Ohio-based State Auto Financial Corporation reported fourth quarter net income of $29.5 million, or $0.71 per diluted share, versus $38.0 million, or $0.93 per diluted share for the same period in 2004. Net income from operations(a) per diluted share for the fourth quarter of 2005 was $0.73 versus $0.92 for the same period in 2004.
STFC’s GAAP combined ratio for the fourth quarter of 2005 was 90.5, versus 85.2 for the fourth quarter of 2004. Catastrophe losses, including Hurricane Wilma, contributed 7.6 points to the loss ratio for the fourth quarter of 2005 versus a 0.9 point favorable impact during the same 2004 period. STFC’s fourth quarter 2005 revenue was $280.9 million, up from $273.0 million for the same period in 2004.
Revenue for the year 2005 was $1.14 billion, up from $1.09 billion for the same 2004 period. For the year 2005, STFC achieved record net income of $125.9 million, or $3.06 per diluted share, compared to $110.0 million, or $2.70 per diluted share for the same 2004 period, an increase of 14.5%. The annual GAAP combined ratio for 2005 was 90.1, as compared to 91.7 for 2004. STFC shareholders’ book value per share increased 14.9% during 2005 to an all time high of $18.86 per share.
“Results for the fourth quarter were strong and 2005 finished as another record setting year for State Auto Financial. We are quite proud to be able to report such outstanding results in a year that experienced devastating losses from numerous weather related events including, most notably, Hurricanes Katrina and Wilma,” said STFC President Bob Moone.
“Normally the impact of catastrophe losses is relatively mild in the final quarter of the year. Hurricane Wilma’s occurrence and a $7.7 million dollar assessment from the Mississippi Windstorm Underwriting Association attributable to Hurricane Katrina were unexpected. The 7.6 loss ratio points contributed by catastrophes is atypical for our fourth quarter. In spite of this, results for the quarter attest to the fact that our core book of business continues to perform very well. Overall, 2005 was an outstanding year in terms of overall earnings growth, return on equity performance and continued value building for shareholders of STFC,” added Moone.
(a) Net income from operations, a non-GAAP financial measure which management believes is informative to Company management and investors, differs from GAAP net earnings only by the exclusion of realized capital gains or losses, net of applicable taxes, on investment activity for the periods being reported. For STFC, this amounts to ($0.02) for the fourth quarter and $0.09 for 2005 year to date compared to $0.01 and $0.12 for the same periods in 2004.
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