NU Online News Service, Nov. 2, 3:53 p.m. EDT

Catastrophe losses impacted the earnings of super-regional property and casualty insurers State Auto Financial Corp. and Harleysville Group, leading to third-quarter net income reductions of 98.5 percent and 15.8 percent, respectively, for the two companies.

Columbus, Ohio-based State Auto reported 2010 third-quarter net income of $200,000, down from $13 million a year ago. The company said it experienced $23.7 million in catastrophe losses in the quarter, compared to $10.8 million a year ago.

State Auto's 2010 third-quarter combined ratio climbed to 105.9 compared to 102.5 last year.

Net written premiums increased 11.8 percent compared to last year's third quarter.

"Higher levels of catastrophes and lower investment income hurt both third-quarter underwriting performance and net income results," said State Auto Chairman, President and CEO Bob Restrepo. "Although State Auto and the industry avoided any meaningful losses from hurricanes this year, above average frequency and severity of wind and hail storms in the Midwest increased our catastrophe loss ratio results relative to last year's third quarter and our five-year average trend."

State Auto reported a net loss for the first nine months of 2010 of $13.1 million, compared to a loss of $4.2 million for same period in 2009.

For Harleysville, Pa.-based Harleysville Group, 2010 net income totaled $20.8 million, compared to 2009 third-quarter net income of $24.7 million. Catastrophes added 1.7 points to the company's 99.9 third-quarter combined ratio, compared to 0.4 points attributable to catastrophes in last year's third quarter.

Premiums earned climbed to $220.2 million in the quarter compared to $212.6 million a year ago.

Harleysville saw no investment gains or losses for the quarter compared to gains of $2.4 million in the 2009 third quarter.

Harleysville President and Chief Executive Officer Michael Brown said, "Excluding the impact of catastrophe losses, our operating earnings were comparable to a year ago and our statutory combined ratio was slightly better than last year--all of which indicate that we continue to perform well in the fundamental areas of our business...."

For the first nine months of 2010, Harleysville reported net income of $45.9 million compared to net income of $62.1 million for the same period last year.

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Catastrophes Impact State Auto, Harleysville 3Q Earnings

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