State Auto Financial Reports Second Quarter 2021 Results

State Auto Financial Corporation (NASDAQ:STFC) today reported second quarter 2021 net income of $0.6 million, or $0.01 per diluted share, compared to $34.3 million, or $0.74 per diluted share, for the same 2020 period. Net loss from operations¹ per diluted share for the second quarter of 2021 was $0.47 versus $0.59 for the same 2020 period. STFC’s GAAP combined ratio for the second quarter 2021 was 110.0 compared to 114.7 for the same 2020 period.

For the first six months of 2021, STFC had net income of $4.2 million, or $0.09 per diluted share, compared to a net loss of $80.3 million, or $1.83 per diluted share, for the same 2020 period. Net loss from operations¹ per diluted share for the first six months of 2021 was $1.07 versus $0.76 for the same 2020 period. STFC’s GAAP combined ratio for the first six months of 2021 was 111.4 compared to 111.0 for the same 2020 period.

SAP Operating Results

STFC's SAP combined ratio for the second quarter 2021 was 108.4 compared to 113.3 for the same 2020 period. Catastrophe losses and ALAE during the second quarter 2021 accounted for 21.6 points of the 80.9 total loss ratio points, or $80.0 million, versus 26.5 points of the 79.7 total loss ratio points, or $90.4 million, for the same period in 2020. The second quarter 2021 was impacted by wind and hail events in Texas. Approximately 70% of the second quarter 2021 catastrophe losses occurred within homeowners. Non-catastrophe losses and ALAE during the second quarter 2021 included 4.3 points of favorable development relating to prior years, or $15.9 million, versus 0.6 points of favorable development, or $2.0 million, for the same period in 2020.

STFC's SAP combined ratio for the first six months of 2021 was 110.2 compared to 110.4 for the same 2020 period. Catastrophe losses and ALAE during the second quarter 2021 accounted for 20.9 points of the 74.0 total loss ratio points, or $151.6 million, versus 19.7 points of the 76.2 total loss ratio points, or $132.3 million, for the same period in 2020. The first six months of 2021 were impacted by winter storms Uri and Viola in Texas, which added 8.5 points to the loss and ALAE ratio. Approximately 70% of the year to date 2021 catastrophe losses occurred within homeowners. Non-catastrophe losses and ALAE during the second quarter 2021 included 5.6 points of favorable development relating to prior years, or $40.5 million, versus 1.9 points of favorable development, or $12.5 million, for the same period in 2020.

Net written premium for the second quarter 2021 increased 8.0% compared to the same period in 2020. By insurance segment, net written premium for the commercial insurance segment increased 18.0% and the personal insurance segment increased 1.4%. The increase in the commercial segment was primarily driven by new business growth and rate increases in commercial auto and farm & ranch. The net written premium growth was partially offset by a decrease in net written premiums in workers’ compensation due to our 2020 decision to not renew and no longer write nursing home business. The increase in the personal segment was primarily due to increased rates in homeowners and other personal and new business growth in other personal. The net written premium growth was partially offset by a decline in new business in personal auto.

Net written premium for the first six months of 2021 increased 5.9% compared to the same period in 2020. By insurance segment, net written premium for the commercial insurance segment increased 15.6% and the personal insurance segment decreased 0.8%. The trends in the personal and commercial net written premiums are due to the same factors discussed above for the second quarter.

Book Value and Return on Equity

STFC’s book value increased to $22.18 per share as of June 30, 2021, compared to $22.07 on March 31, 2021. The increase in book value was primarily driven by an increase in the fair market value of fixed income investments attributable to lower interest rates.

Return on stockholders’ equity for the 12 months ended June 30, 2021, was 10.2% compared to (3.9)% for the 12 months ended June 30, 2020.

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

“On July 12, we announced our plans to be acquired by Liberty Mutual, whose domestic personal lines and small commercial insurance is an ideal complement to our capabilities and product expertise. This transaction, which we expect to close in 2022 pending the appropriate member, shareholder, and regulatory approvals, furthers our commitment to independent agents and will contribute to the collective success of our agents, policyholders, shareholders and associates.

“The second quarter statutory combined ratio for our ongoing lines of business of 108.0 included catastrophe losses, primarily in homeowners, in excess of what was expected in the quarter that typically produces the highest amount of catastrophe losses each year. In commercial lines, overall growth and profitability continued, with net written premium growing 18.0% and a quarterly statutory combined ratio of 93.1%. The State Auto Group has now written in excess of $1.0 billion of commercial lines net written premiums in the twelve months ended June 30, 2021.

“Over the past six years, we’ve clearly demonstrated our ability to build the teams, technology and products required to deliver sustained profitable growth. In the months ahead, our focus will remain to make progress toward that goal throughout all our lines of business.”

About State Auto Financial Corporation

State Auto Financial Corporation, headquartered in Columbus, Ohio, is a super regional property and casualty insurance holding company. STFC stock is traded on the Nasdaq Global Select Market, which represents the top fourth of all Nasdaq listed companies.

The insurance subsidiaries of State Auto Financial Corporation are part of the State Auto Group. The State Auto Group markets its insurance products throughout the United States, through independent insurance agencies. The State Auto Group is rated A- (Excellent) by the A.M. Best Company and includes State Automobile Mutual, State Auto Property & Casualty, State Auto Ohio, State Auto Wisconsin, Milbank, Meridian Security, Patrons Mutual, Rockhill Insurance, Plaza Insurance, American Compensation and Bloomington Compensation. Additional information on State Auto Financial Corporation and the State Auto Insurance Companies can be found online at http://www.StateAuto.com/STFC.

¹ Net earnings (loss) from operations, a non-GAAP financial measure which management believes is informative to Company management and investors, differs from GAAP net income (loss) only by the exclusion of net investment gain (loss), net of applicable taxes, on investment activity for the periods being reported. For STFC, this amounted to income of $0.48 and $1.16 per diluted share for the second quarter and year to date 2021, respectively, versus income of $1.35 per diluted share for the second quarter 2020 and a loss of $1.07 year to date 2020.

* * * * *

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in State Auto Financial's Form 10-K and Form 10-Q reports and exhibits to those reports, and include (but are not limited to) legislative changes at both the state and federal level, state and federal regulatory rule making promulgations and adjudications, class action litigation involving the insurance industry and judicial decisions affecting claims, policy coverages and the general costs of doing business, the impact of competition on products and pricing, inflation in the costs of the products and services insurance pays for, product development, geographic spread of risk, weather and weather-related events, and other types of catastrophic events. State Auto Financial undertakes no obligation to update or revise any forward-looking statements.

Selected Consolidated Financial Data
($ in millions, except per share amounts)
(unaudited)		Three months ended June 30								Six months ended June 30
		2021				2020				2021				2020
Net premiums written		$	412.3			$	381.6			$	771.0			$	728.1
Earned premiums		369.9				340.7				725.8				671.2
Net investment income		17.7				17.7				35.3				36.6
Net investment gain (loss)		26.7				75.9				64.9				(59.3		)
Other income		0.4				0.5				0.9				1.1
Total revenue		414.7				434.8				826.9				649.6
Income (loss) before federal income taxes		4.2				41.6				9.8				(102.4		)
Federal tax expense (benefit)		3.6				7.3				5.6				(22.1		)
Net income (loss)		$	0.6			$	34.3			$	4.2			$	(80.3	)
Earnings (loss) per common share:
- basic		$	0.01			$	0.78			$	0.10			$	(1.83	)
- diluted		$	0.01			$	0.74			$	0.09			$	(1.83	)
Loss per share from operations(A):
- basic		$	(0.47	)		$	(0.59	)		$	(1.07	)		$	(0.76	)
- diluted		$	(0.47	)		$	(0.59	)		$	(1.07	)		$	(0.76	)
Weighted average shares outstanding:
- basic		44.0				43.8				44.0				43.7
- diluted		44.8				44.1				44.6				43.7
Return on average equity (LTM)		10.2		%		(3.9		)%
Book value per share		$	22.18			$	21.26
Dividends paid per share		$	0.10			$	0.10			$	0.20			$	0.20
Total shares outstanding		44.1				43.8
GAAP ratios:
Cat loss and ALAE ratio		21.6				26.5				20.9				19.7
Non-cat loss and LAE ratio		59.4				53.1				59.1				56.4
Loss and LAE ratio		81.0				79.6				80.0				76.1
Expense ratio		29.0				35.1				31.4				34.9
Combined ratio		110.0				114.7				111.4				111.0
(A) Reconciliation of non-GAAP financial measure:
Net loss from operations:
Net income (loss)		$	0.6			$	34.3			$	4.2			$	(80.3	)
Net investment gain (loss), net of tax		21.1				59.9				51.3				(46.9		)
Net loss from operations		$	(20.5	)		$	(25.6	)		$	(47.1	)		$	(33.4	)

Condensed Consolidated Balance Sheets
($ and shares in millions, except per share amounts)
(unaudited)		June 30				December 31
		2021				2020
ASSETS
Fixed maturities, available-for-sale, at fair value (amortized cost $2,134.9 and $2,117.0, respectively)		$	2,214.9			$	2,237.2
Equity securities		375.5				389.7
Other invested assets		79.6				71.1
Other invested assets, at cost		11.1				12.1
Notes receivable from affiliate		70.0				70.0
Total investments		2,751.1				2,780.1
Cash and cash equivalents		108.7				90.7
Accrued investment income and other assets		26.4				29.7
Premiums Receivable		17.6				14.0
Deferred policy acquisition costs		127.2				122.2
Reinsurance recoverable on losses and loss expenses payable		19.7				24.3
Prepaid reinsurance premiums		8.8				8.3
Current federal income taxes		1.7				1.7
Net deferred federal income taxes		29.0				27.3
Property and equipment, at cost		3.8				4.2
Total assets		$	3,094.0			$	3,102.5
LIABILITIES
Losses and loss expenses payable		$	1,060.9			$	1,050.4
Unearned premiums		769.1				723.4
Notes payable (affiliates $15.3 and $15.3, respectively)		122.1				122.1
Pension and postretirement benefits		52.2				66.2
Due to affiliate		16.2				11.2
Other liabilities		95.2				119.2
Total liabilities		2,115.7				2,092.5
STOCKHOLDERS' EQUITY
Common stock, without par value. Authorized 100.0 shares; 51.0 and 50.7 shares issued, respectively, at stated value of $2.50 per share		127.5				126.8
Treasury stock, 6.9 and 6.9 shares, respectively, at cost		(118.8		)		(118.4		)
Additional paid-in capital		213.1				213.3
Accumulated other comprehensive (loss) income		(13.3		)		13.9
Retained earnings		769.8				774.4
Total stockholders' equity		978.3				1,010.0
Total liabilities and stockholders' equity		$	3,094.0			$	3,102.5

Condensed Consolidated Statements of Income
($ in millions, except per share amounts)
(unaudited)		Three months ended June 30								Six months ended June 30
		2021				2020				2021				2020
Earned premiums		$	369.9			$	340.7			$	725.8			$	671.2
Net investment income		17.7				17.7				35.3				36.6
Net investment gain (loss)		26.7				75.9				64.9				(59.3		)
Other income from affiliates		0.4				0.5				0.9				1.1
Total revenues		414.7				434.8				826.9				649.6
Losses and loss expenses		299.8				271.2				580.6				510.6
Acquisition and operating expenses		107.2				119.5				228.2				234.4
Interest expense		1.1				1.3				2.2				2.5
Other expenses		2.4				1.2				6.1				4.5
Total expenses		410.5				393.2				817.1				752.0
Income (loss) before federal income taxes		4.2				41.6				9.8				(102.4		)
Federal income tax expense (benefit):
Current		—				(0.4		)		—				(0.4		)
Deferred		3.6				7.7				5.6				(21.7		)
Federal income tax expense (benefit)		3.6				7.3				5.6				(22.1		)
Net income (loss)		$	0.6			$	34.3			$	4.2			$	(80.3	)
Earnings (loss) per common share:
Basic		$	0.01			$	0.78			$	0.10			$	(1.83	)
Diluted		$	0.01			$	0.74			$	0.09			$	(1.83	)
Dividends paid per common share		$	0.10			$	0.10			$	0.20			$	0.20

Consolidated Statements of Comprehensive Income (Loss)
($ in millions)
(unaudited)	Three months ended June 30								Six months ended June 30
	2021				2020				2021				2020
Net income (loss)	$	0.6			$	34.3			$	4.2			$	(80.3	)
Other comprehensive income (loss), net of tax:
Net unrealized holding gain (loss) on available-for-sale investments:
Unrealized holding gains (losses)	17.7				38.9				(39.5		)		69.9
Reclassification adjustments for losses (gains) realized in net income	0.8				(1.0		)		(0.7		)		(3.4		)
Income tax (expense) benefit	(3.9		)		(7.9		)		8.5				(13.9		)
Total net unrealized holding gains (losses) on available- for-sale investments	14.6				30.0				(31.7		)		52.6
Net unrecognized benefit plan obligations:
Reclassification adjustments for amortization to statements of income:
Prior service credit	(1.6		)		(1.6		)		(3.2		)		(3.2		)
Net actuarial loss	4.4				3.6				8.9				7.3
Income tax expense	(0.6		)		(0.4		)		(1.2		)		(0.9		)
Total net unrecognized benefit plan obligations	2.2				1.6				4.5				3.2
Other comprehensive income (loss)	16.8				31.6				(27.2		)		55.8
Comprehensive income (loss)	$	17.4			$	65.9			$	(23.0	)		$	(24.5	)

Condensed Consolidated Statement of Stockholders' Equity
($ and shares in millions)
(unaudited)		Six months ended				Year Ended
		June 30				December 31
		2021				2020
Common shares:
Balance at beginning of year		50.7				50.4
Issuance of shares		0.3				0.3
Balance at period ended		51.0				50.7
Treasury shares:
Balance at beginning of year		(6.9		)		(6.9		)
Balance at period ended		(6.9		)		(6.9		)
Common stock:
Balance at beginning of year		$	126.8			$	125.9
Issuance of shares		0.7				0.9
Balance at period ended		127.5				126.8
Treasury stock:
Balance at beginning of year		$	(118.4	)		$	(117.5	)
Shares acquired on stock award exercises and vested restricted shares		(0.4		)		(0.9		)
Balance at beginning of year and period ended		(118.8		)		(118.4		)
Additional paid-in capital:
Balance at beginning of year		$	213.3			$	206.7
Issuance of common stock		1.4				3.0
Stock awards granted		(1.6		)		3.6
Balance at period ended		213.1				213.3
Accumulated other comprehensive (loss) income:
Balance at beginning of the year		$	13.9			$	(26.9	)
Change in net unrealized holding (losses) gains on available-for-sale investments		(31.7		)		56.7
Change in net unrecognized benefit plan obligations		4.5				(15.9		)
Balance at period ended		(13.3		)		13.9
Retained earnings:
Balance at beginning of year		$	774.4			$	779.3
Cumulative effect of change in accounting to establish an allowance for expected credit losses at January 1, 2020		—				(0.5		)
Net income		4.2				13.1
Cash dividends paid		(8.8		)		(17.5		)
Balance at period ended		769.8				774.4
Total stockholders' equity at period ended		$	978.3			$	1,010.0

Condensed Consolidated Statements of Cash Flow
($ in millions)
(unaudited)		Six months ended
		June 30
		2021				2020
Cash flows from operating activities:
Net income (loss)		$	4.2			$	(80.3	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization, net		3.8				5.7
Share-based compensation		(1.5		)		(0.5		)
Net investment (gain) loss		(65.3		)		59.3
Changes in operating assets and liabilities:
Deferred policy acquisition costs		(5.0		)		(8.9		)
Accrued investment income and other assets		3.3				0.6
Premiums receivable		(3.6		)		(4.5		)
Postretirement and pension benefits		(11.7		)		(10.5		)
Reinsurance recoverable on losses and loss expenses payable and prepaid reinsurance premiums		4.1				(23.8		)
Other liabilities and due to/from affiliates, net		(15.8		)		(42.0		)
Losses and loss expenses payable		10.5				38.2
Unearned premiums		45.7				56.6
Deferred tax on share-based awards		(0.4		)		(0.2		)
Federal income taxes		6.0				(21.9		)
Net cash used in operating activities		(25.7		)		(32.2		)
Cash flows from investing activities:
Purchases of fixed maturities available-for-sale		(359.4		)		(280.8		)
Purchases of equity securities		(12.9		)		(42.7		)
Purchases of other invested assets		(0.5		)		(6.9		)
Maturities, calls and pay downs of fixed maturities available-for-sale		203.3				186.7
Sales of fixed maturities available-for-sale		135.5				188.3
Sales of equity securities		83.5				30.0
Sales of other invested assets		1.3				0.6
Disposals of property and equipment		—				0.2
Net cash provided by investing activities		50.8				75.4
Cash flows from financing activities:
Proceeds from issuance of common stock		2.1				3.0
Payments to acquire treasury stock		(0.4		)		(0.9		)
Payment of dividends		(8.8		)		(8.7		)
Proceeds from short-term debt		—				60.0
Net cash (used in) provided by financing activities		(7.1		)		53.4
Net increase in cash and cash equivalents		18.0				96.6
Cash and cash equivalents at beginning of period		90.7				78.0
Cash and cash equivalents at end of period		$	108.7			$	174.6
Supplemental disclosures:
Interest paid (affiliates $0.3 and $0.5, respectively)		$	2.2			$	2.3

Net Investment Income
($ in millions)
(unaudited)
		6/30/2020				9/30/2020				12/31/2020				3/31/2021				6/30/2021
Quarter to Date
Gross investment income:
Fixed maturities		$	14.8			$	13.7			$	14.3			$	14.7			$	13.4
TIPS		(0.3		)		1.3				0.7				0.7				2.0
Total fixed maturities		14.5				15.0				15.0				15.4				15.4
Equity securities		2.6				2.1				1.5				1.6				1.2
Other		0.8				0.9				1.3				0.9				1.1
Total gross investment income		17.9				18.0				17.8				17.9				17.7
Less: Investment expenses		0.2				0.1				0.2				0.3				—
Net investment income		$	17.7			$	17.9			$	17.6			$	17.6			$	17.7
Year to Date
Gross investment income:
Fixed maturities		$	29.3			$	43.0			$	57.3			$	14.7			$	28.1
TIPS		0.3				1.6				2.3				0.7				2.7
Total fixed maturities		29.6				44.6				59.6				15.4				30.8
Equity securities		5.7				7.8				9.3				1.6				2.8
Other		1.8				2.7				4.0				0.9				2.0
Total gross investment income		37.1				55.1				72.9				17.9				35.6
Less: Investment expenses		0.5				0.6				0.8				0.3				0.3
Net investment income		$	36.6			$	54.5			$	72.1			$	17.6			$	35.3
		6/30/2020				9/30/2020				12/31/2020				3/31/2021				6/30/2021
TIPS, fair value		$	115.9			$	117.0			$	116.2			$	104.7			$	108.2
TIPS, book value		$	100.9			$	99.4			$	97.8			$	89.2			$	90.9

Net Investment Gain (Loss)
($ in millions)
unaudited	Three months ended June 30								Six months ended June 30
	2021				2020				2021				2020
Investment gain (loss), net:
Fixed maturities:
Realized gains on sales of securities	$	0.9			$	1.9			$	3.9			$	5.5
Realized losses on sales of securities	(1.7		)		(0.9		)		(3.2		)		(2.1		)
Net (loss) gain on fixed securities	(0.8		)		1.0				0.7				3.4
Net gain (loss) on equity securities	24.9				69.1				56.4				(53.3		)
Net gain (loss) on other invested assets	3.0				5.8				8.2				(9.6		)
Other net realized (loss) gain	(0.4		)		—				(0.4		)		0.2
Net gain (loss) on investments	$	26.7			$	75.9			$	64.9			$	(59.3	)

Income Taxes
($ in millions)
(unaudited)
The following table sets forth the tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities:
		June 30				December 31
		2021				2020
Deferred tax assets:
Unearned premiums not currently deductible		$	32.0			$	30.1
Losses and loss expenses payable discounting		11.3				10.5
Postretirement and pension benefits		17.3				19.3
Other liabilities		10.7				12.2
Net operating loss carryforward		28.3				19.8
Capital loss carryforward		6.1				6.1
Tax credit carryforward		2.3				1.9
Other		—				1.1
Total deferred tax assets		108.0				101.0
Deferred tax liabilities:
Deferral of policy acquisition costs		26.7				25.7
Investments		48.7				48.0
Other		3.3				—
Total deferred tax liabilities		78.7				73.7
Total net deferred tax assets before valuation allowance		29.3				27.3
Less valuation allowance		0.3				—
Net deferred federal income taxes		$	29.0			$	27.3

The following table sets forth the components of federal income tax expense (benefit):
		Three months ended June 30								Six months ended June 30
		2021				2020				2021				2020
Income (loss) before federal income taxes		$	4.2			$	41.6			$	9.8			$	(102.4	)
Federal income tax expense (benefit)
Current		—				(0.4		)		—				(0.4		)
Deferred		3.6				7.7				5.6				(21.7		)
Total federal income tax expense (benefit)		3.6				7.3				5.6				(22.1		)
Net income (loss)		$	0.6			$	34.3			$	4.2			$	(80.3	)

SAP Personal Insurance Segment Results
(unaudited)
($ in millions)
Three months ended June 30, 2021		Personal Auto				Homeowners				Other Personal				Total
Net written premiums		$	92.0			$	116.2			$	20.3			$	228.5
Net earned premiums		93.6				102.1				17.4				213.1
Losses and LAE incurred:
Cat loss and ALAE		4.5				55.2				9.5				69.2
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(1.3		)		2.5				(0.2		)		1.0
Current accident year non-cat loss and ALAE		62.6				46.0				9.4				118.0
Total non-cat loss and ALAE		61.3				48.5				9.2				119.0
Total Loss and ALAE		65.8				103.7				18.7				188.2
ULAE		6.2				5.2				0.7				12.1
Total Loss and LAE		72.0				108.9				19.4				200.3
Underwriting expenses		23.8				28.3				4.9				57.0
Net underwriting loss		$	(2.2	)		$	(35.1	)		$	(6.9	)		$	(44.2	)
Cat loss and ALAE ratio		4.8		%		54.1		%		54.5		%		32.5		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(1.4		)%		2.5		%		(1.4		)%		0.5		%
Current accident year non-cat loss and ALAE ratio		66.9		%		45.0		%		54.0		%		55.3		%
Total non-cat loss and ALAE ratio		65.5		%		47.5		%		52.6		%		55.8		%
Total Loss and ALAE ratio		70.3		%		101.6		%		107.1		%		88.3		%
ULAE ratio		6.7		%		5.0		%		3.9		%		5.7		%
Total Loss and LAE ratio		77.0		%		106.6		%		111.0		%		94.0		%
Expense ratio		25.8		%		24.4		%		24.1		%		24.9		%
Combined ratio		102.8		%		131.0		%		135.1		%		118.9		%

($ in millions)
Three months ended June 30, 2020		Personal Auto				Homeowners				Other Personal				Total
Net written premiums		$	104.3			$	106.1			$	15.0			$	225.4
Net earned premiums		103.3				87.7				11.8				202.8
Losses and LAE incurred:
Cat loss and ALAE		4.1				54.6				7.6				66.3
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		5.9				(0.1		)		(0.1		)		5.7
Current accident year non-cat loss and ALAE		45.5				36.7				3.9				86.1
Total non-cat loss and ALAE		51.4				36.6				3.8				91.8
Total Loss and ALAE		55.5				91.2				11.4				158.1
ULAE		8.3				6.5				0.6				15.4
Total Loss and LAE		63.8				97.7				12.0				173.5
Underwriting expenses		33.7				31.5				4.5				69.7
Net underwriting gain (loss)		$	5.8			$	(41.5	)		$	(4.7	)		$	(40.4	)
Cat loss and ALAE ratio		4.0		%		62.3		%		64.3		%		32.7		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		5.7		%		(0.2		)%		(0.8		)%		2.8		%
Current accident year non-cat loss and ALAE ratio		44.0		%		41.8		%		33.2		%		42.4		%
Total non-cat loss and ALAE ratio		49.7		%		41.6		%		32.4		%		45.2		%
Total Loss and ALAE ratio		53.7		%		103.9		%		96.7		%		77.9		%
ULAE ratio		8.1		%		7.5		%		4.8		%		7.6		%
Total Loss and LAE ratio		61.8		%		111.4		%		101.5		%		85.5		%
Expense ratio		32.3		%		29.7		%		30.6		%		31.0		%
Combined ratio		94.1		%		141.1		%		132.1		%		116.5		%

($ in millions)
Six months ended June 30, 2021		Personal Auto				Homeowners				Other Personal				Total
Net written premiums		$	181.1			$	202.4			$	38.2			$	421.7
Net earned premiums		189.3				198.4				33.2				420.9
Losses and LAE incurred:
Cat loss and ALAE		5.0				107.6				19.1				131.7
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(2.1		)		0.4				(0.2		)		(1.9		)
Current accident year non-cat loss and ALAE		119.5				101.1				17.5				238.1
Total non-cat loss and ALAE		117.4				101.5				17.3				236.2
Total Loss and ALAE		122.4				209.1				36.4				367.9
ULAE		14.7				13.9				1.9				30.5
Total Loss and LAE		137.1				223.0				38.3				398.4
Underwriting expenses		51.3				54.8				10.0				116.1
Net underwriting gain (loss)		$	0.9			$	(79.4	)		$	(15.1	)		$	(93.6	)
Cat loss and ALAE ratio		2.6		%		54.2		%		57.4		%		31.3		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(1.1		)%		0.2		%		(0.6		)%		(0.4		)%
Current accident year non-cat loss and ALAE ratio		63.1		%		51.0		%		52.8		%		56.6		%
Total non-cat loss and ALAE ratio		62.0		%		51.2		%		52.2		%		56.2		%
Total Loss and ALAE ratio		64.6		%		105.4		%		109.6		%		87.5		%
ULAE ratio		7.8		%		7.0		%		5.6		%		7.2		%
Total Loss and LAE ratio		72.4		%		112.4		%		115.2		%		94.7		%
Expense ratio		28.3		%		27.1		%		26.2		%		27.5		%
Combined ratio		100.7		%		139.5		%		141.4		%		122.2		%

($ in millions)
Six months ended June 30, 2020		Personal Auto				Homeowners				Other Personal				Total
Net written premiums		$	208.9			$	187.7			$	28.3			$	424.9
Net earned premiums		208.0				170.4				22.5				400.9
Losses and LAE incurred:
Cat loss and ALAE		4.6				65.3				9.1				79.0
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		11.1				2.1				(1.1		)		12.1
Current accident year non-cat loss and ALAE		107.5				74.3				8.2				190.0
Total non-cat loss and ALAE		118.6				76.4				7.1				202.1
Total Loss and ALAE		123.2				141.7				16.2				281.1
ULAE		15.6				11.8				1.0				28.4
Total Loss and LAE		138.8				153.5				17.2				309.5
Underwriting expenses		66.5				56.5				8.5				131.5
Net underwriting gain (loss)		$	2.7			$	(39.6	)		$	(3.2	)		$	(40.1	)
Cat loss and ALAE ratio		2.2		%		38.3		%		40.4		%		19.7		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		5.4		%		1.2		%		(4.8		)%		3.0		%
Current accident year non-cat loss and ALAE ratio		51.6		%		43.7		%		36.4		%		47.4		%
Total non-cat loss and ALAE ratio		57.0		%		44.9		%		31.6		%		50.4		%
Total Loss and ALAE ratio		59.2		%		83.2		%		72.0		%		70.1		%
ULAE ratio		7.5		%		6.9		%		4.4		%		7.1		%
Total Loss and LAE ratio		66.7		%		90.1		%		76.4		%		77.2		%
Expense ratio		31.9		%		30.1		%		30.3		%		31.0		%
Combined ratio		98.6		%		120.2		%		106.7		%		108.2		%

SAP Commercial Insurance Segment Results
(unaudited)
($ in millions)
Three months ended June 30, 2021		Commercial Auto				Small Commercial Package				Middle Market Commercial				Workers' Comp				Farm & Ranch				Other Commercial				Total
Net written premiums		$	57.4			$	34.9			$	50.4			$	11.8			$	22.5			$	7.5			$	184.5
Net earned premiums		45.0				33.1				41.3				14.5				17.8				5.9				157.6
Losses and LAE incurred:
Cat loss and ALAE		1.9				3.2				2.0				—				2.9				—				10.0
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(0.3		)		(2.3		)		(5.4		)		(6.9		)		(0.1		)		(1.7		)		(16.7		)
Current accident year non-cat loss and ALAE		29.9				23.3				22.9				12.6				9.8				1.6				100.1
Total non-cat loss and ALAE		29.6				21.0				17.5				5.7				9.7				(0.1		)		83.4
Total Loss and ALAE		31.5				24.2				19.5				5.7				12.6				(0.1		)		93.4
ULAE		2.1				1.1				0.7				0.7				0.4				0.1				5.1
Total Loss and LAE		33.6				25.3				20.2				6.4				13.0				—				98.5
Underwriting expenses		15.8				10.0				15.6				5.5				7.0				2.4				56.3
Net underwriting (loss) gain		$	(4.4	)		$	(2.2	)		$	5.5			$	2.6			$	(2.2	)		$	3.5			$	2.8
Cat loss and ALAE ratio		4.3		%		9.6		%		4.9		%		—		%		16.0		%		0.5		%		6.4		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(0.6		)%		(6.9		)%		(13.2		)%		(47.5		)%		(0.9		)%		(28.8		)%		(10.6		)%
Current accident year non-cat loss and ALAE ratio		66.5		%		70.2		%		55.5		%		87.4		%		54.3		%		28.0		%		63.5		%
Total non-cat loss and ALAE ratio		65.9		%		63.3		%		42.3		%		39.9		%		53.4		%		(0.8		)%		52.9		%
Total Loss and ALAE ratio		70.2		%		72.9		%		47.2		%		39.9		%		69.4		%		(0.3		)%		59.3		%
ULAE ratio		4.7		%		3.5		%		1.7		%		4.7		%		2.6		%		1.0		%		3.3		%
Total Loss and LAE ratio		74.9		%		76.4		%		48.9		%		44.6		%		72.0		%		0.7		%		62.6		%
Expense ratio		27.3		%		28.9		%		30.8		%		46.4		%		32.1		%		30.9		%		30.5		%
Combined ratio		102.2		%		105.3		%		79.7		%		91.0		%		104.1		%		31.6		%		93.1		%

($ in millions)
Three months ended June 30, 2020		Commercial Auto				Small Commercial Package				Middle Market Commercial				Workers' Comp				Farm & Ranch				Other Commercial				Total
Net written premiums		$	41.4			$	32.5			$	46.5			$	13.0			$	17.5			$	5.4			$	156.3
Net earned premiums		31.6				31.1				39.6				17.2				13.7				4.7				137.9
Losses and LAE incurred:
Cat loss and ALAE		0.7				11.9				6.9				—				4.6				—				24.1
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(0.2		)		(3.6		)		(2.9		)		(4.8		)		(0.3		)		(2.1		)		(13.9		)
Current accident year non-cat loss and ALAE		15.0				17.2				22.0				12.8				6.1				1.3				74.4
Total non-cat loss and ALAE		14.8				13.6				19.1				8.0				5.8				(0.8		)		60.5
Total Loss and ALAE		15.5				25.5				26.0				8.0				10.4				(0.8		)		84.6
ULAE		1.7				2.1				1.1				1.7				0.6				0.1				7.3
Total Loss and LAE		17.2				27.6				27.1				9.7				11.0				(0.7		)		91.9
Underwriting expenses		13.7				11.3				17.7				6.0				7.7				2.0				58.4
Net underwriting gain (loss)		$	0.7			$	(7.8	)		$	(5.2	)		$	1.5			$	(5.0	)		$	3.4			$	(12.4	)
Cat loss and ALAE ratio		2.0		%		38.4		%		17.6		%		—		%		33.4		%		(0.1		)%		17.5		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(0.6		)%		(11.7		)%		(7.3		)%		(28.0		)%		(2.0		)%		(43.9		)%		(10.1		)%
Current accident year non-cat loss and ALAE ratio		47.7		%		55.3		%		55.4		%		74.3		%		45.2		%		27.5		%		54.0		%
Total non-cat loss and ALAE ratio		47.1		%		43.6		%		48.1		%		46.3		%		43.2		%		(16.4		)%		43.9		%
Total Loss and ALAE ratio		49.1		%		82.0		%		65.7		%		46.3		%		76.6		%		(16.5		)%		61.4		%
ULAE ratio		5.3		%		6.7		%		2.8		%		9.9		%		4.5		%		1.8		%		5.3		%
Total Loss and LAE ratio		54.4		%		88.7		%		68.5		%		56.2		%		81.1		%		(14.7		)%		66.7		%
Expense ratio		33.1		%		34.8		%		38.1		%		45.5		%		43.4		%		37.6		%		37.3		%
Combined ratio		87.5		%		123.5		%		106.6		%		101.7		%		124.5		%		22.9		%		104.0		%

($ in millions)
Six months ended June 30, 2021		Commercial Auto				Small Commercial Package				Middle Market Commercial				Workers' Comp				Farm & Ranch				Other Commercial				Total
Net written premiums		$	108.7			$	69.9			$	89.7			$	27.8			$	42.4			$	12.2			$	350.7
Net earned premiums		85.9				64.8				80.9				29.7				34.3				10.7				306.3
Losses and LAE incurred:
Cat loss and ALAE		2.1				8.4				5.0				—				6.1				—				21.6
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(0.9		)		(4.5		)		(13.5		)		(15.4		)		(1.5		)		(2.7		)		(38.5		)
Current accident year non-cat loss and ALAE		55.3				43.1				48.5				21.9				15.3				3.5				187.6
Total non-cat loss and ALAE		54.4				38.6				35.0				6.5				13.8				0.8				149.1
Total Loss and ALAE		56.5				47.0				40.0				6.5				19.9				0.8				170.7
ULAE		4.7				3.5				1.5				1.4				1.1				0.2				12.4
Total Loss and LAE		61.2				50.5				41.5				7.9				21.0				1.0				183.1
Underwriting expenses		31.9				21.5				31.8				13.0				15.0				4.2				117.4
Net underwriting (loss) gain		$	(7.2	)		$	(7.2	)		$	7.6			$	8.8			$	(1.7	)		$	5.5			$	5.8
Cat loss and ALAE ratio		2.4		%		12.9		%		6.2		%		—		%		17.8		%		0.3		%		7.1		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(1.0		)%		(7.0		)%		(16.7		)%		(51.8		)%		(4.5		)%		(25.1		)%		(12.6		)%
Current accident year non-cat loss and ALAE ratio		64.4		%		66.6		%		60.0		%		73.7		%		44.3		%		32.9		%		61.2		%
Total non-cat loss and ALAE ratio		63.4		%		59.6		%		43.3		%		21.9		%		39.8		%		7.8		%		48.6		%
Total Loss and ALAE ratio		65.8		%		72.5		%		49.5		%		21.9		%		57.6		%		8.1		%		55.7		%
ULAE ratio		5.4		%		5.4		%		1.8		%		4.8		%		3.3		%		1.7		%		4.1		%
Total Loss and LAE ratio		71.2		%		77.9		%		51.3		%		26.7		%		60.9		%		9.8		%		59.8		%
Expense ratio		29.3		%		30.8		%		35.4		%		46.7		%		35.7		%		34.0		%		33.5		%
Combined ratio		100.5		%		108.7		%		86.7		%		73.4		%		96.6		%		43.8		%		93.3		%

($ in millions)
Six months ended June 30, 2020		Commercial Auto				Small Commercial Package				Middle Market Commercial				Workers' Comp				Farm & Ranch				Other Commercial				Total
Net written premiums		$	77.8			$	64.4			$	86.8			$	31.8			$	32.3			$	10.3			$	303.4
Net earned premiums		60.6				61.4				75.7				36.9				26.3				9.4				270.3
Losses and LAE incurred:
Cat loss and ALAE		1.0				15.5				31.0				—				5.5				0.2				53.2
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(0.3		)		(9.0		)		(8.0		)		(8.8		)		(1.1		)		(3.5		)		(30.7		)
Current accident year non-cat loss and ALAE		31.6				36.3				49.5				26.2				10.1				4.3				158.0
Total non-cat loss and ALAE		31.3				27.3				41.5				17.4				9.0				0.8				127.3
Total Loss and ALAE		32.3				42.8				72.5				17.4				14.5				1.0				180.5
ULAE		3.2				3.7				3.2				3.4				1.1				0.3				14.9
Total Loss and LAE		35.5				46.5				75.7				20.8				15.6				1.3				195.4
Underwriting expenses		26.4				23.1				34.4				14.9				14.4				4.1				117.3
Net underwriting (loss) gain		$	(1.3	)		$	(8.2	)		$	(34.4	)		$	1.2			$	(3.7	)		$	4.0			$	(42.4	)
Cat loss and ALAE ratio		1.6		%		25.3		%		41.0		%		—		%		20.8		%		1.9		%		19.7		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(0.4		)%		(14.7		)%		(10.6		)%		(24.0		)%		(4.1		)%		(36.9		)%		(11.4		)%
Current accident year non-cat loss and ALAE ratio		52.2		%		59.1		%		65.4		%		71.1		%		38.7		%		45.5		%		58.5		%
Total non-cat loss and ALAE ratio		51.8		%		44.4		%		54.8		%		47.1		%		34.6		%		8.6		%		47.1		%
Total Loss and ALAE ratio		53.4		%		69.7		%		95.8		%		47.1		%		55.4		%		10.5		%		66.8		%
ULAE ratio		5.2		%		6.0		%		4.2		%		9.3		%		4.2		%		2.9		%		5.5		%
Total Loss and LAE ratio		58.6		%		75.7		%		100.0		%		56.4		%		59.6		%		13.4		%		72.3		%
Expense ratio		34.0		%		35.9		%		39.6		%		46.8		%		44.4		%		39.6		%		38.6		%
Combined ratio		92.6		%		111.6		%		139.6		%		103.2		%		104.0		%		53.0		%		110.9		%

SAP Insurance Segment Results
(unaudited)
($ in millions)		2021				2020				2021				2020
Three months ended June 30		Personal & Commercial				Personal & Commercial				Total(1)				Total(1)
Net written premiums		$	413.0			$	381.7			$	412.3			$	381.6
Net earned premiums		370.7				340.7				369.9				340.7
Losses and LAE incurred:
Cat loss and ALAE		79.2				90.4				80.0				90.4
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(15.7		)		(8.2		)		(15.9		)		(2.0		)
Current accident year non-cat loss and ALAE		218.1				160.5				218.0				160.5
Total non-cat loss and ALAE		202.4				152.3				202.1				158.5
Total Loss and ALAE		281.6				242.7				282.1				248.9
ULAE		17.2				22.7				17.1				22.7
Total Loss and LAE		298.8				265.4				299.2				271.6
Underwriting expenses		113.3				128.1				113.5				128.2
Net underwriting loss		$	(41.4	)		$	(52.8	)		$	(42.8	)		$	(59.1	)
Cat loss and ALAE ratio		21.4		%		26.5		%		21.6		%		26.5		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(4.2		)%		(2.4		)%		(4.3		)%		(0.6		)%
Current accident year non-cat loss and ALAE ratio		58.8		%		47.1		%		59.0		%		47.1		%
Total non-cat loss and ALAE ratio		54.6		%		44.7		%		54.7		%		46.5		%
Total Loss and ALAE ratio		76.0		%		71.2		%		76.3		%		73.0		%
ULAE ratio		4.6		%		6.7		%		4.6		%		6.7		%
Total Loss and LAE ratio		80.6		%		77.9		%		80.9		%		79.7		%
Expense ratio		27.4		%		33.6		%		27.5		%		33.6		%
Combined ratio		108.0		%		111.5		%		108.4		%		113.3		%
(1)Includes specialty run-off

(unaudited)
($ in millions)		2021				2020				2021				2020
Six months ended June 30		Personal & Commercial				Personal & Commercial				Total(1)				Total(1)
Net written premiums		$	772.4			$	728.3			$	771.0			$	728.1
Net earned premiums		727.2				671.2				725.8				671.2
Losses and LAE incurred:
Cat loss and ALAE		153.3				132.2				151.6				132.3
Non-cat loss and ALAE
Prior accident years non-cat loss and ALAE		(40.4		)		(18.6		)		(40.5		)		(12.5		)
Current accident year non-cat loss and ALAE		425.7				348.0				425.7				348.1
Total non-cat loss and ALAE		385.3				329.4				385.2				335.6
Total Loss and ALAE		538.6				461.6				536.8				467.9
ULAE		42.9				43.3				42.8				43.3
Total Loss and LAE		581.5				504.9				579.6				511.2
Underwriting expenses		233.5				248.8				233.8				249.2
Net underwriting loss		$	(87.8	)		$	(82.5	)		$	(87.6	)		$	(89.2	)
Cat loss and ALAE ratio		21.1		%		19.7		%		20.9		%		19.7		%
Non-cat loss and ALAE ratio
Prior accident years non-cat loss and ALAE ratio		(5.6		)%		(2.8		)%		(5.6		)%		(1.9		)%
Current accident year non-cat loss and ALAE ratio		58.6		%		51.8		%		58.7		%		52.0		%
Total non-cat loss and ALAE ratio		53.0		%		49.0		%		53.1		%		50.1		%
Total Loss and ALAE ratio		74.1		%		68.7		%		74.0		%		69.8		%
ULAE ratio		5.9		%		6.5		%		5.9		%		6.4		%
Total Loss and LAE ratio		80.0		%		75.2		%		79.9		%		76.2		%
Expense ratio		30.2		%		34.2		%		30.3		%		34.2		%
Combined ratio		110.2		%		109.4		%		110.2		%		110.4		%
(1)Includes specialty run-off

The following table provides a reconciliation of our statutory underwriting results to GAAP consolidated income (loss) before federal income taxes for the three and six months ended June 30, 2021 and 2020:

($ millions)	2Q 2021				2Q 2020				YTD 2021				YTD 2020
Segment income (loss) before federal income taxes:
Insurance operations:
Personal insurance SAP underwriting loss	$	(44.2	)		$	(40.4	)		$	(93.6	)		$	(40.1	)
Commercial insurance SAP underwriting gain (loss)	2.8				(12.4		)		5.8				(42.4		)
Specialty run-off	(1.4		)		(6.3		)		0.2				(6.7		)
Total insurance operations	(42.8		)		(59.1		)		(87.6		)		(89.2		)
Investment operations:
Net investment income	17.7				17.7				35.3				36.6
Net investment gain (loss)	26.7				75.9				64.9				(59.3		)
Total investment operations	44.4				93.6				100.2				(22.7		)
All other segments income	—				—				—				0.1
Reconciling items:
GAAP adjustments	5.7				8.7				4.4				14.6
Interest expense on corporate debt	(1.1		)		(1.3		)		(2.2		)		(2.5		)
Corporate expenses	(2.0		)		(0.3		)		(5.0		)		(2.7		)
Total reconciling items	2.6				7.1				(2.8		)		9.4
Total consolidated income (loss) before federal income taxes	$	4.2			$	41.6			$	9.8			$	(102.4	)

 

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