NU Online News Service, Aug. 2, 8:45 p.m. EST
State Auto Financial Corp. says it suffered an "unprecedented and unexpected" second quarter loss of $201.4 million.
Bob Restrepo, president and chief executive of State Auto, says the combined ratio of 147 during the 2011 second quarter was the company's worst quarterly combined ratio since the Columbus, Ohio-based, super-regional insurer went public in 1991.
"Our claims staff handled almost 32,000 claims resulting from second quarter weather events," says Restrepo in a statement. "Approximately half were specifically related to one of the 12 catastrophe events the industry incurred, rivaling the 17,000 claims we received following Hurricane Ike."
Twenty of the insurer's operating states were impacted by storms during the second quarter, Restrepo continues.
Due to weather-related losses, the second quarter is "seldom a good one," says Restrepo. Last year the company reported a net loss of $26.2 million and a combined ratio of 115.2.
Looking ahead, the chief executive says, "The quarter is behind us and our outlook for the future remains optimistic."
"We continue to work to implement strategies to leverage our superior personal auto capabilities, aggressively fix our homeowners business, invest in diversification through our standard and specialty business insurance segments, and reduce our exposure to weather related losses," he adds.
In one move to reduce exposure, State Auto says it will no longer be writing new automobile and homeowners' insurance in Rhode Island, and is putting an end to its homeowners business in Massachusetts.
At the start of June, rating agency A.M. Best Co. downgraded the financial strength rating of State Auto from "A-plus" to "A." Restrepo said the action would not affect State Auto's plans for the future.
Restrepo says State Auto is making progress in its specialty segment and has "several marketing prototypes in place to offer excess and surplus products to State Auto agents and expand our presence in the profitable small, guaranteed-cost workers' compensation market." This diversification will lessen the impact on the company when storms strike, he adds.
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