A.M. Best Affirms Credit Ratings of State Automobile Mutual Insurance Company and Its Operating Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. 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, A.M. 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 A.M. Best categorizes as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect State Auto’s long-standing regional market presence, well-established agency relationships, solid brand name recognition and diversified product offerings.

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 has been marginal, primarily due to underwriting results that have been plagued by above-average expense ratios in recent years. Management has taken a number of actions in recent years to improve profitability including implementing rate increases, aggressively moving to a digital platform to improve efficiency and ease of use and exiting a number of unprofitable lines of business to focus on its core product lines where it feels it has a competitive advantage.

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 A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180612005986/en/

A.M. Best

Jonathan Harris, CFA, FRM, CPCU, +1 908-439-2200, ext. 5771

Senior Financial Analyst

[email protected]

or

Jacqalene Lentz, CPA, +1 908-439-2200, ext. 5762

Director

[email protected]

or

Christopher Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations

[email protected]

or

Jim Peavy, +1 908-439-2200, ext. 5644

Director, Public Relations

[email protected]

Source: A.M. Best