STATE AUTO FINANCIAL CORPORATION SEPTEMBER 2018 1 SAFE HARBOR - - PowerPoint PPT Presentation

STATE AUTO FINANCIAL CORPORATION SEPTEMBER 2018

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SAFE HARBOR

FORWARD-LOOKING STATEMENTS

This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “estimate,” “target,” and similar expressions, among others, identify forward-looking statements. All forward-looking statements are based on assumptions, expectations and other information currently available to management. Such forward-looking statements are subject to certain risks and uncertainties that could cause the Company’s actual results to differ materially from those projected, anticipated or implied. The most significant of these risk and uncertainties are described in STFC’s most recently filed Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. STFC undertakes no obligation to update or revise any forward-looking statements.

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STATE AUTO FINANCIAL CORPORATION

REGIONAL PROPERTY AND CASUALTY INSURER

• $1.3 billion in 2017 annual net written premiums; 51% personal, 33% commercial

and 16% specialty (in run-off)

• Insurance products distributed through non-exclusive insurance agents and

brokers

NASDAQ: STFC 60% OWNED BY STATE AUTOMOBILE MUTUAL (SAM)

• $2.0 billion in State Auto Group 2017 annual net written premiums subject to

intercompany pooling arrangement

• STFC currently retains 65% of the pool

RATED A- (EXCELLENT) BY A.M. BEST

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STATE AUTO GROUP ORGANIZATION

Rockhill Insurance Group State Auto Financial Corporation Insurance Subsidiaries Public Investors Insurance Subsidiaries Insurance Subsidiaries State Automobile Mutual Insurance Company

60% 40%

Insurance company members of the State Auto Group participate in an intercompany reinsurance pooling arrangement. STFC-owned insurance companies share in 65% of the pool.

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PRODUCT LINES

GO-FORWARD PRODUCT LINES EXITED PRODUCT LINES

Personal Insurance

Personal Auto Homeowners Dwelling Fire Personal Umbrella

Commercial Insurance

Business Owners Program Commercial Package Commercial Auto Commercial Property Commercial Liability Workers’ Compensation Farm & Ranch

Specialty Insurance

E&S Property E&S Casualty Programs

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SEGMENT AND PRODUCT MIX

• DEC. 31, 2017

NWP BY SEGMENT NWP BY LINE OF BUSINESS

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WHAT WE’VE DONE

Data analytics

Focus/ Alignment People Strategy Technology Distribution Culture Products

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2015 2016 2017 YTD 2018 Net premiums written $ 1,266.1 1,294.1 1,270.3 600.3 Total revenue $ 1,373.9 1,404.6 1,422.3 665.4 Net income (loss) $ 52.2 19.2 (10.7) 3.9 Diluted EPS $ 1.26 0.46 (0.25) 0.09 Dividends paid/share $ 0.40 0.40 0.40 0.20 Book value/share $ 21.24 21.17 20.63 19.75 Return on equity 6.0% 2.2% (1.2)% (1.9)% Combined ratio 101.1% 106.3% 107.8% 104.8%

FINANCIAL OVERVIEW

GAAP COMBINED RATIO

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INVESTMENT PORTFOLIO June 30, 2018

Mix Fixed Income 81.6% Equities 13.6% Other 4.8% Total 100.0% Bond Ratings*

AAA 2.6% AA** 61.4% A 18.3% BBB 17.5% Below investment grade 0.2% Total 100.0%

Total $2.7 Billion (Market Value) Average Maturity 7.1 years Duration 4.3 Pre-Tax Yield 3.1%

* Based on ratings by nationally recognized rating agencies, excluding any credit enhancements. ** Our AA rating category includes securities which have been pre-refunded or escrowed to maturity.

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BOOK AND MARKET VALUE PER SHARE

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