State Auto Financial saw its net income drop to $6 million during the second quarter this year from $8.7 million during the same period in 2017, marking a 31% fall according to its latest financial statement.
The drop comes as catastrophe losses soared to $37.7 million for the second quarter, up by an annualized 35%. Meanwhile, non-catastrophe losses and ALAE during the second quarter reached $20.2 million, versus $15.7 million a year before.
The insurer also reported an overall year-on-year 9.7% drop in net written premiums. By segment, net written premium for the personal and commercial segments increased 23.0% and 2.8%, respectively, and the specialty segment decreased 96.7%.
The increase in the personal segment was driven by rate actions taken to improve profitability in personal auto, new business growth and a higher level of policies in force for the second quarter, while the rise in commercial segment was primarily driven by rate increases and a higher level of new business production from commercial auto, middle market commercial and farm & ranch. The firm added that the major drop in the specialty segment was caused by its decision to exit the specialty business.
“Our journey to profitable growth continued this quarter with some significant milestones being achieved. Most notably our largest line, personal auto, was both profitable and growing. We’ve worked very hard over the last three years to get to this point and with the help of our agency partners, we were successful,” said the firm’s chairman, president, and CEO Mike LaRocco in a statement.
“In addition, there was also strong growth in our homeowners’ line. Perhaps most significantly, for our ongoing lines of business, personal and commercial, we achieved a non-catastrophe combined ratio of 91.33. This is a clear indication that our hard work in building our digital only technology, new products and improved claims handling is paying off,” he added.
The firm is aiming to complete the digital rollout for commercial auto and small commercial packages by the end of September, and expects to see the benefit of the changes in these lines in the second half of this year.
“There is much work left to be done, but in both the first quarter and more significantly in the second – our momentum is building and our outlook is bright,” said LaRocco.