State Auto Financial Corp. has reached the stage in its turnaround in which the "noise" from its financial results will start to go away, Chairman, President and CEO Michael LaRocco said.
The insurer's fourth-quarter 2017 GAAP combined ratio of 100.9% was a slight improvement from the 2016 fourth quarter, while the full-year combined ratio of 107.7% showed a slight deterioration year over year.
State Auto has been exiting less profitable specialty lines and increasing premium rates. Management is encouraged by the improvement in the personal and commercial lines that the company will continue to operate or has been introducing to the market, LaRocco said during a conference call to discuss earnings results.
The statutory personal and commercial combined ratio for 2017 was 102.3%, down from 104.5% for 2016.
"For our ongoing, go-forward businesses ... it was a year of progress and a clear indicator that our turnaround is working," LaRocca said.
The insurer booked a slight uptick in the fourth-quarter 2017 combined ratio for its continuing lines to 97.1% from 96.7%.
Expenses that the company saw climb for 2017 came partly from a change in its agent bonus compensation plan and from technology investment in which the company is largely replacing legacy systems. State Auto expects those expense lines to diminish in 2018 and 2019, executives said.
The company lost policyholders in 2017 as it hiked premium rates, and it expects policies in force to remain under pressure as it seeks further rate increases in 2018. State Auto expects to complete the runoff of its specialty business through 2018, executives said.