State Auto Financial Corporation (STFC) announced that the State Auto Group has entered into a one year property aggregate excess catastrophe reinsurance agreement with a syndicate of reinsurers covering property business underwritten by its personal insurance and business insurance segments, including automobile physical damage.
This aggregate excess reinsurance agreement replaces the State Auto Group’s homeowner quota share reinsurance agreement that had been in place for the prior three years. Under the quota share reinsurance agreement, which terminated in accordance with its terms on Dec. 31, 2014, the State Auto Group ceded to reinsurers 75% of its homeowner business during the term of the agreement.
The new property aggregate excess catastrophe reinsurance agreement provides reinsurance coverage of $75 million during 2015 for PCS numbered catastrophes after the retention of $165 million of losses by the State Auto Group.
Individual occurrences are not subject to an occurrence deductible, but are subject to a maximum amount of $55 million consistent with the Group’s retention under its existing property catastrophe excess of loss reinsurance agreement. The agreement excludes property risks underwritten by the specialty insurance segment.
As a result of the termination of the homeowner quota share reinsurance agreement, approximately $89 million of unearned premiums and $63 million of cash will be returned to STFC. The net difference of approximately $26 million represents the return of ceding commission to the reinsurers and will increase deferred policy acquisition costs and reduce other liabilities.
State Auto Financial Corporation, headquartered in Columbus, Ohio, is a super regional property and casualty insurance holding company and is proud to be a Trusted Choice company partner. STFC stock is traded on the NASDAQ Global Select Market, which represents the top third of all NASDAQ listed companies.
The insurance subsidiaries of State Auto Financial Corporation are part of the State Auto Group. The State Auto Group markets its insurance products throughout the United States, through independent insurance agencies, which include retail agencies and wholesale brokers.