Q4 2020 State Auto Financial Corp Earnings Call
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Welcome and thank you for standing by at this time all parties are in a listen only mode. After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During the time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key.
Today's call is being recorded.
If you have any objections. Please disconnect at this time I would now like to turn the call over to Investor Relations Director Natalie Schoolcraft. Please go ahead.
[laughter].
Thank you Nicole good morning, everyone welcome to our fourth quarter 'twenty 'twenty earnings Conference call today, I'm joined by our Chairman President and CEO, Mike Morocco.
<unk>, Vice President and CFO, Steve English senior Vice President of personal and commercial lines and managing director of State Auto Labs Kim Garland.
Senior Vice President of data and analytics, Jason Berkey, Chief Actuarial Officer, Matt Mrozek, and Chief Investment Officer, Scott Zone.
After our prepared remarks, we'll open the lines for questions.
Our comments today may include forward looking statements, which by their nature of involved the number of risk factors and uncertainties, which may affect future financial performance.
Risk factors may cause actual results to differ materially from those contained in the our projections or forward looking statements.
These types of factors are discussed at the end of our press release as well as in our annual and quarterly filings with the Securities and Exchange Commission.
Financial schedules containing reconciliations of certain non-GAAP measures along with other supplemental financial information are included as part of our press release.
Additional material titled monitoring our progress has been made available on our website at state auto Dotcom and along with the press release can be found under the investors section now I'll turn the call over to Stl's, He's chairman President and CEO, Mike Morocco.
Thanks, Natalie and good morning, everyone before I begin I just wanted to say I hope everyone on this call.
And your families are safe and healthy as we continue to battle. This virus I do believe we're of the final phase of this challenge, but we have many difficult days ahead of us.
I could not be more proud of the state auto and our team as we look back on 2020, Mike.
My Pride is based on both of our results and how the team responded to a year of which we had so many challenges let me begin with the response of this team of associates and.
In the year, where we face the pandemic.
The reality of ongoing ratio of justice of near record level of catastrophic claims and the device of political election, our team did not turn away from one another rather we came together.
It began with our transition to a primarily work from home organization, which took place overnight.
Thanks, sure I'll say in the digital platform not a day was lost more importantly, our culture of putting the family and community first allowed our team to work through the personal challenges of making the change while dealing with the realities of shelter in place the whole family members kids at home schooled challenge.
<unk> and more.
We dealt with the issues of the ratio of adjusted head on we had open and candid discussions about racial bias both conscious and unconscious they.
They were difficult and emotional but it was the right thing to do as of our culture also requires a workplace where all of our welcome and all are treated fairly.
The weather required our teams to meet our customers' needs other difficult and challenging circumstances made worse by the reality of the pandemic.
Words cannot properly express my pride in the way our team deliver our product, which at the end of the day, it's a promise to be there for our customers and their moment of need state.
Deliberate of the speed fairness and empathy.
Now to the results.
The fourth quarter really told the story of the entire year.
Demonstrated where we are at the company.
We made a profit and we grew that is who we are the first three quarters were disproportionately impacted by catastrophic weather.
And we accept the overall results, but we know that the fourth quarter results of the reality of 2020 of solid year.
Now when I say the fourth quarter told the story of the year of that does not mean destroyed did not have some bad news in our case was our personal auto results. We spent the year continuing our work to get this product line back to profitability and I'm happy with the progress you've made however for the year. This product line was unable to re.
Turned the profitability.
I will say I'm confident that our personal auto product will be profitable in 2021, Tim will cover this in detail.
Other than personal auto I'm pleased with all of the other lines of business. Many suffered from the unusually high level of cats, but in those cases, the underlying non cat loss ratios were at levels. We expect will produce a profit in years, where we do not experience the very high level of cats, we saw in 2020.
Our workers' compensation products was adversely impacted by Covid, even with that effect I'm pleased with where the slides finish the year and how they are positioned now that we have workers' compensation on our digital platform.
The expense ratio continued to be impacted by our investment in technology now that we've completed the big bills by getting all our products on connect will begin to see the transition to more competitive expense ratios for all of our lines of business our.
Our vision over just five years ago is being delivered.
New debt, we could not get too of competitive expense ratio without investing in technology. We did what we committed to one of our focus on continuing the journey to efficiency.
I wanted to take a moment to talk about that success story in 2020, our it department.
Our strategy for the last five years has been the gain the scale needed to offer more competitive rates and to ensure the long term viability of state auto ex.
Everything we've done has been in support of the strategy, including the complete digital transformation.
We've invested in creating an updated technology environment that is truly cloud native and has already enabled two very tangible results first as we've grown over the last four years, we've been able to do so without adding staff.
This is a huge productivity lift and we believe we'll continue to see these benefits as we continue to intelligently deliver technology solutions for our agents and customers on top of the platform. We built second investments in our digital platform and transformation allowed us to accelerate our business.
Success through a global pandemic.
Seamlessly shifted to a work from home environment and continued to meet our agency customers need.
Our digital transformation is far from over and it's my expectation that the benefits of these investments and continued productivity will flow through to the bottom line.
Again in the face of this pandemic, we did not Miss a single technology released all year.
The only do we deliver our final products farm and ranch as well as workers' compensation on connect but we continue to bring the digital platform to our claims service sales and finance organization.
<unk> moved the digital will be felt throughout the entire organization not just sales quoting and policy issuance.
Also completed several changes of our pricing models improve the underlying architecture and continue to improve our information security.
Working remote we did not face the team they got even better.
Finally, a quick comment on business interruption claims our teams working alongside of our outside counsel have done extraordinary work defending the requirement of a physical loss is not net by closure or virus and the additional virus exclusion further eliminates the potential for coverage in the.
Situations, where the exclusion of the specified to date the vast majority of court ruling support our position and I remain cautiously optimistic the precedent will prevail.
Now, let me pass the call along there are of scheme.
CFO, Steve English Steve.
Okay, Thanks, Mike and good morning, everyone.
<unk> reported net income for the fourth quarter of 2020, which exceeded the same period from the year ago.
Driven by increased net investment gain and a much improved GAAP combined ratio on a growing book of business.
Net investment gain reflects greater unrealized gains for Q2 2020 of than a year ago, along with marginally more net realized gains this cash.
The year in which catastrophe losses, along with COVID-19 dominated the headlines for the first three quarters of 2020.
On an operating basis STC reported 66 cents income per diluted share for the fourth quarter of 2020 compared to 30 and the.
The fourth quarter of 2018.
On a year to date basis, STC reported 19 cents loss per diluted share compared to <unk> 59 <unk>.
Income per diluted share for all of <unk> 19.
Fourth quarter 2020 operating earnings reflected improved underwriting results while year to date of operating earnings were negatively impacted by greater losses from catastrophes, including additions to specialty casually loss reserves related to hurricane Irma from 2017 as the.
Well as reduced net investment income.
The fourth quarter 2020, GAAP combined ratio of $93 eight six.
The 6.2 points better than the fourth quarter of year ago with improvement reported in all three metrics cat loss ratio non cat loss ratio and the expense ratio.
For the year, our GAAP combined ratio of one of five three is two three points higher in 2019.
The higher full year cat loss ratio could not be overcome by improvements in the non cat loss ratio of hand, the expense ratio.
Fourth quarter cats at four 3% were down three four points from the year ago, which was elevated due to specialty Irma and Harvey loss development along the storms in late October of 2019 impacting Dallas Fort worth for.
For the year, our cat loss ratio of 14, 9% the six nine points higher than all of 2019.
The non cat loss and ALAE ratio for the fourth quarter 2020 improved one eight points compared to the fourth quarter of 2019, and the GAAP expense ratio declined of point when comparing the same two periods on a year to date basis. The non cat loss ratio improved $4, one point with the expense ratio improving half of point.
Net favorable development of prior year loss reserves in the fourth quarter of 2020 was consistent with the recorded amount in the fourth quarter of 2019, and primarily related to workers compensation and small commercial product.
For the year net favorable development of prior year loss in ALAE loss reserves totaled $51 5 million compared to $72 4 million for 2019.
Specialty experienced adverse development in 2020 with $5 2 million, primarily due to one claim from 2016 relating to the former E&S casualty product lines compared to $1 1 million of favorable development in 2019.
Personal lines also shifted from overall net favorable development of $12 5 million in 2019 to overall net adverse development of $21 7 million in 2020.
This shift was primarily related to personal auto where multiple accident years experience unexpected severity increases from bodily injury claims.
Commercial lines net favorable development continues to be strong with $78 4 million in 2020 compared to $15 8 million in 2019.
Workers' compensation, along with small and middle market commercial products drove the favorable development.
The Q4 GAAP expense ratio of $34 eight improved one point compared to the fourth quarter a year ago.
On a yearly basis, the GAAP expense ratio of $34 nine was down half of point for our combined personal and commercial segment results. The statutory expense ratio for the quarter of $35 three and year to date 34.3 were essentially flat with 2019 levels.
Expense ratios reflect increases in agent variable compensation and related costs offset by the impact of scale from growth.
Overall net written premiums grew seven 9% in the quarter and 10, 7% for the year when comparing 2019 personal lines finished the year with net written premium growth of nine 4%, while commercial lines grew $12 seven.
Fourth quarter investment valuations continue to be on the rise, but the major stock index is up for the quarter. This along with higher fixed income values of operating income in the quarter of $29 2 million of finished.
<unk> finished the year with book value per share of $23 compared to $22 19 at December 31 2019.
Net investment income for the quarter and year to date was lower than the same periods a year ago exiting our MLP investment class of lower interest rate on notes receivable for state auto mutual and a lower interest rate environment. All contributed to this decline.
The follow up on what Mike mentioned I will provide an update on business interruption cases since we last commented regarding this during the second quarter earnings call, which at that time, we had 15 active lawsuits four of which were proposed class actions.
As a reminder, we have recognized $3 $4 million of loss adjustment expenses for the year end of December 31, 2020 for defending these cases.
Through today, we have had 21 lawsuits filed with 14 currently pending of the <unk>.
Seven no longer pending three motions to the miss to dismiss for granted while the remaining four suits were withdrawn by the plaintiffs.
The 14th currently pending cases include three class actions for two cases, our motion to dismiss was not granted and we have moved to targeted discovery case.
Cases involving situations, where policies require direct physical loss or damage as well as policies that have the virus exclusion and the requirement.
Of direct physical loss or damage of the approximately 2100 business interruption claims we've received 98% are closed.
Before I turn it over to Kim Garland, you wanted to briefly point out some immaterial revisions to the 2018 and 2019 income statements primarily for other reported ceded premiums and to the 2019 balance sheet for premiums receivable, which was reflected last quarter and a revision to recognize an actuarial gain which reduced our post retirement medical liability.
While increasing shareholders equity the.
The gain was the result of future cost savings by moving to of Medicare advantage funding strategy. Beginning in 2024 are closed and retiree medical plan.
And with that I'll turn the call over to Kim.
Thanks, Steve and good morning, everyone. Our overall personal lines and commercial lines statutory results of the following the.
The <unk> 'twenty combined ratio of 94, 5% compared to 97, one for <unk> 19.
Personal auto added eight nine points to the overall personal and commercial lines combined ratio for the quarter.
Our 2020 combined ratio was one of three six compared to 101 four for 2019.
Written premium growth was seven 8% for <unk> 'twenty versus <unk> 19, excluding personal auto written premium growth for the remainder of personal and commercial lines was 16, 9% for <unk> 'twenty versus <unk> 19, written premium growth of 10, 7% for all of the 2020 compared to 2019.
For the quarter commercial lines had a combined ratio of 87, six and written premium growth of 10, 6% and personal lines had a combined ratio of $99 three and written premium growth of 6%.
Our <unk> 'twenty combined ratio for personalizing, the personal lines is two points to six points better than the <unk> 19 of our cat loss ratio is one four points lower than for Q 19, with personal lines being three nine points lower than commercial lines being two three points higher.
Our non cat loss and ALAE ratio was six points lower than the <unk> 19. Prior year Reserve development was relatively consistent with the <unk> 19 of the prior year accident year loss ratio impact is <unk> six points less and less favorable than the <unk> 19.
Our current accident year loss ratio is a bit better than for 2019 at 1.2 points lower than for 2019, our expense ratio is consistent with the fourth quarter of 19 at 0.3 points higher than the <unk> 19.
To understand our overall results for the quarter, one should look at our personal auto results very poor separately from the remainder of our results very solid of.
A year ago on this call I spoke to you about the poor condition of our personal auto business I told you that our struggles in personal auto predominantly came from not effectively managing our nonstandard personal auto business and the things that we were going to due to the address the situation, we're going to shift the mix of our personal auto book of business away from non standard and more.
Ford's preferred auto.
To implement a new rating structure of that made us more competitive on preferred risks and more rate adequate on non standard the risks and we're going to address underwriting leakage issues that we had identified in our personal auto business. We have done each of these things the policies in force mix shift of our personal auto connect business has changed in the following ways.
For ultra preferred and preferred as of December 2018, 15% of our connect policies in force were ultra preferred and preferred <unk>.
Remember 2019, 19% of our connect business was ultra preferred and preferred and by the end of December 2020, 24% of our connect business was ultra preferred and preferred.
<unk> growth in 2020 for ultra preferred and preferred connect was 40%.
For non standard as of December 2018, 34% of our connect personal auto business was non standard.
And by December 2019 that had dropped to 26% of our connect business being non standard and by the end of December 2020, 25% of our connect business with non standard in the year 2020, non standard Pip shrunk by 14%.
The implementation of personal auto connect version two dot one pricing model 22 states have now been approved and implemented and we're seeing the impact from connect to the one that we anticipated.
And addressed underlying addressing underwriting leakage issues, we have overhauled both of our data verification and the agency management processes. This year to improve in this area.
But the harsh reality of the economics of insurance is.
Of that these actions only had a small impact on our 2020 financial results and the majority of the impact of these actions will be seen in our 2021 personal auto financial results.
The other question that needs to be asked about our personal auto results is why did the state auto is 2020 personal auto combined ratio not improve when the rest of the industries results improved in 2020.
Our personal auto 2020 combined ratio of one of $4 seven as a point higher than our 2019 combined ratio of one of the $3. Seven. This is clearly an outlier result in the industry.
The driver of our outlier result is pretty straightforward, our non cat loss and LAE ratio of only decreased one one points in 2020, but this was made up of of prior accident year impact that was seven five points worse in 2020 than it was in 2019 and of current accident year impact that was eight six points better.
In 2020 than it was in 2019.
We believe that the improvement in our current accident year results are in line with what other personal auto carriers are seeing and net adverse prior year Reserve development is the driver of our outlier personal auto results.
I'll end the section of I opened at our 2020 personal auto auto results are horrible, but we're confident that we have identified and addressed the root causes and our results reflect two headlines adverse prior year development and the reality of the economics of insurance the impact of our 2020 actions will primarily be seen in our 2021.
Non financial results not our 2020 results.
But the fact that made our 2020 personal auto results poor also gives us great optimism going forward. We believe that we have now paid the majority of the price for our passengers.
And the impact of our 2020 actions will show up in our 2021 personal auto results.
We entered 2021 with our personal and commercial lines of business positioned as the mid Ninety's combined ratio of business and an average cat year with of rehabilitated personal auto business, having completed the build out of all of our products on connect and coming off of our third consecutive year of double digit growth. We're excited about how we are positioned as we enter.
Of our 2021.
Here of brief updates on the rest of our individual product lines for homeowners <unk> had a combined ratio of 84, 5% and written premium growth of 2000 2022, 6% of terrific result.
We had a cat loss and ALAE ratio of six 6% compared to 15, 5% of <unk> 19.
Growth continues to be strong and homeowners with homeowners, becoming our largest product line. After a third straight year of 20% growth of <unk>.
Third rate increase in the 13 month period in Texas is now beginning to slow our growth in Texas as expected and we continue to focus on accelerating our growth in other states to continue balancing our geographic footprint.
Commercial auto or commercial auto results continued to be terrific with for Q2 'twenty results of the combined ratio of 99, three and written premium growth of 39, 9%.
2020 represented the second consecutive year of plus 40% growth with the combined ratio for 2020 of 95.0% the.
The commercial auto expense ratio continues to improve as we achieve scale in this product line with a 33, 8% 2020 expense ratio representing a six three point improvement over 2019. It was the historically great year for our commercial auto product line.
Small commercial <unk> <unk> had a combined ratio of 55, 5% with 24 points of favorable prior year development written premium growth of six 6% and Pip growth rate of 12% of another terrific result.
Growth continues to accelerate in our small commercial product line and the combination of accelerating growth in our more efficient platform produced the 2020 of expense ratio of 35, 2% representing a three four point improvement over 2019 our.
Our small commercial business is very well positioned for the future.
Middle market had a combined ratio for the quarter of 101, 5% with 17 nine points of cats, and <unk> 20, compared to 7.0 cat loss ratio in the <unk> 19.
And the written premium growth rate of one 5% there are a number of moving pieces with respect to our middle market business. It was a horrific cat year in 2020 with the cat loss in LAE ratio of 27, 4%, which is 21 three points higher than 2019.
An excellent non cat loss ratio in 2020 of $46 one of our best middle market non cat loss ratio of six years.
<unk> slowdown in the middle market submissions agents are telling us that COVID-19 has made the middle market policyholders more hesitant move carriers until things return to a more normal state.
<unk> <unk> middle market, New business written premiums declined 40% from a year ago, and our 2020 middle market New business written premium is flat from a year ago and.
And expense ratio of 45% relatively flat versus the 2019 expense ratio of 41% as 2020 was another year of heavy investment in middle market connect for state Rollouts mid.
The middle market connect is now live in 16 states with the remainder of states to be rolled out in the first half of 2020 of.
Our middle market business is currently well positioned from a profit perspective, but we need to leverage the middle market connect to reverse the COVID-19 driven decline in submissions to grow and gain expense ratio of benefit.
Workers' compensation.
Workers' comp had a combined ratio for the quarter of 99.0% with 53, one points of favorable prior year development and of written premium growth of minus 24% workers.
Workers comp is another product line with the number of moving pieces of poor current accident year loss ratio for 2020 of 78, 5% eight eight points higher than our current accident year loss ratio for 2019 of $69 seven.
This higher loss ratio has been driven by Covid losses from nursing homes, entering 2020, and nursing homes, where our largest class of business in workers compensation and May of 2020, we made the decision to non renew our nursing home workers compensation business, but that process takes a year and we have still been exposed to COVID-19 workers' comp losses from nursing homes. This year.
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Prior accident year loss ratio for 2020 of minus 35, 1% eight three points of more favorable reserve development than we saw in 2019.
2020 workers comp expense ratio of 47, 6%, which is 12, one points higher than our 2019 expense ratio.
This expense ratio increase was driven by two things 2020 of being the highest investment year for workers' comp connect and workers' compensation premium continuing to shrink.
2020 Workers' comp written premiums shrank by 18% versus 2019. This was driven by the non renewal of our nursing home business and the completion of the runoff of our Monoline small workers comp business written through wholesalers, which was the segment of business that historically lost money for state auto.
And <unk> 20 of the first workers' comp connect states launched for the first time in over a decade workers' comp is now on the same system as the rest of our workers comp products. After years of hard work getting out of unprofitable segments of business navigating of software occurs compensation market and building the workers' comp connect system our workers.
<unk> business is now positioned to start their profitable growth journey.
I am incredibly excited about the future of our workers' comp business.
For farm and ranch <unk> 'twenty had a combined ratio of 109, 8% and written premium growth of 34, 1%. The progress of our farm <unk> Ranch business continues to be terrific 2020 had a combined ratio of 105 with 16 points of cat losses, which is 11, one points higher than the 2019 cat loss.
Ratio and 2020 written premium growth of 28, 4%.
On a group direct written premium basis, our farm and ranch product line broke the $100 million barrier in 2020.
The 2020, non cat loss and LAE ratio of 41, 2% was under 45 for the fifth time in the last six years the.
<unk> 2020 of expense ratio of 44% should start to decline now that the farm and ranch connect investment has been completed.
Farm <unk> Ranch had a new business written premium growth rate of 155% in 2020 farm <unk> Ranch entered eight new states in 2020 and farm and ranch connect is now implemented in 2027 states and absolutely great performance by our farm <unk> Ranch team in 2020, we enter 2021 well positioned in <unk>.
Free single, one of our product lines and with that we'll open the lines for questions.
As a reminder, in order to ask an audio question. Please press star and the number one on your telephone keypad, we'll pause for just a moment.
The first question will come from the line of Marla backer.
Thank you.
Thank you.
Any kind of color on.
Severity increases.
And I think that's the trend we're seeing of across the board.
Can you talk about.
Thanks.
You see it is.
That is short term or sort of something we should think of that.
One of the industry.
Jim you want to start.
Yes.
So I'm going to assume this is the.
Personal auto question.
And if it's not you can reframe me, but sorry, yes.
That's fine.
Yes were seeing severity up but not not abnormally high I mean, we're seeing some severity increases, but clearly dwarfed by the decline in frequency. So I think.
Again, it varies by coverage I think.
Collision severities are pretty stable from our perspective, we're seeing sort of more and more of the severity increases in bodily injury.
Will they continue to stay at those levels, maybe I think the biggest unknown at this point is theres just been a slowdown in the court system and add longer by claims day open the sort of more expensive the against so if that debt the speed of that cycle of <unk>.
Clines, we may see bodily injury severities.
Sort of the rate of increase go down a bit.
Don't know if you want to add anything Mike.
Yes, no I think you've really covered at the but I will add.
Just the and.
And it really goes both the auto and quite frankly, all of our coverages I think we're going to continue to see some inflationary pressure I know that sounds strange because we're not particularly suffering there but.
The cost of paint materials in the the on the.
The.
On the repair side of our business, whether it's on the property side or whether its the automobiles I think it really bears worth watching and so I think your question of Super important and obviously, it's something we keep a very close eye on.
And coming out of Covid, there's just going to be a whole lot of things changing.
It really bears watching but obviously Kim hit the nail on the head on the auto side I appreciate the question.
Okay. Thank you for that answer.
Then.
In terms of what we saw.
2020.
Very severe weather patterns in certain markets, we're continuing to see.
Michelle.
The harsh weather.
Into 2021.
Does this in any way.
In terms of.
Writing new business.
Mike put the brakes in the near term.
Or not.
Yeah, I'll start and then kimco free or quite frankly disagree that's lovely bought us but.
Again, another important question I want to having the opened with that I wanted to stay that low.
We're obviously monitoring things right now with the.
It's a very severe winter weather, we experienced in particularly for the folks in Texas and.
We spent some time, making sure our associates are safe and we're reaching out to our customers and hoping they're safe. This is really.
A very severe event for the people that aren't accustomed to this and the power outages that were.
Starting prayers are going out to everybody to be safe and I know our team is all over the situation and watching it carefully.
Having said that Mike My view is strategically.
Other than what Kim has already said, which is that we would like our property business to be more geographically diverse.
And our our position in the state like Texas, while it's our largest property state, we're not that big in Texas, and so our problem isn't necessarily the size of our book in Texas. It's the.
The fact that we need more business in Arizona, and Illinois, and Colorado are key in all of the other states that we're in.
Now, having said that the weather patterns are something that we watch very carefully and so it will affect kind of what we consider as cat loads and how that.
But that's something that Kim could probably address.
So I'll turn it over to him.
Yeah I think.
I think Mike nailed it on the head and how we think about it is just are we doing a good job of managing.
The cat risk whether risk those sorts of things and so.
He mentioned one of them.
Don't be over concentrated have spread of risk and so the discussions we've had over the past few quarters about what we're doing in Texas, especially with rate increases.
Address that I would say you asked sort of if it changed our strategy probably the biggest changes that I think is.
The other part of this is you have to price the risk appropriately and so you have to price the weather load in the cat load and so I think we will continue to see like reinsurance costs go up and that gets loaded into the price that we charge consumers. So that's going to put upward pressure on rates and then every.
The year, we do we like everybody else when we set rates, we put in like how much do we load in for cats and <unk>.
Given the trying to pricing is both art and science, we probably smidge to up the cat load a little more than maybe the math said this year just to have a little extra margin of safety I think those of the.
Two biggest things, we probably did strategy wise or just sort of we up the cat load and our rates a little bit.
Okay. Thanks, very much of those answers. Thank you.
The next question will come from the line of Ron Bachman.
Alright, Thanks, a lot.
Growth in the quarter.
Other question about sort of the current.
Bitter cold and sort of snow storm.
Across the south and particularly the Texas could you.
Obviously, a lot of experience could you talk about the types of claims the industry is going to sort of experience do you think it's more of a personal lines event typically when you have severe weather of this nature in this part of the country. The curious to get your sort of little bit of a crystal ball.
Not necessarily state auto's unique exposure, but sort of the broader insurance industry. Thanks.
Yeah, I'll start and then Ken more Steve.
Can tag on I literally break before this call I got all of.
Our conversation with our pulse the ticker of our head of.
Sure.
Claims and risk engineering and in the.
Thats like this I think this is going to be much more of a personal lines effect as does not mean that there won't be some impact obviously on small businesses and even larger size.
Commercial risk, but these types of events, where you get a lot of.
Ice and quite frankly wind.
And the heavy snow the impact on roofs in the and the impact on the homes structures I think tends to be a little bit more significant.
Can't tell you that and give you some state of auto information that I can tell you that this will definitely be much more of a personal lines of event for us I know enough at this point the challenge that we face of events like this because we just can't get into the to the area and start kind of helping our customers, which is super frustrating for our team.
And the key is really power outages and thats going to create on the losses through the power.
Well so.
These are broad strokes, but I appreciate the question and I can say that Mike My position as the my view is that it will.
I'll definitely impact personal lines much more than commercial lines, but Kim or Steve do you guys want to add to that at all.
Steve I don't have any net of that yes.
Clearly more of a personal lines event from what we're seeing so far.
And when you see personal lines because.
You mentioned homeowners so within personal lines is it the.
The thing where basically people are sort of hunkered down at home the cars are probably not debt.
In any great effect impact of its much more of a homeowners.
Cohort within personal lines.
Saying without just the leasing.
Yes. It is.
Always hard to again early on the assume a whole lot.
Hence the happened in the early part of the storm is you get some other significant amount of auto losses, because people are trying to where they can hunker down right. So there's a lot of ice and.
Very difficult driving conditions, but in a case like this where you have this kind of ongoing weather event. In most cases people are exactly as you suggest they're not going anywhere and the event really.
And the trauma of the event happens when their day.
Of issues with their homes, and that's where the power outages at a high level of of.
The complexity of challenge to folks in it.
It's a very difficult situation, but I think it moves from early days of being some auto losses to becoming much more of a residential challenge.
Okay, great. Thanks for the color best of luck in the World.
Thank you.
Again to asking out of your question you may do so by pressing star and the number one on your telephone keypad.
We are showing no further audio questions at this time.
Okay.
Okay.
Okay.
Nicole Thank you very much for that Nathalie you wanted to close this out then.
Yeah.
Yeah, Mike Thanks, everyone for your questions for participating in our conference call and for your continued interest in and support of the State Auto Financial Corporation. We look forward to speaking with you again on our first quarter earnings call, which is currently scheduled for Thursday may <unk> 2021, Thank you and have a wonderful day.
Thank you that concludes today's fourth quarter 2020 earnings conference call. Thank you for participating you may disconnect at this time.
Okay.
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Yes.
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Sure.
Okay.
Good morning.
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