|
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|
ý
|
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Ohio
|
|
31-1324304
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
518 East Broad Street, Columbus, Ohio
|
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43215-3976
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated file
¨
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Accelerated filer
ý
|
Non-accelerated filer
¨
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|
Item 1.
|
|
|
|
||
|
||
|
Condensed consolidated statements of comprehensive income –
Three months ended March 31, 2014 and 2013
|
|
|
Condensed consolidated statements of cash flows –
Three months ended March 31, 2014 and 2013
|
|
|
Notes to condensed consolidated financial statements –
March 31, 2014
|
|
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
($ and shares in millions, except per share amounts)
|
March 31, 2014
|
|
December 31, 2013
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value
(amortized cost $1,799.9 and $1,804.0, respectively)
|
$
|
1,840.4
|
|
|
$
|
1,830.1
|
|
Equity securities, available-for-sale, at fair value
(cost $210.4 and $196.6, respectively)
|
274.6
|
|
|
265.3
|
|
||
Other invested assets, available-for-sale, at fair value
(cost $49.6 and $49.5, respectively)
|
83.4
|
|
|
80.9
|
|
||
Other invested assets
|
5.0
|
|
|
5.0
|
|
||
Notes receivable from affiliate
|
70.0
|
|
|
70.0
|
|
||
Total investments
|
2,273.4
|
|
|
2,251.3
|
|
||
Cash and cash equivalents
|
78.3
|
|
|
80.3
|
|
||
Accrued investment income and other assets
|
35.1
|
|
|
33.6
|
|
||
Deferred policy acquisition costs
|
99.7
|
|
|
96.8
|
|
||
Reinsurance recoverable on losses and loss expenses payable
|
9.5
|
|
|
9.1
|
|
||
Prepaid reinsurance premiums
|
4.9
|
|
|
4.7
|
|
||
Current federal income taxes
|
—
|
|
|
0.3
|
|
||
Net deferred federal income taxes
|
7.7
|
|
|
11.9
|
|
||
Property and equipment, at cost
|
8.3
|
|
|
8.4
|
|
||
Total assets
|
$
|
2,516.9
|
|
|
$
|
2,496.4
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Losses and loss expenses payable (affiliates $425.9 and $438.0, respectively)
|
$
|
951.7
|
|
|
$
|
959.9
|
|
Unearned premiums (affiliates $85.4 and $78.4, respectively)
|
493.9
|
|
|
491.0
|
|
||
Notes payable (affiliates $15.5 and $15.5, respectively)
|
100.8
|
|
|
100.8
|
|
||
Postretirement and pension benefits
|
73.1
|
|
|
71.6
|
|
||
Due to affiliate
|
8.3
|
|
|
1.3
|
|
||
Current federal income taxes
|
0.4
|
|
|
—
|
|
||
Other liabilities
|
71.2
|
|
|
86.8
|
|
||
Total liabilities
|
1,699.4
|
|
|
1,711.4
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Class A Preferred stock (nonvoting), without par value. Authorized 2.5 shares; none issued
|
—
|
|
|
—
|
|
||
Class B Preferred stock, without par value. Authorized 2.5 shares; none issued
|
—
|
|
|
—
|
|
||
Common stock, without par value. Authorized 100.0 shares; 47.6 and 47.5 shares issued, respectively, at stated value of $2.50 per share
|
119.0
|
|
|
118.8
|
|
||
Treasury stock, 6.8 and 6.8 shares, respectively, at cost
|
(116.0
|
)
|
|
(115.9
|
)
|
||
Additional paid-in capital
|
138.7
|
|
|
137.5
|
|
||
Accumulated other comprehensive income
|
89.1
|
|
|
80.8
|
|
||
Retained earnings
|
586.7
|
|
|
563.8
|
|
||
Total stockholders’ equity
|
817.5
|
|
|
785.0
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,516.9
|
|
|
$
|
2,496.4
|
|
|
($ in millions, except per share amounts)
|
Three months ended March 31
|
||||||
(unaudited)
|
2014
|
|
2013
|
||||
Earned premiums (ceded to affiliates $215.4 and $210.7, respectively)
|
$
|
262.5
|
|
|
$
|
261.3
|
|
Net investment income (affiliate $1.2 and $1.2, respectively)
|
17.6
|
|
|
16.9
|
|
||
Net realized gains on investments:
|
|
|
|
||||
Total other-than-temporary impairment losses
|
(0.8
|
)
|
|
(0.3
|
)
|
||
Portion of loss recognized in other comprehensive income
|
—
|
|
|
—
|
|
||
Other net realized investment gains
|
11.5
|
|
|
7.0
|
|
||
Total net realized gains on investments
|
10.7
|
|
|
6.7
|
|
||
Other income from affiliates
|
0.5
|
|
|
0.4
|
|
||
Total revenues
|
291.3
|
|
|
285.3
|
|
||
|
|
|
|
||||
Losses and loss expenses (ceded to affiliates $142.2 and $131.8, respectively)
|
171.8
|
|
|
173.0
|
|
||
Acquisition and operating expenses
|
88.5
|
|
|
88.8
|
|
||
Interest expense (affiliates $0.2 and $0.2, respectively)
|
1.3
|
|
|
1.7
|
|
||
Other expenses
|
2.0
|
|
|
1.8
|
|
||
Total expenses
|
263.6
|
|
|
265.3
|
|
||
Income before federal income taxes
|
27.7
|
|
|
20.0
|
|
||
Federal income tax expense
|
0.6
|
|
|
0.3
|
|
||
Net income
|
$
|
27.1
|
|
|
$
|
19.7
|
|
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.67
|
|
|
$
|
0.49
|
|
Diluted
|
$
|
0.66
|
|
|
$
|
0.49
|
|
Dividends paid per common share
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
($ in millions, except per share amounts)
|
Three months ended March 31
|
||||||
(unaudited)
|
2014
|
|
2013
|
||||
Net income
|
$
|
27.1
|
|
|
$
|
19.7
|
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Net unrealized holding gains on investments:
|
|
|
|
||||
Unrealized holding gains arising during the period ended
|
23.0
|
|
|
19.4
|
|
||
Reclassification adjustments for gains realized in net income
|
(10.7
|
)
|
|
(6.7
|
)
|
||
Income tax (expense) benefit
|
(4.2
|
)
|
|
0.3
|
|
||
Total net unrealized holding gains on investments
|
8.1
|
|
|
13.0
|
|
||
Net unrecognized benefit plan obligations:
|
|
|
|
||||
Reclassification adjustments for amortization to statements of income:
|
|
|
|
||||
Prior service benefits
|
(1.4
|
)
|
|
(1.4
|
)
|
||
Net actuarial loss
|
1.6
|
|
|
2.3
|
|
||
Total net unrecognized benefit plan obligations
|
0.2
|
|
|
0.9
|
|
||
Other comprehensive income, net of tax
|
8.3
|
|
|
13.9
|
|
||
Comprehensive income, net of tax
|
$
|
35.4
|
|
|
$
|
33.6
|
|
|
($ in millions)
|
Three months ended March 31
|
||||||
(unaudited)
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
27.1
|
|
|
$
|
19.7
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization, net
|
3.4
|
|
|
4.3
|
|
||
Share-based compensation
|
1.0
|
|
|
1.2
|
|
||
Net realized gains on investments
|
(10.7
|
)
|
|
(6.7
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Deferred policy acquisition costs
|
(2.9
|
)
|
|
(2.8
|
)
|
||
Accrued investment income and other assets
|
(1.5
|
)
|
|
(3.4
|
)
|
||
Postretirement and pension benefits
|
1.7
|
|
|
(1.7
|
)
|
||
Other liabilities and due to/from affiliates, net
|
(10.6
|
)
|
|
(9.0
|
)
|
||
Reinsurance recoverable on losses and loss expenses payable and prepaid reinsurance premiums
|
(0.6
|
)
|
|
1.2
|
|
||
Losses and loss expenses payable
|
(8.2
|
)
|
|
2.1
|
|
||
Unearned premiums
|
2.9
|
|
|
2.8
|
|
||
Federal income taxes
|
0.7
|
|
|
0.3
|
|
||
Net cash provided by operating activities
|
2.3
|
|
|
8.0
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of fixed maturities, available-for-sale
|
(137.2
|
)
|
|
(81.7
|
)
|
||
Purchases of equity securities, available-for-sale
|
(38.0
|
)
|
|
(24.0
|
)
|
||
Purchases of other invested assets
|
(0.4
|
)
|
|
(0.2
|
)
|
||
Maturities, calls and pay downs of fixed maturities, available-for-sale
|
68.9
|
|
|
40.2
|
|
||
Sales of fixed maturities, available-for-sale
|
71.3
|
|
|
38.5
|
|
||
Sales of equity securities, available-for-sale
|
34.6
|
|
|
28.1
|
|
||
Sales of other invested assets
|
0.2
|
|
|
0.2
|
|
||
Net additions of property and equipment
|
—
|
|
|
0.2
|
|
||
Net cash (used in) provided by investing activities
|
(0.6
|
)
|
|
1.3
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
0.6
|
|
|
0.1
|
|
||
Payments to acquire treasury stock
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Payment of dividends
|
(4.2
|
)
|
|
(4.0
|
)
|
||
Net cash used in financing activities
|
(3.7
|
)
|
|
(4.0
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(2.0
|
)
|
|
5.3
|
|
||
Cash and cash equivalents at beginning of period
|
80.3
|
|
|
59.0
|
|
||
Cash and cash equivalents at end of period
|
$
|
78.3
|
|
|
$
|
64.3
|
|
Supplemental disclosures:
|
|
|
|
||||
Interest paid (affiliates $0.2 and $0.2, respectively)
|
$
|
1.3
|
|
|
$
|
0.2
|
|
|
|
($ millions)
|
Cost or amortized cost
|
|
Gross unrealized holding gains
|
|
Gross unrealized holding losses
|
|
Fair value
|
||||||||
March 31, 2014
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
314.3
|
|
|
$
|
15.8
|
|
|
$
|
(5.0
|
)
|
|
$
|
325.1
|
|
Obligations of states and political subdivisions
|
691.4
|
|
|
24.8
|
|
|
(8.2
|
)
|
|
708.0
|
|
||||
Corporate securities
|
355.7
|
|
|
11.9
|
|
|
(4.9
|
)
|
|
362.7
|
|
||||
U.S. government agencies residential mortgage-backed securities
|
438.5
|
|
|
10.2
|
|
|
(4.1
|
)
|
|
444.6
|
|
||||
Total fixed maturities
|
1,799.9
|
|
|
62.7
|
|
|
(22.2
|
)
|
|
1,840.4
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
163.0
|
|
|
44.9
|
|
|
—
|
|
|
207.9
|
|
||||
Small-cap securities
|
47.4
|
|
|
19.3
|
|
|
—
|
|
|
66.7
|
|
||||
Total equity securities
|
210.4
|
|
|
64.2
|
|
|
—
|
|
|
274.6
|
|
||||
Other invested assets
|
49.6
|
|
|
33.8
|
|
|
—
|
|
|
83.4
|
|
||||
Total available-for-sale securities
|
$
|
2,059.9
|
|
|
$
|
160.7
|
|
|
$
|
(22.2
|
)
|
|
$
|
2,198.4
|
|
|
|
|
|
|
|
|
|
||||||||
($ millions)
|
Cost or amortized cost
|
|
Gross unrealized holding gains
|
|
Gross unrealized holding losses
|
|
Fair value
|
||||||||
December 31, 2013
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
345.5
|
|
|
$
|
13.4
|
|
|
$
|
(6.5
|
)
|
|
$
|
352.4
|
|
Obligations of states and political subdivisions
|
765.3
|
|
|
25.8
|
|
|
(16.9
|
)
|
|
774.2
|
|
||||
Corporate securities
|
345.0
|
|
|
11.4
|
|
|
(6.7
|
)
|
|
349.7
|
|
||||
U.S. government agencies residential mortgage-backed securities
|
348.2
|
|
|
9.7
|
|
|
(4.1
|
)
|
|
353.8
|
|
||||
Total fixed maturities
|
1,804.0
|
|
|
60.3
|
|
|
(34.2
|
)
|
|
1,830.1
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
148.2
|
|
|
46.5
|
|
|
(0.3
|
)
|
|
194.4
|
|
||||
Small-cap securities
|
48.4
|
|
|
22.5
|
|
|
—
|
|
|
70.9
|
|
||||
Total equity securities
|
196.6
|
|
|
69.0
|
|
|
(0.3
|
)
|
|
265.3
|
|
||||
Other invested assets
|
49.5
|
|
|
31.4
|
|
|
—
|
|
|
80.9
|
|
||||
Total available-for-sale securities
|
$
|
2,050.1
|
|
|
$
|
160.7
|
|
|
$
|
(34.5
|
)
|
|
$
|
2,176.3
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||||||||
($ millions, except # of positions)
|
Fair value
|
|
Unrealized losses
|
|
Number of positions
|
|
Fair value
|
|
Unrealized losses
|
|
Number of positions
|
|
Fair value
|
|
Unrealized losses
|
|
Number of positions
|
|||||||||||||
March 31, 2014
|
||||||||||||||||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
77.1
|
|
|
$
|
(5.0
|
)
|
|
24
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
77.1
|
|
|
$
|
(5.0
|
)
|
|
24
|
Obligations of states and political subdivisions
|
178.2
|
|
|
(5.0
|
)
|
|
60
|
|
64.0
|
|
|
(3.2
|
)
|
|
21
|
|
|
242.2
|
|
|
(8.2
|
)
|
|
81
|
||||||
Corporate securities
|
91.0
|
|
|
(2.2
|
)
|
|
18
|
|
42.6
|
|
|
(2.7
|
)
|
|
9
|
|
|
133.6
|
|
|
(4.9
|
)
|
|
27
|
||||||
U.S. government agencies residential mortgage-backed securities
|
187.4
|
|
|
(3.4
|
)
|
|
37
|
|
14.6
|
|
|
(0.7
|
)
|
|
8
|
|
|
202.0
|
|
|
(4.1
|
)
|
|
45
|
||||||
Total fixed maturities
|
533.7
|
|
|
(15.6
|
)
|
|
139
|
|
121.2
|
|
|
(6.6
|
)
|
|
38
|
|
|
654.9
|
|
|
(22.2
|
)
|
|
177
|
||||||
Total temporarily impaired securities
|
$
|
533.7
|
|
|
$
|
(15.6
|
)
|
|
139
|
|
$
|
121.2
|
|
|
$
|
(6.6
|
)
|
|
38
|
|
|
$
|
654.9
|
|
|
$
|
(22.2
|
)
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||||||||
($ millions, except # of positions)
|
Fair value
|
|
Unrealized losses
|
|
Number of positions
|
|
Fair value
|
|
Unrealized losses
|
|
Number of positions
|
|
Fair value
|
|
Unrealized losses
|
|
Number of positions
|
|||||||||||||
December 31, 2013
|
||||||||||||||||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
109.6
|
|
|
$
|
(6.5
|
)
|
|
29
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
109.6
|
|
|
$
|
(6.5
|
)
|
|
29
|
Obligations of states and political subdivisions
|
206.4
|
|
|
(14.7
|
)
|
|
76
|
|
25.6
|
|
|
(2.2
|
)
|
|
7
|
|
|
232.0
|
|
|
(16.9
|
)
|
|
83
|
||||||
Corporate securities
|
105.6
|
|
|
(3.2
|
)
|
|
22
|
|
40.9
|
|
|
(3.5
|
)
|
|
8
|
|
|
146.5
|
|
|
(6.7
|
)
|
|
30
|
||||||
U.S. government agencies residential mortgage-backed securities
|
103.6
|
|
|
(3.3
|
)
|
|
25
|
|
19.3
|
|
|
(0.8
|
)
|
|
10
|
|
|
122.9
|
|
|
(4.1
|
)
|
|
35
|
||||||
Total fixed maturities
|
525.2
|
|
|
(27.7
|
)
|
|
152
|
|
85.8
|
|
|
(6.5
|
)
|
|
25
|
|
|
611.0
|
|
|
(34.2
|
)
|
|
177
|
||||||
Large-cap equity securities
|
5.3
|
|
|
(0.3
|
)
|
|
2
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
(0.3
|
)
|
|
2
|
||||||
Total temporarily impaired securities
|
$
|
530.5
|
|
|
$
|
(28.0
|
)
|
|
154
|
|
$
|
85.8
|
|
|
$
|
(6.5
|
)
|
|
25
|
|
|
$
|
616.3
|
|
|
$
|
(34.5
|
)
|
|
179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
Equity securities:
|
|
|
|
||||
Large-cap securities
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
Small-cap securities
|
(0.6
|
)
|
|
(0.3
|
)
|
||
Total other-than-temporary impairments
|
$
|
(0.8
|
)
|
|
$
|
(0.3
|
)
|
|
|
|
|
|
($ millions)
|
Amortized cost
|
|
Fair
value
|
||||
Due in 1 year or less
|
$
|
54.8
|
|
|
$
|
55.5
|
|
Due after 1 year through 5 years
|
376.2
|
|
|
392.9
|
|
||
Due after 5 years through 10 years
|
359.7
|
|
|
376.4
|
|
||
Due after 10 years
|
570.7
|
|
|
571.0
|
|
||
U.S. government agencies residential mortgage-backed securities
|
438.5
|
|
|
444.6
|
|
||
Total
|
$
|
1,799.9
|
|
|
$
|
1,840.4
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
Fixed maturities
|
$
|
15.4
|
|
|
$
|
14.8
|
|
Equity securities
|
1.4
|
|
|
1.2
|
|
||
Cash and cash equivalents, and other
|
1.3
|
|
|
1.4
|
|
||
Investment income
|
18.1
|
|
|
17.4
|
|
||
Investment expenses
|
0.5
|
|
|
0.5
|
|
||
Net investment income
|
$
|
17.6
|
|
|
$
|
16.9
|
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
Realized gains:
|
|
|
|
||||
Fixed maturities
|
$
|
2.1
|
|
|
$
|
0.5
|
|
Equity securities
|
9.4
|
|
|
6.6
|
|
||
Other invested assets
|
0.1
|
|
|
—
|
|
||
Total realized gains
|
11.6
|
|
|
7.1
|
|
||
Realized losses:
|
|
|
|
||||
Equity securities:
|
|
|
|
||||
Sales
|
(0.1
|
)
|
|
(0.1
|
)
|
||
OTTI
|
(0.8
|
)
|
|
(0.3
|
)
|
||
Total realized losses
|
(0.9
|
)
|
|
(0.4
|
)
|
||
Net realized gains on investments
|
$
|
10.7
|
|
|
$
|
6.7
|
|
Change in unrealized holding gains (losses), net of tax:
|
|
|
|
||||
Fixed maturities
|
$
|
14.4
|
|
|
$
|
(9.2
|
)
|
Equity securities
|
(4.5
|
)
|
|
18.3
|
|
||
Other invested assets
|
2.4
|
|
|
3.6
|
|
||
Deferred federal income tax liability
|
(4.3
|
)
|
|
(4.5
|
)
|
||
Valuation allowance
|
0.1
|
|
|
4.8
|
|
||
Change in net unrealized holding gains, net of tax
|
$
|
8.1
|
|
|
$
|
13.0
|
|
|
|
|
|
|
•
|
Level 1 includes observable inputs which reflect quoted prices for identical assets or liabilities in active markets at the measurement date.
|
•
|
Level 2 includes observable inputs for assets or liabilities other than quoted prices included in Level 1, and it includes valuation techniques which use prices for similar assets and liabilities.
|
•
|
Level 3 includes unobservable inputs which reflect the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).
|
|
|
($ millions)
|
Total
|
|
Quoted prices in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs (Level 2)
|
|
Significant unobservable inputs (Level 3)
|
||||||||
March 31, 2014
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
325.1
|
|
|
$
|
—
|
|
|
$
|
325.1
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
708.0
|
|
|
—
|
|
|
708.0
|
|
|
—
|
|
||||
Corporate securities
|
362.7
|
|
|
—
|
|
|
353.6
|
|
|
9.1
|
|
||||
U.S. government agencies residential mortgage-backed securities
|
444.6
|
|
|
—
|
|
|
444.6
|
|
|
—
|
|
||||
Total fixed maturities
|
1,840.4
|
|
|
—
|
|
|
1,831.3
|
|
|
9.1
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
207.9
|
|
|
207.9
|
|
|
—
|
|
|
—
|
|
||||
Small-cap securities
|
66.7
|
|
|
66.7
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
274.6
|
|
|
274.6
|
|
|
—
|
|
|
—
|
|
||||
Other invested assets
|
83.4
|
|
|
6.9
|
|
|
76.5
|
|
|
—
|
|
||||
Total available-for-sale investments
|
$
|
2,198.4
|
|
|
$
|
281.5
|
|
|
$
|
1,907.8
|
|
|
$
|
9.1
|
|
|
|
|
|
|
|
|
|
||||||||
($ millions)
|
Total
|
|
Quoted prices in active markets for identical assets (Level 1)
|
|
Significant other observable inputs (Level 2)
|
|
Significant unobservable inputs (Level 3)
|
||||||||
December 31, 2013
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
352.4
|
|
|
$
|
—
|
|
|
$
|
352.4
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
774.2
|
|
|
—
|
|
|
774.2
|
|
|
—
|
|
||||
Corporate securities
|
349.7
|
|
|
—
|
|
|
340.8
|
|
|
8.9
|
|
||||
U.S. government agencies residential mortgage-backed securities
|
353.8
|
|
|
—
|
|
|
353.8
|
|
|
—
|
|
||||
Total fixed maturities
|
1,830.1
|
|
|
—
|
|
|
1,821.2
|
|
|
8.9
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
194.4
|
|
|
194.4
|
|
|
—
|
|
|
—
|
|
||||
Small-cap securities
|
70.9
|
|
|
70.9
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
265.3
|
|
|
265.3
|
|
|
—
|
|
|
—
|
|
||||
Other invested assets
|
80.9
|
|
|
6.7
|
|
|
74.2
|
|
|
—
|
|
||||
Total available-for-sale investments
|
$
|
2,176.3
|
|
|
$
|
272.0
|
|
|
$
|
1,895.4
|
|
|
$
|
8.9
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Fixed maturities
|
||
Balance at January 1, 2014
|
$
|
8.9
|
|
Total realized gains (losses) – included in earnings
|
—
|
|
|
Total unrealized gains – included in other comprehensive income
|
0.1
|
|
|
Purchases
|
0.1
|
|
|
Sales
|
—
|
|
|
Transfers into Level 3
|
—
|
|
|
Transfers out of Level 3
|
—
|
|
|
Balance at March 31, 2014
|
$
|
9.1
|
|
|
|
||
($ millions)
|
Fixed maturities
|
||
Balance at January 1, 2013
|
$
|
8.5
|
|
Total realized (losses) gains – included in earnings
|
—
|
|
|
Total unrealized gains – included in other comprehensive income
|
0.2
|
|
|
Purchases
|
0.2
|
|
|
Sales
|
—
|
|
|
Transfers into Level 3
|
—
|
|
|
Transfers out of Level 3
|
—
|
|
|
Balance at December 31, 2013
|
$
|
8.9
|
|
|
|
|
($ millions, except interest rates)
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||
|
Carrying value
|
|
Fair value
|
|
Interest rate
|
|
Carrying value
|
|
Fair
value
|
|
Interest rate
|
||||||||||
Notes receivable from affiliate
|
$
|
70.0
|
|
|
$
|
75.8
|
|
|
7.00
|
%
|
|
$
|
70.0
|
|
|
$
|
74.6
|
|
|
7.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except interest rates)
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||
|
Carrying value
|
|
Fair Value
|
|
Interest rate
|
|
Carrying value
|
|
Fair value
|
|
Interest rate
|
||||||||||
FHLB Loan due 2033: issued $85.0, July 2013 with fixed interest
|
$
|
85.3
|
|
|
$
|
86.5
|
|
|
5.03
|
%
|
|
$
|
85.3
|
|
|
$
|
85.7
|
|
|
5.03
|
%
|
Affiliate Subordinated Debentures due 2033: issued $15.5, May 2003 with variable interest
|
15.5
|
|
|
15.5
|
|
|
4.44
|
%
|
|
15.5
|
|
|
15.5
|
|
|
4.44
|
%
|
||||
Total notes payable
|
$
|
100.8
|
|
|
$
|
102.0
|
|
|
|
|
$
|
100.8
|
|
|
$
|
101.2
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
|
Premiums earned:
|
|
|
|
||||
|
Assumed from external insurers and reinsurers
|
$
|
1.0
|
|
|
$
|
0.4
|
|
|
Assumed under Pooling Arrangement
|
262.5
|
|
|
261.3
|
|
||
|
Ceded to external insurers and reinsurers
|
(6.0
|
)
|
|
(5.5
|
)
|
||
|
Ceded under Pooling Arrangement
|
(215.4
|
)
|
|
(210.7
|
)
|
||
|
Net assumed premiums earned
|
$
|
42.1
|
|
|
$
|
45.5
|
|
|
Losses and loss expenses incurred:
|
|
|
|
||||
|
Assumed from external insurers and reinsurers
|
$
|
0.7
|
|
|
$
|
(0.2
|
)
|
|
Assumed under Pooling Arrangement
(a)
|
171.8
|
|
|
173.0
|
|
||
|
Ceded to external insurers and reinsurers
|
(2.5
|
)
|
|
(1.0
|
)
|
||
|
Ceded under Pooling Arrangement
(a)
|
(142.2
|
)
|
|
(131.8
|
)
|
||
|
Net assumed losses and loss expenses incurred
|
$
|
27.8
|
|
|
$
|
40.0
|
|
|
|
|
|
|
||||
(a)
|
Includes adjustments for accounting differences between SAP and GAAP of $0.8 million and $0.7 million for the three months ended March 31, 2014 and 2013, respectively.
|
($ millions)
|
2014
|
|
2013
|
||||||||||
Amount at statutory rate
|
$
|
9.7
|
|
|
35
|
%
|
|
$
|
7.0
|
|
|
35
|
%
|
Tax-exempt interest and dividends received deduction
|
(2.1
|
)
|
|
(8
|
)
|
|
(2.3
|
)
|
|
(12
|
)
|
||
Other, net
|
0.2
|
|
|
1
|
|
|
0.2
|
|
|
1
|
|
||
Valuation allowance
|
(7.2
|
)
|
|
(26
|
)
|
|
(4.6
|
)
|
|
(23
|
)
|
||
Federal income tax expense and effective rate
|
$
|
0.6
|
|
|
2
|
%
|
|
$
|
0.3
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
($ millions)
|
March 31, 2014
|
|
December 31, 2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Unearned premiums not currently deductible
|
$
|
34.0
|
|
|
$
|
33.8
|
|
Losses and loss expenses payable discounting
|
21.4
|
|
|
21.6
|
|
||
Postretirement and pension benefits
|
25.4
|
|
|
24.9
|
|
||
Realized loss on other-than-temporary impairment
|
8.3
|
|
|
7.5
|
|
||
Other liabilities
|
15.7
|
|
|
17.3
|
|
||
Net operating loss carryforward
|
50.9
|
|
|
56.5
|
|
||
Tax credit carryforward
|
2.3
|
|
|
1.7
|
|
||
Other
|
8.3
|
|
|
9.2
|
|
||
Total deferred tax assets
|
166.3
|
|
|
172.5
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Deferral of policy acquisition costs
|
34.9
|
|
|
33.9
|
|
||
Net unrealized holding gains on investments
|
48.5
|
|
|
44.1
|
|
||
Total deferred tax liabilities
|
83.4
|
|
|
78.0
|
|
||
Total net deferred tax assets before valuation allowance
|
82.9
|
|
|
94.5
|
|
||
Less valuation allowance
|
75.2
|
|
|
82.6
|
|
||
Net deferred federal income taxes
|
$
|
7.7
|
|
|
$
|
11.9
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
Continuing operations
|
$
|
(7.2
|
)
|
|
$
|
(4.6
|
)
|
Other comprehensive income
|
(0.2
|
)
|
|
(5.1
|
)
|
||
Change in valuation allowance
|
$
|
(7.4
|
)
|
|
$
|
(9.7
|
)
|
|
|
|
|
|
($ millions)
|
Pension
|
|
Postretirement
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Service cost
|
$
|
1.3
|
|
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
2.8
|
|
|
2.4
|
|
|
0.3
|
|
|
0.2
|
|
||||
Expected return on plan assets
|
(3.2
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefits
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
(1.4
|
)
|
||||
Net actuarial loss
|
1.4
|
|
|
2.0
|
|
|
0.2
|
|
|
0.3
|
|
||||
Net periodic cost (benefit)
|
$
|
2.3
|
|
|
$
|
2.9
|
|
|
$
|
(0.9
|
)
|
|
$
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Unrealized Gains and Losses on Available-for-Sale Securities
|
|
Benefit Plan Items
|
|
Gains and Losses on Cash Flow Hedges
|
|
Total
|
|||||||||
Beginning balance at January 1, 2014
|
$
|
84.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
—
|
|
|
$
|
80.8
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income before reclassifications
|
18.8
|
|
|
—
|
|
|
—
|
|
|
18.8
|
|
|||||
Amounts reclassified from AOCI
(a)
|
(10.7
|
)
|
|
0.2
|
|
|
—
|
|
|
(10.5
|
)
|
|||||
Net current period other comprehensive income
|
8.1
|
|
|
0.2
|
|
|
—
|
|
|
8.3
|
|
|||||
Ending balance at March 31, 2014
|
$
|
92.7
|
|
|
$
|
(3.6
|
)
|
|
$
|
—
|
|
|
$
|
89.1
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Beginning balance at January 1, 2013
|
$
|
124.0
|
|
|
$
|
(39.9
|
)
|
|
$
|
0.1
|
|
|
$
|
84.2
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income before reclassifications
|
19.7
|
|
|
—
|
|
|
—
|
|
|
19.7
|
|
|||||
Amounts reclassified from AOCI
(a)
|
(6.7
|
)
|
|
0.9
|
|
|
—
|
|
|
(5.8
|
)
|
|||||
Net current period other comprehensive income
|
13.0
|
|
|
0.9
|
|
|
—
|
|
|
13.9
|
|
|||||
Ending balance at March 31, 2013
|
$
|
137.0
|
|
|
$
|
(39.0
|
)
|
|
$
|
0.1
|
|
|
$
|
98.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(a)
|
See separate table below for details about these reclassifications
|
($ and shares in millions, except per share amounts)
|
2014
|
|
2013
|
||||
Numerator:
|
|
|
|
||||
Net income for basic earnings per common share
|
$
|
27.1
|
|
|
$
|
19.7
|
|
Denominator:
|
|
|
|
||||
Weighted average shares for basic net earnings per common share
|
40.8
|
|
|
40.5
|
|
||
Effect of dilutive share-based awards
|
0.5
|
|
|
0.2
|
|
||
Adjusted weighted average shares for diluted net earnings per common share
|
41.3
|
|
|
40.7
|
|
||
|
|
|
|
||||
Basic net earnings per common share
|
$
|
0.67
|
|
|
$
|
0.49
|
|
Diluted net earnings per common share
|
$
|
0.66
|
|
|
$
|
0.49
|
|
|
|
|
|
( millions)
|
2014
|
|
2013
|
||
Total number of antidilutive options and awards
|
1.7
|
|
|
3.2
|
|
|
|
|
|
|
|
($ millions)
|
Three months ended March 31
|
||||||
|
2014
|
|
2013
|
||||
Revenues from external sources:
|
|
|
|
||||
Insurance segments
|
|
|
|
||||
Personal insurance
|
$
|
114.3
|
|
|
$
|
114.7
|
|
Business insurance
|
93.5
|
|
|
88.5
|
|
||
Specialty insurance
|
54.7
|
|
|
58.1
|
|
||
Total insurance segments
|
262.5
|
|
|
261.3
|
|
||
Investment operations segment
|
|
|
|
||||
Net investment income
|
17.6
|
|
|
16.9
|
|
||
Net realized capital gains
|
10.7
|
|
|
6.7
|
|
||
Total investment operations segment
|
28.3
|
|
|
23.6
|
|
||
All other
|
0.5
|
|
|
0.4
|
|
||
Total revenues from external sources
|
291.3
|
|
|
285.3
|
|
||
Intersegment revenues:
|
1.3
|
|
|
1.3
|
|
||
Total revenues
|
292.6
|
|
|
286.6
|
|
||
Reconciling items:
|
|
|
|
||||
Eliminate intersegment revenues
|
(1.3
|
)
|
|
(1.3
|
)
|
||
Total consolidated revenues
|
$
|
291.3
|
|
|
$
|
285.3
|
|
Segment income before federal income tax:
|
|
|
|
||||
Insurance segments SAP underwriting (loss) income
|
|
|
|
||||
Personal insurance
|
$
|
5.1
|
|
|
$
|
1.3
|
|
Business insurance
|
(8.5
|
)
|
|
(5.3
|
)
|
||
Specialty insurance
|
(0.5
|
)
|
|
(1.7
|
)
|
||
Total insurance segments
|
(3.9
|
)
|
|
(5.7
|
)
|
||
Investment operations segment
|
|
|
|
||||
Net investment income
|
17.6
|
|
|
16.9
|
|
||
Net realized capital gains
|
10.7
|
|
|
6.7
|
|
||
Total investment operations segment
|
28.3
|
|
|
23.6
|
|
||
All other segments income
|
0.1
|
|
|
0.4
|
|
||
Total segment income before tax expense
|
24.5
|
|
|
18.3
|
|
||
Reconciling items:
|
|
|
|
||||
GAAP expense adjustments
|
5.4
|
|
|
4.5
|
|
||
Interest expense on corporate debt
|
(1.3
|
)
|
|
(1.7
|
)
|
||
Corporate expenses
|
(0.9
|
)
|
|
(1.1
|
)
|
||
Total reconciling items
|
3.2
|
|
|
1.7
|
|
||
Total consolidated income before federal income tax expense
|
$
|
27.7
|
|
|
$
|
20.0
|
|
|
|
|
|
|
|
|
STFC Pooled Companies:
|
|
|
State Auto P&C
|
51.0
|
%
|
Milbank
|
14.0
|
|
SA Ohio
|
—
|
|
Total STFC Pooled Companies
|
65.0
|
%
|
State Auto Mutual Pooled Companies:
|
|
|
State Auto Mutual
|
34.0
|
%
|
SA Wisconsin
|
—
|
|
Meridian Security
|
—
|
|
Meridian Citizens Mutual
|
0.5
|
|
Patrons Mutual
|
0.5
|
|
RIC
|
—
|
|
Plaza
|
—
|
|
American Compensation
|
—
|
|
Bloomington Compensation
|
—
|
|
Total State Auto Mutual Pooled Companies
|
35.0
|
%
|
|
|
|
($ millions, except per share amounts)
|
Three months ended March 31
|
||||||
GAAP Basis:
|
2014
|
|
2013
|
||||
Total revenues
|
$
|
291.3
|
|
|
$
|
285.3
|
|
Net income
|
$
|
27.1
|
|
|
$
|
19.7
|
|
Basic earnings per share
|
$
|
0.67
|
|
|
$
|
0.49
|
|
Diluted earnings per share
|
$
|
0.66
|
|
|
$
|
0.49
|
|
Stockholders’ equity
|
$
|
817.5
|
|
|
$
|
767.5
|
|
Return on average equity (LTM)
|
8.6
|
%
|
|
4.3
|
%
|
||
Book value per share
|
$
|
20.05
|
|
|
$
|
18.96
|
|
Debt to capital ratio
|
11.0
|
%
|
|
13.1
|
%
|
||
Cat loss and ALAE ratio
|
2.4
|
%
|
|
1.7
|
%
|
||
Non-cat loss and LAE ratio
|
63.1
|
%
|
|
64.5
|
%
|
||
Loss and LAE ratio
|
65.5
|
%
|
|
66.2
|
%
|
||
Expense ratio
|
33.7
|
%
|
|
34.0
|
%
|
||
Combined ratio
|
99.2
|
%
|
|
100.2
|
%
|
||
Premium written growth
|
0.6
|
%
|
|
0.2
|
%
|
||
Investment yield
|
3.3
|
%
|
|
3.1
|
%
|
||
|
|
|
|
||||
SAP Basis :
|
|
|
|
||||
Cat loss and ALAE points
|
2.4
|
%
|
|
1.7
|
%
|
||
Non-cat loss and ALAE
|
57.3
|
%
|
|
58.4
|
%
|
||
ULAE
|
6.0
|
%
|
|
6.4
|
%
|
||
Loss and LAE ratio
|
65.7
|
%
|
|
66.5
|
%
|
||
Expense ratio
|
35.3
|
%
|
|
35.3
|
%
|
||
Combined ratio
|
101.0
|
%
|
|
101.8
|
%
|
|
Twelve months ended March 31
|
||||
|
2014
|
|
2013
|
||
Net premiums written to surplus
|
1.4
|
|
|
1.6
|
|
|
($ millions)
|
GAAP HO QS Arrangement Cession - Overall Results
|
||||||||||
|
|
|
|
|
Pro-Forma
|
||||||
|
|
|
|
|
without HO QS
|
||||||
Three months ended March 31, 2014
|
As Reported
|
|
HO QS Cession
|
|
Cession
|
||||||
Net written premiums
|
$
|
265.4
|
|
|
$
|
37.9
|
|
|
$
|
303.3
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
262.5
|
|
|
44.2
|
|
|
306.7
|
|
|||
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
6.3
|
|
|
2.4
|
|
|
8.7
|
|
|||
Non-cat loss and LAE
|
165.5
|
|
|
20.5
|
|
|
186.0
|
|
|||
Total Loss and LAE incurred
|
171.8
|
|
|
22.9
|
|
|
194.7
|
|
|||
Acquisition and operating expenses
|
88.5
|
|
|
12.8
|
|
|
101.3
|
|
|||
Net underwriting gain
|
$
|
2.2
|
|
|
$
|
8.5
|
|
|
$
|
10.7
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
2.4
|
%
|
|
5.4
|
%
|
|
2.8
|
%
|
|||
Non-cat loss and LAE ratio
|
63.1
|
%
|
|
46.3
|
%
|
|
60.7
|
%
|
|||
Total Loss and LAE ratio
|
65.5
|
%
|
|
51.7
|
%
|
|
63.5
|
%
|
|||
Expense ratio
|
33.7
|
%
|
|
29.0
|
%
|
|
33.0
|
%
|
|||
Combined ratio
|
99.2
|
%
|
|
80.7
|
%
|
|
96.5
|
%
|
|||
|
|
|
|
|
|
|
($ millions)
|
GAAP HO QS Arrangement Cession - Overall Results
|
||||||||||
|
|
|
|
|
Pro-Forma
|
||||||
|
|
|
|
|
without HO QS
|
||||||
Three months ended March 31, 2013
|
As Reported
|
|
HO QS Cession
|
|
Cession
|
||||||
Net written premiums
|
$
|
263.7
|
|
|
$
|
37.9
|
|
|
$
|
301.6
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
261.3
|
|
|
45.3
|
|
|
306.6
|
|
|||
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
4.6
|
|
|
2.0
|
|
|
6.6
|
|
|||
Non-cat loss and LAE
|
168.4
|
|
|
17.3
|
|
|
185.7
|
|
|||
Total Loss and LAE incurred
|
173.0
|
|
|
19.3
|
|
|
192.3
|
|
|||
Acquisition and operating expenses
|
88.8
|
|
|
13.1
|
|
|
101.9
|
|
|||
Net underwriting (loss) gain
|
$
|
(0.5
|
)
|
|
$
|
12.9
|
|
|
$
|
12.4
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
1.7
|
%
|
|
4.4
|
%
|
|
2.2
|
%
|
|||
Non-cat loss and LAE ratio
|
64.5
|
%
|
|
38.2
|
%
|
|
60.6
|
%
|
|||
Total Loss and LAE ratio
|
66.2
|
%
|
|
42.6
|
%
|
|
62.8
|
%
|
|||
Expense ratio
|
34.0
|
%
|
|
29.0
|
%
|
|
33.2
|
%
|
|||
Combined ratio
|
100.2
|
%
|
|
71.6
|
%
|
|
96.0
|
%
|
|||
|
|
|
|
|
|
($ millions)
|
SAP HO QS Arrangement Cession - Overall Results
|
||||||||||
|
|
|
|
|
Pro-Forma
|
||||||
|
|
|
|
|
without HO QS
|
||||||
Three months ended March 31, 2014
|
As Reported
|
|
HO QS Cession
|
|
Cession
|
||||||
Net written premiums
|
$
|
265.4
|
|
|
$
|
37.9
|
|
|
$
|
303.3
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
262.5
|
|
|
44.2
|
|
|
306.7
|
|
|||
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
6.3
|
|
|
2.4
|
|
|
8.7
|
|
|||
Non-cat loss and ALAE
|
150.4
|
|
|
20.5
|
|
|
170.9
|
|
|||
Total Loss and ALAE
|
156.7
|
|
|
22.9
|
|
|
179.6
|
|
|||
ULAE
|
15.9
|
|
|
—
|
|
|
15.9
|
|
|||
Total Loss and ALAE incurred
|
172.6
|
|
|
22.9
|
|
|
195.5
|
|
|||
Underwriting expenses
|
93.8
|
|
|
11.0
|
|
|
104.8
|
|
|||
Net underwriting (loss) gain
|
$
|
(3.9
|
)
|
|
$
|
10.3
|
|
|
$
|
6.4
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
2.4
|
%
|
|
5.4
|
%
|
|
2.8
|
%
|
|||
Non-cat loss and ALAE ratio
|
57.3
|
%
|
|
46.3
|
%
|
|
55.7
|
%
|
|||
Total loss and ALAE ratio
|
59.7
|
%
|
|
51.7
|
%
|
|
58.5
|
%
|
|||
ULAE ratio
|
6.0
|
%
|
|
—
|
|
|
5.2
|
%
|
|||
Total loss and LAE ratio
|
65.7
|
%
|
|
51.7
|
%
|
|
63.7
|
%
|
|||
Expense ratio
|
35.3
|
%
|
|
29.0
|
%
|
|
34.6
|
%
|
|||
Combined ratio
|
101.0
|
%
|
|
80.7
|
%
|
|
98.3
|
%
|
|||
|
|
|
|
|
|
|
($ millions)
|
SAP HO QS Arrangement Cession - Overall Results
|
||||||||||
|
|
|
|
|
Pro-Forma
|
||||||
|
|
|
|
|
without HO QS
|
||||||
Three months ended March 31, 2013
|
As Reported
|
|
HO QS Cession
|
|
Cession
|
||||||
Net written premiums
|
$
|
263.7
|
|
|
$
|
37.9
|
|
|
$
|
301.6
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
261.3
|
|
|
45.3
|
|
|
306.6
|
|
|||
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
4.6
|
|
|
2.0
|
|
|
6.6
|
|
|||
Non-cat loss and ALAE
|
153.0
|
|
|
17.3
|
|
|
170.3
|
|
|||
Total Loss and ALAE
|
157.6
|
|
|
19.3
|
|
|
176.9
|
|
|||
ULAE
|
16.2
|
|
|
—
|
|
|
16.2
|
|
|||
Total Loss and ALAE incurred
|
173.8
|
|
|
19.3
|
|
|
193.1
|
|
|||
Underwriting expenses
|
93.2
|
|
|
11.0
|
|
|
104.2
|
|
|||
Net underwriting (loss) gain
|
$
|
(5.7
|
)
|
|
$
|
15.0
|
|
|
$
|
9.3
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
1.7
|
%
|
|
4.4
|
%
|
|
2.2
|
%
|
|||
Non-cat loss and ALAE ratio
|
58.6
|
%
|
|
38.2
|
%
|
|
55.5
|
%
|
|||
Total loss and ALAE ratio
|
60.3
|
%
|
|
42.6
|
%
|
|
57.7
|
%
|
|||
ULAE ratio
|
6.2
|
%
|
|
—
|
|
|
5.3
|
%
|
|||
Total loss and LAE ratio
|
66.5
|
%
|
|
42.6
|
%
|
|
63.0
|
%
|
|||
Expense ratio
|
35.3
|
%
|
|
29.0
|
%
|
|
34.5
|
%
|
|||
Combined ratio
|
101.8
|
%
|
|
71.6
|
%
|
|
97.5
|
%
|
|||
|
|
|
|
|
|
|
($ millions)
|
Three months ended
|
|||||||||||||||||||||||
|
March 31, 2014
|
|||||||||||||||||||||||
|
Personal
|
|
%
Ratio
|
|
Business
|
|
%
Ratio
|
|
Specialty
|
|
%
Ratio
|
|
Total
|
|
%
Ratio
|
|||||||||
Net written premiums
|
$
|
109.6
|
|
|
|
|
$
|
94.6
|
|
|
|
|
$
|
61.2
|
|
|
|
|
$
|
265.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Earned premiums
|
114.3
|
|
|
|
|
93.5
|
|
|
|
|
54.7
|
|
|
|
|
262.5
|
|
|
|
|||||
Cat loss and ALAE
|
0.4
|
|
|
0.4
|
|
5.2
|
|
|
5.5
|
|
0.7
|
|
|
1.3
|
|
|
6.3
|
|
|
2.4
|
||||
Non-cat loss and ALAE
|
65.1
|
|
|
57.0
|
|
56.0
|
|
|
59.9
|
|
29.3
|
|
|
53.5
|
|
|
150.4
|
|
|
57.3
|
||||
ULAE
|
10.1
|
|
|
8.9
|
|
3.8
|
|
|
4.1
|
|
2.0
|
|
|
3.6
|
|
|
15.9
|
|
|
6.0
|
||||
Underwriting expenses
|
33.6
|
|
|
30.7
|
|
37.0
|
|
|
39.1
|
|
23.2
|
|
|
37.9
|
|
|
93.8
|
|
|
35.3
|
||||
SAP underwriting gain (loss) and SAP combined ratio
|
$
|
5.1
|
|
|
97.0
|
|
$
|
(8.5
|
)
|
|
108.6
|
|
$
|
(0.5
|
)
|
|
96.3
|
|
|
$
|
(3.9
|
)
|
|
101.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
($ millions)
|
Three months ended
|
|||||||||||||||||||||||
|
March 31, 2013
|
|||||||||||||||||||||||
|
Personal
|
|
%
Ratio
|
|
Business
|
|
%
Ratio
|
|
Specialty
|
|
%
Ratio
|
|
Total
|
|
%
Ratio
|
|||||||||
Net written premiums
|
$
|
114.5
|
|
|
|
|
$
|
91.9
|
|
|
|
|
$
|
57.3
|
|
|
|
|
$
|
263.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Earned premiums
|
114.7
|
|
|
|
|
88.5
|
|
|
|
|
58.1
|
|
|
|
|
261.3
|
|
|
|
|||||
Cat loss and ALAE
|
0.6
|
|
|
0.5
|
|
4.2
|
|
|
4.8
|
|
(0.2
|
)
|
|
(0.4
|
)
|
|
4.6
|
|
|
1.7
|
||||
Non-cat loss and ALAE
|
68.7
|
|
|
59.9
|
|
46.2
|
|
|
52.1
|
|
37.6
|
|
|
65.0
|
|
|
153.0
|
|
|
58.4
|
||||
ULAE
|
10.2
|
|
|
8.9
|
|
5.2
|
|
|
5.9
|
|
1.3
|
|
|
2.0
|
|
|
16.7
|
|
|
6.4
|
||||
Underwriting expenses
|
33.9
|
|
|
29.6
|
|
38.2
|
|
|
41.6
|
|
21.1
|
|
|
36.8
|
|
|
93.2
|
|
|
35.3
|
||||
SAP underwriting gain (loss) and SAP combined ratio
|
$
|
1.3
|
|
|
98.9
|
|
$
|
(5.3
|
)
|
|
104.4
|
|
$
|
(1.7
|
)
|
|
103.4
|
|
|
$
|
(5.7
|
)
|
|
101.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Net Written Premiums
|
|||||||||
Personal insurance segment:
|
2014
|
|
2013
|
|
%
Change
|
|||||
Personal auto
|
$
|
89.5
|
|
|
$
|
93.9
|
|
|
(4.7
|
)
|
Homeowners
|
12.5
|
|
|
13.0
|
|
|
(3.8
|
)
|
||
Other personal
|
7.6
|
|
|
7.6
|
|
|
—
|
|
||
Total personal
|
$
|
109.6
|
|
|
$
|
114.5
|
|
|
(4.3
|
)
|
|
|
|
|
|
|
Statutory Loss and LAE Ratios
|
($ millions)
|
%
|
|||||||||||||||||||
Three months ended March 31
|
Earned Premium
|
|
Cat Loss & ALAE
|
|
Non-Cat Loss & ALAE
|
|
Statutory Loss & LAE
|
Cat loss Ratio
|
|
Non-Cat Loss & ALAE Ratio
|
|
Total Loss and LAE Ratio
|
|||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Personal insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Personal auto
|
$
|
92.4
|
|
|
$
|
(0.1
|
)
|
|
$
|
55.7
|
|
|
$
|
55.6
|
|
(0.1
|
)
|
|
60.3
|
|
60.2
|
Homeowners
|
14.6
|
|
|
0.6
|
|
|
7.2
|
|
|
7.8
|
|
4.5
|
|
|
49.3
|
|
53.8
|
||||
Other personal
|
7.3
|
|
|
(0.1
|
)
|
|
2.2
|
|
|
2.1
|
|
(1.2
|
)
|
|
29.6
|
|
28.4
|
||||
Total personal
|
114.3
|
|
|
0.4
|
|
|
65.1
|
|
|
65.5
|
|
0.4
|
|
|
57.0
|
|
57.4
|
||||
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
10.1
|
|
—
|
|
|
—
|
|
8.9
|
||||
Total Loss and LAE
|
$
|
114.3
|
|
|
$
|
0.4
|
|
|
$
|
65.1
|
|
|
$
|
75.6
|
|
0.4
|
|
|
57.0
|
|
66.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Personal insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Personal auto
|
$
|
94.9
|
|
|
$
|
0.4
|
|
|
$
|
61.1
|
|
|
$
|
61.5
|
|
0.4
|
|
|
64.4
|
|
64.8
|
Homeowners
|
12.5
|
|
|
0.5
|
|
|
5.8
|
|
|
6.3
|
|
3.7
|
|
|
46.9
|
|
50.6
|
||||
Other personal
|
7.3
|
|
|
(0.3
|
)
|
|
1.8
|
|
|
1.5
|
|
(3.6
|
)
|
|
24.0
|
|
20.4
|
||||
Total personal
|
114.7
|
|
|
0.6
|
|
|
68.7
|
|
|
69.3
|
|
0.5
|
|
|
59.9
|
|
60.4
|
||||
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
10.2
|
|
—
|
|
|
—
|
|
8.9
|
||||
Total Loss and LAE
|
$
|
114.7
|
|
|
$
|
0.6
|
|
|
$
|
68.7
|
|
|
$
|
79.5
|
|
0.5
|
|
|
59.9
|
|
69.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
SAP HO QS Arrangement Cession - Homeowners
|
||||||||||
|
|
|
|
|
Pro-Forma
|
||||||
|
|
|
|
|
without HO QS
|
||||||
Three months ended March 31, 2014
|
As Reported
|
|
HO QS Cession
|
|
Cession
|
||||||
Net written premiums
|
$
|
12.5
|
|
|
$
|
37.9
|
|
|
$
|
50.4
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
14.6
|
|
|
44.2
|
|
|
58.8
|
|
|||
Losses and ALAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
0.6
|
|
|
2.4
|
|
|
3.0
|
|
|||
Non-cat loss and ALAE
|
7.2
|
|
|
20.5
|
|
|
27.7
|
|
|||
Total Loss and ALAE incurred
|
$
|
7.8
|
|
|
$
|
22.9
|
|
|
$
|
30.7
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
4.5
|
%
|
|
5.4
|
%
|
|
5.2
|
%
|
|||
Non-cat loss and ALAE ratio
|
49.3
|
%
|
|
46.3
|
%
|
|
47.1
|
%
|
|||
Total Loss and ALAE ratio
|
53.8
|
%
|
|
51.7
|
%
|
|
52.3
|
%
|
|||
|
|
|
|
|
|
($ millions)
|
SAP HO QS Arrangement Cession - Homeowners
|
||||||||||
|
|
|
|
|
Pro-Forma
|
||||||
|
|
|
|
|
without HO QS
|
||||||
Three months ended March 31, 2013
|
As Reported
|
|
HO QS Cession
|
|
Cession
|
||||||
Net written premiums
|
$
|
13.0
|
|
|
$
|
37.9
|
|
|
$
|
50.9
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
12.5
|
|
|
45.3
|
|
|
57.8
|
|
|||
Losses and ALAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
0.5
|
|
|
2.0
|
|
|
2.5
|
|
|||
Non-cat loss and ALAE
|
5.8
|
|
|
17.3
|
|
|
23.1
|
|
|||
Total Loss and ALAE incurred
|
$
|
6.3
|
|
|
$
|
19.3
|
|
|
$
|
25.6
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
3.7
|
%
|
|
4.4
|
%
|
|
4.3
|
%
|
|||
Non-cat loss and ALAE ratio
|
46.9
|
%
|
|
38.2
|
%
|
|
40.0
|
%
|
|||
Total Loss and ALAE ratio
|
50.6
|
%
|
|
42.6
|
%
|
|
44.3
|
%
|
|||
|
|
|
|
|
|
|
($ millions)
|
Net Written Premiums
|
|||||||||
Business insurance segment:
|
2014
|
|
2013
|
|
%
Change
|
|||||
Commercial auto
|
$
|
24.4
|
|
|
$
|
23.4
|
|
|
4.3
|
|
Commercial multi-peril
|
30.2
|
|
|
27.9
|
|
|
8.2
|
|
||
Fire & allied lines
|
18.4
|
|
|
18.5
|
|
|
(0.5
|
)
|
||
Other & product liability
|
17.2
|
|
|
17.6
|
|
|
(2.3
|
)
|
||
Other commercial
|
4.4
|
|
|
4.5
|
|
|
(2.2
|
)
|
||
Total business
|
$
|
94.6
|
|
|
$
|
91.9
|
|
|
2.9
|
|
|
|
|
|
|
|
Statutory Loss and LAE Ratios
|
($ millions)
|
%
|
|||||||||||||||||||
Three months ended March 31
|
Earned Premium
|
|
Cat Loss & ALAE
|
|
Non-Cat Loss & ALAE
|
|
Statutory Loss & LAE
|
Cat loss Ratio
|
|
Non-Cat Loss & ALAE Ratio
|
|
Total Loss and LAE Ratio
|
|||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Business insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial auto
|
$
|
24.0
|
|
|
$
|
0.1
|
|
|
$
|
13.1
|
|
|
$
|
13.2
|
|
0.2
|
|
|
54.6
|
|
54.8
|
Commercial multi-peril
|
28.7
|
|
|
2.0
|
|
|
19.4
|
|
|
21.4
|
|
7.0
|
|
|
67.6
|
|
74.6
|
||||
Fire & allied lines
|
19.4
|
|
|
3.1
|
|
|
11.9
|
|
|
15.0
|
|
16.0
|
|
|
61.4
|
|
77.4
|
||||
Other & product liability
|
17.0
|
|
|
—
|
|
|
10.0
|
|
|
10.0
|
|
—
|
|
|
58.7
|
|
58.7
|
||||
Other commercial
|
4.4
|
|
|
—
|
|
|
1.6
|
|
|
1.6
|
|
(1.0
|
)
|
|
36.3
|
|
35.3
|
||||
Total business
|
93.5
|
|
|
5.2
|
|
|
56.0
|
|
|
61.2
|
|
5.5
|
|
|
59.9
|
|
65.4
|
||||
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
—
|
|
|
—
|
|
4.1
|
||||
Total Loss and LAE
|
$
|
93.5
|
|
|
$
|
5.2
|
|
|
$
|
56.0
|
|
|
$
|
65.0
|
|
5.5
|
|
|
59.9
|
|
69.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Business insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial auto
|
$
|
22.4
|
|
|
$
|
0.2
|
|
|
$
|
13.3
|
|
|
$
|
13.5
|
|
0.9
|
|
|
59.1
|
|
60.0
|
Commercial multi-peril
|
25.9
|
|
|
2.4
|
|
|
14.7
|
|
|
17.1
|
|
9.5
|
|
|
56.4
|
|
65.9
|
||||
Fire & allied lines
|
19.1
|
|
|
1.6
|
|
|
5.7
|
|
|
7.3
|
|
8.3
|
|
|
30.0
|
|
38.3
|
||||
Other & product liability
|
16.5
|
|
|
—
|
|
|
9.8
|
|
|
9.8
|
|
—
|
|
|
59.2
|
|
59.2
|
||||
Other commercial
|
4.6
|
|
|
—
|
|
|
2.7
|
|
|
2.7
|
|
(0.2
|
)
|
|
60.3
|
|
60.1
|
||||
Total business
|
88.5
|
|
|
4.2
|
|
|
46.2
|
|
|
50.4
|
|
4.8
|
|
|
52.1
|
|
56.9
|
||||
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
5.2
|
|
—
|
|
|
—
|
|
5.9
|
||||
Total Loss and LAE
|
$
|
88.5
|
|
|
$
|
4.2
|
|
|
$
|
46.2
|
|
|
$
|
55.6
|
|
4.8
|
|
|
52.1
|
|
62.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Net Written Premiums
|
|||||||||
Specialty insurance segment:
|
2014
|
|
2013
|
|
%
Change
|
|||||
Excess & Surplus property
|
$
|
7.6
|
|
|
$
|
9.4
|
|
|
(19.1
|
)
|
Excess & Surplus casualty
|
11.9
|
|
|
10.0
|
|
|
19.0
|
|
||
Programs
|
20.5
|
|
|
19.0
|
|
|
7.9
|
|
||
Workers’ compensation
|
21.2
|
|
|
18.9
|
|
|
12.2
|
|
||
Total specialty
|
$
|
61.2
|
|
|
$
|
57.3
|
|
|
6.8
|
|
|
|
|
|
|
|
|
Statutory Loss and LAE Ratios
|
($ millions)
|
%
|
|||||||||||||||||||
Three months ended March 31
|
Earned Premium
|
|
Cat Loss & ALAE
|
|
Non-Cat Loss & ALAE
|
|
Statutory Loss & LAE
|
Cat loss Ratio
|
|
Non-Cat Loss & ALAE Ratio
|
|
Total Loss and LAE Ratio
|
|||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Specialty insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Excess & Surplus property
|
$
|
8.1
|
|
|
$
|
0.7
|
|
|
$
|
0.4
|
|
|
$
|
1.1
|
|
8.7
|
|
|
4.7
|
|
13.4
|
Excess & Surplus casualty
|
10.5
|
|
|
—
|
|
|
5.0
|
|
|
5.0
|
|
—
|
|
|
48.0
|
|
48.0
|
||||
Programs
|
17.9
|
|
|
—
|
|
|
12.0
|
|
|
12.0
|
|
—
|
|
|
66.8
|
|
66.8
|
||||
Workers’ compensation
|
18.2
|
|
|
—
|
|
|
11.9
|
|
|
11.9
|
|
—
|
|
|
65.3
|
|
65.3
|
||||
Total specialty
|
54.7
|
|
|
0.7
|
|
|
29.3
|
|
|
30.0
|
|
1.3
|
|
|
53.5
|
|
54.8
|
||||
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
—
|
|
|
—
|
|
3.6
|
||||
Total Loss and LAE
|
$
|
54.7
|
|
|
$
|
0.7
|
|
|
$
|
29.3
|
|
|
$
|
32.0
|
|
1.3
|
|
|
53.5
|
|
58.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Specialty insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Excess & Surplus property
|
$
|
7.8
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
$
|
1.4
|
|
—
|
|
|
17.5
|
|
17.5
|
Excess & Surplus casualty
|
9.2
|
|
|
—
|
|
|
5.0
|
|
|
5.0
|
|
—
|
|
|
54.2
|
|
54.2
|
||||
Programs
|
23.9
|
|
|
(0.2
|
)
|
|
21.1
|
|
|
20.9
|
|
(0.9
|
)
|
|
88.8
|
|
87.9
|
||||
Workers’ compensation
|
17.2
|
|
|
—
|
|
|
10.1
|
|
|
10.1
|
|
—
|
|
|
59.0
|
|
59.0
|
||||
Total specialty
|
58.1
|
|
|
(0.2
|
)
|
|
37.6
|
|
|
37.4
|
|
(0.4
|
)
|
|
65.0
|
|
64.6
|
||||
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
—
|
|
|
—
|
|
2.0
|
||||
Total Loss and LAE
|
$
|
58.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
37.6
|
|
|
$
|
38.7
|
|
(0.4
|
)
|
|
65.0
|
|
66.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
Change
|
||||||
Personal insurance segment:
|
|
|
|
|
|
||||||
Personal auto
|
$
|
182.7
|
|
|
$
|
188.8
|
|
|
$
|
(6.1
|
)
|
Homeowners
|
24.6
|
|
|
24.3
|
|
|
0.3
|
|
|||
Other personal
|
9.1
|
|
|
10.6
|
|
|
(1.5
|
)
|
|||
Total personal
|
216.4
|
|
|
223.7
|
|
|
(7.3
|
)
|
|||
Business insurance segment:
|
|
|
|
|
|
||||||
Commercial auto
|
83.4
|
|
|
83.4
|
|
|
—
|
|
|||
Commercial multi-peril
|
93.2
|
|
|
91.5
|
|
|
1.7
|
|
|||
Fire & allied lines
|
26.6
|
|
|
22.1
|
|
|
4.5
|
|
|||
Other & product liability
|
157.4
|
|
|
159.8
|
|
|
(2.4
|
)
|
|||
Other business
|
3.0
|
|
|
2.8
|
|
|
0.2
|
|
|||
Total business
|
363.6
|
|
|
359.6
|
|
|
4.0
|
|
|||
Specialty insurance segment:
|
|
|
|
|
|
||||||
Excess & Surplus property
|
7.0
|
|
|
7.4
|
|
|
(0.4
|
)
|
|||
Excess & Surplus casualty
|
58.0
|
|
|
61.1
|
|
|
(3.1
|
)
|
|||
Programs
|
146.0
|
|
|
150.7
|
|
|
(4.7
|
)
|
|||
Workers’ compensation
|
151.2
|
|
|
148.3
|
|
|
2.9
|
|
|||
Total specialty
|
362.2
|
|
|
367.5
|
|
|
(5.3
|
)
|
|||
Total losses and loss expenses payable net of reinsurance recoverable on losses and loss expenses payable
|
$
|
942.2
|
|
|
$
|
950.8
|
|
|
$
|
(8.6
|
)
|
|
|
|
|
|
|
|
($ millions)
|
March 31, 2014
|
|
% of Total
|
|
December 31, 2013
|
|
% of Total
|
|||||
Cash and cash equivalents
|
$
|
78.3
|
|
|
3.3
|
|
$
|
80.3
|
|
|
3.4
|
|
Fixed maturities, at fair value:
|
|
|
|
|
|
|
|
|||||
Fixed maturities
|
1,648.8
|
|
|
70.1
|
|
1,630.6
|
|
|
69.9
|
|||
Treasury inflation-protected securities
|
191.6
|
|
|
8.1
|
|
199.5
|
|
|
8.6
|
|||
Total fixed maturities
|
1,840.4
|
|
|
78.2
|
|
1,830.1
|
|
|
78.5
|
|||
Notes receivable from affiliate
(a)
|
70.0
|
|
|
3.0
|
|
70.0
|
|
|
3.0
|
|||
Equity securities, at fair value:
|
|
|
|
|
|
|
|
|||||
Large-cap securities
|
207.9
|
|
|
8.8
|
|
194.4
|
|
|
8.4
|
|||
Small-cap securities
|
66.7
|
|
|
2.8
|
|
70.9
|
|
|
3.0
|
|||
Total equity securities
|
274.6
|
|
|
11.6
|
|
265.3
|
|
|
11.4
|
|||
Other invested assets, at fair value:
|
|
|
|
|
|
|
|
|||||
International funds
|
76.5
|
|
|
3.3
|
|
74.2
|
|
|
3.2
|
|||
Other invested assets
|
6.9
|
|
|
0.4
|
|
6.7
|
|
|
0.3
|
|||
Total other invested assets, at fair value
|
83.4
|
|
|
3.7
|
|
80.9
|
|
|
3.5
|
|||
Other invested assets, at cost
|
5.0
|
|
|
0.2
|
|
5.0
|
|
|
0.2
|
|||
Total portfolio
|
$
|
2,351.7
|
|
|
100.0
|
|
$
|
2,331.6
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
||||
(a)
|
In May 2009, we entered into two separate Credit Agreements with State Auto Mutual. Under these Credit Agreements, State Auto Mutual borrowed a total of $70.0 million from us on an unsecured basis. Interest is payable semi-annually at a fixed annual interest rate of 7.00%. Principal is payable May 2019.
|
|
($ millions)
|
Amortized cost
|
|
Fair
value
|
||||
Due in 1 year or less
|
$
|
54.8
|
|
|
$
|
55.5
|
|
Due after 1 year through 5 years
|
376.2
|
|
|
392.9
|
|
||
Due after 5 years through 10 years
|
359.7
|
|
|
376.4
|
|
||
Due after 10 years
|
570.7
|
|
|
571.0
|
|
||
U.S. government agencies residential mortgage-backed securities
|
438.5
|
|
|
444.6
|
|
||
Total
|
$
|
1,799.9
|
|
|
$
|
1,840.4
|
|
|
|
|
|
($ millions)
|
Three months ended March 31
|
||||||
|
2014
|
|
2013
|
||||
Gross investment income:
|
|
|
|
||||
Fixed maturities
|
$
|
15.4
|
|
|
$
|
14.8
|
|
Equity securities
|
1.4
|
|
|
1.2
|
|
||
Other
|
1.3
|
|
|
1.4
|
|
||
Total gross investment income
|
18.1
|
|
|
17.4
|
|
||
Less: Investment expenses
|
0.5
|
|
|
0.5
|
|
||
Net investment income
|
$
|
17.6
|
|
|
$
|
16.9
|
|
|
|
|
|
||||
Average invested assets (at cost)
|
$
|
2,130.3
|
|
|
$
|
2,150.6
|
|
Annualized investment yield
|
3.3
|
%
|
|
3.1
|
%
|
||
Annualized investment yield, after tax
|
2.6
|
%
|
|
2.5
|
%
|
||
Net investment income, after tax
|
$
|
13.6
|
|
|
$
|
13.3
|
|
Effective tax rate
|
22.8
|
%
|
|
21.3
|
%
|
|
($ in millions)
|
2014
|
|
2013
|
||||||||||||
|
Realized gains (losses)
|
|
Proceeds received on sale
|
|
Realized gains (losses)
|
|
Proceeds received on sale
|
||||||||
Realized gains:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
$
|
2.1
|
|
|
$
|
71.3
|
|
|
$
|
0.5
|
|
|
$
|
38.5
|
|
Equity securities
|
9.4
|
|
|
33.0
|
|
|
6.6
|
|
|
27.5
|
|
||||
Other invested assets
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
Total realized gains
|
11.6
|
|
|
104.4
|
|
|
7.1
|
|
|
66.0
|
|
||||
Realized losses:
|
|
|
|
|
|
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Sales
|
(0.1
|
)
|
|
1.6
|
|
|
(0.1
|
)
|
|
0.6
|
|
||||
OTTI
|
(0.8
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||
Total realized losses
|
(0.9
|
)
|
|
1.6
|
|
|
(0.4
|
)
|
|
0.6
|
|
||||
Net realized gain on investments
|
$
|
10.7
|
|
|
$
|
106.0
|
|
|
$
|
6.7
|
|
|
$
|
66.6
|
|
|
|
|
|
|
|
|
|
($ millions, except # of positions)
|
2014
|
|||||
|
Number of positions
|
|
Total impairment
|
|||
Equity securities:
|
|
|||||
Large-cap securities
|
1
|
|
|
$
|
(0.2
|
)
|
Small-cap securities
|
10
|
|
|
(0.6
|
)
|
|
Total other-than-temporary impairments
|
11
|
|
|
$
|
(0.8
|
)
|
|
|
|
|
($ millions, except # of positions)
|
Cost or amortized cost
|
|
Gross unrealized holding gains
|
|
Number of gain positions
|
|
Gross unrealized holding
losses
|
|
Number of loss positions
|
|
Fair value
|
||||||||||
Fixed maturities:
|
|
|
|
||||||||||||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
314.3
|
|
|
$
|
15.8
|
|
|
37
|
|
|
$
|
(5.0
|
)
|
|
24
|
|
|
$
|
325.1
|
|
Obligations of states and political subdivisions
|
691.4
|
|
|
24.8
|
|
|
194
|
|
|
(8.2
|
)
|
|
81
|
|
|
708.0
|
|
||||
Corporate securities
|
355.7
|
|
|
11.9
|
|
|
66
|
|
|
(4.9
|
)
|
|
27
|
|
|
362.7
|
|
||||
U.S. government agencies residential mortgage-backed securities
|
438.5
|
|
|
10.2
|
|
|
73
|
|
|
(4.1
|
)
|
|
45
|
|
|
444.6
|
|
||||
Total fixed maturities
|
1,799.9
|
|
|
62.7
|
|
|
370
|
|
|
(22.2
|
)
|
|
177
|
|
|
1,840.4
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Large-cap securities
|
163.0
|
|
|
44.9
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
207.9
|
|
||||
Small-cap securities
|
47.4
|
|
|
19.3
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
66.7
|
|
||||
Total equity securities
|
210.4
|
|
|
64.2
|
|
|
114
|
|
|
—
|
|
|
—
|
|
|
274.6
|
|
||||
Other invested assets
|
49.6
|
|
|
33.8
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
83.4
|
|
||||
Total available-for-sale investments
|
$
|
2,059.9
|
|
|
$
|
160.7
|
|
|
487
|
|
|
$
|
(22.2
|
)
|
|
177
|
|
|
$
|
2,198.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
$
Change
|
||||||
Available-for-sale investments:
|
|
|
|
|
|
||||||
Unrealized holding gains:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
40.5
|
|
|
$
|
26.1
|
|
|
$
|
14.4
|
|
Equity securities
|
64.2
|
|
|
68.7
|
|
|
(4.5
|
)
|
|||
Other invested assets
|
33.8
|
|
|
31.4
|
|
|
2.4
|
|
|||
Unrealized gains
|
138.5
|
|
|
126.2
|
|
|
12.3
|
|
|||
Net deferred federal income tax liability (less valuation allowance)
|
(45.8
|
)
|
|
(41.6
|
)
|
|
(4.2
|
)
|
|||
Unrealized gains, net of tax
|
$
|
92.7
|
|
|
$
|
84.6
|
|
|
$
|
8.1
|
|
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
Income before federal income taxes
|
$
|
27.7
|
|
|
$
|
20.0
|
|
|
|
|
|
||||
Current tax expense
|
0.6
|
|
|
0.3
|
|
||
Deferred tax expense
|
7.2
|
|
|
4.6
|
|
||
|
7.8
|
|
|
4.9
|
|
||
Valuation allowance
|
(7.2
|
)
|
|
(4.6
|
)
|
||
Total federal income tax expense
|
0.6
|
|
|
0.3
|
|
||
Net income
|
$
|
27.1
|
|
|
$
|
19.7
|
|
|
|
|
|
|
($ millions)
|
2014
|
|
2013
|
||||
Continuing operations
|
$
|
(7.2
|
)
|
|
$
|
(4.6
|
)
|
Other comprehensive income
|
(0.2
|
)
|
|
(5.1
|
)
|
||
Change in valuation allowance
|
$
|
(7.4
|
)
|
|
$
|
(9.7
|
)
|
|
|
|
|
|
|
|
|
1.
|
Information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission;
|
2.
|
Information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure; and
|
3.
|
Our disclosure controls and procedures are effective in timely making known to them material information required to be included in our periodic filings with the Securities and Exchange Commission.
|
|
|
Exhibit
No.
|
|
Description of Exhibits
|
|
|
|
|
|
10.01
|
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated March 6, 2014, between State Auto Financial Corporation and Robert P. Restrepo, Jr.
|
|
|
|
|
10.02
|
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated March 6, 2014, between State Auto Financial Corporation and Steven E. English
|
|
|
|
|
10.03
|
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated March 6, 2014, between State Auto Financial Corporation and Clyde H. Fitch
|
|
|
|
|
10.04
|
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated March 6, 2014, between State Auto Financial Corporation and Jessica E. Buss
|
|
|
|
|
10.05
|
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated March 6, 2014, between State Auto Financial Corporation and James A. Yano
|
|
|
|
|
31.01
|
|
|
CEO certification required by Section 302 of Sarbanes Oxley Act of 2002
|
|
|
|
|
31.02
|
|
|
CFO certification required by Section 302 of Sarbanes Oxley Act of 2002
|
|
|
|
|
32.01
|
|
|
CEO certification required by Section 906 of Sarbanes Oxley Act of 2002
|
|
|
|
|
32.02
|
|
|
CFO certification required by Section 906 of Sarbanes Oxley Act of 2002
|
|
|
|
|
101.INS*
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH*
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL*
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF*
|
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
|
|
|
101.LAB*
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE*
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
|
|
|
State Auto Financial Corporation
|
|
|
Date: May 1, 2014
|
/s/ Steven E. English
|
|
Steven E. English
|
|
Chief Financial Officer
|
|
(Duly Authorized Officer and
|
|
Principal Financial Officer)
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Lorraine M. Siegworth
|
Lori Siegworth, Senior Vice President and Chief Strategy and
|
Organization Effectiveness Officer
(as authorized and approved
|
by the Compensation Committee of the Board of Directors)
|
/s/Robert P. Restrepo, Jr
|
Robert P. Restrepo, Jr.
|
|
Accepted as of: March 13, 2014
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Lorraine M. Siegworth
|
Lori Siegworth, Senior Vice President and Chief Strategy and
|
Organization Effectiveness Officer
(as authorized and approved
|
by the Compensation Committee of the Board of Directors)
|
/s/Steven E. English
|
Steven E. English
|
|
Accepted as of: March 21, 2014
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Lorraine M. Siegworth
|
Lori Siegworth, Senior Vice President and Chief Strategy and
|
Organization Effectiveness Officer
(as authorized and approved
|
by the Compensation Committee of the Board of Directors)
|
/s/Clyde H. Fitch
|
Clyde H. Fitch
|
|
Accepted as of: March 20, 2014
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Lorraine M. Siegworth
|
Lori Siegworth, Senior Vice President and Chief Strategy and
|
Organization Effectiveness Officer
(as authorized and approved
|
by the Compensation Committee of the Board of Directors)
|
/s/Jessica E. Buss
|
Jessica E. Buss
|
|
Accepted as of: March 13, 2014
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Lorraine M. Siegworth
|
Lori Siegworth, Senior Vice President and Chief Strategy and
|
Organization Effectiveness Officer
(as authorized and approved
|
by the Compensation Committee of the Board of Directors)
|
/s/James A. Yano
|
James A. Yano
|
|
Accepted as of: March 13, 2014
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: May 1, 2014
|
/s/ Robert P. Restrepo, Jr.
|
|
Robert P. Restrepo, Jr., Chief Executive Officer
|
|
(Principal executive officer)
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: May 1, 2014
|
/s/ Steven E. English
|
|
Steven E. English, Chief Financial Officer
|
|
(Principal financial officer)
|
|
/s/ Robert P. Restrepo, Jr.
|
|
Robert P. Restrepo, Jr.
|
|
Chief Executive Officer
|
|
May 1, 2014
|
|
/s/ Steven E. English
|
|
Steven E. English
|
|
Chief Financial Officer
|
|
May 1, 2014
|