On March 4, 2019, State Auto Financial Corporation (the “Company”)>issued a press release reporting that it was revising previously disclosed financial information related to accounting for its pension and postretirement benefits (the Release”). As described in the Release, the Company had been pooling the net liabilities and the unrecognized actuarial gains and losses along with prior service costs recorded in accumulated other comprehensive income for pension and postretirement benefits to affiliated companies to a quota share reinsurance agreement or pooling agreement. However, the Company and its auditors have determined that such pooling is not appropriate for these items. The full text of the Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The Release included two non-GAAP financial measures, net income (loss) from operations per diluted share and adjusted book value per share. The Company uses net income (loss) from operations because it believes this calculation better indicates the Companys operating performance than GAAP net income (loss) in that net income (loss) from operations excludes the sometimes volatile investment gains/losses, net of applicable federal income taxes, that can produce inconsistent results. In addition, the Company uses adjusted book value per share because it believes this calculation is informative to the Company’s management and investors.

Net income (loss) from operations differs from GAAP net income (loss) only by the exclusion of net investment gain (loss), net of applicable taxes, on investment activity for the periods being reported. For the three-month periods ended December 31, 2018>and 2017, GAAP net loss was $(0.57)>and $(0.33)>per diluted share, respectively, while net income from operations was $0.67>per diluted share and net loss from operations was $(0.65)>per diluted share for the same respective periods. For the three-month periods ended December 31, 2018>and 2017, net investment (loss) gain, net of applicable taxes, impacted GAAP net (loss) income per diluted share by $(1.25)>and $0.32, respectively. For the fiscal years ended December 31, 2018>and 2017, GAAP net income was $0.29>per diluted share while net loss was $(0.42)>per diluted share, respectively, while net income from operations was $1.06>per diluted share and net loss from operations was $(1.43)>per diluted share for the same respective periods. For the fiscal years ended December 31, 2018>and 2017, net investment (loss) gain, net of applicable taxes, impacted GAAP net income (loss) per diluted share by $(0.91)>and $1.01, respectively.

Adjusted book value per share differs from GAAP book value per share only by the exclusion of accumulated other comprehensive (loss) income, net of applicable taxes, for the periods being reported . This amounted to a decrease of $2.23>per share and increase of $0.09>per share for the years ended December 31, 2018>and 2017.

State Auto Financial CORP Exhibit
EX-99.01 2 a2018year-endpressreleasex.htm PRESS RELEASE Exhibit EXHIBIT 99.1State Auto Financial reports revised financial information related to accounting for pension and postretirement benefitsCOLUMBUS,…
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About STATE AUTO FINANCIAL CORPORATION (NASDAQ:STFC)

State Auto Financial Corporation (State Auto Financial) is a property and casualty insurance holding company. The Company is engaged in writing personal, business and specialty insurance. Its segments include personal insurance, business insurance, specialty insurance and investment operations. Its personal insurance, business insurance and specialty insurance are known as insurance segments of the Company. It writes standard insurance covering personal exposures to individuals in the personal insurance segment. The Company writes insurance covering small-to-medium sized commercial exposures in the business insurance segment. The specialty insurance segment offers commercial coverages requiring product underwriting, claims handling and/or risk management services through a distribution channel of retail agents and wholesale brokers, which include program administrators and other sources. Its investment portfolio is managed by its subsidiary, Stateco Financial Services, Inc.