State Auto Financial Q1 Profit Plunges 88%

State Auto Financial Corporation STFC reported net income of $3.0 million, or $0.07 per share for the first quarter, down 88 percent from $24.7 million, or $0.60 per share, in the year-ago quarter. The company indicated net income from operations was $0.05 a share versus net income from operations1 per share of $0.54 in the same period last year.

The company's GAAP combined ratio was 103.9 compared to 94.6 in the first quarter of 2015. The company added that catastrophe losses accounted for 4.7 points of the 70.3 total loss ratio points, or $15.0 million, compared to 1.4 points of the total 61.8 loss ratio points, or $4.5 million, for the same period in 2015.

State Auto Financial said its Non-catastrophe losses included 3.2 points of adverse development relating to prior years, or $10.3 million, compared to 1.4 points of favorable development, or $4.4 million, in the comparable quarter last year.

Net written premium fell 0.7 percent to $304.8 million from $307.8 million in the previous year quarter. Street analysts predicted the company to earn $0.29 a share and $334.20 million revenue.

President and CEO Mike LaRocco commented, "We are determined to see every line of business profitable and growing. That's been our focus and we're largely demonstrating success with one notable exception: auto, both personal and commercial."

He added, "We've taken aggressive steps to restore our auto book to profitability, but those efforts will take time to show up in our results. We believe the increase in auto loss costs for the industry is being impacted both by an increase in miles driven and a continued increase in distracted driving. Evidence is mounting that distracted driving is increasingly the cause of accidents and contributing to the negative trend in traffic deaths. In the months ahead, we'll be working aggressively to focus attention on this issue with our customers and agents, as well as the insurance industry."

On Thursday, the stock traded 6.6 percent down.