State Auto Financial (NASDAQ:STFC)
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A.M. Best Co. has affirmed the financial strength
ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of
"aa-" for State Auto Insurance Companies (State Auto) (Columbus, OH).
A.M. Best has also affirmed the debt rating of "a-" on the $100
million 6.25% senior unsecured notes issued by State Auto Financial
Corporation (NASDAQ: STFC) (Columbus, OH) and its ICR of "a-". The
outlook for all ratings remains stable.
The ratings reflect State Auto's strong capitalization, favorable
earnings trend and excellent regional market franchise. These
attributes reflect its long-standing market presence, well-established
agency relationships, diversified product offerings and adherence to
sound underwriting fundamentals.
Somewhat offsetting these positive rating factors include
variability in operating results, which is reflective of
weather-related losses as storm loss frequency and severity have
trended higher in recent years. In addition, the group has debt
servicing requirements due to the above mentioned debt issuance, which
could put a strain on future earnings. However, State Auto implemented
numerous initiatives to improve earnings that included
re-underwriting, pricing adjustments and agency management actions. As
a result of these actions, firm market conditions and the recent
improvement in loss reserve development related to the Meridian
business, State Auto has reported favorable operating results during
the past three years.
The FSRs of A+ (Superior) have been affirmed and ICRs of "aa-"
have been assigned with a stable outlook for the following members of
State Auto Insurance Companies:
-- State Auto Florida Insurance Company
-- Farmers Casualty Insurance Company
-- Milbank Insurance Company
-- State Auto Property and Casualty Insurance Company
-- State Auto Insurance Company of Wisconsin
-- State Auto National Insurance Company
-- State Automobile Mutual Insurance Company
-- State Auto Insurance Company of Ohio
-- Meridian Citizens Mutual Insurance Company
-- Meridian Security Insurance Company
The following debt rating has been affirmed with a stable outlook:
State Auto Financial Corporation--
-- "a-" on $100 million 6.25% senior unsecured notes, due 2013
For Best's Debt Ratings, all other Best's Ratings, an overview of
the rating process and rating methodologies, please visit
www.ambest.com/ratings.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit A.M. Best's Web site at www.ambest.com.