateAuto.com/STFC prior to the conference call.

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

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31

 

Year ended December 31

 

 

2019

 

2018

 

2019

 

2018

Net written premiums

 

$

323.6

 

 

$

297.6

 

 

$

1,318.1

 

 

$

1,210.3

 

 

 

 

 

 

 

 

 

 

Earned premiums

 

323.0

 

 

308.8

 

 

1,253.0

 

 

1,238.0

 

Net investment income

 

20.0

 

 

22.7

 

 

80.4

 

 

84.9

 

Net investment gain (loss)

 

24.0

 

 

(67.9

)

 

74.2

 

 

(49.7

)

Other income from affiliates

 

0.8

 

 

0.8

 

 

2.4

 

 

2.6

 

Total revenue

 

367.8

 

 

264.4

 

 

1,410.0

 

 

1,275.8

 

 

 

 

 

 

 

 

 

 

Income (loss) before federal income taxes

 

40.3

 

 

(32.5

)

 

107.0

 

 

12.9

 

 

 

 

 

 

 

 

 

 

Federal income tax expense (benefit)

 

7.6

 

 

(8.0

)

 

19.6

 

 

0.1

 

Net income (loss)

 

$

32.7

 

 

$

(24.5

)

 

$

87.4

 

 

$

12.8

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

– basic

 

$

0.75

 

 

$

(0.57

)

 

$

2.01

 

 

$

0.30

 

– diluted

 

$

0.72

 

 

$

(0.57

)

 

$

1.96

 

 

$

0.29

 

Earnings (loss) per share from operations (A):

 

 

 

 

 

 

 

 

– basic

 

$

0.31

 

 

$

0.68

 

 

$

0.66

 

 

$

1.21

 

– diluted

 

$

0.29

 

 

$

0.67

 

 

$

0.63

 

 

$

1.20

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

– basic

 

43.6

 

 

43.1

 

 

43.4

 

 

42.9

 

– diluted

 

44.0

 

 

43.1

 

 

44.0

 

 

43.4

 

Return on average equity (LTM)

 

9.8

%

 

1.5

%

 

 

 

 

Book value per share

 

$

22.01

 

 

$

18.91

 

 

 

 

 

Dividends paid per share

 

$

0.10

 

 

$

0.10

 

 

$

0.40

 

 

$

0.40

 

Total shares outstanding

 

43.6

 

 

43.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP ratios:

 

 

 

 

 

 

 

 

Cat loss and ALAE ratio

 

7.7

 

 

2.6

 

 

8.0

 

 

5.8

 

Non-cat loss and ALAE ratio

 

56.5

 

 

54.2

 

 

59.4

 

 

58.5

 

Loss and LAE ratio

 

64.2

 

 

56.8

 

 

67.4

 

 

64.3

 

Expense ratio

 

36.2

 

 

37.8

 

 

35.3

 

 

36.3

 

Combined ratio

 

100.4

 

 

94.6

 

 

102.7

 

 

100.6

 

 

 

 

 

 

 

 

 

 

(A)Reconciliation of non-GAAP financial measure:

 

 

 

 

 

 

 

 

Net income from operations

 

 

 

 

 

 

 

 

Net income (loss)

 

$

32.7

 

 

$

(24.5

)

 

$

87.4

 

 

$

12.8

 

Net investment gain (loss), net of tax

 

19.0

 

 

(53.6

)

 

58.7

 

 

(39.3

)

Net income from operations

 

$

13.7

 

 

$

29.1

 

 

$

28.7

 

 

$

52.1

 

 

Condensed Consolidated Balance Sheets

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

 

 

 

 

(unaudited)

 

December 31

 

December 31

 

 

2019

 

2018

ASSETS

 

 

 

 

Fixed maturities, available-for-sale, at fair value (amortized cost $2,080.0 and $2,188.2, respectively)

 

$

2,127.9

 

 

$

2,159.5

 

Equity securities

 

395.2

 

 

315.0

 

Other invested assets

 

69.7

 

 

48.8

 

Other invested assets, at cost

 

6.5

 

 

5.6

 

Notes receivable from affiliate

 

70.0

 

 

70.0

 

Total investments

 

2,669.3

 

 

2,598.9

 

 

 

 

 

 

Cash and cash equivalents

 

78.0

 

 

59.8

 

Accrued investment income and other assets

 

31.7

 

 

32.4

 

Deferred policy acquisition costs

 

111.1

 

 

101.9

 

Reinsurance recoverable on losses and loss expenses payable

 

13.6

 

 

5.5

 

Prepaid reinsurance premiums

 

7.5

 

 

6.6

 

Due from affiliate

 

21.5

 

 

 

Current federal income taxes

 

6.3

 

 

5.9

 

Net deferred federal income taxes

 

42.2

 

 

77.8

 

Property and equipment, net

 

4.2

 

 

7.1

 

Total assets

 

$

2,985.4

 

 

$

2,895.9

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Losses and loss expenses payable

 

$

1,066.5

 

 

$

1,146.8

 

Unearned premiums

 

649.2

 

 

584.2

 

Notes payable (affiliates $15.2 and $15.2, respectively)

 

122.0

 

 

122.0

 

Pension and postretirement benefits

 

72.9

 

 

83.0

 

Due to affiliate

 

 

 

22.4

 

Other liabilities

 

114.9

 

 

119.0

 

Total liabilities

 

2,025.5

 

 

2,077.4

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Common stock, without par value. Authorized 100.0 shares; 50.4 and 50.0 shares issued, respectively, at stated value of $2.50 per share

 

125.9

 

 

125.0

 

Treasury stock, 6.9 and 6.8 shares, respectively, at cost

 

(117.5

)

 

(117.0

)

Additional paid-in capital

 

206.7

 

 

194.2

 

Accumulated other comprehensive loss

 

(37.9

)

 

(96.4

)

Retained earnings

 

782.7

 

 

712.7

 

Total stockholders’ equity

 

959.9

 

 

818.5

 

Total liabilities and stockholders’ equity

 

$

2,985.4

 

 

$

2,895.9

 

 

 

 

 

 

Condensed Consolidated Statements of Income

($ in millions, except per share amounts)

 

 

 

 

 

 

 

 

(unaudited)

 

Three months ended December 31

 

Year ended December 31

 

 

2019

 

2018

 

2019

 

2018

Earned premiums

 

$

323.0

 

 

$

308.8

 

 

$

1,253.0

 

 

$

1,238.0

 

Net investment income

 

20.0

 

 

22.7

 

 

80.4

 

 

84.9

 

Net investment gain (loss)

 

24.0

 

 

(67.9

)

 

74.2

 

 

(49.7

)

Other income from affiliates

 

0.8

 

 

0.8

 

 

2.4

 

 

2.6

 

Total revenues

 

367.8

 

 

264.4

 

 

1,410.0

 

 

1,275.8

 

 

 

 

 

 

 

 

 

 

Losses and loss expenses

 

207.2

 

 

175.3

 

 

844.8

 

 

796.4

 

Acquisition and operating expenses

 

116.8

 

 

116.8

 

 

442.0

 

 

449.8

 

Interest expense

 

1.2

 

 

1.2

 

 

4.9

 

 

5.7

 

Other expenses

 

2.3

 

 

3.6

 

 

11.3

 

 

11.0

 

Total expenses

 

327.5

 

 

296.9

 

 

1,303.0

 

 

1,262.9

 

 

 

 

 

 

 

 

 

 

Income (loss) before federal income taxes

 

40.3

 

 

(32.5

)

 

107.0

 

 

12.9

 

Federal income tax expense (benefit):

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

(0.4

)

 

(1.1

)

Deferred

 

7.6

 

 

(8.0

)

 

20.0

 

 

1.2

 

Federal income tax expense (benefit)

 

7.6

 

 

(8.0

)

 

19.6

 

 

0.1

 

Net income (loss)

 

$

32.7

 

 

$

(24.5

)

 

$

87.4

 

 

$

12.8

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.75

 

 

$

(0.57

)

 

$

2.01

 

 

$

0.30

 

Diluted

 

$

0.72

 

 

$

(0.57

)

 

$

1.96

 

 

$

0.29

 

Dividends paid per common share

 

$

0.10

 

 

$

0.10

 

 

$

0.40

 

 

$

0.40

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income

($ in millions)

 

 

 

 

 

 

 

(unaudited)

Three months ended December 31

 

Year ended December 31

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

32.7

 

 

$

(24.5

)

 

$

87.4

 

 

$

12.8

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Unrealized holding (loss) gain

(11.6

)

 

15.2

 

 

80.2

 

 

(46.4

)

Reclassification adjustments for gains realized in net income

(0.7

)

 

(0.3

)

 

(3.5

)

 

(2.0

)

Income tax benefit (expense)

2.6

 

 

(3.2

)

 

(16.1

)

 

10.1

 

Total net unrealized holding (loss) gain on available- for-sale investments

(9.7

)

 

11.7

 

 

60.6

 

 

(38.3

)

Net unrecognized benefit plan obligations:

 

 

 

 

 

 

 

Net actuarial loss arising during the period

(5.9

)

 

(4.3

)

 

(5.9

)

 

(4.3

)

Reclassification adjustments for amortization to statement of income:

 

 

 

 

 

 

 

Prior service credit

(1.5

)

 

(1.5

)

 

(6.3

)

 

(6.3

)

Net actuarial loss

2.4

 

 

3.3

 

 

9.6

 

 

13.2

 

Income tax expense (benefit)

1.0

 

 

0.5

 

 

0.5

 

 

(0.6

)

Total net unrecognized benefit plan obligations

(4.0

)

 

(2.0

)

 

(2.1

)

 

2.0

 

Other comprehensive (loss) income

(13.7

)

 

9.7

 

 

58.5

 

 

(36.3

)

Comprehensive income (loss)

$

19.0

 

 

$

(14.8

)

 

$

145.9

 

 

$

(23.5

)

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Stockholders’ Equity

($ and shares in millions)

 

 

 

 

(unaudited)

 

Year Ended

 

Year Ended

 

 

December 31

 

December 31

 

 

2019

 

2018

Common shares:

 

 

 

 

Balance at beginning of year

 

50.0

 

 

49.2

 

Issuance of shares

 

0.4

 

 

0.8

 

Balance at end of year

 

50.4

 

 

50.0

 

 

 

 

 

 

Treasury shares:

 

 

 

 

Balance at beginning of year

 

(6.8

)

 

(6.8

)

Issuance of shares

 

(0.1

)

 

 

Balance at beginning of year and year ended

 

(6.9

)

 

(6.8

)

 

 

 

 

 

Common stock:

 

 

 

 

Balance at beginning of year

 

$

125.0

 

 

$

123.0

 

Issuance of shares

 

0.9

 

 

2.0

 

Balance at end of year

 

125.9

 

 

125.0

 

 

 

 

 

 

Treasury stock:

 

 

 

 

Balance at beginning of year

 

$

(117.0

)

 

$

(116.8

)

Shares acquired on stock award exercises

 

(0.5

)

 

(0.2

)

Balance at end of year

 

(117.5

)

 

(117.0

)

 

 

 

 

 

Additional paid-in capital:

 

 

 

 

Balance at beginning of year

 

$

194.2

 

 

$

171.8

 

Issuance of common stock

 

5.1

 

 

13.3

 

Stock awards granted

 

7.4

 

 

9.1

 

Balance at end of year

 

206.7

 

 

194.2

 

 

 

 

 

 

Accumulated other comprehensive loss:

 

 

 

 

Balance at beginning of 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 gain (loss) on available-for-sale investments, net of tax

 

60.6

 

 

(38.3

)

Change in unrecognized benefit plan obligations, net of tax

 

(2.1

)

 

2.0

 

Balance at end of year

 

(37.9

)

 

(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

 

87.4

 

 

12.8

 

Dividends declared (affiliates $10.4 and $10.4, respectively)

 

(17.4

)

 

(17.2

)

Balance at end of year

 

782.7

 

 

712.7

 

 

 

 

 

 

Total stockholders’ equity at end of year

 

$

959.9

 

 

$

818.5

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flow

($ millions)

 

 

 

 

(unaudited)

 

 

 

 

Year ended December 31

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

Net income

 

$

87.4

 

 

$

12.8

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

Depreciation and amortization, net

 

9.4

 

 

8.9

 

Share-based compensation

 

6.1

 

 

11.1

 

Net investment (gain) loss

 

(74.2

)

 

49.7

 

Changes in operating assets and liabilities:

 

 

 

 

Deferred policy acquisition costs

 

(9.2

)

 

8.4

 

Accrued investment income and other assets

 

0.7

 

 

3.9

 

Postretirement and pension benefits

 

(14.5

)

 

(16.9

)

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

 

(9.0

)

 

(2.6

)

Other liabilities and due to/from affiliate, net

 

(44.9

)

 

47.6

 

Losses and loss expenses payable

 

(80.3

)

 

(108.8

)

Unearned premiums

 

65.0

 

 

(27.6

)

Deferred tax expense on share-based awards

 

(0.9

)

 

0.9

 

Federal income taxes

 

20.5

 

 

(0.8

)

Net cash used in operating activities

 

(43.9

)

 

(13.4

)

Cash flows from investing activities:

 

 

 

 

Purchases of fixed maturities available-for-sale

 

(592.6

)

 

(349.6

)

Purchases of equity securities available-for-sale

 

(63.4

)

 

(91.4

)

Purchases of other invested assets

 

(13.3

)

 

(1.8

)

Maturities, calls and principal reductions of fixed maturities available-for-sale

 

386.3

 

 

229.8

 

Sales of fixed maturities available-for-sale

 

308.8

 

 

98.0

 

Sales of equity securities available-for-sale

 

45.4

 

 

97.8

 

Sales of other invested assets available-for-sale

 

1.3

 

 

1.2

 

Net sales of property and equipment

 

1.6

 

 

 

Net cash provided by (used in) investing activities

 

74.1

 

 

(16.0

)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of common stock

 

5.9

 

 

15.4

 

Payments to acquire treasury shares

 

(0.5

)

 

(0.2

)

Payment of dividends

 

(17.4

)

 

(17.1

)

Payment of credit facility issue costs

 

 

 

(0.4

)

Net cash used in financing activities

 

(12.0

)

 

(2.3

)

Net increase (decrease) in cash and cash equivalents

 

18.2

 

 

(31.7

)

Cash and cash equivalents at beginning of period

 

59.8

 

 

91.5

 

Cash and cash equivalents at end of period

 

$

78.0

 

 

$

59.8

 

Supplemental disclosures:

 

 

 

 

Interest paid (affiliates $1.1 and $1.0, respectively)

 

$

4.8

 

 

$

5.7

 

 

 

 

 

 

Net Investment Income

($ in millions)

 

 

 

 

 

 

 

 

 

 

unaudited

 

12/31/2018

 

3/31/2019

 

6/30/2019

 

9/30/2019

 

12/31/2019

Quarter to Date

 

 

 

 

 

 

 

 

 

 

Gross investment income:

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

15.0

 

 

$

15.4

 

 

$

14.7

 

 

$

14.4

 

 

$

13.9

 

TIPS

 

0.9

 

 

(0.3

)

 

2.6

 

 

0.9

 

 

0.7

 

Total fixed maturities

 

15.9

 

 

15.1

 

 

17.3

 

 

15.3

 

 

14.6

 

Equity securities

 

4.8

 

 

2.8

 

 

3.1

 

 

3.0

 

 

4.3

 

Other

 

2.0

 

 

1.7

 

 

1.4

 

 

1.1

 

 

1.3

 

Total gross investment income

 

22.7

 

 

19.6

 

 

21.8

 

 

19.4

 

 

20.2

 

Less: Investment expenses

 

 

 

0.2

 

 

0.1

 

 

0.1

 

 

0.2

 

Net investment income

 

$

22.7

 

 

$

19.4

 

 

$

21.7

 

 

$

19.3

 

 

$

20.0

 

 

 

 

 

 

 

 

 

 

 

 

Year to Date

 

 

 

 

 

 

 

 

 

 

Gross investment income:

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

60.0

 

 

$

15.4

 

 

$

30.1

 

 

$

44.5

 

 

$

58.4

 

TIPS

 

5.3

 

 

(0.3

)

 

2.3

 

 

3.2

 

 

3.9

 

Total fixed maturities

 

65.3

 

 

15.1

 

 

32.4

 

 

47.7

 

 

62.3

 

Equity securities

 

13.4

 

 

2.8

 

 

5.9

 

 

8.9

 

 

13.2

 

Other

 

7.2

 

 

1.7

 

 

3.1

 

 

4.2

 

 

5.5

 

Total gross investment income

 

85.9

 

 

19.6

 

 

41.4

 

 

60.8

 

 

81.0

 

Less: Investment expenses

 

1.0

 

 

0.2

 

 

0.3

 

 

0.4

 

 

0.6

 

Net investment income

 

$

84.9

 

 

$

19.4

 

 

$

41.1

 

 

$

60.4

 

 

$

80.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2018

 

3/31/2019

 

6/30/2019

 

9/30/2019

 

12/31/2019

TIPS, fair value

 

$

142.3

 

 

$

147.0

 

 

$

145.2

 

 

$

135.3

 

 

$

135.6

 

TIPS, book value

 

$

141.2

 

 

$

140.5

 

 

$

137.4

 

 

$

125.9

 

 

$

126.2

 

 

 

 

 

 

 

 

 

 

 

 

Net Investment Gain (Loss)

($ millions)

Three months ended

December 31

 

Twelve months ended

December 31

 

2019

 

2018

 

2019

 

2018

Investment gain (loss), net:

 

 

 

 

 

 

 

Fixed maturities:

 

 

 

 

 

 

 

Realized gains on sales of securities

$

0.7

 

 

$

0.3

 

 

$

3.5

 

 

$

2.0

 

Net gains on fixed maturities

0.7

 

 

0.3

 

 

3.5

 

 

2.0

 

Equity securities:

 

 

 

 

 

 

 

Realized gains (losses) on sales of securities, net

0.7

 

 

0.3

 

 

(1.8

)

 

5.7

 

Unrealized gain (loss) on securities still held, net

17.5

 

 

(62.5

)

 

63.9

 

 

(49.7

)

Net gain (loss) on equity securities

18.2

 

 

(62.2

)

 

62.1

 

 

(44.0

)

Other invested assets:

 

 

 

 

 

 

 

Unrealized gain (loss) on securities still held, net

5.1

 

 

(6.0

)

 

9.9

 

 

(7.7

)

Net gain (loss) on other invested assets

5.1

 

 

(6.0

)

 

9.9

 

 

(7.7

)

Other net realized loss

 

 

 

 

(1.3

)

 

 

Net gain (loss) on investments

$

24.0

 

 

$

(67.9

)

 

$

74.2

 

 

$

(49.7

)

 

 

 

 

 

 

 

 

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:

 

 

 

 

 

 

 

December 31

 

 

2019

 

2018

Deferred tax assets:

 

 

 

 

Unearned premiums not currently deductible

 

$

27.0

 

 

$

24.3

 

Losses and loss expenses payable discounting

 

10.6

 

 

11.2

 

Postretirement and pension benefits

 

20.0

 

 

21.4

 

Investments

 

 

 

8.9

 

Other liabilities

 

13.4

 

 

14.8

 

Net operating loss carryforward

 

12.1

 

 

15.1

 

Tax credit carryforwards

 

2.5

 

 

2.7

 

Other

 

1.1

 

 

0.8

 

Total deferred tax assets

 

86.7

 

 

99.2

 

Deferred tax liabilities:

 

 

 

 

Deferral of policy acquisition costs

 

23.3

 

 

21.4

 

Investments

 

21.2

 

 

 

Total deferred tax liabilities

 

44.5

 

 

21.4

 

Net deferred federal income taxes

 

$

42.2

 

 

$

77.8

 

 

Contacts

Media contact: Kyle Anderson, [email protected], 614-917-5497

Investor contact: Natalie Schoolcraft, [email protected], 614-917-4341

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