International Directory of Company Histories - State Auto Financial Corporation
State Auto Financial Corporation
518 East Broad Street Columbus, Ohio 43215 U.S.A. Telephone: (614) 464-5000 Toll Free: (800) 444-9950 Fax: (614) 464-5325 Web site: http://www.stateauto.com
Public Company Incorporated: 1991 Employees: 2,029Total Assets: $2.02 billion (2004) Stock Exchanges: NASDAQ Ticker Symbol: STFC NAIC: 524126 Direct Property and Casualty Insurance Carriers; 551112 Offices of Other Holding Companies
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State Auto Financial Corporation is an insurance holding company for five regional insurance subsidiaries: State Auto Property and Casualty Insurance Company, Milbank Insurance Company, Farmers Casualty Insurance Company, State Auto Insurance Company of Ohio, and State Auto National Insurance Company. Through its insurance subsidiaries, State Auto Financial writes personal and commercial automobile, homeowners, commercial multi-peril, fire, and general liability insurance, serving customers in 26 states through 22,500 independent insurance agents. The company's insurance operations are supported through ten regional and branch offices. State Auto Financial also controls three non-insurance subsidiaries: Stateco Financial Services, Inc., which provides investment management services to all of the holding company's subsidiaries; Strategic Insurance Software, Inc., a developer of software that is marketed in the insurance agency management system market; and 518 Property Management and Leasing, LLC, a subsidiary that owns and leases real and personal property to other State Auto Financial subsidiaries. Policyholder-owned State Auto Mutual Insurance Company controls 67 percent of State Auto Financial.
ORIGINS
The company at the center of a billion-dollar tug-of-war in the early 21st century began operating nearly a century earlier, formed with modest resources that hardly suggested the birth of one of the country's largest insurance companies. In 1921, Robert S. Pein borrowed $30,000 and started the State Automobile Insurance Company, the first home-office casualty company in Columbus, Ohio. Pein, motivated by his displeasure at the exorbitant rates charged by other insurers and their inept settlement of claims, promised to give Columbus residents a better alternative for their insurance needs, but it was doubtful he could have foreseen the expansion of his business into a billion-dollar corporation with operations covering more than half of the United States.
The 1930s presented a formidable challenge to virtually every type of business in the United States, presenting an exacting, determinative test of a company's durability. For State Automobile Insurance, the crucible arrived early in the company's development, making its chances at survival all that more tenuous, but the company responded to the harsh economic conditions of the Great Depression with remarkable resilience. Pein's company, it could be easily argued, thrived during the disastrous decade. As if setting the tone for the robustness the company would demonstrate during the 1930s, a new, larger headquarters building was occupied at the decade's start, the company's third move to grander quarters in nine years. Pein began expanding operations the following year, entering Kentucky, West Virginia, and Tennessee, giving State Automobile Insurance a four-state operating territory that relied on more than 700 agents.
Midway through the decade, as the Great Depression reached its trough, State Automobile Insurance exhibited even greater strength, expanding its product portfolio and its operating territory. The company was aided somewhat by the passage of two laws in Ohio, the first of which, promulgated in 1935, was a statute assigning financial responsibility to drivers. The following year, the state passed the Driver's License Law, making driving a privilege rather than a right. Because of the two laws, the number of drivers buying liability insurance increased markedly, but Ohio was not the only source of growth for Pein's enterprise. On the heels of the expansion achieved early in the decade, the company entered Maryland, South Carolina, and Michigan midway through the decade. State Automobile Insurance's growing customer base had more products to choose from as well, as the company began offering an early version of homeowners insurance and general liability coverage.
In some ways, the 1940s presented a bigger challenge than the Great Depression to State Auto Insurance, but again the company persevered, ensuring that it was well positioned to share in the explosive growth of the national economy following World War II. Several months after the United States entered the conflict, every automobile manufacturer in the country halted production of civilian passenger cars to direct their efforts fully toward the prosecution of the war. For insurers such as State Automobile Insurance who were heavily reliant on writing automobile insurance, the nation's new priorities cut off the supply of new business that would have come from the purchase of new automobiles. State Automobile Insurance withstood the shock to its operations and, by the end of the 1940s, when new automobile production soared to a near record level, the company reigned as a formidable regional force. State Automobile Insurance had $20.4 million in assets by the 1940s, issuing more than 250,000 policies and recording gross premium writings of $14.5 million during the final year of the decade.
