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FORM 10-K
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ý
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Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Ohio
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31-1324304
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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518 East Broad Street, Columbus, Ohio
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43215-3976
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Form 10-K
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Item
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Description
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Page
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Part I
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1
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1A
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1B
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2
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3
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4
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Part II
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5
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6
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7
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7A
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8
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9
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9A
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9B
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Part III
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10
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11
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12
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13
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14
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Part IV
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15
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Glossary of Terms for State Auto Financial Corporation and Its Subsidiaries and Affiliates
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State Auto Financial or STFC
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Refers to our holding company, State Auto Financial Corporation.
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We, us, our or the Company
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Refers to STFC and its consolidated subsidiaries, namely State Auto Property & Casualty Insurance Company (“State Auto P&C”), Milbank Insurance Company (“Milbank”), State Auto Insurance Company of Ohio (“SA Ohio”), and Stateco Financial Services, Inc. (“Stateco”).
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State Auto Mutual
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Refers to State Automobile Mutual Insurance Company, which owns approximately 61.9% of STFC’s outstanding common shares. State Auto Mutual also owns Risk Evaluation & Design, LLC (“RED”), which previously acted as a managing general underwriter exclusively for the benefit of our Pooled Companies.
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STFC Pooled Companies
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Refers to State Auto P&C, Milbank, and SA Ohio.
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Mutual Pooled Companies
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Refers to State Auto Mutual, and certain subsidiaries and affiliates of State Auto Mutual, namely, State Auto Insurance Company of Wisconsin (“SA Wisconsin”), Meridian Security Insurance Company (“Meridian Security”), Patrons Mutual Insurance Company of Connecticut (“Patrons Mutual”), Rockhill Insurance Company (“RIC”), Plaza Insurance Company (“Plaza”), American Compensation Insurance Company (“American Compensation”) and Bloomington Compensation Insurance Company (“Bloomington Compensation”).
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Pooled Companies or our Pooled Companies
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Refers to the STFC Pooled Companies and the Mutual Pooled Companies.
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Rockhill Insurance Group
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Refers to Rockhill Holding Company, its insurance subsidiaries, namely RIC, Plaza, American Compensation and Bloomington Compensation, and its other non-insurance subsidiaries, including RTW, Inc. (“RTW”), a holding company that owns 100% of American Compensation and Bloomington Compensation.
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Rockhill Insurers
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Refers to RIC, Plaza, American Compensation and Bloomington Compensation.
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State Auto Group
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Refers to the Pooled Companies
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Glossary of Selected Insurance and Accounting Terms
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Accident year
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The calendar year in which loss events occur, regardless of when the losses are actually reported, booked or paid.
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Accounting standards codification or ASC
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The Codification is the single source of authoritative nongovernmental GAAP developed by the Financial Accounting Standards Board (“FASB”).
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Admitted insurer
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An insurer licensed to transact insurance business within a state and subject to comprehensive policy rate, form and market conduct regulation by that state’s insurance regulatory authority.
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American Institute of Certified Public Accountants or AICPA
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The AICPA represents the certified public accounting profession nationally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA also monitors and enforces compliance with the profession’s technical and ethical standards.
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Allocated loss adjustment expenses or ALAE
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The costs that can be related to a specific claim, which may include attorney fees, external claims adjusters and investigation costs, among others.
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Book value per share
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Total common stockholders’ equity divided by the number of common shares outstanding.
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Catastrophe loss
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Loss and ALAE from catastrophes, where catastrophes are defined as a severe loss caused by various natural events, including hurricanes, hailstorms, tornadoes, windstorms, earthquakes, severe winter weather and fires. Our catastrophe losses are those designated by the Insurance Services Office (“ISO”) Property Claim Services (“PCS”). PCS defines a catastrophe as an event that causes $25.0 million or more in industry insured property losses and affects a significant number of property and casualty policyholders and insurers.
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Combined ratio
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The sum of the loss and LAE ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
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Debt to capital ratio
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The ratio of notes payable to the sum of total stockholders’ equity and notes payable.
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Deferred acquisition costs or DAC
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Expenses that vary with, and are primarily related to, the production of new and renewal insurance business, and are deferred and amortized to achieve a matching of revenues and expenses when reported in financial statements prepared in accordance with GAAP.
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Direct written premiums
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The amounts charged by an insurer to insureds in exchange for coverages provided in accordance with the terms of an insurance contract. The amounts exclude the impact of all reinsurance premiums, either assumed or ceded.
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Duration
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A measure of the sensitivity of a financial asset’s price to interest rate movements.
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Earned premiums or premiums earned
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The portion of written premiums that applies to the expired portion of the policy term. Earned premiums are recognized as revenue under both SAP and GAAP.
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Excess and surplus lines insurance
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Specialized property and liability coverages written by non-admitted insurers. These coverages include exposures that do not fit within normal underwriting patterns, involve a degree of risk that is not commensurate with standard rates and/or policy forms, or are not written by admitted insurers because of general market conditions.
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Expense ratio or underwriting expense ratio
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For SAP, it is the ratio of (i) the sum of statutory underwriting and miscellaneous expenses incurred offset by miscellaneous income (collectively, “underwriting expenses”) to (ii) written premiums. For GAAP, it is the ratio of acquisition and operating expenses incurred to earned premiums.
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Generally accepted accounting principles or GAAP
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Accounting practices used in the United States of America determined by the FASB and American Institute of Certified Public Accountants (“AICPA”).
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Incurred but not reported reserves or IBNR
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Estimated losses and LAE that have been incurred but not yet reported to the insurer. This includes amounts for unreported claims, development on known cases, and re-opened claims.
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Loss adjustment expenses or LAE
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The expenses of settling claims, including legal and other fees, and the portion of general expenses allocated to claim settlement. LAE is comprised of ALAE and ULAE.
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Loss and LAE ratio or loss ratio
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For both SAP and GAAP, it is the ratio of incurred losses and LAE to earned premiums.
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Loss reserves
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Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance it has written. Reserves are established for losses and for LAE, and consist of case reserves and IBNR reserves.
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Managing general underwriter or MGU
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An independent insurance professional firm that acts as an intermediary between the insurer and retail agents, much like a wholesaler. MGUs frequently have binding authority to issue insurance policies on behalf of an insurer that fit into the underwriting guidelines provided by that insurer. MGUs typically are compensated by an override commission on the insurance coverages sold by their sub-agents.
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National Association of Insurance Commissioners or NAIC
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An organization of the insurance commissioners or directors of all 50 states, the District of Columbia and the five U.S. territories organized to promote consistency of regulatory practices and statutory accounting standards throughout the United States.
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Net premiums written to surplus ratio or leverage ratio
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A SAP calculation which measures statutory surplus available to absorb losses. This ratio is calculated by dividing the net statutory premiums written for a rolling twelve month period by the ending statutory surplus for the period. For example, a ratio of 1.5 means that for every dollar of surplus, the insurer wrote $1.50 in premiums.
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Net written premiums
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Direct written premiums plus assumed reinsurance premiums less ceded reinsurance premiums.
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Non-admitted insurer or surplus lines carrier
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An insurer that is not required to be licensed in a state but is allowed to do business in that state subject to certain regulatory oversight by that state’s insurance regulatory authority. Non-admitted insurers are not subject to most of the rate and form regulations imposed on admitted insurers because they write specialized property and liability coverages, also known as excess and surplus lines insurance, which allows them the flexibility to change coverages offered and rates charged without time constraints and financial costs associated with the filing process. As such, these insurers offer an opportunity for coverage for specialized exposures that otherwise might not be insurable.
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Retail agent or retail agency
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An independent insurance professional who represents, and acts as an intermediary for, admitted insurers, generally recommending, marketing and selling insurance products and services to insurance consumers.
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Return on average equity
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The percent derived by dividing net income by average total stockholders’ equity.
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Risk-based capital or RBC
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A measure adopted by the NAIC and state regulatory authorities for determining the minimum statutory capital and surplus requirements of insurers. Insurers having total adjusted capital less than that required by the RBC calculation will be subject to varying degrees of regulatory action depending on the level of capital inadequacy.
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Standard insurance
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Insurance which is typically written by admitted insurers. Our personal and business insurance segments are comprised of standard insurance.
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Statutory accounting practices or SAP
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The practices and procedures prescribed or permitted by state insurance regulatory authorities in the United States for recording transactions and preparing financial statements.
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Statutory surplus
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Under SAP, the amount remaining after all liabilities, including loss reserves, are subtracted from all admitted assets. Admitted assets are assets of an insurer prescribed or permitted by a state to be recognized on the balance sheet prepared in accordance with SAP.
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Unallocated loss adjustment expenses or ULAE
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The costs incurred in settling claims, such as in-house processing costs, which cannot be associated with a specific claim.
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Underwriting gain or loss
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Under SAP, earned premiums less loss and LAE and underwriting expenses.
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Unearned premiums
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The portion of written premiums that applies to the unexpired portion of the policy term. Unearned premiums are not recognized as revenues under both SAP and GAAP.
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Wholesale broker
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An independent insurance professional who offers specialized insurance products and serves as an intermediary between a retail agent and an insurer, while typically having no contact with the insured. A wholesale broker may represent both admitted and non-admitted insurers, and may offer both standard and excess and surplus lines insurance.
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•
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Commercial Insurance Segment - commercial auto, small commercial package, middle market commercial, workers’ compensation and other commercial
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State
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% of Total
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Ohio
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8.9
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%
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Texas
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7.9
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Kentucky
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6.2
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California
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4.8
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Florida
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4.8
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Minnesota
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4.2
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Tennessee
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3.7
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Georgia
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3.7
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Indiana
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3.7
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Connecticut
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3.6
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Illinois
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3.4
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Maryland
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3.4
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Pennsylvania
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3.2
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North Carolina
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3.2
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South Carolina
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3.1
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All others (1)
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32.2
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Total
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100.0
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%
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(1)
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No other single state accounted for 3.0% or more of the total direct written premiums written in 2016.
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Name of Executive Officer and
Position(s) with Company
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Age(1)
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Principal Occupation(s)
During the Past Five Years
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An Executive Officer
of the Company Since(2)
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Michael E. LaRocco,
Chairman, President and Chief Executive Officer
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60
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President and Chief Executive Officer of STFC and State Auto Mutual, 5/15 to present; Chairman of the Board of STFC, 1/16 to present; chief executive officer of Business Insurance Direct LLC, 10/11 to 4/15; chief executive officer of AssureStart Insurance Agency LLC, 1/13 to 7/14; chief executive officer of Fireman’s Fund Insurance Company, 3/08 to 7/11.
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2015
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Steven E. English,
Senior Vice President, Chief Financial Officer
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56
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Senior Vice President of STFC and State Auto Mutual, 8/13 to present; Vice President of STFC and State Auto Mutual, 5/06 to 7/13; Chief Financial Officer of STFC and State Auto Mutual, 12/06 to present.
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2006
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Melissa A. Centers,
Senior Vice President, Secretary and General Counsel
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45
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Senior Vice President, Secretary and General Counsel of STFC, 11/15 to present; General Counsel and Secretary of State Auto Mutual, 11/15 to present; Assistant Secretary of STFC and State Auto Mutual, 11/12 to 11/15; Associate General Counsel of STFC and State Auto Mutual, 3/12 to 11/15; Assistant General Counsel of STFC and State Auto Mutual, 6/10 to 3/12.
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2015
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Jessica E. Clark,
Senior Vice President, Director of Commercial and Specialty Lines
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45
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Senior Vice President, Director of Specialty Lines and Middle Markets of STFC and State Auto Mutual, 8/15 to present; Senior Vice President, Specialty Lines, of STFC and State Auto Mutual, 8/13 to 7/15; Vice President, Specialty Lines of STFC and State Auto Mutual, 1/11 to 7/13; Chief Operating Officer of Rockhill Insurance Company, 11/08 to 1/11.
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2011
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Kim B. Garland,
Senior Vice President, Director of Standard Lines
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51
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Senior Vice President of Standard Lines of STFC and State Auto Mutual, 8/15 to present; chief product officer of American Insurance Group, Inc.’s (“AIG”) consumer division, 1/13 to 12/14; chief underwriting officer of AIG’s global consumer insurance division, 12/12 to 1/13; president and chief executive officer of United Guaranty Corporation (“UGC”), an affiliate of AIG, 2/12 to 12/12; chief operating officer of UGC, 6/09 to 12/12.
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2015
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John M. Petrucci,
Senior Vice President, Customer Service |
58
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Senior Vice President, Customer Service, 04/16 to present; Senior Vice President, Service and Administration, 9/15 to present; Vice President and Director of Sales of STFC and State Auto Mutual, 3/00 to 9/15.
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2015
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Elise D. Spriggs,
Senior Vice President, External Relations
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46
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Senior Vice President, External and Government Affairs of STFC and State Auto Mutual, 3/16 to present; vice president and director of government relations, 7/11 to 6/15. Attorney, Carpenter, Lipps & Leland LLP, 06/15 to 03/16
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2016
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Paul M. Stachura,
Senior Vice President, Chief CARE Officer
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59
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Senior Vice President and Chief Claims Officer of STFC and State Auto Mutual, 9/15 to present; chief claims officer, of QBE Holdings, Inc., 5/13 to 9/15; chief claims and risk services officer of Fireman’s Fund Insurance Company, 5/05 to 4/13.
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2015
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Gregory A. Tacchetti,
Senior Vice President, Chief Information and Strategy Officer |
48
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Senior Vice President and Chief Information and Strategy Officer of STFC and State Auto Mutual, 8/15 to present; chief executive officer of AssureStart Insurance Agency LLC, 7/14 to 12/14; chief operating officer of AssureStart Insurance Agency LLC, 10/11 to 6/14; senior vice president and chief administrative officer of Fireman’s Fund Insurance Company, 2008 to 10/11.
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2015
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Scott A. Jones,
Vice President, Chief Investment Officer
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52
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Vice President and Chief Investment Officer of STFC and State Auto Mutual, 3/12 to present; Assistant Vice President of STFC and State Auto Mutual, 8/09 to 3/12.
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2012
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Matthew S. Mrozek,
Vice President, Chief Actuarial Officer |
48
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Vice President and Chief Actuarial Officer of STFC and State Auto Mutual, 3/09 to present.
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2015
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Matthew R. Pollak,
Vice President, Chief Accounting Officer and Treasurer |
51
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Vice President, Chief Accounting Officer and Treasurer of STFC and State Auto Mutual, 4/13 to present; vice president, corporate finance and accounting of American Safety Insurance Holdings, Ltd. 2/10 to 4/13.
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2013
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(1)
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Age as of March 1, 2017.
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(2)
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Each of the foregoing officers has been designated by our Board of Directors as an executive officer for purposes of Section 16 of the Exchange Act.
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•
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the timely availability of sufficient, reliable data;
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•
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our ability to conduct a complete and accurate analysis of available data;
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•
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our ability to timely recognize changes in trends and to project both the severity and frequency of losses with reasonable accuracy;
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uncertainties which are generally inherent in estimates and assumptions;
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our ability to project changes in certain operating expense levels with reasonable accuracy;
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the development, selection and application of appropriate rating formula or other pricing methodologies;
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our use of predictive modeling or other underwriting tools to assist with correctly and consistently achieving the intended results in underwriting and pricing;
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our ability to establish and consistently follow company underwriting guidelines;
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our ability to innovate with new product and/or pricing strategies, and the success of those innovations on implementation;
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our ability to secure regulatory approval of premium rates on an adequate and timely basis and effectively implement such rate changes;
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our ability to accurately predict consumer behavior, such as policyholder retention;
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our ability to properly classify our new and renewal business;
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•
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unanticipated court decisions, legislation or regulatory action;
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unanticipated changes or execution problems in our claim settlement practices, including our ability to recognize and respond to fraudulent or inflated claims;
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changing driving patterns for auto exposures including distracted driving; changing weather patterns (including those which may be related to climate change) for property exposures;
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technological innovations in automobiles, such as accident avoidance systems and advances leading to autonomous cars;
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changes in the medical sector of the economy; including healthcare reform cost shifting and other factors;
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unanticipated changes in auto repair costs, auto parts prices and used car prices;
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impact of inflation and other factors, such as demand surge on cost of construction materials, labor and other expenditures;
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our ability to monitor and manage property concentration in catastrophe prone areas, such as hurricane, earthquake and wind/hail regions; and
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the general state of the economy in the states in which we operate.
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2016
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High
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Low
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Dividend
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||||||
First Quarter
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$
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22.83
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$
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17.84
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$
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0.10
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Second Quarter
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22.22
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18.69
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0.10
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Third Quarter
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24.35
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20.76
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0.10
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Fourth Quarter
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27.42
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19.54
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0.10
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2015
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High
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Low
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Dividend
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||||||
First Quarter
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$
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24.80
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$
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20.36
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$
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0.10
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Second Quarter
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25.70
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20.63
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0.10
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Third Quarter
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27.37
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21.55
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0.10
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Fourth Quarter
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25.69
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20.01
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0.10
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(1) Adjusted for stock splits.
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12/31/2011
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12/31/2012
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12/31/2013
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12/31/2014
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12/31/2015
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12/31/2016
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||||||
STFC
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100.00
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92.85
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134.87
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143.73
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151.97
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201.34
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NASDAQ Index
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100.00
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116.71
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163.60
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187.86
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201.21
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219.26
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NASDAQ Ins. Index
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100.00
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123.33
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161.75
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178.82
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194.41
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228.72
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($ millions, except per share data)
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2016
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2015
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2014
|
|||||||
GAAP Basis:
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|||||||
Total revenues
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$
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1,405.4
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$
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1,368.6
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$
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1,172.7
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Income before federal income taxes
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$
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19.2
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$
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67.3
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$
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26.8
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Net income
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$
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21.0
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$
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51.2
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$
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107.4
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Stockholders’ equity
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$
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891.3
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$
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884.6
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$
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872.9
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Book value per share
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$
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21.31
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|
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$
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21.40
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$
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21.32
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Return on average equity
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2.4
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%
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5.8
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%
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|
13.0
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%
|
||||
Debt to capital ratio
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12.0
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%
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10.2
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%
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10.4
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%
|
||||
Cat loss and ALAE ratio
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6.3
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%
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4.0
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%
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3.0
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%
|
||||
Non-cat loss and LAE ratio
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66.6
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%
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63.9
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%
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|
68.8
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%
|
||||
Loss and LAE ratio
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72.9
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%
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67.9
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%
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71.8
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%
|
||||
Expense ratio
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33.3
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%
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33.6
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%
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33.7
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%
|
||||
Combined ratio
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106.2
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%
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101.5
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%
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105.5
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%
|
||||
Premiums written growth
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1.6
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%
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6.6
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%
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12.4
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%
|
||||
Investment yield
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3.1
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%
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3.1
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%
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3.5
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%
|
||||
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|||||||
SAP Basis:
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|||||||
Cat loss and ALAE ratio
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6.3
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%
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4.0
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%
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3.0
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%
|
||||
Non-cat loss and ALAE ratio
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60.9
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%
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57.7
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%
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62.6
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%
|
||||
ULAE ratio
|
5.9
|
%
|
|
6.3
|
%
|
|
6.5
|
%
|
||||
Loss and LAE ratio
|
73.1
|
%
|
|
68.0
|
%
|
|
72.1
|
%
|
||||
Expense ratio
|
33.4
|
%
|
|
33.9
|
%
|
|
33.9
|
%
|
||||
Combined ratio
|
106.5
|
%
|
|
101.9
|
%
|
|
106.0
|
%
|
||||
Net premiums written to surplus
|
1.5
|
|
|
1.6
|
|
|
1.5
|
|
•
|
Earned premiums in 2016 were $1,291.9 million compared to $1,270.5 million and $1,074.1 million in 2015 and 2014, respectively. Earned premium growth in 2016 was due to new business growth in the specialty insurance segment. Earned premium growth in 2015 was due to (i) the termination of the HO QS Arrangement (as defined below) and (ii) new business growth in workers’ compensation and the specialty insurance segment.
|
•
|
The SAP cat loss and ALAE ratio for 2016 was 6.3% compared to 4.0% and 3.0% for 2015 and 2014, respectively. The 2016 cat loss ratio increased when compared to the same 2015 and 2014 periods primarily driven by an increase in storm activity including wind and hail storms in Texas, Hurricane Matthew and wildfires in Tennessee.
|
•
|
The SAP non-catastrophe loss and ALAE ratio for 2016 was 60.9% compared to 57.7% and 62.6% for 2015 and 2014, respectively. The 2016 loss ratio increased compared to 2015 due primarily to higher severity in lines of business with auto exposures. The 2014 loss ratios were impacted by strengthening RED reserves within the specialty insurance segment by $96.7 million, which included the net cost of the ADC reinsurance agreement, as well as the impact of the HO QS Arrangement, which increased our SAP non-catastrophe loss and ALAE ratio 3.4 points in 2014.
|
•
|
Net realized gains on investments were $36.5 million compared to $24.7 million and $20.7 million in 2015 and 2014, respectively. Net realized gains in 2016 were impacted by the recognition of a $12.0 million gain from the redemption of a limited partnership investment in international equities. 2015 net realized gains increased $4.0 million when compared to 2014 partially driven by an increase in realized gains in the fixed income portfolio as a result of reducing our TIPS position due to our inflation outlook.
|
($ millions)
|
GAAP HO QS Arrangement Cession - Overall Results
|
||||||||||
December 31, 2014
|
As Reported
|
|
HO QS Cession
|
|
Pro Forma
without HO QS
Cession
|
||||||
Net written premiums
|
$
|
1,194.2
|
|
|
$
|
83.3
|
|
|
$
|
1,277.5
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
1,074.1
|
|
|
175.6
|
|
|
1,249.7
|
|
|||
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
32.3
|
|
|
19.0
|
|
|
51.3
|
|
|||
Non-cat loss and LAE
|
739.0
|
|
|
66.8
|
|
|
805.8
|
|
|||
Total Loss and LAE incurred
|
771.3
|
|
|
85.8
|
|
|
857.1
|
|
|||
Acquisition and operating expenses
|
361.9
|
|
|
70.0
|
|
|
431.9
|
|
|||
Net underwriting (loss) income
|
$
|
(59.1
|
)
|
|
$
|
19.8
|
|
|
$
|
(39.3
|
)
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
3.0
|
%
|
|
10.8
|
%
|
|
4.1
|
%
|
|||
Non-cat loss and LAE ratio
|
68.8
|
%
|
|
38.1
|
%
|
|
64.5
|
%
|
|||
Total Loss and LAE ratio
|
71.8
|
%
|
|
48.9
|
%
|
|
68.6
|
%
|
|||
Expense ratio
|
33.7
|
%
|
|
39.8
|
%
|
|
34.6
|
%
|
|||
Combined ratio
|
105.5
|
%
|
|
88.7
|
%
|
|
103.2
|
%
|
|||
|
($ millions)
|
SAP HO QS Arrangement Cession—Overall Results
|
||||||||||
December 31, 2014
|
As Reported
|
|
HO QS Cession
|
|
Pro Forma
without HO QS
Cession
|
||||||
Net written premiums
|
$
|
1,194.2
|
|
|
$
|
83.3
|
|
|
$
|
1,277.5
|
|
|
|
|
|
|
|
||||||
Earned premiums
|
1,074.1
|
|
|
175.6
|
|
|
1,249.7
|
|
|||
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
32.3
|
|
|
19.0
|
|
|
51.3
|
|
|||
Non-cat loss and ALAE
|
672.8
|
|
|
66.8
|
|
|
739.6
|
|
|||
Total Loss and ALAE
|
705.1
|
|
|
85.8
|
|
|
790.9
|
|
|||
ULAE
|
69.4
|
|
|
—
|
|
|
69.4
|
|
|||
Total Loss and LAE incurred
|
774.5
|
|
|
85.8
|
|
|
860.3
|
|
|||
Underwriting expenses
|
405.4
|
|
|
43.2
|
|
|
448.6
|
|
|||
Net underwriting (loss) income
|
$
|
(105.8
|
)
|
|
$
|
46.6
|
|
|
$
|
(59.2
|
)
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
3.0
|
%
|
|
10.8
|
%
|
|
4.1
|
%
|
|||
Non-cat loss and ALAE ratio
|
62.6
|
%
|
|
38.1
|
%
|
|
59.2
|
%
|
|||
Total loss and ALAE ratio
|
65.6
|
%
|
|
48.9
|
%
|
|
63.3
|
%
|
|||
ULAE ratio
|
6.5
|
%
|
|
—
|
%
|
|
5.6
|
%
|
|||
Total loss and LAE ratio
|
72.1
|
%
|
|
48.9
|
%
|
|
68.9
|
%
|
|||
Expense ratio
|
33.9
|
%
|
|
51.9
|
%
|
|
35.1
|
%
|
|||
Combined ratio
|
106.0
|
%
|
|
100.8
|
%
|
|
104.0
|
%
|
|||
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Net Written Premiums
|
|
|
|
|
|
||||||
Personal auto
|
$
|
333.8
|
|
|
$
|
334.4
|
|
|
$
|
354.4
|
|
Homeowners(1)
|
213.9
|
|
|
215.8
|
|
|
146.4
|
|
|||
Other personal
|
35.1
|
|
|
32.8
|
|
|
31.3
|
|
|||
Total personal
|
$
|
582.8
|
|
|
$
|
583.0
|
|
|
$
|
532.1
|
|
|
|
|
|
|
|
||||||
(1) December 31, 2014 net written premiums include $89.5 million of unearned premiums received by the STFC Pooled Companies on December 31, 2014 related to the expiration of the HO QS Arrangement.
|
($ millions)
Statutory Loss and LAE Ratios
|
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
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Personal auto
|
$
|
330.6
|
|
|
$
|
7.1
|
|
|
$
|
243.8
|
|
|
$
|
250.9
|
|
|
2.1
|
|
73.8
|
|
75.9
|
Homeowners
|
217.7
|
|
|
40.3
|
|
|
82.0
|
|
|
122.3
|
|
|
18.5
|
|
37.7
|
|
56.2
|
||||
Other personal
|
33.9
|
|
|
3.4
|
|
|
12.0
|
|
|
15.4
|
|
|
10.1
|
|
35.3
|
|
45.4
|
||||
Total personal
|
$
|
582.2
|
|
|
$
|
50.8
|
|
|
$
|
337.8
|
|
|
$
|
388.6
|
|
|
8.7
|
|
58.1
|
|
66.8
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
36.9
|
|
|
—
|
|
—
|
|
6.3
|
||||
Total Loss and LAE
|
$
|
582.2
|
|
|
$
|
50.8
|
|
|
$
|
337.8
|
|
|
$
|
425.5
|
|
|
8.7
|
|
58.1
|
|
73.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Personal auto
|
$
|
339.1
|
|
|
$
|
4.6
|
|
|
$
|
236.0
|
|
|
$
|
240.6
|
|
|
1.3
|
|
69.7
|
|
71.0
|
Homeowners
|
220.5
|
|
|
28.9
|
|
|
76.1
|
|
|
105.0
|
|
|
13.1
|
|
34.5
|
|
47.6
|
||||
Other personal
|
32.2
|
|
|
1.6
|
|
|
11.2
|
|
|
12.8
|
|
|
5.0
|
|
34.7
|
|
39.7
|
||||
Total personal
|
$
|
591.8
|
|
|
$
|
35.1
|
|
|
$
|
323.3
|
|
|
$
|
358.4
|
|
|
5.9
|
|
54.7
|
|
60.6
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
45.2
|
|
|
—
|
|
—
|
|
7.6
|
||||
Total Loss and LAE
|
$
|
591.8
|
|
|
$
|
35.1
|
|
|
$
|
323.3
|
|
|
$
|
403.6
|
|
|
5.9
|
|
54.7
|
|
68.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Personal auto
|
$
|
362.6
|
|
|
$
|
7.0
|
|
|
$
|
228.6
|
|
|
$
|
235.6
|
|
|
1.9
|
|
63.1
|
|
65.0
|
Homeowners
|
58.8
|
|
|
5.5
|
|
|
21.3
|
|
|
26.8
|
|
|
9.4
|
|
36.1
|
|
45.0
|
||||
Other personal
|
30.0
|
|
|
1.4
|
|
|
11.0
|
|
|
12.4
|
|
|
4.5
|
|
36.9
|
|
41.4
|
||||
Total personal
|
$
|
451.4
|
|
|
$
|
13.9
|
|
|
$
|
260.9
|
|
|
$
|
274.8
|
|
|
3.1
|
|
57.8
|
|
60.9
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
43.5
|
|
|
—
|
|
—
|
|
9.6
|
||||
Total Loss and LAE
|
$
|
451.4
|
|
|
$
|
13.9
|
|
|
$
|
260.9
|
|
|
$
|
318.3
|
|
|
3.1
|
|
57.8
|
|
70.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For the year ended December 31, 2014, the following table sets forth the reconciliation of as reported net written premiums to pro forma net written premiums that exclude the impact of the return of unearned premium associated with the termination of the HO QS Arrangement:
|
($ millions)
|
|
2015
|
|
2014
|
|
%
Change |
|||||
Net written premiums:
|
|
|
|
|
|
|
|||||
Homeowners
|
|
$
|
215.8
|
|
|
$
|
146.4
|
|
|
47.4
|
|
Homeowners cession
|
|
—
|
|
|
172.8
|
|
|
(100.0
|
)
|
||
Return of ceded premium
|
|
—
|
|
|
(89.5
|
)
|
|
(100.0
|
)
|
||
Pro forma net written premiums
|
|
$
|
215.8
|
|
|
$
|
229.7
|
|
|
(6.1
|
)
|
|
|
|
|
|
|
|
|||||
Personal insurance segment
|
|
$
|
583.0
|
|
|
$
|
532.1
|
|
|
9.6
|
|
Homeowners cession
|
|
—
|
|
|
172.8
|
|
|
(100.0
|
)
|
||
Return of ceded premium
|
|
—
|
|
|
(89.5
|
)
|
|
(100.0
|
)
|
||
Pro forma net written premiums
|
|
$
|
583.0
|
|
|
$
|
615.4
|
|
|
(5.3
|
)
|
|
|
|
|
|
|
|
•
|
Technology - In October of 2016, we launched our new digital platform for our personal auto and homeowners products in five states. The platform offers new products and coverages using new pricing models. In addition, the platform incorporates advanced data analytics, and it gives our agents the ability to submit, rate, quote, bind, issue and bill policies through a completely digital and integrated platform. During 2017, we plan on completing the rollout of this digital platform to our remaining states.
|
•
|
Pricing/Rates - As a result of the rate review process initiated in the fourth quarter of 2015, we revised our rate filings in numerous states and implemented policy form changes designed to improve profitability.
|
•
|
Claims - At the end of 2015, the claims department was re-aligned to create a dedicated personal auto team to improve our (i) claims handling processes, (ii) vendor utilization, (iii) fraud awareness and referral, and (iv) integration of data/metrics to expedite operational responses to identified trends.
|
($ millions)
|
SAP HO QS Arrangement Cession
– Homeowners
|
||||||||||
December 31, 2014
|
As
Reported
|
|
HO QS
Cession
|
|
Pro-Forma
without
HO QS
Cession
|
||||||
Earned premiums
|
$
|
58.8
|
|
|
$
|
175.6
|
|
|
$
|
234.4
|
|
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
5.5
|
|
|
19.0
|
|
|
24.5
|
|
|||
Non-cat loss and ALAE
|
21.3
|
|
|
66.8
|
|
|
88.1
|
|
|||
Total Loss and ALAE incurred
|
$
|
26.8
|
|
|
$
|
85.8
|
|
|
$
|
112.6
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
9.4
|
%
|
|
10.8
|
%
|
|
10.5
|
%
|
|||
Non-cat loss and ALAE ratio
|
36.1
|
%
|
|
38.1
|
%
|
|
37.6
|
%
|
|||
Total Loss and ALAE ratio
|
45.5
|
%
|
|
48.9
|
%
|
|
48.1
|
%
|
|||
|
|
|
|
|
|
($ millions)
|
SAP HO QS Arrangement Cession
– Personal Insurance Segment
|
||||||||||
December 31, 2014
|
As
Reported
|
|
HO QS
Cession
|
|
Pro-Forma
without
HO QS
Cession
|
||||||
Earned premiums
|
$
|
451.4
|
|
|
$
|
175.6
|
|
|
$
|
627.0
|
|
Losses and LAE incurred:
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
13.9
|
|
|
19.0
|
|
|
32.9
|
|
|||
Non-cat loss and ALAE
|
260.9
|
|
|
66.8
|
|
|
327.7
|
|
|||
Total Loss and ALAE incurred
|
$
|
274.8
|
|
|
$
|
85.8
|
|
|
$
|
360.6
|
|
|
|
|
|
|
|
||||||
Cat loss and ALAE ratio
|
3.1
|
%
|
|
10.8
|
%
|
|
5.2
|
%
|
|||
Non-cat loss and ALAE ratio
|
57.8
|
%
|
|
38.1
|
%
|
|
52.3
|
%
|
|||
Total Loss and ALAE ratio
|
60.9
|
%
|
|
48.9
|
%
|
|
57.5
|
%
|
|||
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Net Written Premiums
|
|
|
|
|
|
||||||
Commercial auto
|
$
|
85.9
|
|
|
$
|
102.5
|
|
|
$
|
101.8
|
|
Commercial multi-peril
|
117.1
|
|
|
119.9
|
|
|
121.4
|
|
|||
Fire & allied lines
|
73.0
|
|
|
73.6
|
|
|
76.9
|
|
|||
Other & product liability
|
69.5
|
|
|
73.9
|
|
|
71.4
|
|
|||
Workers’ compensation
|
92.0
|
|
|
92.8
|
|
|
83.9
|
|
|||
Other commercial
|
16.3
|
|
|
16.8
|
|
|
17.7
|
|
|||
Total business
|
$
|
453.8
|
|
|
$
|
479.5
|
|
|
$
|
473.1
|
|
|
|
|
|
|
|
($ millions)
Statutory Loss and LAE Ratios
|
Earned
Premium
|
|
Cat Loss
& ALAE
|
|
Non-Cat
Loss &
ALAE
|
|
Statutory
Loss &
LAE
|
|
Cat
loss
Ratio
|
|
Non-Cat
loss
Ratio
|
|
Total Loss
and LAE
Ratio
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial auto
|
$
|
94.8
|
|
|
$
|
0.9
|
|
|
$
|
74.1
|
|
|
$
|
75.0
|
|
|
1.0
|
|
|
78.2
|
|
|
79.2
|
|
Commercial multi-peril
|
119.2
|
|
|
12.8
|
|
|
63.9
|
|
|
76.7
|
|
|
10.8
|
|
|
53.6
|
|
|
64.4
|
|
||||
Fire & allied lines
|
73.5
|
|
|
9.5
|
|
|
30.6
|
|
|
40.1
|
|
|
12.8
|
|
|
41.6
|
|
|
54.4
|
|
||||
Other & product liability
|
71.0
|
|
|
—
|
|
|
42.4
|
|
|
42.4
|
|
|
—
|
|
|
59.7
|
|
|
59.7
|
|
||||
Workers’ compensation
|
93.8
|
|
|
—
|
|
|
58.4
|
|
|
58.4
|
|
|
—
|
|
|
62.3
|
|
|
62.3
|
|
||||
Other commercial
|
16.6
|
|
|
0.1
|
|
|
5.9
|
|
|
6.0
|
|
|
0.6
|
|
|
35.2
|
|
|
35.8
|
|
||||
Total business
|
$
|
468.9
|
|
|
$
|
23.3
|
|
|
$
|
275.3
|
|
|
$
|
298.6
|
|
|
5.0
|
|
|
58.7
|
|
|
63.7
|
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
29.4
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
||||
Total Loss and LAE
|
$
|
468.9
|
|
|
$
|
23.3
|
|
|
$
|
275.3
|
|
|
$
|
328.0
|
|
|
5.0
|
|
|
58.7
|
|
|
69.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial auto
|
$
|
101.6
|
|
|
$
|
0.6
|
|
|
$
|
83.8
|
|
|
$
|
84.4
|
|
|
0.6
|
|
|
82.4
|
|
|
83.0
|
|
Commercial multi-peril
|
120.0
|
|
|
8.3
|
|
|
73.4
|
|
|
81.7
|
|
|
6.9
|
|
|
61.2
|
|
|
68.1
|
|
||||
Fire & allied lines
|
74.9
|
|
|
6.8
|
|
|
26.8
|
|
|
33.6
|
|
|
9.1
|
|
|
35.8
|
|
|
44.9
|
|
||||
Other & product liability
|
73.1
|
|
|
—
|
|
|
45.4
|
|
|
45.4
|
|
|
—
|
|
|
62.1
|
|
|
62.1
|
|
||||
Workers’ compensation
|
89.3
|
|
|
—
|
|
|
54.6
|
|
|
54.6
|
|
|
—
|
|
|
61.1
|
|
|
61.1
|
|
||||
Other commercial
|
17.1
|
|
|
—
|
|
|
4.3
|
|
|
4.3
|
|
|
0.1
|
|
|
25.3
|
|
|
25.4
|
|
||||
Total business
|
$
|
476.0
|
|
|
$
|
15.7
|
|
|
$
|
288.3
|
|
|
$
|
304.0
|
|
|
3.3
|
|
|
60.6
|
|
|
63.9
|
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
27.3
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
||||
Total Loss and LAE
|
$
|
476.0
|
|
|
$
|
15.7
|
|
|
$
|
288.3
|
|
|
$
|
331.3
|
|
|
3.3
|
|
|
60.6
|
|
|
69.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial auto
|
$
|
98.5
|
|
|
$
|
0.8
|
|
|
$
|
56.6
|
|
|
$
|
57.4
|
|
|
0.8
|
|
|
57.5
|
|
|
58.3
|
|
Commercial multi-peril
|
118.0
|
|
|
7.0
|
|
|
68.1
|
|
|
75.1
|
|
|
6.0
|
|
|
57.6
|
|
|
63.6
|
|
||||
Fire & allied lines
|
77.4
|
|
|
8.7
|
|
|
34.1
|
|
|
42.8
|
|
|
11.3
|
|
|
44.0
|
|
|
55.3
|
|
||||
Other & product liability
|
70.2
|
|
|
—
|
|
|
32.6
|
|
|
32.6
|
|
|
—
|
|
|
46.5
|
|
|
46.5
|
|
||||
Workers’ compensation
|
78.1
|
|
|
—
|
|
|
45.9
|
|
|
45.9
|
|
|
—
|
|
|
58.8
|
|
|
58.8
|
|
||||
Other commercial
|
17.7
|
|
|
—
|
|
|
5.3
|
|
|
5.3
|
|
|
(0.3
|
)
|
|
30.3
|
|
|
30.0
|
|
||||
Total business
|
$
|
459.9
|
|
|
$
|
16.5
|
|
|
$
|
242.6
|
|
|
$
|
259.1
|
|
|
3.6
|
|
|
52.8
|
|
|
56.4
|
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
20.9
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
||||
Total Loss and LAE
|
$
|
459.9
|
|
|
$
|
16.5
|
|
|
$
|
242.6
|
|
|
$
|
280.0
|
|
|
3.6
|
|
|
52.8
|
|
|
60.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Technology - We anticipate introducing our new technology platform (as described in the personal insurance segment discussion) for our business owners’ policy and small commercial auto products to our business insurance agents in the second quarter of 2017.
|
•
|
Underwriting Improvements - During 2016, we implemented a number of changes within our business insurance segment, including (i) the decision to exit our large account solutions business; (ii) the restructuring of our regional sales teams; (iii) redefining our underwriting appetite for commercial exposures; (iv) pricing reviews designed to improve commercial auto profitability, and (v) expanding and strengthening relationships with our agency force.
|
($ millions)
Statutory Loss and LAE Ratios
|
Earned
Premium
|
|
Cat Loss
& ALAE
|
|
Non-Cat
Loss &
ALAE
|
|
Statutory
Loss &
LAE
|
|
Cat
loss
Ratio
|
|
Non-Cat
loss
Ratio
|
|
Total Loss
and LAE
Ratio
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
E&S property
|
$
|
40.4
|
|
|
$
|
6.9
|
|
|
$
|
13.5
|
|
|
$
|
20.4
|
|
|
17.0
|
|
33.5
|
|
50.5
|
E&S casualty
|
91.0
|
|
|
0.1
|
|
|
65.3
|
|
|
65.4
|
|
|
0.1
|
|
71.8
|
|
71.9
|
||||
Programs
|
109.4
|
|
|
0.5
|
|
|
94.9
|
|
|
95.4
|
|
|
0.5
|
|
86.7
|
|
87.2
|
||||
Total specialty
|
$
|
240.8
|
|
|
$
|
7.5
|
|
|
$
|
173.7
|
|
|
$
|
181.2
|
|
|
3.1
|
|
72.2
|
|
75.3
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
9.4
|
|
|
—
|
|
—
|
|
3.9
|
||||
Total Loss and LAE
|
$
|
240.8
|
|
|
$
|
7.5
|
|
|
$
|
173.7
|
|
|
$
|
190.6
|
|
|
3.1
|
|
72.2
|
|
79.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
E&S property
|
$
|
49.4
|
|
|
$
|
0.1
|
|
|
$
|
6.9
|
|
|
$
|
7.0
|
|
|
0.3
|
|
13.8
|
|
14.1
|
E&S casualty
|
64.0
|
|
|
—
|
|
|
41.2
|
|
|
41.2
|
|
|
—
|
|
64.4
|
|
64.4
|
||||
Programs
|
89.3
|
|
|
0.2
|
|
|
73.0
|
|
|
73.2
|
|
|
0.2
|
|
81.8
|
|
82.0
|
||||
Total specialty
|
$
|
202.7
|
|
|
$
|
0.3
|
|
|
$
|
121.1
|
|
|
$
|
121.4
|
|
|
0.2
|
|
59.7
|
|
59.9
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
—
|
|
4.0
|
||||
Total Loss and LAE
|
$
|
202.7
|
|
|
$
|
0.3
|
|
|
$
|
121.1
|
|
|
$
|
129.4
|
|
|
0.2
|
|
59.7
|
|
63.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
E&S property
|
$
|
49.0
|
|
|
$
|
1.9
|
|
|
$
|
9.0
|
|
|
$
|
10.9
|
|
|
3.9
|
|
18.3
|
|
22.2
|
E&S casualty
|
48.6
|
|
|
—
|
|
|
20.0
|
|
|
20.0
|
|
|
—
|
|
41.3
|
|
41.3
|
||||
Programs
|
65.2
|
|
|
—
|
|
|
140.3
|
|
|
140.3
|
|
|
—
|
|
215.2
|
|
215.2
|
||||
Total specialty
|
$
|
162.8
|
|
|
$
|
1.9
|
|
|
$
|
169.3
|
|
|
$
|
171.2
|
|
|
1.1
|
|
104.0
|
|
105.1
|
ULAE
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
—
|
|
3.1
|
||||
Total Loss and LAE
|
$
|
162.8
|
|
|
$
|
1.9
|
|
|
$
|
169.3
|
|
|
$
|
176.2
|
|
|
1.1
|
|
104.0
|
|
108.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
%
GAAP Loss
and LAE Ratio
|
|
2015
|
|
%
GAAP Loss
and LAE Ratio
|
|
2014
|
|
%
GAAP Loss
and LAE Ratio
|
||||||
Provision for losses and loss expenses occurring:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current year
|
$
|
915.4
|
|
|
70.8
|
|
$
|
852.8
|
|
|
67.1
|
|
$
|
726.2
|
|
|
67.6
|
Prior years
|
27.0
|
|
|
2.1
|
|
10.0
|
|
|
0.8
|
|
45.1
|
|
|
4.2
|
|||
Total losses and loss expenses
|
$
|
942.4
|
|
|
72.9
|
|
$
|
862.8
|
|
|
67.9
|
|
$
|
771.3
|
|
|
71.8
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
Redundancy /(Deficiency)
|
||||||||||
Non-cat loss and ALAE:
|
|
|
|
|
|
|
||||||
Personal insurance segment:
|
|
|
|
|
|
|
||||||
Personal auto
|
|
$
|
(7.9
|
)
|
|
$
|
(11.0
|
)
|
|
$
|
2.7
|
|
Homeowners
|
|
(0.4
|
)
|
|
1.6
|
|
|
2.9
|
|
|||
Other personal
|
|
0.5
|
|
|
—
|
|
|
0.8
|
|
|||
Personal segment
|
|
(7.8
|
)
|
|
(9.4
|
)
|
|
6.4
|
|
|||
|
|
|
|
|
|
|
||||||
Business insurance segment:
|
|
|
|
|
|
|
||||||
Commercial auto
|
|
(3.3
|
)
|
|
(10.5
|
)
|
|
5.3
|
|
|||
Commercial multi-peril
|
|
(1.8
|
)
|
|
(1.0
|
)
|
|
(2.1
|
)
|
|||
Fire & allied lines
|
|
(0.1
|
)
|
|
1.3
|
|
|
1.2
|
|
|||
Other & product liability
|
|
4.5
|
|
|
3.8
|
|
|
11.9
|
|
|||
Workers' compensation
|
|
4.2
|
|
|
5.1
|
|
|
5.6
|
|
|||
Other commercial
|
|
0.4
|
|
|
0.9
|
|
|
0.4
|
|
|||
Business segment
|
|
3.9
|
|
|
(0.4
|
)
|
|
22.3
|
|
|||
|
|
|
|
|
|
|
||||||
Specialty insurance segment:
|
|
|
|
|
|
|
||||||
E&S property
|
|
(1.9
|
)
|
|
5.2
|
|
|
3.9
|
|
|||
E&S casualty
|
|
(4.6
|
)
|
|
(2.7
|
)
|
|
3.1
|
|
|||
Programs
|
|
(14.3
|
)
|
|
(9.6
|
)
|
|
(98.5
|
)
|
|||
Specialty segment
|
|
(20.8
|
)
|
|
(7.1
|
)
|
|
(91.5
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cat loss and ALAE
|
|
1.4
|
|
|
0.7
|
|
|
5.2
|
|
|||
ULAE
|
|
(3.7
|
)
|
|
6.2
|
|
|
12.5
|
|
|||
Total
|
|
$
|
(27.0
|
)
|
|
$
|
(10.0
|
)
|
|
$
|
(45.1
|
)
|
|
|
|
|
|
|
|
•
|
ULAE was $3.7 million higher than anticipated in the reserves at December 31, 2015.
|
•
|
Catastrophe reserves contributed $1.4 million of favorable development.
|
•
|
The personal insurance segment non-catastrophe loss and ALAE reserves contributed $7.8 million of the adverse development, driven by personal auto which contributed $7.9 million of adverse development, primarily due to higher than anticipated bodily injury severity from the prior two accident years.
|
•
|
The business insurance segment non-catastrophe loss and ALAE reserves contributed $3.9 million of favorable development, driven by other & product liability and workers’ compensation of $4.5 million and $4.2 million , respectively. Favorable development in these lines was driven by lower than anticipated severity emerging from multiple accident years. The favorable development was partially offset by adverse development in commercial auto of $3.3 million, which was driven by higher than anticipated bodily injury severity from the prior two accident years.
|
•
|
The specialty insurance segment non-catastrophe loss and ALAE reserves accounted for $20.8 million of adverse development, which was driven by programs and E&S casualty with adverse development of $14.3 million and $4.6 million, respectively. Programs adverse development was driven by higher than expected severity in programs with commercial auto exposures. E&S casualty adverse development was driven by increased severity from the healthcare line, which was placed in run-off in the first quarter of 2016.
|
•
|
ULAE was $6.2 million lower than anticipated in the reserves at December 31, 2014.
|
•
|
We experienced favorable catastrophe loss development of $0.7 million in 2015 related to catastrophe losses primarily from accident year 2014.
|
•
|
In the personal and business insurance segments, the non-catastrophe loss and ALAE reserves contributed $9.8 million of unfavorable development. The personal insurance segment contributed $9.4 million of the adverse development, due to higher than anticipated bodily injury severity trends from the 2014 and 2013 accident years in personal auto. The business insurance segment contributed $0.4 million of unfavorable development, with adverse development in commercial auto offset by favorable development in other & product liability and workers’ compensation. Higher than anticipated bodily injury severity from the prior two accident years contributed to the commercial auto development, while the favorable development in the other & product liability and workers’ compensation lines was due to lower than anticipated severity emerging from multiple accident years.
|
•
|
In the specialty insurance segment, the non-catastrophe loss and ALAE reserves accounted for $7.1 million of adverse development, which was due to programs and E&S casualty with unfavorable development of $9.6 million and $2.7 million, respectively. Unfavorable development in programs was due to higher than expected severity in programs with commercial auto exposure. Partially offsetting the unfavorable development was favorable development of $5.2 million in the E&S property unit due to lower than anticipated severity emerging from accident year 2014.
|
($ millions)
Accident Year
|
2014
|
||
|
Redundancy /(Deficiency)
|
||
2004 and prior
|
$
|
1.4
|
|
2005
|
0.3
|
|
|
2006
|
0.5
|
|
|
2007
|
0.5
|
|
|
2008
|
1.3
|
|
|
2009
|
3.9
|
|
|
2010
|
(4.5
|
)
|
|
2011
|
(21.4
|
)
|
|
2012
|
(37.2
|
)
|
|
2013
|
10.1
|
|
|
Total
|
$
|
(45.1
|
)
|
|
|
•
|
ULAE was $12.5 million lower than anticipated in the reserves at December 31, 2013.
|
•
|
We experienced favorable catastrophe loss development of $5.2 million in 2014 related to catastrophe losses primarily from accident year 2013.
|
•
|
In the personal and business insurance segments, the non-catastrophe loss and ALAE reserves contributed $28.7 million of favorable development. The business insurance segment contributed $22.3 million of this favorable development, due to other & product liability, workers' compensation and commercial auto. The favorable development in these lines was due to lower than anticipated severity from accident years 2013 and prior. The personal insurance segment contributed $6.4 million of this favorable development, primarily from accident year 2013.
|
•
|
In the specialty insurance segment, the non-catastrophe loss and ALAE reserves accounted for $91.5 million of adverse development related primarily to accident years 2011 and 2012, which was due to RED reserve strengthening. Partially offsetting the unfavorable development of RED reserves was favorable development in the E&S property and casualty units. Favorable development in these lines was due to better than anticipated severity emerging primarily from the 2012 and 2013 accident years.
|
($ millions)
|
2016
|
|
2015
|
|
$
Change |
||||||
Personal insurance segment:
|
|
|
|
|
|
||||||
Personal auto
|
$
|
192.6
|
|
|
$
|
182.1
|
|
|
$
|
10.5
|
|
Homeowners
|
49.4
|
|
|
37.2
|
|
|
12.2
|
|
|||
Other personal
|
9.1
|
|
|
7.7
|
|
|
1.4
|
|
|||
Total personal
|
251.1
|
|
|
227.0
|
|
|
24.1
|
|
|||
Business insurance segment:
|
|
|
|
|
|
||||||
Commercial auto
|
103.3
|
|
|
97.1
|
|
|
6.2
|
|
|||
Commercial multi-peril
|
123.6
|
|
|
109.1
|
|
|
14.5
|
|
|||
Fire & allied lines
|
19.8
|
|
|
17.4
|
|
|
2.4
|
|
|||
Other & product liability
|
171.0
|
|
|
161.2
|
|
|
9.8
|
|
|||
Workers’ compensation
|
185.6
|
|
|
167.3
|
|
|
18.3
|
|
|||
Other business
|
2.6
|
|
|
1.5
|
|
|
1.1
|
|
|||
Total business
|
605.9
|
|
|
553.6
|
|
|
52.3
|
|
|||
Specialty insurance segment:
|
|
|
|
|
|
||||||
E&S property
|
29.8
|
|
|
21.4
|
|
|
8.4
|
|
|||
E&S casualty
|
137.4
|
|
|
96.6
|
|
|
40.8
|
|
|||
Programs
|
153.8
|
|
|
148.5
|
|
|
5.3
|
|
|||
Total specialty
|
321.0
|
|
|
266.5
|
|
|
54.5
|
|
|||
Total losses and loss expenses payable net of reinsurance recoverable on losses and loss expenses payable
|
$
|
1,178.0
|
|
|
$
|
1,047.1
|
|
|
$
|
130.9
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
% of
Total
|
|
2015
|
|
% of
Total
|
|||||
Cash and cash equivalents
|
$
|
51.1
|
|
|
1.9
|
|
$
|
58.1
|
|
|
2.3
|
|
Fixed maturities, at fair value:
|
|
|
|
|
|
|
|
|||||
Fixed maturities
|
1,947.5
|
|
|
73.1
|
|
1,856.7
|
|
|
73.4
|
|||
Treasury inflation-protected securities
|
161.8
|
|
|
6.1
|
|
144.0
|
|
|
5.7
|
|||
Total fixed maturities
|
2,109.3
|
|
|
79.2
|
|
2,000.7
|
|
|
79.1
|
|||
Notes receivable from affiliate (1)
|
70.0
|
|
|
2.6
|
|
70.0
|
|
|
2.8
|
|||
Equity securities, at fair value:
|
|
|
|
|
|
|
|
|||||
Large-cap securities
|
139.0
|
|
|
5.2
|
|
161.7
|
|
|
6.4
|
|||
Small-cap securities
|
79.1
|
|
|
3.0
|
|
69.6
|
|
|
2.8
|
|||
Mutual and exchange traded funds
|
164.7
|
|
|
6.2
|
|
79.3
|
|
|
3.1
|
|||
Total equity securities
|
382.8
|
|
|
14.4
|
|
310.6
|
|
|
12.3
|
|||
Other invested assets, at fair value:
|
|
|
|
|
|
|
|
|||||
International instruments
|
35.7
|
|
|
1.3
|
|
77.0
|
|
|
3.0
|
|||
Other invested assets
|
9.4
|
|
|
0.4
|
|
8.1
|
|
|
0.3
|
|||
Total other invested assets, at fair value
|
45.1
|
|
|
1.7
|
|
85.1
|
|
|
3.3
|
|||
Other invested assets, at cost
|
5.4
|
|
|
0.2
|
|
5.3
|
|
|
0.2
|
|||
Total portfolio
|
$
|
2,663.7
|
|
|
100.0
|
|
$
|
2,529.8
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|||||
(1)
|
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
|
$
|
74.4
|
|
|
$
|
75.2
|
|
Due after 1 year through 5 years
|
552.7
|
|
|
557.8
|
|
||
Due after 5 years through 10 years
|
280.2
|
|
|
282.9
|
|
||
Due after 10 years
|
574.9
|
|
|
582.1
|
|
||
U.S. government agencies residential mortgage-backed securities
|
613.7
|
|
|
611.3
|
|
||
Total
|
$
|
2,095.9
|
|
|
$
|
2,109.3
|
|
|
|
|
|
($ millions)
|
Fair Value
|
||||||||||||||||||
|
-200 bps
Change |
|
-100 bps
Change |
|
Actual
|
|
+100 bps
Change |
|
+200 bps
Change |
||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
438.6
|
|
|
$
|
422.1
|
|
|
$
|
404.7
|
|
|
$
|
386.0
|
|
|
$
|
366.7
|
|
Obligations of states and political subdivisions
|
697.3
|
|
|
671.3
|
|
|
643.7
|
|
|
613.8
|
|
|
583.3
|
|
|||||
Corporate securities
|
487.0
|
|
|
468.8
|
|
|
449.6
|
|
|
428.8
|
|
|
407.4
|
|
|||||
U.S. government agencies mortgage-backed securities
|
662.0
|
|
|
637.4
|
|
|
611.3
|
|
|
583.0
|
|
|
553.9
|
|
|||||
Balance as of December 31, 2016
|
$
|
2,284.9
|
|
|
$
|
2,199.6
|
|
|
$
|
2,109.3
|
|
|
$
|
2,011.6
|
|
|
$
|
1,911.3
|
|
|
|
|
|
|
|
|
|
|
|
Small-cap equity portfolio:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fair value ($ millions)
|
|
$
|
92.0
|
|
|
$
|
85.6
|
|
|
$
|
79.1
|
|
|
$
|
72.7
|
|
|
$
|
66.3
|
|
Change in Russell 2000 Index
|
|
+20%
|
|
|
+10%
|
|
|
—
|
|
|
-10
|
%
|
|
-20
|
%
|
|||||
Value as % of original value
|
|
116
|
%
|
|
108
|
%
|
|
100
|
%
|
|
92
|
%
|
|
84
|
%
|
Large-cap equity portfolio:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fair value ($ millions)
|
|
$
|
168.7
|
|
|
$
|
153.9
|
|
|
$
|
139.0
|
|
|
$
|
124.1
|
|
|
$
|
109.3
|
|
Change in S&P 500 Index
|
|
+20%
|
|
|
+10%
|
|
|
—
|
|
|
-10
|
%
|
|
-20
|
%
|
|||||
Value as % of original value
|
|
121
|
%
|
|
111
|
%
|
|
100
|
%
|
|
89
|
%
|
|
79
|
%
|
Mutual and exchange traded funds portfolio:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fair value ($ millions)
|
|
$
|
196.5
|
|
|
$
|
180.6
|
|
|
$
|
164.7
|
|
|
$
|
148.8
|
|
|
$
|
132.9
|
|
Change in Russell 2000 Index
|
|
+20%
|
|
|
+10%
|
|
|
—
|
|
|
-10
|
%
|
|
-20
|
%
|
|||||
Value as % of original value
|
|
119
|
%
|
|
110
|
%
|
|
100
|
%
|
|
90
|
%
|
|
81
|
%
|
Fund 1:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fair value ($ millions)
|
|
$
|
40.7
|
|
|
$
|
38.2
|
|
|
$
|
35.7
|
|
|
$
|
33.2
|
|
|
$
|
30.7
|
|
Change in MSCI EAFE Index
|
|
+20%
|
|
|
+10%
|
|
|
—
|
|
|
-10
|
%
|
|
-20
|
%
|
|||||
Value as % of original value
|
|
114
|
%
|
|
107
|
%
|
|
100
|
%
|
|
93
|
%
|
|
86
|
%
|
($ millions)
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Gross investment income:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
63.4
|
|
|
$
|
61.3
|
|
|
$
|
64.3
|
|
Equity securities
|
7.3
|
|
|
6.5
|
|
|
6.2
|
|
|||
Other
|
5.6
|
|
|
5.9
|
|
|
6.2
|
|
|||
Total gross investment income
|
76.3
|
|
|
73.7
|
|
|
76.7
|
|
|||
Less: Investment expenses
|
1.6
|
|
|
2.0
|
|
|
2.0
|
|
|||
Net investment income
|
$
|
74.7
|
|
|
$
|
71.7
|
|
|
$
|
74.7
|
|
|
|
|
|
|
|
||||||
Average invested assets (at cost)
|
$
|
2,443.0
|
|
|
$
|
2,313.3
|
|
|
$
|
2,153.7
|
|
Annualized investment yield
|
3.1
|
%
|
|
3.1
|
%
|
|
3.5
|
%
|
|||
Annualized investment yield, after tax
|
2.3
|
%
|
|
2.4
|
%
|
|
2.6
|
%
|
|||
Net investment income, after tax
|
$
|
55.7
|
|
|
$
|
55.3
|
|
|
$
|
57.0
|
|
Effective tax rate
|
25.5
|
%
|
|
22.8
|
%
|
|
23.7
|
%
|
|||
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
|
Realized
gains
(losses)
|
|
Proceeds
received
on sale
|
|
Realized
gains
(losses)
|
|
Proceeds
received
on sale
|
|
Realized
gains
(losses)
|
|
Proceeds
received
on sale
|
||||||||||||
Realized gains:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturities
|
$
|
2.8
|
|
|
$
|
211.6
|
|
|
$
|
4.6
|
|
|
$
|
180.7
|
|
|
$
|
3.1
|
|
|
$
|
159.9
|
|
Equity securities
|
29.2
|
|
|
147.0
|
|
|
29.6
|
|
|
135.1
|
|
|
21.3
|
|
|
89.2
|
|
||||||
Other invested assets
|
12.1
|
|
|
0.8
|
|
|
0.2
|
|
|
0.7
|
|
|
0.1
|
|
|
0.1
|
|
||||||
Total realized gains
|
$
|
44.1
|
|
|
$
|
359.4
|
|
|
$
|
34.4
|
|
|
$
|
316.5
|
|
|
$
|
24.5
|
|
|
$
|
249.2
|
|
Realized losses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales
|
$
|
(0.8
|
)
|
|
$
|
6.0
|
|
|
$
|
(1.8
|
)
|
|
$
|
9.7
|
|
|
$
|
(1.3
|
)
|
|
$
|
10.4
|
|
OTTI
|
(4.5
|
)
|
|
—
|
|
|
(7.9
|
)
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
OTTI
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total realized losses
|
$
|
(7.6
|
)
|
|
$
|
6.0
|
|
|
$
|
(9.7
|
)
|
|
$
|
9.7
|
|
|
$
|
(3.8
|
)
|
|
$
|
10.4
|
|
Net realized gains on investments
|
$
|
36.5
|
|
|
$
|
365.4
|
|
|
$
|
24.7
|
|
|
$
|
326.2
|
|
|
$
|
20.7
|
|
|
$
|
259.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Number
of
positions
|
|
Total
impairment
|
|
Number
of
positions
|
|
Total
impairment
|
|
Number
of
positions
|
|
Total
impairment
|
|||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Large-cap securities
|
2
|
|
|
$
|
(0.6
|
)
|
|
1
|
|
|
$
|
(2.2
|
)
|
|
1
|
|
|
$
|
(0.3
|
)
|
Small-cap securities
|
28
|
|
|
(3.9
|
)
|
|
41
|
|
|
(5.7
|
)
|
|
33
|
|
|
(2.2
|
)
|
|||
Fixed maturities
|
1
|
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total OTTI
|
31
|
|
|
$
|
(6.8
|
)
|
|
42
|
|
|
$
|
(7.9
|
)
|
|
34
|
|
|
$
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except number 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
|
$
|
401.9
|
|
|
$
|
8.9
|
|
|
22
|
|
|
$
|
(6.1
|
)
|
|
30
|
|
|
$
|
404.7
|
|
Obligations of states and political subdivisions
|
634.6
|
|
|
12.3
|
|
|
152
|
|
|
(3.2
|
)
|
|
26
|
|
|
643.7
|
|
||||
Corporate securities
|
445.7
|
|
|
6.1
|
|
|
59
|
|
|
(2.2
|
)
|
|
20
|
|
|
449.6
|
|
||||
U.S. government agencies mortgage-backed securities
|
613.7
|
|
|
8.5
|
|
|
48
|
|
|
(10.9
|
)
|
|
54
|
|
|
611.3
|
|
||||
Total fixed maturities
|
2,095.9
|
|
|
35.8
|
|
|
281
|
|
|
(22.4
|
)
|
|
130
|
|
|
2,109.3
|
|
||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Large-cap securities
|
108.9
|
|
|
32.7
|
|
|
32
|
|
|
(2.6
|
)
|
|
12
|
|
|
139.0
|
|
||||
Small-cap securities
|
57.2
|
|
|
21.9
|
|
|
73
|
|
|
—
|
|
|
—
|
|
|
79.1
|
|
||||
Mutual and exchange traded funds
|
157.0
|
|
|
8.5
|
|
|
9
|
|
|
(0.8
|
)
|
|
2
|
|
|
164.7
|
|
||||
Total equity securities
|
323.1
|
|
|
63.1
|
|
|
114
|
|
|
(3.4
|
)
|
|
14
|
|
|
382.8
|
|
||||
Other invested assets
|
25.5
|
|
|
19.6
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
45.1
|
|
||||
Total available-for-sale investments
|
$
|
2,444.5
|
|
|
$
|
118.5
|
|
|
397
|
|
|
$
|
(25.8
|
)
|
|
144
|
|
|
$
|
2,537.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
$
Change
|
||||||
Available-for-sale investments
|
|
|
|
|
|
||||||
Unrealized gains:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
13.4
|
|
|
$
|
27.8
|
|
|
$
|
(14.4
|
)
|
Equity securities
|
59.7
|
|
|
45.4
|
|
|
14.3
|
|
|||
Other invested assets
|
19.6
|
|
|
28.2
|
|
|
(8.6
|
)
|
|||
Unrealized gains
|
92.7
|
|
|
101.4
|
|
|
(8.7
|
)
|
|||
Deferred federal income tax liability
|
(29.9
|
)
|
|
(32.9
|
)
|
|
3.0
|
|
|||
Unrealized gains, net of tax
|
$
|
62.8
|
|
|
$
|
68.5
|
|
|
$
|
(5.7
|
)
|
|
|
|
|
|
|
($ millions)
|
Carrying
Value
|
|
Fair
Value
|
|
Interest
Rate
|
|||||
Subordinated Debentures due 2033: issued $15.5 million, May 2003 with variable interest adjusting quarterly
|
$
|
15.2
|
|
|
$
|
15.2
|
|
|
5.13
|
%
|
FHLB loan due 2033: issued $85.0 million, July 2013 with fixed interest
|
85.4
|
|
|
85.6
|
|
|
5.03
|
%
|
||
FHLB loan due 2021: issued $21.5 million , September 2016 with fixed interest
|
21.5
|
|
|
21.0
|
|
|
1.73
|
%
|
||
Total notes payable
|
$
|
122.1
|
|
|
$
|
121.8
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Total
|
|
Due
1 year
or less
|
|
Due
1-3
years
|
|
Due
3-5
years
|
|
Due
after 5
years
|
||||||||||||
Direct loss and ALAE reserves(1)
|
$
|
1,178.0
|
|
|
$
|
487.7
|
|
|
$
|
416.1
|
|
|
$
|
146.8
|
|
|
$
|
127.4
|
|
||
Notes payable(2):
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subordinated Debentures due 2033:
issued $15.5, May 2003 with variable interest(3) adjusting
quarterly
|
15.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.5
|
|
|||||||
FHLB loan due 2033; issued $85.0 million, July 2013 with fixed interest
|
85.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85.0
|
|
|||||||
FHLB loan due 2021: issued $21.5 million , September 2016 with fixed interest
|
21.5
|
|
|
|
|
|
|
|
|
21.5
|
|
||||||||||
Total notes payable
|
122.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122.0
|
|
|||||||
Interest payable (2):
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subordinated Debentures due 2033:
issued $15.5, May 2003 with variable interest(3) adjusting
quarterly
|
13.8
|
|
|
0.8
|
|
|
1.6
|
|
|
1.6
|
|
|
9.8
|
|
|||||||
FHLB loan due 2021: issued $21.5 million , September 2016 with fixed interest
|
1.9
|
|
|
0.4
|
|
|
0.7
|
|
|
0.8
|
|
|
—
|
|
|||||||
FHLB loan due 2033; issued $85.0 million, July 2013 with fixed interest
|
74.9
|
|
|
4.3
|
|
|
8.6
|
|
|
8.6
|
|
|
53.4
|
|
|||||||
Total interest payable
|
90.6
|
|
|
5.5
|
|
|
10.9
|
|
|
11.0
|
|
|
63.2
|
|
|||||||
Postretirement benefits
|
13.1
|
|
|
1.5
|
|
|
2.9
|
|
|
2.7
|
|
|
6.0
|
|
|||||||
Pension funding(4)
|
47.7
|
|
|
4.3
|
|
|
8.9
|
|
|
9.2
|
|
|
25.3
|
|
|||||||
Total
|
$
|
1,451.4
|
|
|
$
|
499.0
|
|
|
$
|
438.8
|
|
|
$
|
169.7
|
|
|
$
|
343.9
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1)
|
We derived expected payment patterns separately for the direct loss and ALAE reserves. Amounts included the STFC Pooled Companies net additional share of transactions assumed from State Auto Mutual through the Pooling Arrangement. For a reconciliation of management’s best estimate, see “Critical Accounting Policies – Losses and Loss Expenses Payable” included in this Item 7. These patterns were applied to the December 31, 2016, loss and ALAE payable to generate estimated annual incremental loss and ALAE payments for each subsequent calendar year. These amounts are based on historical payment patterns and do not represent actual contractual obligations. The actual payment amounts and the related timing of those payments could differ significantly from these estimates.
|
||||||||||||||||||||
(2)
|
For a discussion of these debt instruments, see “Liquidity and Capital Resources—Borrowing Arrangements” included in this Item 7.
|
||||||||||||||||||||
(3)
|
Interest on the subordinated debentures was calculated using an interest rate equal to the three-month LIBOR rate at December 31, 2016 of 0.9307% plus 4.20%, or 5.1307%.
|
||||||||||||||||||||
(4)
|
These amounts are estimates of ERISA minimum funding levels based on adjustments to prior year assumptions for our defined benefit pension plan and do not represent an estimate of our expected contributions. Funding levels generally are not determined until later in the year with respect to the contribution year. See Note 10, “Pension and Postretirement Benefits Plans” to our consolidated financial statements included in Item 8 of this Form 10-K for a tabular presentation of STFC’s share of expected benefit payments from the State Auto Group’s defined benefit pension plan.
|
||||||||||||||||||||
|
|
|
Statutory Leverage Ratios
|
2016
|
|
2015
|
|
2014
|
||||
State Auto P&C
|
1.5
|
|
|
1.5
|
|
|
1.5
|
|
|
Milbank
|
1.9
|
|
|
1.9
|
|
|
1.9
|
|
|
Weighted Average
|
1.5
|
|
|
1.6
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|||
Direct loss and ALAE reserve:
|
|
|
|
|||
STFC Pooled Companies
|
$
|
536.9
|
|
|
508.1
|
|
Assumed by STFC Pooled Companies
|
643.8
|
|
|
529.1
|
|
|
Total direct loss and ALAE reserve
|
1,180.7
|
|
|
1,037.2
|
|
|
Direct ULAE reserve:
|
|
|
|
|||
STFC Pooled Companies
|
31.3
|
|
|
27.9
|
|
|
Assumed by STFC Pooled Companies
|
32.2
|
|
|
25.5
|
|
|
Total direct ULAE reserve
|
63.5
|
|
|
53.4
|
|
|
Direct salvage and subrogation recoverable:
|
|
|
|
|||
STFC Pooled Companies
|
(22.5
|
)
|
|
(20.4
|
)
|
|
Assumed by STFC Pooled Companies
|
(4.5
|
)
|
|
(4.3
|
)
|
|
Total direct salvage and subrogation recoverable
|
(27.0
|
)
|
|
(24.7
|
)
|
|
Reinsurance recoverable
|
(3.6
|
)
|
|
(5.9
|
)
|
|
Assumed reinsurance
|
5.1
|
|
|
5.0
|
|
|
Reinsurance assumed by STFC Pooled Companies
|
(40.7
|
)
|
|
(17.9
|
)
|
|
Total losses and loss expenses payable, net of reinsurance recoverable on losses and loss expenses payable of $3.6 million and $5.9 million in 2016 and 2015, respectively
|
$
|
1,178.0
|
|
|
1,047.1
|
|
|
|
|
|
($ millions)
|
Ending
Loss &
ALAE
Case &
Formula
|
|
Ending
Loss &
ALAE
IBNR
|
|
Ending
ULAE
Bulk
|
|
Total
Reserves
|
|||||
December 31, 2016
|
|
|
|
|||||||||
Personal insurance segment:
|
|
|
|
|
|
|
|
|||||
Personal auto
|
$
|
121.6
|
|
|
60.2
|
|
|
10.8
|
|
|
192.6
|
|
Homeowners
|
32.5
|
|
|
14.1
|
|
|
2.8
|
|
|
49.4
|
|
|
Other personal
|
7.2
|
|
|
1.7
|
|
|
0.2
|
|
|
9.1
|
|
|
Total personal
|
161.3
|
|
|
76.0
|
|
|
13.8
|
|
|
251.1
|
|
|
Business insurance segment:
|
|
|
|
|
|
|
|
|||||
Commercial auto
|
50.3
|
|
|
48.9
|
|
|
4.1
|
|
|
103.3
|
|
|
Commercial multi-peril
|
57.3
|
|
|
59.4
|
|
|
6.9
|
|
|
123.6
|
|
|
Fire & allied lines
|
15.0
|
|
|
4.0
|
|
|
0.8
|
|
|
19.8
|
|
|
Other & product liability
|
48.0
|
|
|
108.9
|
|
|
14.1
|
|
|
171.0
|
|
|
Workers’ compensation
|
68.0
|
|
|
106.0
|
|
|
11.6
|
|
|
185.6
|
|
|
Other commercial
|
1.3
|
|
|
1.2
|
|
|
0.1
|
|
|
2.6
|
|
|
Total business
|
239.9
|
|
|
328.4
|
|
|
37.6
|
|
|
605.9
|
|
|
Specialty insurance segment:
|
|
|
|
|
|
|
|
|||||
E&S property
|
12.0
|
|
|
16.2
|
|
|
1.6
|
|
|
29.8
|
|
|
E&S casualty
|
30.2
|
|
|
99.5
|
|
|
7.7
|
|
|
137.4
|
|
|
Programs
|
68.1
|
|
|
82.6
|
|
|
3.1
|
|
|
153.8
|
|
|
Total specialty
|
110.3
|
|
|
198.3
|
|
|
12.4
|
|
|
321.0
|
|
|
Total losses and loss expenses payable net of reinsurance recoverable on losses and loss expenses payable
|
$
|
511.5
|
|
|
602.7
|
|
|
63.8
|
|
|
1,178.0
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Ending
Loss &
ALAE
Case &
Formula
|
|
Ending
Loss &
ALAE
IBNR
|
|
Ending
ULAE
Bulk
|
|
Total
Reserves
|
|||||
December 31, 2015
|
|
|
|
|||||||||
Personal insurance segment:
|
|
|
|
|
|
|
|
|||||
Personal auto
|
$
|
113.0
|
|
|
59.2
|
|
|
9.9
|
|
|
182.1
|
|
Homeowners
|
25.1
|
|
|
10.1
|
|
|
2.0
|
|
|
37.2
|
|
|
Other personal
|
5.4
|
|
|
2.1
|
|
|
0.2
|
|
|
7.7
|
|
|
Total personal
|
143.5
|
|
|
71.4
|
|
|
12.1
|
|
|
227.0
|
|
|
Business insurance segment:
|
|
|
|
|
|
|
|
|||||
Commercial auto
|
54.9
|
|
|
38.6
|
|
|
3.6
|
|
|
97.1
|
|
|
Commercial multi-peril
|
51.4
|
|
|
51.6
|
|
|
6.1
|
|
|
109.1
|
|
|
Fire & allied lines
|
15.2
|
|
|
1.7
|
|
|
0.5
|
|
|
17.4
|
|
|
Other & product liability
|
53.7
|
|
|
94.1
|
|
|
13.4
|
|
|
161.2
|
|
|
Workers’ compensation
|
59.2
|
|
|
99.7
|
|
|
8.4
|
|
|
167.3
|
|
|
Other commercial
|
0.8
|
|
|
0.6
|
|
|
0.1
|
|
|
1.5
|
|
|
Total business
|
235.2
|
|
|
286.3
|
|
|
32.1
|
|
|
553.6
|
|
|
Specialty insurance segment:
|
|
|
|
|
|
|
|
|||||
E&S property
|
6.5
|
|
|
12.5
|
|
|
2.4
|
|
|
21.4
|
|
|
E&S casualty
|
18.5
|
|
|
72.6
|
|
|
5.5
|
|
|
96.6
|
|
|
Programs
|
75.5
|
|
|
71.3
|
|
|
1.7
|
|
|
148.5
|
|
|
Total specialty
|
100.5
|
|
|
156.4
|
|
|
9.6
|
|
|
266.5
|
|
|
Total losses and loss expenses payable net of reinsurance recoverable on losses and loss expenses payable
|
$
|
479.2
|
|
|
514.1
|
|
|
53.8
|
|
|
1,047.1
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Pension
|
|
Postretirement
|
||||||||||||||||
|
Discount rate
|
|
Discount rate
|
||||||||||||||||
|
3.75%
|
|
4.00%
|
|
4.25%
|
|
3.75%
|
|
4.00%
|
|
4.25%
|
||||||||
Benefit obligation
|
$
|
295.3
|
|
|
284.4
|
|
|
274.2
|
|
|
$
|
18.4
|
|
|
18.8
|
|
|
19.3
|
|
Net periodic benefit cost (benefit)
|
$
|
8.5
|
|
|
7.5
|
|
|
6.6
|
|
|
$
|
(4.7
|
)
|
|
(4.6
|
)
|
|
(4.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Expected return on plan assets
|
|
|
|
|
|
|
||||||||||||
|
6.75%
|
|
7.00%
|
|
7.25%
|
|
|
|
|
|
|
||||||||
Net periodic benefit cost
|
$
|
8.1
|
|
|
7.5
|
|
|
6.9
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Income before federal income taxes
|
$
|
19.2
|
|
|
$
|
67.3
|
|
|
$
|
26.8
|
|
|
|
|
|
|
|
||||||
Current tax (benefit) expense
|
(1.7
|
)
|
|
2.9
|
|
|
0.1
|
|
|||
Deferred tax (benefit) expense
|
(0.1
|
)
|
|
13.2
|
|
|
1.9
|
|
|||
|
(1.8
|
)
|
|
16.1
|
|
|
2.0
|
|
|||
Valuation allowance
|
—
|
|
|
—
|
|
|
(82.6
|
)
|
|||
Total federal income tax (benefit) expense
|
(1.8
|
)
|
|
16.1
|
|
|
(80.6
|
)
|
|||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
|
|
|
|
|
|
/s/ Ernst & Young LLP
|
|
|
Columbus, Ohio
|
|
|
March 1, 2017
|
|
|
/s/ Ernst & Young LLP
|
|
|
Columbus, Ohio
|
|
|
March 1, 2017
|
|
|
($ and shares in millions, except per share amounts)
|
December 31
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value (amortized cost $2,095.9 and $1,972.9, respectively)
|
$
|
2,109.3
|
|
|
$
|
2,000.7
|
|
Equity securities, available-for-sale, at fair value (cost $323.1 and $265.2, respectively)
|
382.8
|
|
|
310.6
|
|
||
Other invested assets, available-for-sale, at fair value (cost $25.5 and $56.9, respectively)
|
45.1
|
|
|
85.1
|
|
||
Other invested assets
|
5.4
|
|
|
5.3
|
|
||
Notes receivable from affiliate
|
70.0
|
|
|
70.0
|
|
||
Total investments
|
2,612.6
|
|
|
2,471.7
|
|
||
Cash and cash equivalents
|
51.1
|
|
|
58.1
|
|
||
Accrued investment income and other assets
|
40.0
|
|
|
35.7
|
|
||
Deferred policy acquisition costs (affiliated net assumed $50.7 and $49.3, respectively)
|
129.8
|
|
|
129.1
|
|
||
Reinsurance recoverable on losses and loss expenses payable
|
3.6
|
|
|
5.9
|
|
||
Prepaid reinsurance premiums
|
6.1
|
|
|
6.8
|
|
||
Due from affiliate
|
—
|
|
|
5.9
|
|
||
Current federal income taxes
|
6.7
|
|
|
4.9
|
|
||
Net deferred federal income taxes
|
102.1
|
|
|
102.5
|
|
||
Property and equipment, at cost (net of accumulated depreciation of $6.6 and $6.3, respectively)
|
7.4
|
|
|
7.6
|
|
||
Total assets
|
$
|
2,959.4
|
|
|
$
|
2,828.2
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Losses and loss expenses payable (affiliated net assumed $630.9 and $532.4, respectively)
|
$
|
1,181.6
|
|
|
1,053.0
|
|
|
Unearned premiums (affiliated net assumed $220.9 and $214.2, respectively)
|
617.8
|
|
|
616.3
|
|
||
Notes payable (affiliates $15.2 and $15.2, respectively)
|
122.1
|
|
|
100.5
|
|
||
Postretirement and pension benefits (affiliated net ceded $40.1 and $56.0, respectively)
|
74.4
|
|
|
104.0
|
|
||
Due to affiliate
|
2.4
|
|
|
—
|
|
||
Other liabilities (affiliated net assumed $11.0 and affiliated net ceded $8.4, respectively)
|
69.8
|
|
|
69.8
|
|
||
Total liabilities
|
2,068.1
|
|
|
1,943.6
|
|
||
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; 48.6 and 48.1 shares issued, respectively, at stated value of $2.50 per share
|
121.6
|
|
|
120.4
|
|
||
Treasury stock, 6.8 and 6.8 shares, respectively, at cost
|
(116.5
|
)
|
|
(116.3
|
)
|
||
Additional paid-in capital
|
159.9
|
|
|
153.5
|
|
||
Accumulated other comprehensive income (affiliated net ceded $53.7 and $56.7, respectively)
|
32.5
|
|
|
37.6
|
|
||
Retained earnings
|
693.8
|
|
|
689.4
|
|
||
Total stockholders’ equity
|
891.3
|
|
|
884.6
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,959.4
|
|
|
$
|
2,828.2
|
|
|
|
|
|
($ millions, except per share amounts)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Earned premiums (affiliated net assumed $472.0, $437.6 and $212.4, respectively)
|
$
|
1,291.9
|
|
|
$
|
1,270.5
|
|
|
$
|
1,074.1
|
|
Net investment income (affiliates $4.9, $4.9 and $4.9, respectively)
|
74.7
|
|
|
71.7
|
|
|
74.7
|
|
|||
Net realized gain on investments:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(6.8
|
)
|
|
(7.9
|
)
|
|
(2.5
|
)
|
|||
Portion of loss recognized in other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other net realized investment gains
|
43.3
|
|
|
32.2
|
|
|
23.2
|
|
|||
Total net realized gain on investments
|
36.5
|
|
|
24.3
|
|
|
20.7
|
|
|||
Other income (affiliates $2.3, $2.1 and $1.9, respectively)
|
2.3
|
|
|
2.1
|
|
|
3.2
|
|
|||
Total revenues
|
1,405.4
|
|
|
1,368.6
|
|
|
1,172.7
|
|
|||
Losses and loss expenses (affiliated net assumed $383.8, $293.3 and $250.8, respectively)
|
942.4
|
|
|
862.8
|
|
|
771.3
|
|
|||
Acquisition and operating expenses (affiliated net assumed $285.8, $248.6 and $156.9, respectively)
|
430.4
|
|
|
426.8
|
|
|
361.9
|
|
|||
Interest expense (affiliates $0.8, $0.7 and $0.7, respectively)
|
5.5
|
|
|
5.4
|
|
|
5.4
|
|
|||
Other expenses
|
7.9
|
|
|
6.3
|
|
|
7.3
|
|
|||
Total expenses
|
1,386.2
|
|
|
1,301.3
|
|
|
1,145.9
|
|
|||
Income before federal income taxes
|
19.2
|
|
|
67.3
|
|
|
26.8
|
|
|||
Federal income tax (benefit) expense:
|
|
|
|
|
|
||||||
Current
|
(1.7
|
)
|
|
2.9
|
|
|
0.1
|
|
|||
Deferred
|
(0.1
|
)
|
|
13.2
|
|
|
(80.7
|
)
|
|||
Total federal income tax (benefit) expense
|
(1.8
|
)
|
|
16.1
|
|
|
(80.6
|
)
|
|||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.50
|
|
|
$
|
1.25
|
|
|
$
|
2.63
|
|
Diluted
|
$
|
0.50
|
|
|
$
|
1.23
|
|
|
$
|
2.60
|
|
Dividends paid per common share
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
($ millions)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
||||||
Net change in unrealized holding gains (losses) on investments:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) arising during year
|
27.8
|
|
|
(39.2
|
)
|
|
59.8
|
|
|||
Reclassification adjustments for gains realized in net income
|
(36.5
|
)
|
|
(24.7
|
)
|
|
(20.7
|
)
|
|||
Income tax benefit (expense)
|
3.0
|
|
|
22.4
|
|
|
(13.7
|
)
|
|||
Total change in net unrealized holding gains (losses) on investments
|
(5.7
|
)
|
|
(41.5
|
)
|
|
25.4
|
|
|||
Net unrecognized benefit plan obligations:
|
|
|
|
|
|
||||||
Net actuarial (loss) gain arising during period
|
(3.0
|
)
|
|
5.3
|
|
|
(54.4
|
)
|
|||
Reclassification adjustments for amortization to statements of income:
|
|
|
|
|
|
||||||
Negative prior service cost
|
(5.5
|
)
|
|
(5.4
|
)
|
|
(5.5
|
)
|
|||
Net actuarial loss
|
9.4
|
|
|
11.5
|
|
|
6.9
|
|
|||
Income tax (expense) benefit
|
(0.3
|
)
|
|
(4.0
|
)
|
|
18.5
|
|
|||
Total net unrecognized benefit plan obligations
|
0.6
|
|
|
7.4
|
|
|
(34.5
|
)
|
|||
Other comprehensive loss
|
(5.1
|
)
|
|
(34.1
|
)
|
|
(9.1
|
)
|
|||
Comprehensive income
|
$
|
15.9
|
|
|
$
|
17.1
|
|
|
$
|
98.3
|
|
|
|
|
|
|
|
(in millions)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Common shares:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
48.1
|
|
|
47.7
|
|
|
47.5
|
|
|||
Issuance of shares
|
0.5
|
|
|
0.4
|
|
|
0.2
|
|
|||
Balance at end of year
|
48.6
|
|
|
48.1
|
|
|
47.7
|
|
|||
Treasury shares:
|
|
|
|
||||||||
Balance at beginning of year
|
(6.8
|
)
|
|
(6.8
|
)
|
|
(6.8
|
)
|
|||
Balance at end of year
|
(6.8
|
)
|
|
(6.8
|
)
|
|
(6.8
|
)
|
|||
Common stock:
|
|
|
|
||||||||
Balance at beginning of year
|
$
|
120.4
|
|
|
$
|
119.3
|
|
|
$
|
118.8
|
|
Issuance of shares
|
1.2
|
|
|
1.1
|
|
|
0.5
|
|
|||
Balance at end of year
|
$
|
121.6
|
|
|
$
|
120.4
|
|
|
$
|
119.3
|
|
Treasury stock:
|
|
|
|
||||||||
Balance at beginning of year
|
$
|
(116.3
|
)
|
|
(116.0
|
)
|
|
(115.9
|
)
|
||
Shares acquired on stock option exercises and vested restricted shares
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|||
Balance at end of year
|
$
|
(116.5
|
)
|
|
$
|
(116.3
|
)
|
|
$
|
(116.0
|
)
|
Additional paid-in capital:
|
|
|
|
||||||||
Balance at beginning of year
|
$
|
153.5
|
|
|
$
|
143.2
|
|
|
$
|
137.5
|
|
Issuance of common stock
|
6.8
|
|
|
5.2
|
|
|
2.9
|
|
|||
Tax (expense) benefit from stock option exercises
|
(3.0
|
)
|
|
0.3
|
|
|
—
|
|
|||
Stock options granted
|
2.6
|
|
|
4.8
|
|
|
2.8
|
|
|||
Balance at end of year
|
$
|
159.9
|
|
|
$
|
153.5
|
|
|
$
|
143.2
|
|
Accumulated other comprehensive income:
|
|
|
|
||||||||
Balance at beginning of year
|
$
|
37.6
|
|
|
$
|
71.7
|
|
|
$
|
80.8
|
|
Change in unrealized holding gains (losses) on investments, net of tax
|
(5.7
|
)
|
|
(41.5
|
)
|
|
25.4
|
|
|||
Change in unrecognized benefit plan obligations, net of tax and reclassification adjustments
|
0.6
|
|
|
7.4
|
|
|
(34.5
|
)
|
|||
Balance at end of year
|
$
|
32.5
|
|
|
$
|
37.6
|
|
|
$
|
71.7
|
|
Retained earnings:
|
|
|
|
||||||||
Balance at beginning of year
|
$
|
689.4
|
|
|
$
|
654.7
|
|
|
$
|
563.8
|
|
Net income
|
21.0
|
|
|
51.2
|
|
|
107.4
|
|
|||
Cash dividends paid (affiliates $10.4, $10.4 and $10.2, respectively)
|
$
|
(16.6
|
)
|
|
(16.5
|
)
|
|
(16.5
|
)
|
||
Balance at end of year
|
693.8
|
|
|
689.4
|
|
|
654.7
|
|
|||
Total stockholders’ equity at end of year
|
$
|
891.3
|
|
|
$
|
884.6
|
|
|
$
|
872.9
|
|
|
|
|
|
|
|
($ millions)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization, net
|
14.6
|
|
|
15.7
|
|
|
11.7
|
|
|||
Share-based compensation
|
3.7
|
|
|
4.5
|
|
|
3.6
|
|
|||
Net realized gain on investments
|
(36.5
|
)
|
|
(24.3
|
)
|
|
(20.7
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Deferred policy acquisition benefits
|
(0.7
|
)
|
|
(2.6
|
)
|
|
(29.7
|
)
|
|||
Accrued investment income and other assets
|
(4.5
|
)
|
|
(2.4
|
)
|
|
0.2
|
|
|||
Postretirement and pension benefits
|
(28.8
|
)
|
|
(6.0
|
)
|
|
(7.3
|
)
|
|||
Reinsurance recoverable on losses and loss expenses payable and prepaid reinsurance premiums
|
3.0
|
|
|
3.0
|
|
|
(1.9
|
)
|
|||
Other liabilities and due to/from affiliates, net
|
7.3
|
|
|
(39.9
|
)
|
|
(50.8
|
)
|
|||
Losses and loss expenses payable
|
128.6
|
|
|
69.8
|
|
|
23.3
|
|
|||
Unearned premiums
|
1.5
|
|
|
3.9
|
|
|
121.4
|
|
|||
Excess tax expense on share-based awards
|
(0.2
|
)
|
|
(0.3
|
)
|
|
—
|
|
|||
Federal income taxes
|
4.5
|
|
|
13.7
|
|
|
(81.6
|
)
|
|||
Cash provided from December 31, 2014 unearned premium transfer related to the homeowners quota-share reinsurance arrangement
|
—
|
|
|
63.5
|
|
|
—
|
|
|||
Net cash provided by operating activities
|
$
|
113.5
|
|
|
$
|
149.8
|
|
|
$
|
75.6
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of fixed maturities available-for-sale
|
$
|
(589.3
|
)
|
|
$
|
(573.9
|
)
|
|
$
|
(431.4
|
)
|
Purchases of equity securities available-for-sale
|
(143.1
|
)
|
|
(154.0
|
)
|
|
(119.0
|
)
|
|||
Purchases of other invested assets
|
(1.5
|
)
|
|
(6.9
|
)
|
|
(1.8
|
)
|
|||
Maturities, calls and pay downs of fixed maturities available-for-sale
|
240.9
|
|
|
241.0
|
|
|
232.4
|
|
|||
Sales of fixed maturities available-for-sale
|
211.6
|
|
|
180.7
|
|
|
163.5
|
|
|||
Sales of equity securities available-for-sale
|
153.0
|
|
|
144.8
|
|
|
99.2
|
|
|||
Sales of other invested assets available-for-sale
|
0.8
|
|
|
0.7
|
|
|
0.6
|
|
|||
Net disposals of property and equipment
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
$
|
(127.6
|
)
|
|
$
|
(167.7
|
)
|
|
$
|
(56.5
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
$
|
2.2
|
|
|
$
|
6.2
|
|
|
$
|
3.5
|
|
Payments to acquire treasury stock
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|||
Payments of dividends (affiliates $10.4, $10.4 and $10.2, respectively)
|
(16.6
|
)
|
|
(16.5
|
)
|
|
(16.5
|
)
|
|||
Excess tax expense on share-based awards
|
0.2
|
|
|
0.3
|
|
|
—
|
|
|||
Proceeds from long-term debt
|
21.5
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
7.1
|
|
|
$
|
(10.3
|
)
|
|
$
|
(13.1
|
)
|
Net (decrease) increase in cash and cash equivalents
|
(7.0
|
)
|
|
(28.2
|
)
|
|
6.0
|
|
|||
Cash and cash equivalents at beginning of year
|
58.1
|
|
|
86.3
|
|
|
80.3
|
|
|||
Cash and cash equivalents at end of year
|
$
|
51.1
|
|
|
$
|
58.1
|
|
|
$
|
86.3
|
|
Supplemental disclosures:
|
|
|
|
|
|
||||||
Interest paid (affiliates $0.8, $0.7 and $0.7, respectively)
|
$
|
5.4
|
|
|
$
|
5.3
|
|
|
$
|
5.2
|
|
Federal income taxes paid
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
•
|
State Auto Property and Casualty Insurance Company (“State Auto P&C”), an Iowa corporation
|
•
|
Milbank Insurance Company (“Milbank”), an Iowa corporation
|
•
|
State Auto Insurance Company of Ohio (“SA Ohio”), an Ohio corporation
|
•
|
Stateco Financial Services, Inc. (“Stateco”), an Ohio corporation
|
|
|
($ millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance, beginning of year
|
|
$
|
129.1
|
|
|
$
|
126.5
|
|
|
$
|
96.8
|
|
Acquisition costs deferred
|
|
291.0
|
|
|
285.6
|
|
|
251.5
|
|
|||
Acquisition costs amortized to expense
|
|
(290.3
|
)
|
|
(283.0
|
)
|
|
(221.8
|
)
|
|||
Balance, end of year
|
|
$
|
129.8
|
|
|
$
|
129.1
|
|
|
$
|
126.5
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
Cost or
amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
||||||||
December 31, 2016
|
||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
|
$
|
401.9
|
|
|
$
|
8.9
|
|
|
$
|
(6.1
|
)
|
|
$
|
404.7
|
|
Obligations of states and political subdivisions
|
|
634.6
|
|
|
12.3
|
|
|
(3.2
|
)
|
|
643.7
|
|
||||
Corporate securities
|
|
445.7
|
|
|
6.1
|
|
|
(2.2
|
)
|
|
449.6
|
|
||||
U.S. government agencies mortgage-backed securities
|
|
613.7
|
|
|
8.5
|
|
|
(10.9
|
)
|
|
611.3
|
|
||||
Total fixed maturities
|
|
2,095.9
|
|
|
35.8
|
|
|
(22.4
|
)
|
|
2,109.3
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
|
108.9
|
|
|
32.7
|
|
|
(2.6
|
)
|
|
139.0
|
|
||||
Small-cap securities
|
|
57.2
|
|
|
21.9
|
|
|
—
|
|
|
79.1
|
|
||||
Mutual and exchange traded funds
|
|
157.0
|
|
|
8.5
|
|
|
(0.8
|
)
|
|
164.7
|
|
||||
Total equity securities
|
|
323.1
|
|
|
63.1
|
|
|
(3.4
|
)
|
|
382.8
|
|
||||
Other invested assets
|
|
25.5
|
|
|
19.6
|
|
|
—
|
|
|
45.1
|
|
||||
Total available-for-sale securities
|
|
$
|
2,444.5
|
|
|
$
|
118.5
|
|
|
$
|
(25.8
|
)
|
|
$
|
2,537.2
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
Cost or
amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
||||||||
December 31, 2015
|
||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
|
$
|
219.8
|
|
|
$
|
6.6
|
|
|
$
|
(2.0
|
)
|
|
$
|
224.4
|
|
Obligations of states and political subdivisions
|
|
804.0
|
|
|
22.5
|
|
|
(1.7
|
)
|
|
824.8
|
|
||||
Corporate securities
|
|
500.3
|
|
|
5.8
|
|
|
(11.7
|
)
|
|
494.4
|
|
||||
U.S. government agencies mortgage-backed securities
|
|
448.8
|
|
|
11.5
|
|
|
(3.2
|
)
|
|
457.1
|
|
||||
Total fixed maturities
|
|
1,972.9
|
|
|
46.4
|
|
|
(18.6
|
)
|
|
2,000.7
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
|
136.3
|
|
|
29.4
|
|
|
(4.0
|
)
|
|
161.7
|
|
||||
Small-cap securities
|
|
53.3
|
|
|
16.5
|
|
|
(0.2
|
)
|
|
69.6
|
|
||||
Mutual and exchange traded funds
|
|
75.6
|
|
|
4.8
|
|
|
(1.1
|
)
|
|
79.3
|
|
||||
Total equity securities
|
|
265.2
|
|
|
50.7
|
|
|
(5.3
|
)
|
|
310.6
|
|
||||
Other invested assets
|
|
56.9
|
|
|
28.3
|
|
|
(0.1
|
)
|
|
85.1
|
|
||||
Total available-for-sale securities
|
|
$
|
2,295.0
|
|
|
$
|
125.4
|
|
|
$
|
(24.0
|
)
|
|
$
|
2,396.4
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except # of positions)
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||||||||||
December 31, 2016
|
Fair
value
|
|
Unrealized
losses
|
|
Number
of
positions
|
|
Fair
value
|
|
Unrealized
losses
|
|
Number
of
positions
|
|
Fair
value
|
|
Unrealized
losses
|
|
Number
of
positions
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
229.1
|
|
|
$
|
(6.1
|
)
|
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
229.1
|
|
|
$
|
(6.1
|
)
|
|
30
|
|
Obligations of states and political subdivisions
|
178.9
|
|
|
(3.2
|
)
|
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
178.9
|
|
|
(3.2
|
)
|
|
26
|
|
||||||
Corporate securities
|
102.9
|
|
|
(1.4
|
)
|
|
16
|
|
|
29.4
|
|
|
(0.8
|
)
|
|
4
|
|
|
132.3
|
|
|
(2.2
|
)
|
|
20
|
|
||||||
U.S. government agencies mortgage-backed securities
|
341.7
|
|
|
(10.1
|
)
|
|
43
|
|
|
20.5
|
|
|
(0.8
|
)
|
|
11
|
|
|
362.2
|
|
|
(10.9
|
)
|
|
54
|
|
||||||
Total fixed maturities
|
852.6
|
|
|
(20.8
|
)
|
|
115
|
|
|
49.9
|
|
|
(1.6
|
)
|
|
15
|
|
|
902.5
|
|
|
(22.4
|
)
|
|
130
|
|
||||||
Large-cap equity securities
|
9.1
|
|
|
(0.9
|
)
|
|
7
|
|
|
8.8
|
|
|
(1.7
|
)
|
|
5
|
|
|
17.9
|
|
|
(2.6
|
)
|
|
12
|
|
||||||
Mutual and exchange traded funds
|
29.9
|
|
|
(0.8
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.9
|
|
|
(0.8
|
)
|
|
2
|
|
||||||
Total equity securities
|
39.0
|
|
|
(1.7
|
)
|
|
9
|
|
|
8.8
|
|
|
(1.7
|
)
|
|
5
|
|
|
47.8
|
|
|
(3.4
|
)
|
|
14
|
|
||||||
Total temporarily impaired securities
|
$
|
891.6
|
|
|
$
|
(22.5
|
)
|
|
124
|
|
|
$
|
58.7
|
|
|
$
|
(3.3
|
)
|
|
20
|
|
|
$
|
950.3
|
|
|
$
|
(25.8
|
)
|
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except # of positions)
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||||||||||
December 31, 2015
|
Fair
value
|
|
Unrealized
losses
|
|
Number
of
positions
|
|
Fair
value
|
|
Unrealized
losses
|
|
Number
of
positions
|
|
Fair
value
|
|
Unrealized
losses
|
|
Number
of
positions
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
68.6
|
|
|
$
|
(1.6
|
)
|
|
15
|
|
|
$
|
13.5
|
|
|
$
|
(0.4
|
)
|
|
4
|
|
|
$
|
82.1
|
|
|
$
|
(2.0
|
)
|
|
19
|
|
Obligations of states and political subdivisions
|
137.5
|
|
|
(1.7
|
)
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137.5
|
|
|
(1.7
|
)
|
|
16
|
|
||||||
Corporate securities
|
246.9
|
|
|
(5.3
|
)
|
|
36
|
|
|
63.9
|
|
|
(6.4
|
)
|
|
11
|
|
|
310.8
|
|
|
(11.7
|
)
|
|
47
|
|
||||||
U.S. government agencies mortgage-backed securities
|
132.2
|
|
|
(2.3
|
)
|
|
18
|
|
|
33.0
|
|
|
(0.9
|
)
|
|
11
|
|
|
165.2
|
|
|
(3.2
|
)
|
|
29
|
|
||||||
Total fixed maturities
|
585.2
|
|
|
(10.9
|
)
|
|
85
|
|
|
110.4
|
|
|
(7.7
|
)
|
|
26
|
|
|
695.6
|
|
|
(18.6
|
)
|
|
111
|
|
||||||
Large-cap equity securities
|
46.0
|
|
|
(4.0
|
)
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46.0
|
|
|
(4.0
|
)
|
|
20
|
|
||||||
Small-cap equity securities
|
3.4
|
|
|
(0.2
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
|
(0.2
|
)
|
|
1
|
|
||||||
Mutual and exchange traded funds
|
19.8
|
|
|
(1.1
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19.8
|
|
|
(1.1
|
)
|
|
4
|
|
||||||
Total equity securities
|
69.2
|
|
|
(5.3
|
)
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69.2
|
|
|
(5.3
|
)
|
|
25
|
|
||||||
Other invested assets
|
8.1
|
|
|
(0.1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.1
|
|
|
(0.1
|
)
|
|
1
|
|
||||||
Total temporarily impaired securities
|
$
|
662.5
|
|
|
$
|
(16.3
|
)
|
|
111
|
|
|
$
|
110.4
|
|
|
$
|
(7.7
|
)
|
|
26
|
|
|
$
|
772.9
|
|
|
$
|
(24.0
|
)
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Equity securities:
|
|
|
|
|
|
||||||
Large-cap securities
|
$
|
(0.6
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
(0.3
|
)
|
Small-cap securities
|
(3.9
|
)
|
|
(5.7
|
)
|
|
(2.2
|
)
|
|||
Fixed maturities
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|||
Total other-than-temporary impairments
|
$
|
(6.8
|
)
|
|
$
|
(7.9
|
)
|
|
$
|
(2.5
|
)
|
|
|
|
|
|
|
|
($ millions)
|
Amortized
cost
|
|
Fair
value
|
||||
Due in 1 year or less
|
$
|
74.4
|
|
|
$
|
75.2
|
|
Due after 1 year through 5 years
|
552.7
|
|
|
557.8
|
|
||
Due after 5 years through 10 years
|
280.2
|
|
|
282.9
|
|
||
Due after 10 years
|
574.9
|
|
|
582.1
|
|
||
U.S. government agencies mortgage-backed securities
|
613.7
|
|
|
611.3
|
|
||
Total
|
$
|
2,095.9
|
|
|
$
|
2,109.3
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Fixed maturities
|
$
|
63.4
|
|
|
$
|
61.3
|
|
|
$
|
64.3
|
|
Equity securities
|
7.3
|
|
|
6.5
|
|
|
6.2
|
|
|||
Cash and cash equivalents, and other
|
5.6
|
|
|
5.9
|
|
|
6.2
|
|
|||
Investment income
|
76.3
|
|
|
73.7
|
|
|
76.7
|
|
|||
Investment expenses
|
1.6
|
|
|
2.0
|
|
|
2.0
|
|
|||
Net investment income
|
$
|
74.7
|
|
|
$
|
71.7
|
|
|
$
|
74.7
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Realized gains:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
2.8
|
|
|
$
|
4.6
|
|
|
$
|
3.1
|
|
Equity securities
|
29.2
|
|
|
29.6
|
|
|
21.3
|
|
|||
Other invested assets
|
12.1
|
|
|
0.2
|
|
|
0.1
|
|
|||
Total realized gains
|
44.1
|
|
|
34.4
|
|
|
24.5
|
|
|||
Realized losses:
|
|
|
|
|
|
||||||
Equity securities:
|
|
|
|
|
|
||||||
Sales
|
(0.8
|
)
|
|
(1.8
|
)
|
|
(1.3
|
)
|
|||
OTTI
|
(4.5
|
)
|
|
(7.9
|
)
|
|
(2.5
|
)
|
|||
Fixed maturities:
|
|
|
|
|
|
||||||
OTTI
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|||
Total realized losses
|
(7.6
|
)
|
|
(9.7
|
)
|
|
(3.8
|
)
|
|||
Net realized gains on investments
|
$
|
36.5
|
|
|
$
|
24.7
|
|
|
$
|
20.7
|
|
Change in unrealized holding gains (losses), net of tax:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
(14.4
|
)
|
|
$
|
(32.8
|
)
|
|
$
|
34.5
|
|
Equity securities
|
14.3
|
|
|
(29.5
|
)
|
|
6.2
|
|
|||
Other invested assets
|
(8.6
|
)
|
|
(1.6
|
)
|
|
(1.6
|
)
|
|||
Deferred federal income tax
|
3.0
|
|
|
22.4
|
|
|
(13.7
|
)
|
|||
Change in unrealized holding gains (losses), net of tax
|
$
|
(5.7
|
)
|
|
$
|
(41.5
|
)
|
|
$
|
25.4
|
|
|
|
|
|
|
|
•
|
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)
|
||||||||
December 31, 2016
|
|
|
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
404.7
|
|
|
$
|
—
|
|
|
$
|
404.7
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
643.7
|
|
|
—
|
|
|
643.7
|
|
|
—
|
|
||||
Corporate securities
|
449.6
|
|
|
—
|
|
|
446.1
|
|
|
3.5
|
|
||||
U.S. government agencies mortgage-backed securities
|
611.3
|
|
|
—
|
|
|
611.3
|
|
|
—
|
|
||||
Total fixed maturities
|
2,109.3
|
|
|
—
|
|
|
2,105.8
|
|
|
3.5
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
139.0
|
|
|
139.0
|
|
|
—
|
|
|
—
|
|
||||
Small-cap securities
|
79.1
|
|
|
79.1
|
|
|
—
|
|
|
—
|
|
||||
Mutual and exchange traded funds
|
164.7
|
|
|
164.7
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
382.8
|
|
|
382.8
|
|
|
—
|
|
|
—
|
|
||||
Other invested assets
|
9.4
|
|
|
9.4
|
|
|
—
|
|
|
—
|
|
||||
Total available-for-sale investments
|
$
|
2,501.5
|
|
|
$
|
392.2
|
|
|
$
|
2,105.8
|
|
|
$
|
3.5
|
|
|
|
|
|
|
|
|
|
($ 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, 2015
|
|
|
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
224.4
|
|
|
$
|
—
|
|
|
$
|
224.4
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
824.8
|
|
|
—
|
|
|
824.8
|
|
|
—
|
|
||||
Corporate securities
|
494.4
|
|
|
—
|
|
|
491.1
|
|
|
3.3
|
|
||||
U.S. government agencies mortgage-backed securities
|
457.1
|
|
|
—
|
|
|
457.1
|
|
|
—
|
|
||||
Total fixed maturities
|
2,000.7
|
|
|
—
|
|
|
1,997.4
|
|
|
3.3
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
161.7
|
|
|
161.7
|
|
|
—
|
|
|
—
|
|
||||
Small-cap securities
|
69.6
|
|
|
69.6
|
|
|
—
|
|
|
—
|
|
||||
Mutual and exchange traded funds
|
79.3
|
|
|
79.3
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
310.6
|
|
|
310.6
|
|
|
—
|
|
|
—
|
|
||||
Other invested assets
|
8.1
|
|
|
8.1
|
|
|
—
|
|
|
—
|
|
||||
Total available-for-sale investments
|
$
|
2,319.4
|
|
|
$
|
318.7
|
|
|
$
|
1,997.4
|
|
|
$
|
3.3
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Fixed
maturities
|
||
Balance at January 1, 2016
|
$
|
3.3
|
|
Total realized gains (losses)—included in earnings
|
—
|
|
|
Total unrealized gains (losses)—included in other comprehensive income
|
—
|
|
|
Purchases
|
0.2
|
|
|
Sales
|
—
|
|
|
Transfers into Level 3
|
—
|
|
|
Transfers out of Level 3
|
—
|
|
|
Balance at December 31, 2016
|
$
|
3.5
|
|
($ millions)
|
Fixed
maturities
|
||
Balance at January 1, 2015
|
$
|
9.4
|
|
Total realized gains (losses)—included in earnings
|
—
|
|
|
Total unrealized gains (losses)—included in other comprehensive income
|
(0.2
|
)
|
|
Purchases
|
—
|
|
|
Sales
|
(5.9
|
)
|
|
Transfers into Level 3
|
—
|
|
|
Transfers out of Level 3
|
—
|
|
|
Balance at December 31, 2015
|
$
|
3.3
|
|
|
|
|
($ millions, except interest rates)
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||
Carrying
value
|
|
Fair
Value
|
|
Interest
rate
|
|
Carrying
value
|
|
Fair
value
|
|
Interest
rate
|
|||||||||||
FHLB Loan due 2021:, issued $21.5, September 2016 with fixed interest
|
$
|
21.5
|
|
|
$
|
21.0
|
|
|
1.73
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
FHLB Loan due 2033:, issued $85.0, July 2013 with fixed interest
|
85.4
|
|
|
85.6
|
|
|
5.03
|
%
|
|
85.3
|
|
|
85.5
|
|
|
5.03
|
%
|
||||
Affiliate Subordinated Debentures due 2033: issued $15.5, May 2003 with variable interest
|
15.2
|
|
|
15.2
|
|
|
5.13
|
%
|
|
15.2
|
|
|
15.2
|
|
|
4.61
|
%
|
||||
Total notes payable
|
$
|
122.1
|
|
|
$
|
121.8
|
|
|
|
|
$
|
100.5
|
|
|
$
|
100.7
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Losses and loss expenses payable, at beginning of year
|
$
|
1,053.0
|
|
|
$
|
983.2
|
|
|
$
|
959.9
|
|
Less: reinsurance recoverable on losses and loss expenses payable
|
5.9
|
|
|
9.6
|
|
|
9.1
|
|
|||
Net balance at beginning of year
|
1,047.1
|
|
|
973.6
|
|
|
950.8
|
|
|||
Incurred related to:
|
|
|
|
|
|
||||||
Current year
|
915.4
|
|
|
852.8
|
|
|
726.2
|
|
|||
Prior years
|
27.0
|
|
|
10.0
|
|
|
45.1
|
|
|||
Total incurred
|
942.4
|
|
|
862.8
|
|
|
771.3
|
|
|||
Paid related to:
|
|
|
|
|
|
||||||
Current year
|
417.8
|
|
|
421.5
|
|
|
373.2
|
|
|||
Prior years
|
393.7
|
|
|
367.8
|
|
|
375.3
|
|
|||
Total paid
|
811.5
|
|
|
789.3
|
|
|
748.5
|
|
|||
Net balance at end of year
|
1,178.0
|
|
|
1,047.1
|
|
|
973.6
|
|
|||
Plus: reinsurance recoverable on losses and loss expenses payable
|
3.6
|
|
|
5.9
|
|
|
9.6
|
|
|||
Losses and loss expenses payable, at end of year (affiliates $630.9, $532.4, and $494.3, respectively)
|
$
|
1,181.6
|
|
|
$
|
1,053.0
|
|
|
$
|
983.2
|
|
|
|
|
|
|
|
|
•
|
undiscounted, incurred and paid claims and allocated claim adjustment expenses by accident year, on a net basis after reinsurance;
|
•
|
the sum of IBNR claims liabilities + expected development on reported claims ("IBNR+") included within the incurred claims development tables, for each accident year, for the most recent reporting period; and
|
•
|
cumulative claim frequency information for each accident year;
|
•
|
average annual percentage payout of incurred claims by age, net of reinsurance.
|
|
($ in millions except number of claims)
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|
As of December 31, 2016
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012*(1)
|
|
2013*(1)
|
|
2014*(1)
|
|
2015*
|
|
2016
|
|
IBNR+
|
|
Reported Claims (2)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
2012
|
|
$
|
305.3
|
|
|
$
|
307.6
|
|
|
$
|
306.7
|
|
|
$
|
308.9
|
|
|
$
|
308.6
|
|
|
$
|
0.9
|
|
|
212,774
|
|
2013
|
|
|
|
288.6
|
|
|
283.3
|
|
|
287.9
|
|
|
287.6
|
|
|
2.8
|
|
|
189,392
|
|
|||||||
2014
|
|
|
|
|
|
271.2
|
|
|
272.8
|
|
|
275.2
|
|
|
4.0
|
|
|
171,772
|
|
||||||||
2015
|
|
|
|
|
|
|
|
337.2
|
|
|
343.6
|
|
|
20.3
|
|
|
151,130
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
366.4
|
|
|
44.9
|
|
|
137,561
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,581.4
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
* Supplementary information and unaudited
|
|
|
|
||||||||||||||||||||||||
(1) Allocated claim adjustment expenses, net of reinsurance, for accident years 2012, 2013 and 2014 were impacted by the HO QS Arrangement. See Note 6 for a more detailed discussion of the HO QS Arrangement.
|
|
||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||
(2) Personal insurance segment - short-tail is an aggregation of the homeowners and personal auto product lines. Homeowners reported claims are counted by claimant and personal auto claims are counted by coverage.
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions except number of claims)
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|
As of December 31, 2016
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012*
|
|
2013*
|
|
2014*
|
|
2015*
|
|
2016
|
|
IBNR+
|
|
Reported Claims(1)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
2012
|
|
$
|
170.3
|
|
|
$
|
170.5
|
|
|
$
|
168.1
|
|
|
$
|
170.9
|
|
|
$
|
169.1
|
|
|
$
|
3.7
|
|
|
33,897
|
|
2013
|
|
|
|
170.0
|
|
|
168.7
|
|
|
175.2
|
|
|
176.8
|
|
|
6.4
|
|
|
33,131
|
|
|||||||
2014
|
|
|
|
|
|
181.0
|
|
|
183.9
|
|
|
185.6
|
|
|
15.0
|
|
|
32,253
|
|
||||||||
2015
|
|
|
|
|
|
|
|
189.1
|
|
|
191.0
|
|
|
31.2
|
|
|
30,445
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
186.8
|
|
|
49.8
|
|
|
25,340
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
909.3
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
* Supplementary information and unaudited
|
|||||||||||||||||||||||||||
(1) Business insurance segment - short-tail is an aggregation of the commercial auto, commercial-multi peril and fire & allied product lines. Commercial auto reported claims are counted by coverage, and commercial multi-peril and fire & allied claims are counted by claimant.
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions except number of claims)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
|
|
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|
As of December 31, 2016
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2007*
|
|
2008*
|
|
2009*
|
|
2010*
|
|
2011*
|
|
2012*
|
|
2013*
|
|
2014*
|
|
2015*
|
|
2016
|
|
IBNR+
|
|
Reported Claims(1)
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
2007
|
|
$
|
73.4
|
|
|
$
|
73.3
|
|
|
$
|
74.1
|
|
|
$
|
73.2
|
|
|
$
|
71.9
|
|
|
$
|
71.9
|
|
|
$
|
72.5
|
|
|
$
|
72.4
|
|
|
$
|
73.0
|
|
|
$
|
73.3
|
|
|
$
|
2.7
|
|
|
8,072
|
|
2008
|
|
|
|
86.1
|
|
|
79.1
|
|
|
75.6
|
|
|
75.0
|
|
|
75.4
|
|
|
75.3
|
|
|
74.9
|
|
|
74.2
|
|
|
73.4
|
|
|
4.0
|
|
|
9,577
|
|
||||||||||||
2009
|
|
|
|
|
|
90.2
|
|
|
92.0
|
|
|
87.4
|
|
|
86.0
|
|
|
85.0
|
|
|
83.1
|
|
|
82.4
|
|
|
82.3
|
|
|
5.8
|
|
|
10,086
|
|
|||||||||||||
2010
|
|
|
|
|
|
|
|
85.3
|
|
|
93.5
|
|
|
86.7
|
|
|
82.2
|
|
|
82.0
|
|
|
79.5
|
|
|
78.9
|
|
|
7.2
|
|
|
10,644
|
|
||||||||||||||
2011
|
|
|
|
|
|
|
|
|
|
86.9
|
|
|
86.4
|
|
|
80.9
|
|
|
77.5
|
|
|
76.1
|
|
|
75.3
|
|
|
9.0
|
|
|
17,390
|
|
|||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
|
92.8
|
|
|
85.5
|
|
|
80.2
|
|
|
78.0
|
|
|
77.6
|
|
|
12.2
|
|
|
17,321
|
|
||||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92.6
|
|
|
88.2
|
|
|
88.2
|
|
|
84.9
|
|
|
19.7
|
|
|
16,646
|
|
|||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96.1
|
|
|
96.6
|
|
|
95.2
|
|
|
27.3
|
|
|
16,501
|
|
||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108.9
|
|
|
106.2
|
|
|
45.5
|
|
|
15,783
|
|
|||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109.5
|
|
|
65.6
|
|
|
8,548
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
856.6
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
* Supplementary information and unaudited
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
(1) Business insurance segment-long-tail is an aggregation of the other & product liability and workers' compensation product lines. Other & product liability reported claims are counted by claimant and workers' compensation reported claims are counted by a combination of claimant and coverage.
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
Accident
Year
|
|
2007*
|
|
2008*
|
|
2009*
|
|
2010*
|
|
2011*
|
|
2012*
|
|
2013*
|
|
2014*
|
|
2015*
|
|
2016
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
2007
|
|
$
|
12.7
|
|
|
$
|
28.7
|
|
|
$
|
43.0
|
|
|
$
|
50.3
|
|
|
$
|
57.6
|
|
|
$
|
61.4
|
|
|
$
|
64.0
|
|
|
$
|
65.7
|
|
|
$
|
68.1
|
|
|
$
|
68.6
|
|
2008
|
|
|
|
14.3
|
|
|
34.7
|
|
|
43.9
|
|
|
51.6
|
|
|
56.4
|
|
|
61.3
|
|
|
64.0
|
|
|
65.0
|
|
|
66.0
|
|
|||||||||||
2009
|
|
|
|
|
|
15.2
|
|
|
34.9
|
|
|
48.2
|
|
|
60.2
|
|
|
66.2
|
|
|
70.3
|
|
|
72.1
|
|
|
74.1
|
|
||||||||||||
2010
|
|
|
|
|
|
|
|
12.9
|
|
|
33.0
|
|
|
46.3
|
|
|
54.2
|
|
|
63.3
|
|
|
65.8
|
|
|
67.6
|
|
|||||||||||||
2011
|
|
|
|
|
|
|
|
|
|
16.4
|
|
|
33.9
|
|
|
46.4
|
|
|
53.9
|
|
|
60.7
|
|
|
63.6
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
|
15.3
|
|
|
32.6
|
|
|
43.7
|
|
|
51.8
|
|
|
57.3
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.3
|
|
|
36.7
|
|
|
50.1
|
|
|
57.2
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.8
|
|
|
37.6
|
|
|
53.9
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.3
|
|
|
38.6
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.4
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
562.3
|
|
||||||||||||||||||
|
|
|
|
|
|
All outstanding liabilities before 2007, net of reinsurance
|
|
|
36.6
|
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
Losses and allocated loss adjustment expenses payable, net of reinsurance
|
|
|
$
|
330.9
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
* Supplementary information and unaudited
|
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
Accident
Year
|
|
2007*
|
|
2008*
|
|
2009*
|
|
2010*
|
|
2011*
|
|
2012*
|
|
2013*
|
|
2014*
|
|
2015*
|
|
2016
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
2007
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.6
|
|
|
$
|
0.1
|
|
|
$
|
0.5
|
|
|
$
|
1.3
|
|
|
$
|
1.3
|
|
|
$
|
1.5
|
|
|
$
|
1.5
|
|
|
$
|
1.6
|
|
2008
|
|
|
|
0.1
|
|
|
0.3
|
|
|
0.8
|
|
|
1.3
|
|
|
1.7
|
|
|
2.1
|
|
|
2.4
|
|
|
2.8
|
|
|
3.0
|
|
|||||||||||
2009
|
|
|
|
|
|
0.2
|
|
|
2.4
|
|
|
4.9
|
|
|
7.2
|
|
|
8.6
|
|
|
9.4
|
|
|
9.2
|
|
|
10.0
|
|
||||||||||||
2010
|
|
|
|
|
|
|
|
0.8
|
|
|
2.2
|
|
|
5.2
|
|
|
6.5
|
|
|
7.7
|
|
|
7.6
|
|
|
8.1
|
|
|||||||||||||
2011
|
|
|
|
|
|
|
|
|
|
0.9
|
|
|
3.0
|
|
|
5.2
|
|
|
6.6
|
|
|
7.1
|
|
|
7.9
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
|
0.9
|
|
|
4.0
|
|
|
7.3
|
|
|
10.3
|
|
|
12.5
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.1
|
|
|
3.7
|
|
|
6.7
|
|
|
9.1
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.2
|
|
|
7.2
|
|
|
12.5
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.7
|
|
|
11.0
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.0
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
81.7
|
|
||||||||||||||||||
|
|
|
|
|
|
All outstanding liabilities before 2007, net of reinsurance
|
|
|
2.0
|
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
Losses and allocated loss adjustment expenses payable, net of reinsurance
|
|
|
$
|
129.7
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
* Supplementary information and unaudited
|
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Net losses and allocated loss adjustment expenses payable:
|
|
|
|
|
|
|
||||||||
Personal Insurance Segment
|
|
|
|
|
|
|
||||||||
|
|
Short-tail
|
|
$
|
228.4
|
|
|
$
|
207.4
|
|
|
$
|
183.1
|
|
|
|
Other personal
|
|
8.9
|
|
|
7.5
|
|
|
7.5
|
|
|||
Business Insurance Segment
|
|
|
|
|
|
|
||||||||
|
|
Short-tail
|
|
234.9
|
|
|
213.5
|
|
|
183.9
|
|
|||
|
|
Long-tail
|
|
330.9
|
|
|
306.6
|
|
|
285.6
|
|
|||
|
|
Other business
|
|
2.5
|
|
|
1.4
|
|
|
2.4
|
|
|||
Specialty Insurance Segment
|
|
|
|
|
|
|
||||||||
|
|
Short-tail
|
|
178.9
|
|
|
165.8
|
|
|
195.3
|
|
|||
|
|
Long-tail
|
|
129.7
|
|
|
91.1
|
|
|
65.4
|
|
|||
Net losses and loss expenses payable
|
|
1,114.2
|
|
|
993.3
|
|
|
923.2
|
|
|||||
|
|
|
|
|
|
|
||||||||
ULAE
|
|
63.8
|
|
|
53.8
|
|
|
50.4
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||
Reinsurance recoverable on losses and loss expenses payable
|
|
3.6
|
|
|
5.9
|
|
|
9.6
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||
Total losses and loss expenses payable
|
|
$
|
1,181.6
|
|
|
$
|
1,053.0
|
|
|
$
|
983.2
|
|
||
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
||||
Losses and loss expenses payable:
|
|
|
|
||||
Direct
|
$
|
545.7
|
|
|
$
|
515.6
|
|
Assumed
|
5.0
|
|
|
5.0
|
|
||
Ceded
|
(3.6
|
)
|
|
(5.9
|
)
|
||
Net losses and loss expenses payable
|
$
|
547.1
|
|
|
$
|
514.7
|
|
Unearned premiums:
|
|
|
|
||||
Direct
|
$
|
395.6
|
|
|
$
|
400.9
|
|
Assumed
|
1.3
|
|
|
1.2
|
|
||
Ceded
|
(6.1
|
)
|
|
(6.8
|
)
|
||
Net unearned premiums
|
$
|
390.8
|
|
|
$
|
395.3
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Written premiums:
|
|
|
|
|
|
||||||
Direct
|
$
|
835.4
|
|
|
$
|
854.1
|
|
|
$
|
880.6
|
|
Assumed
|
5.0
|
|
|
4.7
|
|
|
4.4
|
|
|||
Ceded
|
(24.9
|
)
|
|
(35.4
|
)
|
|
(26.8
|
)
|
|||
Net written premiums
|
$
|
815.5
|
|
|
$
|
823.4
|
|
|
$
|
858.2
|
|
Earned premiums:
|
|
|
|
|
|
||||||
Direct
|
$
|
840.6
|
|
|
$
|
863.1
|
|
|
$
|
882.6
|
|
Assumed
|
4.9
|
|
|
4.5
|
|
|
4.4
|
|
|||
Ceded
|
(25.6
|
)
|
|
(34.7
|
)
|
|
(25.3
|
)
|
|||
Net earned premiums
|
$
|
819.9
|
|
|
$
|
832.9
|
|
|
$
|
861.7
|
|
Losses and loss expenses incurred:
|
|
|
|
|
|
||||||
Direct
|
$
|
559.1
|
|
|
$
|
569.0
|
|
|
$
|
525.6
|
|
Assumed
|
3.9
|
|
|
3.4
|
|
|
2.9
|
|
|||
Ceded
|
(4.4
|
)
|
|
(2.9
|
)
|
|
(8.0
|
)
|
|||
Net losses and loss expenses incurred
|
$
|
558.6
|
|
|
$
|
569.5
|
|
|
$
|
520.5
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Deferred policy acquisition costs:
|
|
|
|
||||
Ceded
|
$
|
(79.1
|
)
|
|
$
|
(79.8
|
)
|
Assumed
|
129.8
|
|
|
129.1
|
|
||
Net assumed
|
$
|
50.7
|
|
|
$
|
49.3
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Losses and loss expenses payable:
|
|
|
|
||||
Ceded
|
$
|
(547.1
|
)
|
|
$
|
(514.7
|
)
|
Assumed
|
1,178.0
|
|
|
1,047.1
|
|
||
Net assumed
|
$
|
630.9
|
|
|
$
|
532.4
|
|
Unearned premiums:
|
|
|
|
||||
Ceded
|
$
|
(390.8
|
)
|
|
$
|
(395.3
|
)
|
Assumed
|
611.7
|
|
|
609.5
|
|
||
Net assumed
|
$
|
220.9
|
|
|
$
|
214.2
|
|
Pension and postretirement benefits:
|
|
|
|
||||
Ceded
|
$
|
(114.5
|
)
|
|
$
|
(160.0
|
)
|
Assumed
|
74.4
|
|
|
104.0
|
|
||
Net ceded
|
$
|
(40.1
|
)
|
|
$
|
(56.0
|
)
|
Other liabilities:
|
|
|
|
||||
Ceded
|
$
|
(42.9
|
)
|
|
$
|
(63.8
|
)
|
Assumed
|
53.9
|
|
|
55.4
|
|
||
Net assumed (ceded)
|
$
|
11.0
|
|
|
$
|
(8.4
|
)
|
Stockholders’ Equity
|
|
|
|
||||
Accumulated other comprehensive income:
|
|
|
|
||||
Ceded
|
$
|
(153.5
|
)
|
|
$
|
(162.0
|
)
|
Assumed
|
99.8
|
|
|
105.3
|
|
||
Net ceded
|
$
|
(53.7
|
)
|
|
$
|
(56.7
|
)
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
|||||||
Written premiums:
|
|
|
|
|
|
|||||||
Ceded
|
$
|
(815.5
|
)
|
|
$
|
(823.4
|
)
|
|
$
|
(858.2
|
)
|
|
Assumed
|
1,293.3
|
|
|
1,273.5
|
|
|
1,194.2
|
|
||||
Net assumed
|
$
|
477.8
|
|
|
$
|
450.1
|
|
|
$
|
336.0
|
|
|
Earned premiums:
|
|
|
|
|
|
|||||||
Ceded
|
$
|
(819.9
|
)
|
|
$
|
(832.9
|
)
|
|
$
|
(861.7
|
)
|
|
Assumed
|
1,291.9
|
|
|
1,270.5
|
|
|
1,074.1
|
|
||||
Net assumed
|
$
|
472.0
|
|
|
$
|
437.6
|
|
|
$
|
212.4
|
|
|
Losses and loss expenses incurred:
|
|
|
|
|
|
|||||||
Ceded
|
$
|
(560.3
|
)
|
|
$
|
(570.9
|
)
|
|
$
|
(523.6
|
)
|
|
Assumed
|
944.1
|
|
|
864.2
|
|
|
774.4
|
|
||||
Net assumed
|
$
|
383.8
|
|
|
$
|
293.3
|
|
|
$
|
250.8
|
|
|
Acquisition and operating expenses:
|
|
|
|
|
|
|||||||
Ceded
|
(148.5
|
)
|
|
(183.9
|
)
|
|
(215.4
|
)
|
||||
Assumed
|
434.3
|
|
|
432.5
|
|
|
372.3
|
|
||||
Net assumed
|
$
|
285.8
|
|
|
$
|
248.6
|
|
|
$
|
156.9
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
Amount at statutory rate
|
$
|
6.7
|
|
|
35.0
|
%
|
|
$
|
23.5
|
|
|
35.0
|
%
|
|
$
|
9.4
|
|
|
35.0
|
%
|
Tax-exempt interest and dividends received deduction
|
(7.1
|
)
|
|
(37.2
|
)
|
|
(8.7
|
)
|
|
(13.0
|
)
|
|
(8.5
|
)
|
|
(31.5
|
)
|
|||
Other, net
|
(1.4
|
)
|
|
(7.2
|
)
|
|
1.3
|
|
|
1.9
|
|
|
1.1
|
|
|
4.1
|
|
|||
Valuation allowance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(82.6
|
)
|
|
(308.1
|
)
|
|||
Federal income tax (benefit) expense and effective rate
|
$
|
(1.8
|
)
|
|
(9.4
|
)%
|
|
$
|
16.1
|
|
|
23.9
|
%
|
|
$
|
(80.6
|
)
|
|
(300.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Unearned premiums not currently deductible
|
$
|
42.6
|
|
|
$
|
42.5
|
|
Losses and loss expenses payable discounting
|
19.7
|
|
|
19.3
|
|
||
Postretirement and pension benefits
|
26.1
|
|
|
36.4
|
|
||
Realized loss on other-than-temporary impairment
|
4.0
|
|
|
12.3
|
|
||
Other liabilities
|
16.6
|
|
|
21.3
|
|
||
Net operating loss carryforward
|
58.9
|
|
|
41.8
|
|
||
Tax credit carryforward
|
3.3
|
|
|
4.8
|
|
||
Other
|
8.8
|
|
|
4.9
|
|
||
Total deferred tax assets
|
180.0
|
|
|
183.3
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Deferral of policy acquisition costs
|
45.4
|
|
|
45.2
|
|
||
Net unrealized holding gains on investments
|
32.5
|
|
|
35.6
|
|
||
Total deferred tax liabilities
|
77.9
|
|
|
80.8
|
|
||
Net deferred federal income taxes
|
$
|
102.1
|
|
|
$
|
102.5
|
|
|
|
|
|
|
($ millions)
|
Pension
|
|
Postretirement
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
281.3
|
|
|
$
|
292.5
|
|
|
$
|
20.3
|
|
|
$
|
23.9
|
|
Service cost
|
6.1
|
|
|
7.7
|
|
|
—
|
|
|
—
|
|
||||
Interest cost
|
11.6
|
|
|
11.1
|
|
|
0.8
|
|
|
0.9
|
|
||||
Actuarial loss (gain)
|
4.5
|
|
|
(17.6
|
)
|
|
(0.9
|
)
|
|
(3.3
|
)
|
||||
Benefits paid
|
(19.0
|
)
|
|
(12.4
|
)
|
|
(1.4
|
)
|
|
(1.2
|
)
|
||||
The Company’s portion of benefit obligation at end of year
|
$
|
284.5
|
|
|
$
|
281.3
|
|
|
$
|
18.8
|
|
|
$
|
20.3
|
|
Change in plan assets available for plan benefits:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets available for plan benefits at beginning of year
|
$
|
204.4
|
|
|
$
|
205.1
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
Employer contribution
|
34.5
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
15.8
|
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(19.0
|
)
|
|
(12.4
|
)
|
|
—
|
|
|
(0.3
|
)
|
||||
The Company’s portion of fair value of plan assets at end of year
|
$
|
235.7
|
|
|
$
|
204.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental executive retirement plan
|
(6.8
|
)
|
|
(6.8
|
)
|
|
—
|
|
|
—
|
|
||||
Funded status at end of year
|
$
|
(55.6
|
)
|
|
$
|
(83.7
|
)
|
|
$
|
(18.8
|
)
|
|
$
|
(20.3
|
)
|
Accumulated benefit obligation end of year
|
$
|
267.5
|
|
|
$
|
263.1
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
||||
Prior service benefit
|
$
|
(54.1
|
)
|
|
$
|
(59.5
|
)
|
Net actuarial loss
|
118.5
|
|
|
125.1
|
|
||
Total
|
$
|
64.4
|
|
|
$
|
65.6
|
|
|
|
|
|
($ millions)
|
2017
|
||
Prior service benefit
|
$
|
(5.5
|
)
|
Net actuarial loss
|
8.0
|
|
|
Total
|
$
|
2.5
|
|
|
|
($ millions)
|
Pension
|
|
Postretirement
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Components of net periodic cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
6.2
|
|
|
$
|
7.9
|
|
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
11.9
|
|
|
11.3
|
|
|
11.1
|
|
|
0.9
|
|
|
1.1
|
|
|
1.1
|
|
||||||
Expected return on plan assets
|
(15.1
|
)
|
|
(13.8
|
)
|
|
(12.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.5
|
)
|
|
(5.4
|
)
|
|
(5.5
|
)
|
||||||
Net actuarial loss
|
9.2
|
|
|
10.9
|
|
|
6.3
|
|
|
0.2
|
|
|
0.6
|
|
|
0.6
|
|
||||||
Net periodic cost (benefit)
|
$
|
12.2
|
|
|
$
|
16.3
|
|
|
$
|
10.0
|
|
|
$
|
(4.4
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(3.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Pension
|
|
Postretirement
|
||||
2017
|
$
|
11.3
|
|
|
$
|
1.5
|
|
2018
|
11.8
|
|
|
1.4
|
|
||
2019
|
12.0
|
|
|
1.4
|
|
||
2020
|
12.5
|
|
|
1.4
|
|
||
2021
|
13.1
|
|
|
1.4
|
|
||
2022-2026
|
76.8
|
|
|
6.0
|
|
|
|
Pension
|
|
Postretirement
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Benefit obligations weighted-average assumptions:
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.00
|
%
|
|
4.20
|
%
|
|
4.00
|
%
|
|
4.20
|
%
|
Rates of increase in compensation levels
|
3.50
|
|
|
3.50
|
|
|
—
|
|
|
—
|
|
|
Pension
|
|
Postretirement
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
||||||||
Weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
4.20
|
%
|
|
3.85
|
%
|
|
4.85
|
%
|
|
4.20
|
%
|
|
3.85
|
%
|
|
4.85
|
%
|
|
||
Expected long-term rate of return on assets
|
7.00
|
|
|
7.00
|
|
|
7.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||
Rates of increase in compensation levels
|
3.50
|
|
|
3.50
|
|
|
3.50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Postretirement
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Assumed health care cost trend rates:
|
|
|
|
|
|
|||
Health care cost trend rate assumed for the next year
|
6.50
|
%
|
|
6.50
|
%
|
|
6.00
|
%
|
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
|
3.90
|
%
|
|
3.80
|
%
|
|
3.80
|
%
|
Year that the rate reaches the ultimate trend rate
|
2075
|
|
|
2076
|
|
|
2075
|
|
($ millions)
|
Postretirement
|
||||||
|
Increase
|
|
(Decrease)
|
||||
One percentage point change:
|
|
|
|
||||
Effect on total service and interest cost
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Effect on accumulated postretirement benefit obligation
|
2.8
|
|
|
2.4
|
|
|
|
Asset
allocation
target
(0 to 100%)
|
|
Asset Category:
|
|
|
Fixed maturity
|
49.0
|
%
|
U.S. large-cap equity
|
26.0
|
|
U.S. small-cap equity
|
11.0
|
|
International equity
|
10.0
|
|
Emerging market equity
|
4.0
|
|
Total
|
100.0
|
%
|
|
|
|
($ 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, 2016
|
|
|
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
60.4
|
|
|
$
|
—
|
|
|
$
|
60.4
|
|
|
$
|
—
|
|
Corporate securities
|
48.0
|
|
|
—
|
|
|
48.0
|
|
|
—
|
|
||||
U.S. government agencies mortgage-backed securities
|
4.6
|
|
|
—
|
|
|
4.6
|
|
|
—
|
|
||||
Total fixed maturities
|
113.0
|
|
|
—
|
|
|
113.0
|
|
|
—
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
59.6
|
|
|
59.6
|
|
|
—
|
|
|
—
|
|
||||
Small-cap securities
|
26.3
|
|
|
26.3
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
85.9
|
|
|
85.9
|
|
|
—
|
|
|
—
|
|
||||
Short-term fixed maturities
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
||||
Total pension plan investments
|
$
|
200.9
|
|
|
$
|
85.9
|
|
|
$
|
115.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
($ 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, 2015
|
|
|
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
51.0
|
|
|
$
|
—
|
|
|
$
|
51.0
|
|
|
$
|
—
|
|
Corporate securities
|
38.9
|
|
|
—
|
|
|
38.9
|
|
|
—
|
|
||||
U.S. government agencies mortgage-backed securities
|
6.4
|
|
|
—
|
|
|
6.4
|
|
|
—
|
|
||||
Total fixed maturities
|
96.3
|
|
|
—
|
|
|
96.3
|
|
|
—
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Large-cap securities
|
59.0
|
|
|
59.0
|
|
|
—
|
|
|
—
|
|
||||
Small-cap securities
|
22.3
|
|
|
22.3
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
81.3
|
|
|
81.3
|
|
|
—
|
|
|
—
|
|
||||
Total pension plan investments
|
$
|
177.6
|
|
|
$
|
81.3
|
|
|
$
|
96.3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
Unrealized Gains and Losses on Available-for-Sale Securities
|
|
Benefit Plan Items
|
|
Total
|
|||||||
Beginning balance at January 1, 2016
|
$
|
68.5
|
|
|
$
|
(30.9
|
)
|
|
$
|
37.6
|
|
|
Other comprehensive income before reclassifications
|
18.0
|
|
|
(3.0
|
)
|
|
15.0
|
|
||||
Amounts reclassified from AOCI (a)
|
(23.7
|
)
|
|
3.6
|
|
|
(20.1
|
)
|
||||
Net current period other comprehensive income
|
(5.7
|
)
|
|
0.6
|
|
|
(5.1
|
)
|
||||
Ending balance at December 31, 2016
|
$
|
62.8
|
|
|
$
|
(30.3
|
)
|
|
$
|
32.5
|
|
|
|
|
|
|
|
|
|
||||||
Beginning balance at January 1, 2015
|
$
|
110.0
|
|
|
$
|
(38.3
|
)
|
|
$
|
71.7
|
|
|
Other comprehensive income before reclassifications
|
(25.4
|
)
|
|
5.3
|
|
|
(20.1
|
)
|
||||
Amounts reclassified from AOCI (a)
|
(16.1
|
)
|
|
2.1
|
|
|
(14.0
|
)
|
||||
Net current period other comprehensive income
|
(41.5
|
)
|
|
7.4
|
|
|
(34.1
|
)
|
||||
Ending balance at December 31, 2015
|
$
|
68.5
|
|
|
$
|
(30.9
|
)
|
|
$
|
37.6
|
|
|
|
|
|
|
|
|
|
||||||
Beginning balance at January 1, 2014
|
$
|
84.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
80.8
|
|
|
Other comprehensive income before reclassifications
|
38.9
|
|
|
(54.4
|
)
|
|
(15.5
|
)
|
||||
Amounts reclassified from AOCI (a)
|
(13.5
|
)
|
|
19.9
|
|
|
6.4
|
|
||||
Net current period other comprehensive income
|
25.4
|
|
|
(34.5
|
)
|
|
(9.1
|
)
|
||||
Ending balance at December 31, 2014
|
$
|
110.0
|
|
|
$
|
(38.3
|
)
|
|
$
|
71.7
|
|
|
|
|
|
|
|
|
|
||||||
(a)
|
See separate table below for details about these reclassifications
|
|
($ millions)
|
2016
|
|
2015
|
||||
Statutory capital and surplus of insurance subsidiaries
|
$
|
844.4
|
|
|
$
|
814.3
|
|
Net liabilities of non-insurance parent and affiliates
|
(84.9
|
)
|
|
(80.2
|
)
|
||
|
759.5
|
|
|
734.1
|
|
||
Increases (decreases):
|
|
|
|
||||
Deferred acquisition costs
|
129.8
|
|
|
129.1
|
|
||
Postretirement and pension benefits
|
22.7
|
|
|
23.2
|
|
||
Deferred federal income taxes
|
(49.1
|
)
|
|
(41.6
|
)
|
||
Fixed maturities, at fair value
|
13.5
|
|
|
27.9
|
|
||
Other, net
|
14.9
|
|
|
11.9
|
|
||
Stockholders’ equity per accompanying consolidated financial statements
|
$
|
891.3
|
|
|
$
|
884.6
|
|
|
|
|
|
($ millions)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Statutory net income (loss) of insurance subsidiaries
|
$
|
22.7
|
|
|
$
|
65.4
|
|
|
$
|
(17.5
|
)
|
Net loss of non-insurance parent and affiliates
|
(3.0
|
)
|
|
(4.1
|
)
|
|
(5.3
|
)
|
|||
|
19.7
|
|
|
61.3
|
|
|
(22.8
|
)
|
|||
Increases (decreases):
|
|
|
|
|
|
||||||
Deferred acquisition costs
|
0.7
|
|
|
2.5
|
|
|
29.7
|
|
|||
Postretirement and pension benefits
|
4.4
|
|
|
4.2
|
|
|
10.6
|
|
|||
Deferred federal income taxes
|
(5.4
|
)
|
|
(12.2
|
)
|
|
79.3
|
|
|||
Share-based compensation expense
|
—
|
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|||
Other, net
|
1.6
|
|
|
(4.5
|
)
|
|
11.1
|
|
|||
Net income per accompanying consolidated financial statements
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Fair value per share
|
$
|
6.75
|
|
|
$
|
7.69
|
|
|
$
|
7.28
|
|
Expected dividend yield
|
1.87
|
%
|
|
1.75
|
%
|
|
1.86
|
%
|
|||
Risk free interest rate
|
1.30
|
%
|
|
1.60
|
%
|
|
1.65
|
%
|
|||
Expected volatility factor
|
36.27
|
%
|
|
36.61
|
%
|
|
39.23
|
%
|
|||
Expected life in years
|
5.3
|
|
|
6.0
|
|
|
5.7
|
|
|
(millions, except per share amounts)
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Options
|
|
Weighted-
Average
Exercise
Price
|
|
Options
|
|
Weighted-
Average
Exercise
Price
|
|
Options
|
|
Weighted-
Average
Exercise
Price
|
|||||||||
Outstanding, beginning of year
|
3.4
|
|
|
$
|
21.44
|
|
|
3.7
|
|
|
$
|
21.29
|
|
|
3.9
|
|
|
$
|
22.01
|
|
Granted
|
0.3
|
|
|
21.47
|
|
|
0.4
|
|
|
22.87
|
|
|
0.3
|
|
|
21.20
|
|
|||
Exercised
|
(0.4
|
)
|
|
17.55
|
|
|
(0.3
|
)
|
|
16.56
|
|
|
(0.1
|
)
|
|
16.43
|
|
|||
Canceled
|
(0.5
|
)
|
|
29.81
|
|
|
(0.4
|
)
|
|
25.18
|
|
|
(0.4
|
)
|
|
30.21
|
|
|||
Outstanding, end of year
|
2.8
|
|
|
$
|
20.67
|
|
|
3.4
|
|
|
$
|
21.44
|
|
|
3.7
|
|
|
$
|
21.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Options in millions)
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
|
Number
|
|
Weighted-
Average
Remaining
Contractual Life
|
|
Weighted-
Average
Exercise
Price
|
|
Number
|
|
Weighted-
Average
Exercise
Price
|
||||||
Range of Exercise Prices:
|
|
|
|
|
|
|
|
|
|
||||||
$10.01 – $20.00
|
1.4
|
|
|
4.1
|
|
$
|
16.44
|
|
|
1.3
|
|
|
$
|
16.46
|
|
$20.01 – $30.00
|
1.4
|
|
|
3.6
|
|
24.57
|
|
|
0.9
|
|
|
25.96
|
|
||
|
2.8
|
|
|
3.8
|
|
$
|
20.67
|
|
|
2.2
|
|
|
$
|
20.53
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions, except per share amounts)
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net earnings for basic net earnings per common share
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Adjusted net earnings for dilutive net earnings per common share
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares for basic net earnings per common share
|
41.6
|
|
|
41.1
|
|
|
40.8
|
|
|||
Effect of dilutive share-based awards
|
0.4
|
|
|
0.5
|
|
|
0.4
|
|
|||
Adjusted weighted average shares for diluted net earnings per common share
|
42.0
|
|
|
41.6
|
|
|
41.2
|
|
|||
|
|
|
|
|
|
||||||
Basic net earnings per common share
|
$
|
0.50
|
|
|
$
|
1.25
|
|
|
$
|
2.63
|
|
Diluted net earnings per common share
|
$
|
0.50
|
|
|
$
|
1.23
|
|
|
$
|
2.60
|
|
|
|
|
|
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|||
Total number of antidilutive options and awards
|
1.2
|
|
|
1.5
|
|
|
1.8
|
|
|
|
|
|
|
|
|
•
|
Commercial Insurance Segment - commercial auto, small commercial package, middle market commercial, workers’ compensation and other commercial
|
($ millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues from external sources:
|
|
|
|
|
|
||||||
Insurance segments
|
|
|
|
|
|
||||||
Personal insurance
|
$
|
582.2
|
|
|
$
|
591.8
|
|
|
$
|
451.4
|
|
Business insurance
|
468.9
|
|
|
476.0
|
|
|
459.9
|
|
|||
Specialty insurance
|
240.8
|
|
|
202.7
|
|
|
162.8
|
|
|||
Total insurance segments
|
1,291.9
|
|
|
1,270.5
|
|
|
1,074.1
|
|
|||
Investment operations segment
|
|
|
|
|
|
||||||
Net investment income
|
74.7
|
|
|
71.7
|
|
|
74.7
|
|
|||
Net realized capital gains
|
36.5
|
|
|
24.7
|
|
|
20.7
|
|
|||
Total investment operations segment
|
111.2
|
|
|
96.4
|
|
|
95.4
|
|
|||
Total revenue from reportable segments
|
1,403.1
|
|
|
1,366.9
|
|
|
1,169.5
|
|
|||
All other
|
2.3
|
|
|
1.7
|
|
|
3.2
|
|
|||
Total revenues from external sources
|
1,405.4
|
|
|
1,368.6
|
|
|
1,172.7
|
|
|||
Intersegment revenues
|
5.8
|
|
|
5.6
|
|
|
5.1
|
|
|||
Total revenues
|
1,411.2
|
|
|
1,374.2
|
|
|
1,177.8
|
|
|||
Reconciling items:
|
|
|
|
|
|
||||||
Eliminate intersegment revenues
|
(5.8
|
)
|
|
(5.6
|
)
|
|
(5.1
|
)
|
|||
Total consolidated revenue
|
$
|
1,405.4
|
|
|
$
|
1,368.6
|
|
|
$
|
1,172.7
|
|
Segment loss before federal income tax:
|
|
|
|
|
|
||||||
Insurance segments:
|
|
|
|
|
|
||||||
Personal insurance SAP underwriting (loss) gain
|
$
|
(15.2
|
)
|
|
$
|
17.5
|
|
|
$
|
(11.7
|
)
|
Business insurance SAP underwriting loss
|
(26.7
|
)
|
|
(36.7
|
)
|
|
(4.6
|
)
|
|||
Specialty insurance SAP underwriting loss
|
(42.7
|
)
|
|
(5.9
|
)
|
|
(89.5
|
)
|
|||
Total insurance segments
|
(84.6
|
)
|
|
(25.1
|
)
|
|
(105.8
|
)
|
|||
Investment operations segment:
|
|
|
|
|
|
||||||
Net investment income
|
74.7
|
|
|
71.7
|
|
|
74.7
|
|
|||
Net realized capital gains
|
36.5
|
|
|
24.7
|
|
|
20.7
|
|
|||
Total investment operations segment
|
111.2
|
|
|
96.4
|
|
|
95.4
|
|
|||
All other segments income
|
0.4
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Reconciling items:
|
|
|
|
|
|
||||||
GAAP adjustments
|
2.0
|
|
|
4.2
|
|
|
45.8
|
|
|||
Interest expense on corporate debt
|
(5.5
|
)
|
|
(5.4
|
)
|
|
(5.4
|
)
|
|||
Corporate expenses
|
(4.3
|
)
|
|
(2.7
|
)
|
|
(3.2
|
)
|
|||
Total reconciling items
|
$
|
(7.8
|
)
|
|
$
|
(3.9
|
)
|
|
$
|
37.2
|
|
Total consolidated income before federal income taxes
|
$
|
19.2
|
|
|
$
|
67.3
|
|
|
$
|
26.8
|
|
|
|
|
|
|
|
|
($ millions)
|
2016
|
|
2015
|
||||
Segment assets:
|
|
|
|
||||
Investment operations segment
|
$
|
2,663.7
|
|
|
$
|
2,529.8
|
|
Total segment assets
|
2,663.7
|
|
|
2,529.8
|
|
||
Reconciling items:
|
|
|
|
||||
Corporate assets
|
295.7
|
|
|
298.4
|
|
||
Total consolidated assets
|
$
|
2,959.4
|
|
|
$
|
2,828.2
|
|
|
|
|
|
($ millions, except per share amounts)
|
2016
|
||||||||||||||
|
For three months ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Total revenues
|
$
|
339.2
|
|
|
$
|
348.5
|
|
|
$
|
352.8
|
|
|
$
|
364.9
|
|
Income (loss) before federal income taxes
|
3.8
|
|
|
(25.1
|
)
|
|
7.4
|
|
|
33.1
|
|
||||
Net income (loss)
|
3.0
|
|
|
(24.6
|
)
|
|
10.1
|
|
|
32.5
|
|
||||
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.07
|
|
|
$
|
(0.59
|
)
|
|
$
|
0.24
|
|
|
$
|
0.78
|
|
Diluted
|
$
|
0.07
|
|
|
$
|
(0.59
|
)
|
|
$
|
0.24
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
2015
|
||||||||||||||
|
For three months ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Total revenues
|
$
|
334.9
|
|
|
$
|
337.4
|
|
|
$
|
349.7
|
|
|
$
|
346.6
|
|
Income before federal income taxes
|
33.2
|
|
|
3.4
|
|
|
29.9
|
|
|
0.8
|
|
||||
Net income
|
24.7
|
|
|
2.7
|
|
|
20.7
|
|
|
3.1
|
|
||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.60
|
|
|
$
|
0.06
|
|
|
$
|
0.50
|
|
|
$
|
0.08
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.06
|
|
|
$
|
0.50
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
|
2.
|
Our management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013 framework to evaluate the effectiveness of our internal control over financial reporting. Our management believes that the COSO 2013 framework is a suitable framework for its evaluation of our internal control over financial reporting because it is free from bias, permits reasonably qualitative and quantitative measurements of our internal controls, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal controls are not omitted and is relevant to an evaluation of internal control over financial reporting.
|
3.
|
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting.
|
4.
|
Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2016, and has concluded that such internal control over financial reporting was effective.
|
5.
|
Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this Form 10-K, has issued their attestation report on the Company’s internal control over financial reporting, which is included herein.
|
Schedule
Number
|
|
Schedule
|
|
|
|
I.
|
|
Summary of Investments—Other Than Investments in Related Parties
|
|
|
|
II.
|
|
Condensed Financial Information of Registrant
|
|
|
|
III.
|
|
Supplementary Insurance Information
|
|
|
|
IV.
|
|
Reinsurance
|
|
|
|
V.
|
|
Valuation and Qualifying Accounts
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
3.01
|
|
State Auto Financial Corporation’s Amended and Restated Articles of Incorporation
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 3.01 therein)
|
|
|
|
|
|
3.02
|
|
State Auto Financial Corporation’s Amendment to the Amended and Restated Articles of Incorporation
|
|
1933 Act Registration Statement No. 33-89400 on Form S-8 (see Exhibit 4(b) therein)
|
|
|
|
|
|
3.03
|
|
State Auto Financial Corporation Certificate of Amendment to the Amended and Restated Articles of Incorporation as of June 2, 1998
|
|
Form 10-K Annual Report for the year ended December 31, 1998 (see Exhibit 3(A)(3) therein)
|
|
|
|
|
|
3.04
|
|
State Auto Financial Corporation’s Amended and Restated Code of Regulations
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 3.04 therein)
|
|
|
|
|
|
3.05
|
|
First Amendment to State Auto Financial Corporation’s Amended and Restated Code of Regulations
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2010 (see Exhibit 3.05 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
3.06
|
|
Second Amendment to State Auto Financial Corporation’s Amended and Restated Code of Regulations
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2016 (see Exhibit 3.01 therein)
|
|
|
|
|
|
10.01*
|
|
2000 Directors Stock Option Plan of State Auto Financial Corporation
|
|
Definitive Proxy Statement on Form DEF 14A, File No. 000-19289, for Annual Meeting of Shareholders held on May 26, 2000 (see Appendix B therein)
|
|
|
|
|
|
10.02*
|
|
First Amendment to 2000 Directors Stock Option Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2001 (see Exhibit 10(HH) therein)
|
|
|
|
|
|
10.03*
|
|
Second Amendment to 2000 Directors Stock Option Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2001 (see Exhibit 10(KK) therein)
|
|
|
|
|
|
10.04*
|
|
Third Amendment to 2000 Directors Stock Option Plan of State Auto Financial Corporation
|
|
Form 10-K Annual Report for the year ended December 31, 2001 (see Exhibit 10(EE) therein)
|
|
|
|
|
|
10.05*
|
|
Fourth Amendment to 2000 Directors Stock Option Plan of State Auto Financial Corporation
|
|
Form 10-K Annual Report for year ended December 31, 2002 (see Exhibit 10(UU) therein)
|
|
|
|
|
|
10.06*
|
|
Fifth Amendment to 2000 Directors Stock Option Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.66 therein)
|
|
|
|
|
|
10.07*
|
|
Sixth Amendment to the 2000 Directors Stock Option Plan (effective March 7, 2008) of State Auto Financial Corporation
|
|
Form 8-K Current Report filed on March 13, 2008 (see Exhibit 10.3 therein)
|
|
|
|
|
|
10.08
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and State Automobile Mutual Insurance Company, effective April 1, 1993
|
|
Form 10-K Annual Report for the year ended December 31, 1992 (see Exhibit 10 (N) therein)
|
|
|
|
|
|
10.09
|
|
First Amendment to the Investment Management Agreement between Stateco Financial Services, Inc. and State Automobile Mutual Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.09 therein)
|
|
|
|
|
|
10.10
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and State Automobile Mutual Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.10 therein)
|
|
|
|
|
|
10.11
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and Meridian Security Insurance Company, effective June 1, 2001
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.17 therein)
|
|
|
|
|
|
10.12
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and Meridian Security Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.12 therein)
|
|
|
|
|
|
10.13
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and Midwest Security Insurance Company effective January 1, 1997
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.19 therein)
|
|
|
|
|
|
10.14
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and Midwest Security Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.15 therein)
|
|
|
|
|
|
10.15
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and Meridian Citizens Mutual Insurance Company effective June 1, 2001
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.20 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.16
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and Meridian Citizens Mutual Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.17 therein)
|
|
|
|
|
|
10.17
|
|
Amended and Restated Investment Management Agreement dated as of December 31, 2007, among Stateco Financial Services, Inc. and Patrons Mutual Insurance Company of Connecticut, Patrons Fire Insurance Company of Rhode Island, and Provision State Insurance Company
|
|
Form 10-K Annual Report for the year ended December 31, 2007 (see Exhibit 10.22 therein)
|
|
|
|
|
|
10.18
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and Plaza Insurance Company effective October 1, 2010
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.26 therein)
|
|
|
|
|
|
10.19
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and Plaza Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.22 therein)
|
|
|
|
|
|
10.20
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and Rockhill Insurance Company effective October 1, 2010
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.27 therein)
|
|
|
|
|
|
10.21
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and Rockhill Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.24 therein)
|
|
|
|
|
|
10.22
|
|
Investment Management Agreement between Stateco Financial Services, Inc. and American Compensation Insurance Company and Bloomington Compensation Insurance Company effective October 1, 2010
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.28) therein)
|
|
|
|
|
|
10.23
|
|
Amended and Restated Exhibit A to the Investment Management Agreement between Stateco Financial Services, Inc. and American Compensation Insurance Company and Bloomington Compensation Insurance Company, effective January 1, 2013
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.26 therein)
|
|
|
|
|
|
10.24
|
|
Midwest Security Insurance Company Management Agreement amended and restated as of January 1, 2000 by and among State Automobile Mutual Insurance Company, State Auto Property and Casualty Insurance Company and Midwest Security Insurance Company (nka State Auto Insurance Company of Wisconsin)
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.45 therein)
|
|
|
|
|
|
10.25
|
|
Management and Operations Agreement, Amended and Restated as of January 1, 2005 by and among State Automobile Mutual Insurance Company, State Auto Financial Corporation, State Auto Property and Casualty Insurance Company, State Auto National Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Meridian Insurance Group, Inc., Farmers Casualty Insurance Company, Stateco Financial Services, Inc., Strategic Insurance Software, Inc., and 518 Property Management and Leasing, LLC
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2005 (see Exhibit10.56 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.26
|
|
First Amendment, made as of April 1, 2007, to Management and Operations Agreement Amended and Restated as of January 1, 2005, by and among State Automobile Mutual Insurance Company, State Auto Financial Corporation, State Auto Property and Casualty Insurance Company, State Auto National Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Meridian Insurance Group, Inc., Farmers Casualty Insurance Company, Stateco Financial Services, Inc., Strategic Insurance Software, Inc., 518 Property Management and Leasing, LLC, State Auto Florida Insurance Company, Beacon National Insurance Company, Beacon Lloyds, Inc., Beacon Lloyds Insurance Company, First Preferred Insurance Company, and Petrolia Insurance Company
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2007 (see Exhibit 66.67 therein)
|
|
|
|
|
|
10.27
|
|
Second Amendment dated as of December 31, 2008, to the Management and Operations Agreement, Amended and Restated as of January 1, 2005, among State Auto Financial Corporation, State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, State Auto National Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Meridian Insurance Group, Inc., Farmers Casualty Insurance Company, Stateco Financial Services, Inc., Strategic Insurance Software, Inc., 518 Property Management and Leasing, LLC, State Auto Florida Insurance Company, Beacon National Insurance Company, Beacon Lloyds, Inc., Beacon Lloyds Insurance Company, Patrons Mutual Insurance Company of Connecticut, Litchfield Mutual Fire Insurance Company, and Provision State Insurance Company
|
|
Form 8-K Current Report filed on January 27, 2009 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.28
|
|
Third Amendment, effective as of December 31, 2010, to the Management and Operations Agreement, Amended and Restated as of January 1, 2005, among State Auto Financial Corporation, State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Meridian Insurance Group, Inc., Farmers Casualty Insurance Company, Stateco Financial Services, Inc., Strategic Insurance Software, Inc., 518 Property Management and Leasing, LLC, State Auto Florida Insurance Company, Beacon National Insurance Company, Beacon Lloyds, Inc., Beacon Lloyds Insurance Company, Patrons Mutual Insurance Company of Connecticut and Litchfield Mutual Fire Insurance Company
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.36 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.29
|
|
Management and Operations Agreement, Amended and Restated as of January 1, 2015 by and among State Automobile Mutual Insurance Company, State Auto Financial Corporation, State Auto Property and Casualty Insurance Company, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Patrons Mutual Insurance Company, Stateco Financial Services, Inc., 518 Property Management and Leasing, LLC, State Auto Holdings, Inc., Facilitators, Inc., CDC Holding, Inc., Partners General Insurance Agency, LLC, and Network E&S Brokers, LLC
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2015 (see Exhibit10.01 therein)
|
|
|
|
|
|
10.30
|
|
Consulting Services Agreement dated as of November 1, 2009, by and between State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Farmers Casualty Insurance Company, Milbank Insurance Company, and RTW, Inc.
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2009 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.31
|
|
Amended and Restated Appendix B , effective as of January 1, 2013, to the Consulting Service Agreement, dated as of November 1, 2009, by and between State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Farmers Casualty Insurance Company, Milbank Insurance Company, and RTW, Inc.
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.35 therein)
|
|
|
|
|
|
10.32
|
|
Underwriting Management Agreement effective as of November 20, 2009, by and between Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company, Bloomington Compensation Insurance Company, State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Meridian Security Insurance Company, Milbank Insurance Company, Farmers Casualty Insurance Company, and Risk Evaluation and Design, LLC
|
|
Form 8-K Current Report filed on November 25, 2009 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.33
|
|
Amended and Restated Management and Operations Agreement, effective as of January 1, 2011, by and among State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company, Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company, Bloomington Compensation Insurance Company, Rockhill Holding Company, National Environmental Coverage Corporation of the South, LLC, National Environmental Coverage Corporation, RTW, Inc., Rockhill Insurance Services, LLC and Rockhill Underwriting Management, LLC.
|
|
Form 8-K Current Report filed on January 7, 2011 (see Exhibit 10.2 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.34
|
|
First Amendment, effective as of January 1, 2013, to Amended and Restated Management and Operations Agreement, effective as of January 1, 2011 by and among State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company, Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company, Bloomington Compensation Insurance Company, Rockhill Holding Company, National Environmental Coverage Corporation of the South, LLC, National Environmental Coverage Corporation, RTW, Inc., Rockhill Insurance Services, LLC and Rockhill Underwriting Management, LLC.
|
|
Form 10-K Annual Report for the year ended December 31, 2012 (see Exhibit 10.38 therein)
|
|
|
|
|
|
10.35
|
|
Reinsurance Pooling Agreement Amended and Restated as of January 1, 2011, entered into as of January 3, 2011, by and among State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Wisconsin, Farmers Casualty Insurance Company, State Auto Insurance Company of Ohio, State Auto Florida Insurance Company, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Patrons Mutual Insurance Company of Connecticut, Litchfield Mutual Fire Insurance Company, Beacon National Insurance Company, Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company and Bloomington Compensation Insurance Company
|
|
Form 8-K Current Report filed on January 7, 2011 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.36
|
|
First Amendment, effective December 31, 2011, to Reinsurance Pooling Agreement Amended and Restated as of January 1, 2011 by and among State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Wisconsin, Farmers Casualty Insurance Company, State Auto Insurance Company of Ohio, State Auto Florida Insurance Company, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Patrons Mutual Insurance Company of Connecticut, Litchfield Mutual Fire Insurance Company, Beacon National Insurance Company, Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company and Bloomington Compensation Insurance Company
|
|
Form 10-K Annual Report for year ended December 31, 2011 (see Exhibit 10.45 therein)
|
|
|
|
|
|
10.37
|
|
Second Amendment, effective March 31, 2013, to Reinsurance Pooling Agreement Amended and Restated as of January 1, 2011 by and among State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Wisconsin, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Meridian Citizens Mutual Insurance Company, Patrons Mutual Insurance Company of Connecticut, Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company and Bloomington Compensation Insurance Company
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2013 (see Exhibit 10.1 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.38
|
|
Third Amendment, effective July 1, 2014, to Reinsurance Pooling Agreement Amended and Restated as of January 1, 2011 by and among State Automobile Mutual Insurance Company, State Auto Property & Casualty Insurance Company, Milbank Insurance Company, State Auto Insurance Company of Wisconsin, State Auto Insurance Company of Ohio, Meridian Security Insurance Company, Patrons Mutual Insurance Company of Connecticut, Rockhill Insurance Company, Plaza Insurance Company, American Compensation Insurance Company and Bloomington Compensation Insurance Company
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2014 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.39
|
|
Homeowners Quota Share Reinsurance Contract between State Automobile Mutual Insurance Company (on behalf of itself and insurance subsidiaries and affiliates now under its ownership, control or management, including insurance subsidiaries of State Auto Financial Corporation) and a syndicate of reinsurers effective December 31, 2011 at 11:59 p.m.
|
|
Form 10-K Annual Report for year ended December 31, 2011 (see Exhibit 10.46 therein)
|
|
|
|
|
|
10.40
|
|
Amended and Restated Declaration of Trust of STFC Capital Trust I, dated as of May 22, 2003
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2003 (see 10(XX) therein)
|
|
|
|
|
|
10.41
|
|
Indenture dated as of May 22, 2003, for Floating Rate Junior Subordinated Debt Securities Due 2033
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2003 (see 10(YY) therein)
|
|
|
|
|
|
10.42
|
|
Credit Agreement dated as of May 19, 2009, between State Automobile Mutual Insurance Company, as borrower, and Milbank Insurance Company, as lender
|
|
Form 8-K Current Report filed on May 26, 2009 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.43
|
|
Credit Agreement dated as of May 8, 2009, between State Automobile Mutual Insurance Company, as borrower, and State Auto Property & Casualty, as lender
|
|
Form 8-K Current Report filed on May 13, 2009 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.44
|
|
Credit Agreement dated as of July 26, 2013, among State Auto Property & Casualty, as borrower, a syndicate of financial institutions, as the lenders party thereto, KeyBank National Association, as Administrative Agent, Lead Arranger, Sole Book Runner and Swingline Lender, and JPMorgan Chase Bank, N.A. and PNC BANK, National Association, as Co-Documentation Agents.
|
|
Form 8-K Current Report filed on September 30, 2011 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.45*
|
|
Employment Agreement (dated as of November 17, 2008), including Amendment to Employment Agreement (dated as of November 30, 2010), among Rockhill Holding Company, State Automobile Mutual Insurance Company and Jessica E. Buss
|
|
Form 10-K Annual Report for year ended December 31, 2011 (see Exhibit 10.61 therein)
|
|
|
|
|
|
10.46*
|
|
Employment Agreement, dated as of March 27, 2015, commencing as of April 27, 2015, among State Auto Financial Corporation, State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company and Michael E. LaRocco
|
|
Form 10- Quarterly Report for the period ended March 31, 2015 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.47*
|
|
Executive Change of Control Agreement dated as of October 27, 2014, among State Auto Financial Corporation, State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company and Steven E. English
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2014 (see Exhibit 10.02 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.48*
|
|
Executive Change of Control Agreement dated as of October 27, 2014, among State Auto Financial Corporation, State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company and Jessica E. Buss
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2014 (see Exhibit 10.05 therein)
|
|
|
|
|
|
10.49*
|
|
Executive Change of Control Agreement dated as of March 27, 2015 among State Auto Financial Corporation, State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company and Michael E. LaRocco
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2015 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.50*
|
|
Executive Change of Control Agreement dated as of March 27, 2015 among State Auto Financial Corporation, State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company and Kim B. Garland
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2016 (see Exhibit 10.04 therein)
|
|
|
|
|
|
10.51*
|
|
Executive Change of Control Agreement dated as of December 1, 2015 among State Auto Financial Corporation, State Auto Property & Casualty Insurance Company, State Automobile Mutual Insurance Company and Paul M. Stachura
|
|
Included herein
|
|
|
|
|
|
10.52*
|
|
Form of Indemnification Agreement between State Auto Financial Corporation and each of its directors
|
|
Form 8-K Current Report filed on November 20, 2008 (see Exhibit 99.1 therein)
|
|
|
|
|
|
10.53*
|
|
Officer Indemnification Agreement dated as of May 8, 2009, between State Auto Financial Corporation and Steven E. English
|
|
Form 8-K Current Report filed on May 13, 2009 (see Exhibit 10.3 therein)
|
|
|
|
|
|
10.54*
|
|
Amended and Restated Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.60 therein)
|
|
|
|
|
|
10.55*
|
|
Amendment Number 1 to the Amended and Restated Equity Incentive Compensation Plan of State Auto Financial Corporation (amendment effective August 15, 2008)
|
|
Form 10-K Annual Report for the year ended December 31, 2008 (see Exhibit 10.63 therein)
|
|
|
|
|
|
10.56*
|
|
Form of Non-Qualified Stock Option Agreement under the Amended and Restated Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.62 therein)
|
|
|
|
|
|
10.57*
|
|
Form of Incentive Stock Option Agreement under the Amended and Restated Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.63 therein)
|
|
|
|
|
|
10.58*
|
|
2009 Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 8-K Current Report filed on May 13, 2009 (see Exhibit 10.7 therein)
|
|
|
|
|
|
10.59*
|
|
Amendment No. 1 to the 2009 Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2011 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.60*
|
|
Amendment No. 2 to the 2009 Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2013 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.61*
|
|
Amendment No. 3 to the 2009 Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-K Annual Report for the year ended December 31, 2014 (see Exhibit 10.69 therein)
|
|
|
|
|
|
10.62*
|
|
Amendment No. 4 to the 2009 Equity Incentive Compensation Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2016 (see Exhibit 10.01 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.63*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 6, 2014 between State Auto Financial Corporation and Steven E. English
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2014 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.64*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 5, 2015 between State Auto Financial Corporation and Steven E. English
|
|
Form 8-K Current Report filed on May 13, 2015 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.65*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 6, 2014 between State Auto Financial Corporation and Jessica E. Buss
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2014 (see Exhibit 10.04 therein)
|
|
|
|
|
|
10.66*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 5, 2015 between State Auto Financial Corporation and Jessica E. Buss
|
|
Form 8-K Current Report filed on May 13, 2015 (see Exhibit 10.03 therein)
|
|
|
|
|
|
10.67*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of May 7, 2015 between State Auto Financial Corporation and Michael E. LaRocco
|
|
Form 8-K Current Report filed on May 13, 2015 (see Exhibit 10.06 therein)
|
|
|
|
|
|
10.68*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 3, 2016 between State Auto Financial Corporation and Michael E. LaRocco
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2016 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.69*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 3, 2016 between State Auto Financial Corporation and Steven E. English
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2016 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.70*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 3, 2016 between State Auto Financial Corporation and Jessica E. Clark
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2016 (see Exhibit 10.03 therein)
|
|
|
|
|
|
10.71*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of August 24, 2015 between State Auto Financial Corporation and Kim B. Garland
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2016 (see Exhibit 10.04 therein)
|
|
|
|
|
|
10.72*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of August 24, 2015 between State Auto Financial Corporation and Kim B. Garland
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2016 (see Exhibit 10.05 therein)
|
|
|
|
|
|
10.73*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 3, 2016 between State Auto Financial Corporation and Kim B. Garland
|
|
Form 10-Q Quarterly Report for the period ended March 31, 2016 (see Exhibit 10.06 therein)
|
|
|
|
|
|
10.74*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of September 9, 2015 between State Auto Financial Corporation and Paul M. Stachura
|
|
Included herein
|
|
|
|
|
|
10.75*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of September 9, 2015 between State Auto Financial Corporation and Paul M. Stachura
|
|
Included herein
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.76*
|
|
Restricted Stock Agreement under the 2009 Equity Incentive Compensation Plan dated as of March 3, 2016 between State Auto Financial Corporation and Paul M. Stachura
|
|
Included herein
|
|
|
|
|
|
10.77*
|
|
Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.61 therein)
|
|
|
|
|
|
10.78*
|
|
First Amendment to the Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.54 therein)
|
|
|
|
|
|
10.79*
|
|
Second Amendment to the Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-K Annual Report for the year ended December 31, 2008 (see Exhibit 10.72 therein)
|
|
|
|
|
|
10.80*
|
|
Third Amendment to the Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-K Annual Report for the year ended December 31, 2008 (see Exhibit 10.73 therein)
|
|
|
|
|
|
10.81*
|
|
Fourth Amendment to the Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation effective November 1, 2010
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.89 therein)
|
|
|
|
|
|
10.82*
|
|
Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2016 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.83*
|
|
Form of Restricted Share Unit Agreement for the Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.64 therein)
|
|
|
|
|
|
10.84*
|
|
Form of Designation of Beneficiary for the Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2005 (see Exhibit 10.65 therein)
|
|
|
|
|
|
10.85*
|
|
Supplemental Retirement Plan for Executive Employees of State Auto Insurance Companies effective as of May 1, 2010
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2010 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.86*
|
|
First Amendment to the Supplemental Retirement Plan for Executive Employees of State Auto Insurance Companies (amendment effective December 1, 2010)
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.96 therein)
|
|
|
|
|
|
10.87*
|
|
State Auto Financial Corporation Supplemental Executive Retirement Plan, effective January 1, 2007
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2007 (see Exhibit 10.72 therein)
|
|
|
|
|
|
10.88*
|
|
First Amendment to the State Auto Financial Corporation Supplemental Executive Retirement Plan effective December 1, 2010
|
|
Form 10-K Annual Report for year ended December 31, 2010 (see Exhibit 10.98 therein)
|
|
|
|
|
|
10.89*
|
|
Form of Designation of Distribution Election for the State Auto Financial Corporation Supplemental Executive Retirement Plan
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2007 (see Exhibit 10.73 therein)
|
|
|
|
|
|
10.90*
|
|
State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan (amended and restated as of March 1, 2001)
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.58 therein)
|
|
|
|
|
|
10.91*
|
|
First Amendment to the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan (amendment effective as of December 1, 2005)
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.59 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.92*
|
|
Second Amendment to the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan (amendment effective as of January 1, 2009)
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2008 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.93*
|
|
Third Amendment to the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan (amendment effective as of January 1, 2009)
|
|
Form 10-K Annual Report for the year ended December 31, 2008 (see Exhibit 10.84 therein)
|
|
|
|
|
|
10.94*
|
|
Fourth Amendment to the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan effective November 1, 2010
|
|
1933 Act Registration Statement No. 333-170564 on Form S-8 (see Exhibit 4(j) therein)
|
|
|
|
|
|
10.95*
|
|
Fifth Amendment to the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan effective January 1, 2012
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2012 (see Exhibit 10.1 therein)
|
|
|
|
|
|
10.96*
|
|
Agreement of Assignment and Assumption dated as of March 1, 2001, among State Auto Financial Corporation, State Automobile Mutual Insurance Company, State Auto Property and Casualty Insurance Company, and Midwest Security Insurance Company (nka State Auto Insurance Company of Wisconsin) regarding the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.60 therein)
|
|
|
|
|
|
10.97*
|
|
Form of State Auto Insurance Companies Directors Deferred Compensation Agreement
|
|
Form 10-K Annual Report for the year ended December 31, 2005 (see Exhibit 10.61 therein)
|
|
|
|
|
|
10.98*
|
|
State Auto Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan effective as of March 1, 2010
|
|
1933 Act Registration Statement No. 333-165366 on Form S-8 (see Exhibit 4(e) therein)
|
|
|
|
|
|
10.99*
|
|
First Amendment to the State Auto Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan (amendment effective July 1, 2010)
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2010 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.100*
|
|
Second Amendment to the State Auto Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan (amendment effective November 1, 2010)
|
|
1933 Act Registration Statement No. 333-170568 on Form S-8 (see Exhibit 4(h) therein)
|
|
|
|
|
|
10.101*
|
|
Third Amendment to the State Auto Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan (amendment effective January 1, 2011)
|
|
Form 10-K Annual Report for year ended December 31, 2011 (see Exhibit 10.109 therein)
|
|
|
|
|
|
10.102*
|
|
State Auto Financial Corporation Leadership Bonus Plan
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2007 (see Exhibit 10.64 therein)
|
|
|
|
|
|
10.103*
|
|
First Amendment to the State Auto Financial Corporation Leadership Bonus Plan (amendment effective as of January 1, 2009)
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2008 (see Exhibit 10.04 therein)
|
|
|
|
|
|
10.104*
|
|
Second Amendment to the State Auto Financial Corporation Leadership Bonus Plan (amendment effective as of January 1, 2012)
|
|
Form 8K Current Report filed on May 10, 2012 (see Exhibit 10.2 therein)
|
|
|
|
|
|
10.105*
|
|
Third Amendment to the State Auto Financial Corporation Leadership Bonus Plan (amendment effective as of January 1, 2015)
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2015 (see Exhibit 10.02 therein)
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
10.106*
|
|
Fourth Amendment to the State Auto Financial Corporation Leadership Bonus Plan (amendment effective as of January 1, 2015)
|
|
Form 10-K Annual Report for year ended December 31, 2015 (see Exhibit 10.99 therein)
|
|
|
|
|
|
10.107*
|
|
State Auto Financial Corporation Long-Term Incentive Plan
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2007 (see Exhibit 10.65 therein)
|
|
|
|
|
|
10.108*
|
|
First Amendment to the State Auto Financial Corporation Long-Term Incentive Plan (amendment effective as of January 1, 2008)
|
|
Form 8-K Current Report filed on March 13, 2008 (see Exhibit 10.5 therein)
|
|
|
|
|
|
10.109*
|
|
Second Amendment to the State Auto Financial Corporation Long-Term Incentive Plan (amendment effective as of January 1, 2009)
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2008 (see Exhibit 10.05 therein)
|
|
|
|
|
|
10.110*
|
|
Third Amendment to the State Auto Financial Corporation Long-Term Incentive Plan (amendment effective as of January 1, 2012)
|
|
Form 8-K Current Report filed on May 10, 2012 (see Exhibit 10.3 therein)
|
|
|
|
|
|
10.111*
|
|
Fourth Amendment to the State Auto Financial Corporation Long-Term Incentive Plan (amendment effective as of August 8, 2014)
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2015 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.112*
|
|
Blanket Security Agreement effective February 15, 2013 between State Auto Property & Casualty Insurance Company and Federal Home Loan Bank of Cincinnati
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2013 (see Exhibit 10.02 therein)
|
|
|
|
|
|
10.113*
|
|
Insurance Company Member Addendum to Blanket Security Agreement effective February 15, 2013 between State Auto Property & Casualty Insurance Company and Federal Home Loan Bank of Cincinnati
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2013 (see Exhibit 10.03 therein)
|
|
|
|
|
|
10.114*
|
|
Application for Callable Advance signed July 10, 2013 by State Auto Property & Casualty Insurance Company with respect to Blanket Security Agreement effective February 15, 2013 between State Auto Property & Casualty Insurance Company and Federal Home Loan Bank of Cincinnati
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2013 (see Exhibit 10.04 therein)
|
|
|
|
|
|
10.115*
|
|
Application for Callable Advance signed September 2, 2016 by State Auto Property & Casualty Insurance Company with respect to Blanket Security Agreement effective February 15, 2013 between State Auto Property & Casualty Insurance Company and Federal Home Loan Bank of Cincinnati
|
|
Form 10-Q Quarterly Report for the period ended September 30, 2016 (see Exhibit 10.01 therein)
|
|
|
|
|
|
10.116*
|
|
State Auto Financial Corporation One Team Incentive Plan
|
|
Form 10-Q Quarterly Report for the period ended June 30, 2016 (see Exhibit 10.03 therein)
|
|
|
|
|
|
21.01
|
|
List of Subsidiaries of State Auto Financial Corporation
|
|
Included herein
|
|
|
|
|
|
23.01
|
|
Consent of Independent Registered Public Accounting Firm
|
|
Included herein
|
|
|
|
|
|
24.01
|
|
Powers of Attorney-David J. D’Antoni, Robert E. Baker, Michael J. Fiorile, Kym M. Hubbard, Eileen A. Mallesch, Thomas E. Markert, David R. Meuse and S. Elaine Roberts
|
|
Included herein
|
|
|
|
|
|
31.01
|
|
CEO certification required by Section 302 of Sarbanes-Oxley Act of 2002
|
|
Included herein
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
If incorporated by reference document with which Exhibit was
previously filed with SEC
|
|
|
|
|
|
31.02
|
|
CFO certification required by Section 302 of Sarbanes-Oxley Act of 2002
|
|
Included herein
|
|
|
|
|
|
32.01
|
|
CEO certification required by Section 906 of Sarbanes-Oxley Act of 2002
|
|
Included herein
|
|
|
|
|
|
32.02
|
|
CFO certification required by Section 906 of Sarbanes-Oxley Act of 2002
|
|
Included herein
|
|
|
|
|
|
101.INS
|
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Included herein
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Included herein
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
Included herein
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Included herein
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Included herein
|
*
|
Constitutes either a management contract or a compensatory plan or arrangement required to be filed as an Exhibit.
|
(b)
|
EXHIBITS
|
(c)
|
FINANCIAL STATEMENT SCHEDULES
|
|
STATE AUTO FINANCIAL CORPORATION
|
|
|
Dated: March 1, 2017
|
/s/ Michael E. LaRocco
|
|
Michael E. LaRocco
|
|
Chairman, President and Chief Executive Officer
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Michael E. LaRocco
|
|
Chairman, President and Chief Executive Officer
|
|
March 1, 2017
|
Michael E. LaRocco
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ Steven E. English
|
|
Senior Vice President and Chief Financial Officer
|
|
March 1, 2017
|
Steven E. English
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ Matthew R. Pollak
|
|
Vice President, Treasurer and Chief Accounting Officer
|
|
March 1, 2017
|
Matthew R. Pollak
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
David J. D’Antoni
|
|
Director
|
|
March 1, 2017
|
David J. D’Antoni
|
|
|
|
|
|
|
|
|
|
Robert E. Baker*
|
|
Director
|
|
March 1, 2017
|
Robert E. Baker
|
|
|
|
|
|
|
|
|
|
Michael J. Fiorile*
|
|
Director
|
|
March 1, 2017
|
Michael J. Fiorile
|
|
|
|
|
|
|
|
|
|
Kym M. Hubbard*
|
|
Director
|
|
March 1, 2017
|
Kym M. Hubbard
|
|
|
|
|
|
|
|
|
|
Eileen A. Mallesch*
|
|
Director
|
|
March 1, 2017
|
Eileen A. Mallesch
|
|
|
|
|
|
|
|
|
|
Thomas E. Markert*
|
|
Director
|
|
March 1, 2017
|
Thomas E. Markert
|
|
|
|
|
|
|
|
|
|
David R. Meuse*
|
|
Director
|
|
March 1, 2017
|
David R. Meuse
|
|
|
|
|
|
|
|
|
|
S. Elaine Roberts*
|
|
Director
|
|
March 1, 2017
|
S. Elaine Roberts
|
|
|
|
|
|
|
|
|
|
*
|
Steven E. English by signing his name hereto, does sign this document on behalf of the person indicated above pursuant to a Power of Attorney duly executed by such person.
|
/s/ Steven E. English
|
|
Attorney in Fact
|
|
March 1, 2017
|
Steven E. English
|
|
|
|
|
($ millions)
|
|
|
|
|
|
|||||||
December 31, 2016
|
Cost or
amortized
cost (1)
|
|
Fair
value
|
|
Amount at
which shown
in the
balance sheet
|
|||||||
Available-for-sale:
|
|
|
|
|
|
|||||||
Fixed maturities:
|
|
|
|
|
|
|||||||
U.S. treasury securities and obligations of U.S. government agencies
|
$
|
401.9
|
|
|
$
|
404.7
|
|
|
$
|
404.7
|
|
|
Obligations of states and political subdivisions
|
634.6
|
|
|
643.7
|
|
|
643.7
|
|
||||
Corporate securities
|
445.7
|
|
|
449.6
|
|
|
449.6
|
|
||||
U.S. government agencies residential mortgage-backed securities
|
613.7
|
|
|
611.3
|
|
|
611.3
|
|
||||
Total fixed maturities
|
2,095.9
|
|
|
2,109.3
|
|
|
2,109.3
|
|
||||
Equity securities:
|
|
|
|
|
|
|||||||
Large-cap securities
|
108.9
|
|
|
139.0
|
|
|
139.0
|
|
||||
Small-cap securities
|
57.2
|
|
|
79.1
|
|
|
79.1
|
|
||||
Mutual and exchange traded funds
|
157.0
|
|
|
164.7
|
|
|
164.7
|
|
||||
Total equity securities
|
323.1
|
|
|
382.8
|
|
|
382.8
|
|
||||
Other invested assets
|
25.5
|
|
|
45.1
|
|
|
45.1
|
|
||||
Total available-for-sale securities
|
2,444.5
|
|
|
2,537.2
|
|
|
2,537.2
|
|
||||
Other invested assets
|
5.4
|
|
|
5.4
|
|
|
5.4
|
|
||||
Total investments – other than investments in related parties
|
$
|
2,449.9
|
|
|
$
|
2,542.6
|
|
|
$
|
2,542.6
|
|
|
|
|
|
|
|
|
|
||||||
(1)
|
Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.
|
(in millions, except per share amounts)
|
December 31
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Investments in common stock of subsidiaries (equity method)
|
$
|
983.6
|
|
|
$
|
972.5
|
|
Fixed maturities, available-for-sale, at fair value
|
0.9
|
|
|
0.9
|
|
||
Other invested assets
|
3.5
|
|
|
3.0
|
|
||
Cash and cash equivalents
|
8.1
|
|
|
10.5
|
|
||
Other assets
|
0.2
|
|
|
—
|
|
||
Federal income tax, net
|
21.5
|
|
|
21.9
|
|
||
Total assets
|
$
|
1,017.8
|
|
|
$
|
1,008.8
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Notes payable (affiliates $116.5 and $116.5, respectively)
|
$
|
116.5
|
|
|
$
|
116.5
|
|
Due to affiliates
|
1.3
|
|
|
0.6
|
|
||
Other liabilities
|
8.7
|
|
|
7.1
|
|
||
Total liabilities
|
126.5
|
|
|
124.2
|
|
||
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; 48.6 and 48.1 shares issued, respectively, at stated value of $2.50 per share
|
121.6
|
|
|
120.4
|
|
||
Treasury stock, 6.8 and 6.8 shares, respectively, at cost
|
(116.5
|
)
|
|
(116.3
|
)
|
||
Additional paid-in capital
|
159.9
|
|
|
153.5
|
|
||
Accumulated other comprehensive income
|
32.5
|
|
|
37.6
|
|
||
Retained earnings
|
693.8
|
|
|
689.4
|
|
||
Total stockholders’ equity
|
891.3
|
|
|
884.6
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,017.8
|
|
|
$
|
1,008.8
|
|
|
|
|
|
($ millions)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net investment income
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Total revenues
|
0.2
|
|
|
0.3
|
|
|
0.3
|
|
|||
Interest expense (affiliates $6.1, $6.0 and $6.0, respectively)
|
6.1
|
|
|
6.0
|
|
|
6.0
|
|
|||
Other operating expenses
|
7.0
|
|
|
4.9
|
|
|
5.6
|
|
|||
Total expenses
|
13.1
|
|
|
10.9
|
|
|
11.6
|
|
|||
Loss before federal income taxes
|
(12.9
|
)
|
|
(10.6
|
)
|
|
(11.3
|
)
|
|||
Federal income tax benefit
|
(6.0
|
)
|
|
(2.8
|
)
|
|
(20.6
|
)
|
|||
Net (loss) income before equity in net income of subsidiaries
|
(6.9
|
)
|
|
(7.8
|
)
|
|
9.3
|
|
|||
Equity in net income of subsidiaries
|
27.9
|
|
|
59.0
|
|
|
98.1
|
|
|||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
|
|
|
|
|
|
($ millions, except per share amounts)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
||||||
Net unrealized holding gains (losses) on investments:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) arising during the year
|
0.2
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|||
Reclassification adjustments for gains realized in net income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Income tax (expense) benefit
|
(0.1
|
)
|
|
—
|
|
|
0.1
|
|
|||
Total net unrealized holding gain (losses) on investments
|
0.1
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Unrealized equity in subsidiaries
|
(5.2
|
)
|
|
(34.0
|
)
|
|
(9.0
|
)
|
|||
Other comprehensive loss
|
(5.1
|
)
|
|
(34.1
|
)
|
|
(9.1
|
)
|
|||
Comprehensive income
|
$
|
15.9
|
|
|
$
|
17.1
|
|
|
$
|
98.3
|
|
|
|
|
|
|
|
($ millions)
|
Year ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
21.0
|
|
|
$
|
51.2
|
|
|
$
|
107.4
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization, net
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|||
Share-based compensation
|
1.2
|
|
|
(0.3
|
)
|
|
0.9
|
|
|||
Equity in net income from consolidated subsidiaries
|
(27.9
|
)
|
|
(59.0
|
)
|
|
(98.1
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Other liabilities and due from affiliates
|
0.9
|
|
|
0.9
|
|
|
0.5
|
|
|||
Other assets
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits on share-based awards
|
(0.2
|
)
|
|
(0.5
|
)
|
|
—
|
|
|||
Federal income taxes, net
|
3.3
|
|
|
(0.7
|
)
|
|
(16.6
|
)
|
|||
Net cash used in operating activities
|
(1.9
|
)
|
|
(8.4
|
)
|
|
(5.9
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Dividends received from consolidated subsidiaries
|
14.2
|
|
|
18.0
|
|
|
24.0
|
|
|||
Purchases of other invested assets
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|||
Maturities, calls and pay downs of fixed maturities – available-for-sale
|
—
|
|
|
—
|
|
|
0.5
|
|
|||
Sales of fixed maturities – available-for-sale
|
—
|
|
|
—
|
|
|
0.3
|
|
|||
Net cash provided by investing activities
|
13.9
|
|
|
17.7
|
|
|
24.4
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
2.2
|
|
|
6.2
|
|
|
3.5
|
|
|||
Payments to acquire treasury stock
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|||
Payment of dividends
|
(16.6
|
)
|
|
(16.5
|
)
|
|
(16.5
|
)
|
|||
Excess tax benefits on share-based awards
|
0.2
|
|
|
0.3
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(14.4
|
)
|
|
(10.3
|
)
|
|
(13.1
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(2.4
|
)
|
|
(1.0
|
)
|
|
5.4
|
|
|||
Cash and cash equivalents at beginning of year
|
10.5
|
|
|
11.5
|
|
|
6.1
|
|
|||
Cash and cash equivalents at end of year
|
$
|
8.1
|
|
|
$
|
10.5
|
|
|
$
|
11.5
|
|
Supplemental Disclosures:
|
|
|
|
|
|
||||||
Federal income tax received
|
$
|
—
|
|
|
$
|
2.3
|
|
|
$
|
4.3
|
|
Interest paid (affiliates $6.1, $6.0 and $6.0, respectively)
|
$
|
(6.1
|
)
|
|
$
|
(6.0
|
)
|
|
$
|
(6.0
|
)
|
|
|
|
|
|
|
($ millions, except interest rates)
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||
Carrying
value
|
|
Fair
Value
|
|
Interest
rate
|
|
Carrying
value
|
|
Fair
value
|
|
Interest
rate
|
|||||||||
Affiliate note payable with Milbank, issued $15.0, July 2013 with fixed interest
|
$
|
15.0
|
|
|
$
|
15.4
|
|
|
5.28
|
%
|
|
15.0
|
|
|
15.0
|
|
|
5.28
|
%
|
Affiliate note payable with State Auto P&C, issued $85.0, July 2013 with fixed interest
|
85.0
|
|
|
87.1
|
|
|
5.28
|
%
|
|
85.0
|
|
|
85.1
|
|
|
5.28
|
%
|
||
Total notes payable to affiliates
|
$
|
100.0
|
|
|
$
|
102.5
|
|
|
|
|
100.0
|
|
|
100.1
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
Segment
|
Deferred
policy
acquisition
cost
|
|
Future
benefits,
claims and
losses(1)
|
|
Unearned
premiums
|
|
Other policy
claims and
benefits
payable
|
|
Premium
revenue
|
||||||||||
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
||||||||||
Personal insurance segment
|
$
|
47.5
|
|
|
$
|
251.1
|
|
|
$
|
262.5
|
|
|
$
|
—
|
|
|
$
|
582.2
|
|
Business insurance segment
|
43.7
|
|
|
605.9
|
|
|
230.4
|
|
|
—
|
|
|
468.9
|
|
|||||
Specialty insurance segment
|
38.6
|
|
|
321.0
|
|
|
124.8
|
|
|
—
|
|
|
240.8
|
|
|||||
Investment operations segment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
129.8
|
|
|
$
|
1,178.0
|
|
|
$
|
617.8
|
|
|
$
|
—
|
|
|
$
|
1,291.9
|
|
Year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
||||||||||
Personal insurance segment
|
$
|
47.6
|
|
|
$
|
227.0
|
|
|
$
|
261.9
|
|
|
$
|
—
|
|
|
$
|
591.8
|
|
Business insurance segment
|
46.0
|
|
|
553.6
|
|
|
245.5
|
|
|
—
|
|
|
476.0
|
|
|||||
Specialty insurance segment
|
35.5
|
|
|
266.5
|
|
|
108.9
|
|
|
—
|
|
|
202.7
|
|
|||||
Investment operations segment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
129.1
|
|
|
$
|
1,047.1
|
|
|
$
|
616.3
|
|
|
$
|
—
|
|
|
$
|
1,270.5
|
|
Year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
||||||||||
Personal insurance segment
|
$
|
48.9
|
|
|
$
|
201.9
|
|
|
$
|
270.7
|
|
|
$
|
—
|
|
|
$
|
451.4
|
|
Business insurance segment
|
44.5
|
|
|
503.4
|
|
|
241.1
|
|
|
—
|
|
|
459.9
|
|
|||||
Specialty insurance segment
|
33.1
|
|
|
268.3
|
|
|
100.6
|
|
|
—
|
|
|
162.8
|
|
|||||
Investment operations segment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
126.5
|
|
|
$
|
973.6
|
|
|
$
|
612.4
|
|
|
$
|
—
|
|
|
$
|
1,074.1
|
|
Segment
|
Net
investment
income
|
|
Benefits,
losses and
settlement
expenses(2)
|
|
Amort.
of deferred
policy
acquisition
costs
|
|
Other
operating
expenses
|
|
Premiums
written
|
|||||||||||
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Personal insurance segment
|
$
|
—
|
|
|
$
|
425.5
|
|
|
$
|
104.0
|
|
|
$
|
67.1
|
|
|
$
|
582.8
|
|
|
Business insurance segment
|
—
|
|
|
327.9
|
|
|
103.4
|
|
|
63.5
|
|
|
453.8
|
|
||||||
Specialty insurance segment
|
—
|
|
|
190.7
|
|
|
82.9
|
|
|
9.5
|
|
|
256.7
|
|
||||||
Investment operations segment
|
74.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
74.7
|
|
|
$
|
944.1
|
|
|
$
|
290.3
|
|
|
$
|
140.1
|
|
|
$
|
1,293.3
|
|
|
Year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Personal insurance segment
|
$
|
—
|
|
|
$
|
403.6
|
|
|
$
|
105.4
|
|
|
$
|
63.6
|
|
|
$
|
583.0
|
|
|
Business insurance segment
|
—
|
|
|
331.3
|
|
|
104.9
|
|
|
74.6
|
|
|
479.5
|
|
||||||
Specialty insurance segment
|
—
|
|
|
129.4
|
|
|
72.7
|
|
|
5.6
|
|
|
211.0
|
|
||||||
Investment operations segment
|
71.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
71.7
|
|
|
$
|
864.3
|
|
|
$
|
283.0
|
|
|
$
|
143.8
|
|
|
$
|
1,273.5
|
|
|
Year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Personal insurance segment
|
$
|
—
|
|
|
$
|
318.3
|
|
|
$
|
75.4
|
|
|
$
|
52.0
|
|
|
$
|
532.1
|
|
|
Business insurance segment
|
—
|
|
|
280.0
|
|
|
88.0
|
|
|
74.5
|
|
|
473.1
|
|
||||||
Specialty insurance segment
|
—
|
|
|
176.2
|
|
|
58.4
|
|
|
13.6
|
|
|
189.0
|
|
||||||
Investment operations segment
|
74.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
74.7
|
|
|
$
|
774.5
|
|
|
$
|
221.8
|
|
|
$
|
140.1
|
|
|
$
|
1,194.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1)
|
Segmented balances are net of reinsurance recoverable on losses and loss expenses payable.
|
|||||||||||||||||||
(2)
|
Benefits, losses and settlement expenses are monitored on a statutory basis.
|
($ million, except percentages)
|
|
|
|
Ceded to
|
|
Assumed from
|
|
|
|
|
||||||||||||||||||
|
|
|
Gross
Amount
|
|
Unaffiliated
Companies
|
|
Affiliated
Companies(1)
|
|
Unaffiliated
Companies
|
|
Affiliated
Companies(1)
|
|
Net
Amount
|
|
Percentage
of amount
assumed
to net (2)
|
|||||||||||||
Property-casualty
earned premiums for
year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2016
|
|
$
|
840.6
|
|
|
$
|
25.6
|
|
|
$
|
819.9
|
|
|
$
|
4.9
|
|
|
$
|
1,291.9
|
|
|
$
|
1,291.9
|
|
|
0.4
|
%
|
|
2015
|
|
863.1
|
|
|
34.7
|
|
|
832.9
|
|
|
4.5
|
|
|
1,270.5
|
|
|
1,270.5
|
|
|
0.4
|
%
|
|||||||
2014
|
|
882.6
|
|
|
25.3
|
|
|
861.7
|
|
|
4.4
|
|
|
1,074.1
|
|
|
1,074.1
|
|
|
0.4
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(1)
|
These columns include the effect of intercompany pooling.
|
|||||||||||||||||||||||||||
(2)
|
Calculated as earned premiums assumed from outside companies to net amount.
|
($ millions)
|
At December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Valuation allowance for deferred tax assets:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
82.6
|
|
Deductions
|
—
|
|
|
—
|
|
|
82.6
|
|
|||
Balance at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
A.
|
State Auto P&C is the principal operating subsidiary of State Auto Financial and the employer of record of all employees of State Auto. State Auto Financial is a majority- owned, publicly-traded holding company subsidiary of State Auto Mutual. State Auto Mutual is the ultimate controlling person in the State Auto holding company system.
|
B.
|
State Auto desires to establish and maintain a sound and vital management team as an important part of State Auto’s overall corporate strategy and as an essential means of protecting and enhancing the interests of State Auto, the Boards of State Auto Financial and State Auto Mutual (collectively, the “Boards”), and their shareholders and policyholders, respectively. As part of this corporate strategy, State Auto desires to act in the best interests of State Auto to address Executive’s continued service to State Auto and available benefits in the event of an actual or threatened Change of Control (as defined herein) of State Auto Financial or State Auto Mutual.
|
1.2
|
Annual Base Salary means the greater of (a) the highest annual rate of base salary in effect for Executive during the 12-month period immediately prior to a Change of Control, or (b) the annual rate of base salary in effect on the date Executive’s employment is terminated.
|
1.3
|
Average Annual Award means the average of the annual aggregate bonus under the Short Term Incentive Plans (or its successors) earned by Executive in each of the three calendar years immediately preceding the calendar year in which the Change of Control occurs.
|
1.4
|
Cause means any of the following:
|
(a)
|
the willful and continued failure of Executive to perform Executive’s duties with State Auto (other than any such failure resulting from incapacity due to a Disability), after a written demand for performance is delivered to Executive by the Boards, or their designee, which specifically identifies the manner in which the Boards believe, in their sole discretion, that Executive has not performed Executive’s duties; or
|
(b)
|
the willful engaging by Executive in illegal conduct or gross misconduct which has a material adverse effect on State Auto, as determined by the Boards in their sole discretion; or
|
(c)
|
the breach of any provision of Article IV hereof which has a material adverse effect on State Auto, as determined by the Boards in their sole discretion; or
|
(d)
|
the willful failure to comply with any State Auto code of conduct or code of ethics applicable to Executive, as determined by the Boards in their sole discretion; or
|
(e)
|
the willful failure and refusal to cooperate with or assist State Auto in responding to governmental or regulatory inquiries, investigations or related activities, as determined by the Boards in their sole discretion.
|
1.5
|
Change of Control means the occurrence of any of the following:
|
(a)
|
Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), Directly or Indirectly, of securities of State Auto Financial representing 30% or more of the combined voting power of State Auto Financial’s then outstanding securities, excluding (i) any acquisition by State Auto Financial or any Subsidiary; (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by State Auto Financial, a Subsidiary or State Auto Mutual; or (iii) any acquisition by State Auto Mutual; or
|
(b)
|
A majority of the Board of Directors of State Auto Financial at any time is comprised of other than Continuing Directors; or
|
(c)
|
Any event or transaction State Auto Financial would be required to report in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act; or
|
(d)
|
Any of the following occurs:
|
(i)
|
a merger or consolidation of State Auto Financial, other than a merger or consolidation in which the voting securities of State Auto Financial immediately prior to the merger or consolidation continue to represent (either by remaining outstanding or being converted into securities of the surviving entity) more than 50% of the combined voting power of State Auto Financial or surviving entity immediately after the merger or consolidation with another entity;
|
(ii)
|
a sale, exchange, lease, mortgage, pledge, transfer, or other disposition (in a single transaction or a series of related transactions) of all or substantially all of the assets of State Auto Financial which shall include, without limitation, the sale of assets or earning power aggregating more than 50% of the assets or earning power of State Auto Financial on a consolidated basis;
|
(iii)
|
a reorganization, reverse stock split, or recapitalization of State Auto Financial which would result in any of the foregoing; or
|
(iv)
|
a transaction or series of related transactions having, directly or indirectly, the same effect as any of the foregoing.
|
(e)
|
As respects State Auto Mutual, any of the following occurs:
|
(i)
|
State Auto Mutual affiliates with or is merged into or consolidated with a third party and as a result, a majority of the Board of Directors of State Auto Mutual or its successor is comprised of other than Continuing Directors; or
|
(ii)
|
State Auto Mutual completes a conversion to a stock insurance company and as a result of which a majority of the Board of Directors of State Auto Mutual or its successor is comprised of other than Continuing Directors.
|
1.6
|
Code means the Internal Revenue Code of 1986, as amended.
|
1.7
|
Confidential Information means information disclosed to Executive or known by State Auto, which is not generally known in the business in which State Auto is or may become engaged, including, but not limited to, information about State Auto's services, trade secrets, financial information, customer lists, books, records, memoranda and other proprietary information of State Auto. For purposes of this Agreement, “Confidential Information” shall also mean any information that could be considered a trade secret, as defined by applicable law.
|
1.8
|
Continuing Director of State Auto Financial or State Auto Mutual, as the case may be, means a director who was either:
|
(a)
|
first elected or appointed as a director on or prior to the Effective Date; or
|
(b)
|
subsequent to the Effective Date was elected or appointed as a director if such director was nominated by the Nominating Committee of State Auto Financial or State Auto Mutual, as the case may be, or appointed by at least two-thirds of the total number of the then Continuing Directors of State Auto Financial or State Auto Mutual, as the case may be.
|
1.9
|
Directly or Indirectly means on Executive’s own behalf, or as an officer, director, shareholder, member, partner, owner, agent, consultant, advisor, coach or employee of any corporation, partnership, limited liability company or other entity.
|
1.10
|
Disability means illness or other incapacity as determined under State Auto’s group long-term disability benefit plan.
|
1.11
|
Employee Benefits means the benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which Executive is entitled to participate, including without limitation any stock option, stock purchase, stock appreciation, savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, deferred compensation, incentive compensation, group or other life, health, medical/hospital, or other insurance (whether funded by actual insurance or self-insured by State Auto), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist (and as may be modified from time to time) or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter (and as may be modified from time to time), providing benefits at least as great in a monetary equivalent as are payable thereunder prior to a Change of Control.
|
1.12
|
Good Reason means the occurrence of any one or more of the following:
|
(a)
|
The assignment to Executive of duties which are materially and adversely different from or inconsistent with the duties, responsibilities and status of Executive’s position at any time during the 12-month period prior to a Change of Control, or which result in a significant reduction in Executive’s authority and responsibility as a senior executive officer of State Auto;
|
(b)
|
A reduction by State Auto in Executive’s Annual Base Salary in place as of the day immediately prior to a Change of Control, or after a Change of Control the failure to grant salary increases and bonus payments on a basis comparable to those granted to other executives of State Auto, or a reduction of Executive’s most recent Average Annual Award prior to a Change of Control;
|
(c)
|
After a Change of Control, a demand by State Auto that Executive relocate to a location in excess of 35 miles from the location where Executive is based as of the day immediately prior to a Change of Control, or in the event of any such relocation with Executive’s express written consent, the failure of State Auto or a Subsidiary to pay (or reimburse Executive for) all reasonable moving expenses incurred by Executive relating to a change of principal residence in connection with such relocation and to indemnify Executive against any loss in the sale of Executive’s principal residence in connection with any such change of residence and any expenses incurred by Executive that are directly attributable to such sale (for purposes of this provision, “loss” is understood to mean a sale of such principal residence at a price less than the adjusted basis in such residence);
|
(d)
|
The failure of State Auto to obtain a satisfactory agreement from any successor to State Auto to assume and agree to perform this Agreement, as contemplated in Section 5.1 of this Agreement;
|
(e)
|
The failure of State Auto to provide Executive with substantially the same Employee Benefits that were provided to him immediately prior to the Change of Control, or with a package of Employee Benefits that, though one
|
(f)
|
Any material reduction in Executive’s compensation or benefits or a material adverse change in Executive’s location or duties, if such material reduction or material adverse change occurs at any time after the commencement of any discussion with a third party relating to a possible Change of Control of State Auto involving such third party, if such material reduction or material adverse change is in contemplation of such possible Change of Control and such Change of Control is actually consummated within 12 months after the date of such material reduction or material adverse change.
|
1.14
|
QPB means the State Auto Financial Corporation Quality Performance Bonus Plan.
|
1.15
|
Severance Benefits means the benefits described in Section 2.1 of this Agreement, as adjusted by the applicable provisions of Section 9.1 of this Agreement.
|
1.16
|
Short Term Incentive Plans means collectively, the LBP, the QPB and any other short term incentive compensation plan of State Auto.
|
1.17
|
Subsidiary means any corporation, insurance company or other entity a majority of the voting control of which is directly or indirectly owned or controlled at the time by State Auto Financial.
|
1.18
|
Term means the earlier of the period commencing on the Effective Date of this Agreement and ending on October 27, 2017, both dates inclusive, or the end of the month in which Executive attains age 65; provided, however, that if a Change of Control occurs during the Term of this Agreement, the Term of this Agreement will be extended for the lesser of 36 months beyond the end of the month in which any such Change of Control occurs, or the number of months beyond the end of the month in which any such Change of Control occurs until Executive attains age 65. Notwithstanding the foregoing, this Agreement shall terminate upon Executive’s termination of employment with State Auto for any other reason; provided, however, that Sections 2.3 and 2.4, Articles IV, VI through X, and Sections 11.3, 11.6 and 11.8 of the Agreement shall survive Executive’s termination of employment.
|
(a)
|
Annual Base Salary. In addition to any accrued compensation payable as of Executive’s termination of employment, a lump sum cash amount equal to Executive’s Annual Base Salary multiplied by two, unless at the time of such employment termination Executive is within two years of age 65, in which case the benefit due under this subsection (a) shall not exceed Executive’s Annual Base Salary multiplied by a factor equal to the number of months remaining until Executive attains age 65 presented as a whole integer and a fraction of a partial year (e.g., 15 months equals 1.25).
|
(b)
|
Annual Incentive Compensation. In addition to any compensation otherwise payable pursuant to Executive’s bonus arrangements, a lump sum cash amount equal to Executive’s Average Annual Award multiplied by two, unless at the time of such employment termination Executive is within two years of age 65, in which case the benefit due under this subsection (b) shall not exceed Executive’s Average Annual Award multiplied by a factor equal to the number of months remaining until Executive attains age 65 presented as a whole integer and a fraction of a partial year (e.g., 15 months equals 1.25). In addition, Executive shall be entitled to receive a prorated annual incentive payment for the year in which the Change of Control occurred, if otherwise eligible for such annual incentive. Such prorated annual incentive amount,
|
(c)
|
Stock Options and Other Equity Awards. Stock options and any other types of equity awards (e.g., restricted shares, performance shares, performance units, etc.) held by Executive become exercisable upon a Change of Control according to the terms of the applicable stock option or equity plan and related agreement (if any) under which such stock options or other equity awards were granted.
|
(d)
|
Outplacement. State Auto shall pay all fees for outplacement services incurred by Executive up to a maximum equal to 15% of Executive’s Annual Base Salary, plus provide a travel expense account of up to $5,000 to reimburse job search travel. Such expenses and reimbursements shall be limited to those expenses incurred within the two calendar years following the calendar year of Executive’s separation from service or prior to Executive’s attainment of age 65, if Executive is within two years of age 65 at the time of the Change in Control. Such expenses shall be paid no later than December 31st of the calendar year following the applicable calendar year in which such reimbursable expense was incurred.
|
(e)
|
Health Insurance Reimbursement. State Auto shall pay Executive an amount equal to State Auto’s then current monthly per employee cost of providing State Auto’s health insurance benefit multiplied by 24, unless at the time of the Change in Control Executive is within two years of age 65, in which case the health insurance reimbursement provided in this Section 2.1(e) shall be multiplied by the number of months remaining until Executive attains age 65.
|
(a)
|
the Executive’s employment is terminated from all State Auto companies for any reason other than for Cause, the death or Disability of Executive, or Executive’s mandatory retirement at age 65 (or at the end of the calendar year in which Executive attains age 65), where permitted by law and the regulations under Section 1625.12 of the ADEA, within 24 months after a Change of Control; or
|
(b)
|
Executive terminates employment for Good Reason within 24 months after a Change of Control; or
|
(c)
|
the Executive’s employment is terminated from all State Auto companies for any reason other than for Cause or the death or Disability of Executive after an agreement has been reached with an unaffiliated third party, the performance of which agreement would result in a Change of Control involving such third party, if such Change of Control is actually consummated within 12 months after the date of such termination.
|
(a)
|
The Board may, in its discretion, require Executive to repay to State Auto all or any portion of the amounts paid as Severance Benefits if:
|
(i)
|
Executive violates any non-competition, non-solicitation or confidentiality covenant applicable to the Executive and for the benefit of State Auto, including such covenants included in this Agreement;
|
(ii)
|
It is later discovered that Executive engaged in conduct detrimental to State Auto during the Employment Term which has a material adverse effect on State Auto as determined by the Board of Directors of State Auto Mutual, in its discretion, acting in good faith; or
|
(iii)
|
(A) The amount of any of the Severance Benefits was calculated based upon the achievement of certain financial results of State Auto that were subsequently the subject of a financial statement restatement by State Auto;
|
(b)
|
The terms of any compensation recovery or recoupment policy heretofore or hereafter adopted by the Boards, including any and all amendments thereto (a “clawback policy”), are hereby incorporated into this Agreement by reference. In addition to the terms and conditions set forth in this Agreement, Executive agrees that any amounts payable or paid to Executive under this Agreement shall be subject to the terms of any clawback policy of the Boards.
|
(a)
|
State Auto will use its best efforts to obtain the consent of the appropriate governmental agency to the payment by State Auto to Executive of the maximum amount that is permitted (up to the amounts that would be due to Executive absent the Limiting Rule); and
|
(b)
|
Executive will be entitled to elect to have apply, and therefore to receive benefits directly under, either (i) this Agreement (as limited by the Limiting Rule) or (ii) any generally applicable State Auto severance, separation pay and/or salary continuation plan that may be in effect at the time of Executive’s termination.
|
(a)
|
If to either State Auto Financial, State Auto P&C or State Auto Mutual, to 518 East Broad Street, Columbus, Ohio 43215, Attention: Corporate Secretary; and
|
(b)
|
If to Executive, to the address set forth in the attached Exhibit A.
|
(a)
|
State Auto Financial, State Auto P&C and State Auto Mutual represent and warrant to Executive that they have the capacity and right to enter into this Agreement and perform all of their obligations under this Agreement without any restriction by any agreement, document, restrictive covenant or otherwise.
|
(b)
|
Executive represents and warrants to State Auto Financial, State Auto P&C and State Auto Mutual that he has the capacity and right to enter into this Agreement and perform all of his services and other obligations under this Agreement without any restriction by any agreement, document, restrictive covenant or otherwise.
|
STATE AUTO FINANCIAL CORPORATION
|
|
|
|
|
|
|
|
By
|
/s/ Mike E. LaRocco
|
|
/s/ Paul M. Stachura
|
|
Mike E. LaRocco
|
|
Paul M. Stachura
|
|
President and CEO
|
|
|
|
|
|
|
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
|
|
|
|
|
|
|
|
By
|
/s/ Mike E. LaRocco
|
|
|
|
Mike E. LaRocco
|
|
|
|
President and CEO
|
|
|
|
|
|
|
STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
|
|
|
|
|
|
|
|
By
|
/s/ Mike E. LaRocco
|
|
|
|
Mike E. LaRocco
|
|
|
|
President and CEO
|
|
|
5938 Vandeleur Place
|
|
Dublin, OH 43016
|
|
|
|
|
|
Date:
|
7/7/2016
|
|
|
Paul M. Stachura
|
|
/s/ Paul M. Stachura
|
Signature of Executive
|
|
Paul M. Stachura
|
Print Name of Executive
|
|
Joy Stachura
|
Beneficiary Name
|
|
Spouse
|
Relationship to Executive
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Melissa Centers
|
Melissa Centers, Senior Vice President, Secretary and General
|
Counsel (as authorized and approved by the Compensation
|
Committee of the Board of Directors)
|
/s/ Paul M. Stachura
|
Paul M. Stachura
|
|
Accepted as of: October 6, 2015
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Melissa Centers
|
Melissa Centers, Senior Vice President, Secretary and General
|
Counsel (as authorized and approved by the Compensation
|
Committee of the Board of Directors)
|
/s/ Paul M. Stachura
|
Paul M. Stachura
|
|
Accepted as of: October 6, 2015
|
STATE AUTO FINANCIAL CORPORATION
|
|
By: /s/ Melissa Centers
|
Melissa Centers, Senior Vice President, Secretary and General
|
Counsel (as authorized and approved by the Compensation
|
Committee of the Board of Directors)
|
/s/ Paul M. Stachura
|
Paul M. Stachura
|
|
Accepted as of: March 15, 2016
|
Form
|
|
Registration Number
|
|
Description
|
S-8
|
|
33-44667
|
|
1991 Stock Option Plan
|
|
|
33-89400
|
|
|
S-8
|
|
33-44666
|
|
1991 Directors’ Stock Option Plan
|
S-8
|
|
33-41423
|
|
1991 Employee Stock Purchase and Dividend Reinvestment Plan
|
|
|
333-05755
|
|
|
|
|
333-147333
|
|
|
|
|
333-206148
|
|
|
S-8
|
|
333-56336
|
|
State Auto Insurance Companies Retirement Savings Plan
|
S-8
|
|
333-43882
|
|
2000 Directors’ Stock Option Plan
|
S-8
|
|
333-43880
|
|
2000 Stock Option Plan
|
S-3
|
|
333-41849
|
|
Monthly Stock Purchase Plan for Independent Agents
|
|
|
333-209878
|
|
|
S-3
|
|
333-90529
|
|
1998 State Auto Agents’ Stock Option Plan
|
S-8
|
|
333-127172
|
|
2005 Outside Directors Restricted Share Unit Plan
|
S-8
|
|
333-165364
|
|
State Auto Financial Corporation 2009 Equity Incentive Compensation Plan
|
|
|
333-192158
|
|
|
|
|
333-214472
|
|
|
S-8
|
|
333-165366
|
|
State Auto Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan
|
|
|
333-170568
|
|
|
S-8
|
|
333-170564
|
|
State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan, and
|
S-8
|
|
333-214471
|
|
Outside Directors Restricted Share Unit Plan of State Auto Financial Corporation
|
/s/ Ernst & Young LLP
|
|
|
Columbus, Ohio
|
|
|
March 1, 2017
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ David J. D’Antoni
|
|
Director
|
|
February 28, 2017
|
David J. D’Antoni
|
|
|
|
|
|
|
|
|
|
/s/ Robert E. Baker
|
|
Director
|
|
February 28, 2017
|
Robert E. Baker
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Fiorile
|
|
Director
|
|
February 28, 2017
|
Michael J. Fiorile
|
|
|
|
|
|
|
|
|
|
/s/ Kym M. Hubbard*
|
|
Director
|
|
February 28, 2017
|
Kym M. Hubbard
|
|
|
|
|
|
|
|
|
|
/s/ Eileen A. Mallesch
|
|
Director
|
|
February 28, 2017
|
Eileen A. Mallesch
|
|
|
|
|
|
|
|
|
|
/s/ Thomas E. Markert
|
|
Director
|
|
February 28, 2017
|
Thomas E. Markert
|
|
|
|
|
|
|
|
|
|
/s/ David R. Meuse
|
|
Director
|
|
February 28, 2017
|
David R. Meuse
|
|
|
|
|
|
|
|
|
|
/s/ S. Elaine Roberts
|
|
Director
|
|
February 28, 2017
|
S. Elaine Roberts
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Form 10-K of State Auto Financial Corporation;
|
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;
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(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
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(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; and
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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: March 1, 2017
|
|
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/s/ Michael E. LaRocco
|
|
Michael E. LaRocco, Chief Executive Officer
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Form 10-K of State Auto Financial Corporation;
|
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; and
|
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: March 1, 2017
|
|
|
/s/ Steven E. English
|
|
Steven E. English,
|
|
Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
|
/s/ Michael E. LaRocco
|
|
Michael E. LaRocco
|
|
Chief Executive Officer
|
|
March 1, 2017
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
|
/s/ Steven E. English
|
|
Steven E. English
|
|
Chief Financial Officer
|
|
March 1, 2017
|