August 5, 2013
What is typically a weak quarter for State Auto Financial turned out to be a profitable one this year.The second quarter has been especially difficult over the past few years because of the powerful storms that have struck the Midwest.A quieter spring this year, though, coupled with price increases and other steps that the company has been taking to strengthen its lines of business, were behind the year’s turnaround, the insurer told analysts on a conference call.“The second quarter is typically difficult for State Auto due to weather, but we’re pleased with 2013 results on both a quarterly and a year-to-date basis,” said Robert Restrepo, the company’s president and CEO.The news sent shares of the Columbus-based insurer to a multiyear high yesterday.
State Auto posted profit of $6.2 million, or 15 cents per share, for the quarter that ended on June 30, compared with a loss of $2.7 million, or 7 cents per share, for the comparable period in 2012.
Analysts had been expecting the company to report a loss for the second quarter.
State Auto reported better results across all of its lines of business and continues “to demonstrate substantially better fundamentals and profitability,” Restrepo said in a statement.
Revenue for the period totaled $285.3 million, down slightly from a year ago when the company had a bigger gain on investments.
The results sent the company’s stock jumping. Shares climbed $2.45, more than 12 percent, to close at $22.75. The shares reached a four-year high of $23.10 during the trading day.
For the first half of 2013, the company reported a profit of $25.9 million, compared with a loss of $4.7 million for the first half of 2012.
Jeff Rieder, president of the Ward Group, a Cincinnati consulting and research firm, said most insurers should have done well in the first half of 2013.
Outside of the deadly tornadoes that went through Oklahoma in May and June, there weren’t the kind of powerful storms that the country has experienced in previous springs, and that should help insurers’ bottom line, he said. Insurers also have been raising prices.
“It’s a combination of (few storms) and a reflection of the pricing action that companies have taken over the past couple of years,” Rieder said.