Columbus, Ohio-based State Auto Insurance Group (State Auto) is reviewing options for its excess and surplus (E&S) lines business, including a possible sale, the company said in an announcement.
State Auto has a market valuation of about $981 million, according to Reuters. It announced at the end of 2015 that it would begin making corrections after its net income dropped steeply and its combined ratio rose above 100.
The company continued to struggle, reporting a net loss of $24.6 million, or $0.59 per diluted share, in the second quarter of 2016, versus net income of $2.7 million, or $0.06 per diluted share, for the second quarter of 2015. STFC’s GAAP combined ratio for the second quarter 2016 was 114.7 versus 106.1 for the second quarter of 2015.
State Auto President and CEO Mike LaRocco said in the super regional insurer’s shareholder letter for 2016 that State Auto had “made some hard but necessary decisions to discontinue products that weren’t core to our strategy.”
It exited its large commercial and large transportation business and ” announced our planned exit of Specialty program business. These changes were needed to allow us to use our resources to focus on our core businesses of auto, home, farm and ranch, small and mid-sized commercial, workers’ compensation and excess and surplus property and casualty. We enter 2017 not only with a stronger operational foundation, but with a focused product strategy. We have the right leaders in each line and a crystal clear understanding that each line must be profitable,” La Rocco said.
In the company’s Sept. 8 announcement, he said the company had “made tremendous progress in rebuilding State Auto, putting in place a new technology platform, products and processes for our core lines of business of personal and commercial insurance. … As we move forward focused on our goal of profitable growth, we are evaluating the best use of capital including the strategic fit of our E&S product lines.”
State Auto has retained Keefe, Bruyette & Woods to advise in connection with the evaluation. The review includes affiliate Rockhill Insurance Company, which State Auto acquired in 2009 to enter the excess & surplus lines insurance market.
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