State Auto Financial Reports Record Fourth Quarter Results.* Net Income Increased by 52% to $44.9 Million * Record Quarterly Per Share Earnings of $1.08 * Quarterly GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Combined Ratio of 83.5 * Annual Return on Equity of 15.1% COLUMBUS, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. -- State Auto Financial Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :STFC STFC Swindon Town Football Club STFC Self Test Feature Check STFC Shrewsbury Town Football Club STFC Star Trek: First Contact STFC Saskatoon Track and Field Club (Saskatoon, SK, Canada) ) today reported record fourth quarter net income of $44.9 million, or $1.08 per diluted share, versus $29.5 million or $0.71 per diluted share for the same period in 2005. Net income from operations(a) per diluted share for the fourth quarter of 2006 was $1.03, versus $0.73 for the same period in 2005. STFC's GAAP combined ratio for the fourth quarter of 2006 was 83.5, versus 90.5 for the fourth quarter of 2005. Catastrophe losses accounted for 0.6 points of the total 47.5 loss ratio points or $1.4 million in the fourth quarter 2006, compared to 7.6 points of the total 58.2 loss ratio points, or $19.9 million for the same period in 2005. STFC's fourth quarter 2006 revenue was $281.0 million, versus $280.9 million for the same period in 2005. Revenue for the year of 2006 was $1.12 billion, versus $1.14 billion for 2005. For the full year of 2006, net income was $120.4 million, or $2.90 per diluted share, compared to $125.9 million or $3.06 per diluted share, for 2005. The GAAP combined ratio for 2006 was 91.4, as compared to 90.1 for 2005. Return on stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was a healthy 15.1% for 2006. STFC's book value per share closed the year at $20.32, after recognizing a reduction to stockholders' equity of $63.9 million or $1.56 per share due to adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. "In the face of intensifying competition and softer pricing, the year proved to be a challenging and rewarding one for State Auto Financial. This quarter's record results were outstanding, validating our commitment to disciplined underwriting and capping off another strong year of profitability for STFC. We believe our history of stable and consistent performance provides confidence to our shareholders and policyholders that we can meet industry challenges head-on and succeed," said STFC Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Bob Restrepo. "2007 is expected to be a year of positive transition for State Auto. We are developing and deploying several product and technology enhancements that should provide our independent agency distribution force with the tools necessary to compete for additional profitable business, in both personal and business insurance segments," added Restrepo. 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 third of all NASDAQ-listed companies. The company markets its personal and business insurance products exclusively through independent insurance agencies in 28 states and is proud to be a Trusted Choice[R] company partner. The company was named Forbes Magazine's "Best Managed Insurance Company in America" for 2006 and is one of just 3 percent of publicly listed companies to earn the Mergent Dividend Achiever Award for having increased its dividends for ten or more years in succession. The State Auto Insurance Companies are rated A+ (Superior) by the A.M. Best Company. Additional information on State Auto Financial Corporation and the State Auto Insurance Companies can be found at www.STFC.com and www.StateAuto.com. (a)Net income from operations, a non-GAAP financial measure which management believes is informative to Company management and investors, differs from GAAP net income only by the exclusion of realized capital gains or losses capital gains or losses n. particularly when calculating the tax liability of an individual or business, this is the difference between the original cost plus the cost of capital improvements, excluding maintenance, called "basis" and the sales price. , net of applicable taxes, on investment activity for the periods being reported. For STFC, this amounts to $0.05 for the quarter and $0.09 for the full year 2006 compared to ($0.02) and $0.09 for the same periods in 2005. STFC has scheduled a conference call with interested investors for Thursday, February 15, 10:00 a.m. Eastern Time to discuss the company's fourth quarter 2006 performance. Live and archived broadcasts of the call can be accessed via links on www.STFC.com. A replay of the call can be heard beginning at noon February 15, by calling 1-866-469-7799. Supplemental schedules detailing the company's fourth quarter 2006 financial, sales and underwriting results are made available on www.STFC.com prior to the conference call. Except for historical information, all other information in this news release consists of forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 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 ADJUDICATIONS, Scotch law. Certain proceedings against debtors, by way of actions, before the court of sessions and are of two kinds, special and general. 2.-1. By statute 1672, c. , class action litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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-related events, and other types of catastrophic events. State Auto Financial undertakes no obligation to update or revise any forward-looking statements. [TABLE OMITTED] |
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