NU Online News Service, May 04, 11 a.m. EDT
State Auto Financial Corp. reports a $2 million net loss for the first quarter, but it could have been worse.
The Columbus, Ohio-based super-regional says its recently-implemented quota share reinsurance treaty reduced the insurer's total underwriting loss by $7.1 million and knocked 1.1 points off the combined ratio.
State Auto reports a first-quarter underwriting loss of $24 million and combined ratio of 109.4 compared to 103 during the same period a year ago.
“Although the treaty reduced our catastrophe loss ratio and improved results, it does come with a cost,” says Bob Restrepo, president and chief executive officer. The combined ratio was affected by the ceded-premium impact of the treaty, but “Overall, the treaty worked as expected in the first quarter, and we anticipate the long term benefits of our homeowner actions will be a more predictable and profitable book of homeowners business and reduced risk to our capital base,” he says.
Catastrophe losses for the first three months were $20 million, compared to $16 million a year ago. On event in March affected some the insurer's largest states of Kentucky, Indiana, Ohio and Tennessee. Half the claims received were from Kentucky.
New premiums during the first quarter dropped more than 30 percent as a result of the quota share reinsurance agreement but barring that impact, State Auto says net written premium increased 7.5 percent in the first quarter.
State Auto's specialty segment, Rockhill Insurance, primarily drove the increase.
“Rockhill is finding opportunities in a firming market and producing excellent underwriting results,” Restrepo says.
The company is asking for price increases that exceed loss costs in its personal auto segment
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