NU Online News Service, Feb. 16, 11:56 a.m.EST

State Auto Financial Corp. ended 2011 in the red, as theColumbus, Ohio-based insurer endured record catastrophe losses of$231.1 million for the year.

The super-regional P&C insurance holding company reports anet loss of $146.8 million for 2011 to end what its top executivecalled a “difficult year.”

The company gained $24.5 million the prior year. Its combinedratio for the year climbed to 116.3, compared to 104.6 in 2010.

“Our policyholders and shareholders suffered historic lossesprimarily from the tragic storms in April and May,” says BobRestrepo, president, chairman and chief executive of State Auto, ina statement.

The months were laden with devastating thunderstorms andtornadoes. Restrepo says State Auto has closed about 93 percent ofthe 35,000 claims incurred.

To deal with historic loss trends, State Auto turned to thereinsurance market for a homeowners' quota-share treaty because price increases of 30 percent overthe last three years haven't helped.

The homeowners' quota share reinsurance arrangement and amendedpooling agreement was to blame for a 54.3 percent decrease in 2011fourth-quarter net written premium because ceded unearned premiumreserve amounts transferred in the two transactions are reflectedin net written premium, State Auto says.

The company reports 2011 net income in the fourth quarter of$100.6 million compared to $37.6 million during the same threemonths in 2010.

“Large loss activity moderated as our new casualty-claim processhas matured,” Restrepo says. “Price per exposure increased inpersonal and specialty lines and remained flat in standardcommercial, but we expect to see modest increases across the boardfor 2012, with double-digit increases in homeowners.”

The chief executive says claim actions in property, autophysical damage, casualty, and workers' compensation should improveex-catastrophe loss ratios.