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AM Best Affirms Credit Ratings of State Automobile Mutual Insurance Company and Its Operating Subsidiaries
[June 20, 2019]

AM Best Affirms Credit Ratings of State Automobile Mutual Insurance Company and Its Operating Subsidiaries


AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a-" of State Automobile Mutual Insurance Company (State Auto) and its operating subsidiaries. Concurrently, AM Best has affirmed the Long-Term ICR of "bbb-" of State Auto's intermediate holding company, State Auto Financial Corporation (STFC) [NASDAQ: STFC]. The outlook of these Credit Ratings (ratings) is stable. All of the above companies are headquartered in Columbus, OH. (See below for a listing of the companies.)

The ratings reflect State Auto's balance sheet strength, which AM Best categorizes as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The balance sheet assessment of strongest is derived from risk-adjusted capitalization also being at the strongest level, a high credit quality investment portfolio and adequate reinsurance protection. State Auto also benefits from the financial flexibility and access to capital afforded by its publicly traded intermediate holding company, State Auto Financial Corporation.

Operating performance, although improving, has been marginal. State Auto has been impacted over the past five years by technology costs, reduced premium volume and agent commissions. In 2018, it posted its best underwriting results over the latest five-year period, reflecting 5.8 points of catastrophe loss and three points of favorable prior year loss reserve development. State Auto continues to implement risk management initiatives designed to reduce severity, along with aggressive price monitoring efforts and rate increases.

State Auto's mix of business is well-diversified between personal and commercial lines of business. There is good geographic spread of risk, with modest concentration in he Midwest, which exposes the group to storm loss frequency. It also maintains a formalized ERM framework that is appropriate for its size, scope and risk profile.



Positive rating action could occur if the group sustains a long-term improvement in operating performance. Negative rating action could occur if there is an occurrence of a sudden large catastrophic loss that materially hinders risk-adjusted capitalization or if there is any material deviation from the group's submitted financial projections.

The FSR of A- (Excellent) and the Long-Term ICRs of "a-" have been affirmed for the following operating subsidiaries of State Automobile Mutual Insurance Company:


  • State Auto Property and Casualty Insurance Company
  • Milbank Insurance Company
  • State Auto Insurance Company of Ohio
  • Patrons Mutual Insurance Company of Connecticut
  • Meridian Security Insurance Company
  • State Auto Insurance Company of Wisconsin
  • Rockhill Insurance Company
  • Plaza Insurance Company
  • American Compensation Insurance Company
  • Bloomington Compensation Insurance Company

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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