Higher sales and cost-cutting measures increase profits in state auto insurance


shutterstock_23396512The cost-cutting measures as well as higher sales have helped boost the profits during the fourth quarter as per reports from the State Auto Insurance.  The stock prices jumped more than 7% after this news arrived.

An income of $37.6 million was reported by State Auto, which is more than double compared to $14.4 million a year ago.  The revenue rose to $356.9 million which means an increase of 11%.

The State Auto Insurance Company made $24.5 million for the year when compared to $10.2 million in 2009.  The revenue rose from $1.3 billion to $1.4 billion in 2009.

The company credits the rise in profits this quarter to the increase in sales as well as cost-cutting measures that had been adopted.  There were also improvements in the homeowner’s business as well as lower expenses from the insurance claims.

The company’s Chairman, President and CEO Bob Restreopo, stated that ‘despite above-normal catastrophes, the homeowners had experienced a solid underwriting profit for this quarter as well as improved results for the year.’

The company has suffered in the recent years, like most other insurers who have significant operations in the Midwest, due to the claims for damage due to hailstorms and wind.

Now the homeowners will have to pay more out of their pocket if they have to make such claims.  The rates at the State Auto have also been going up.

Restrepo has also stated that the aggressive action had also drastically reduced the numbers of new homeowner’s policies that have been sold by the company.  He also went on to state that the policy count could be kept considerably flat for the next year or so, however, the premiums will grow as they continue to implement the increase in prices on both homeowner’s as well as auto insurance to benefit from the recovering economy.

One observer has stated that State Auto is not the only one to have increased prices.  This practice seems to have spread from the coastal states into the Midwest due to the powerful storms which hit Ohio, Tennessee, Wisconsin, as well as other states, according to Jeff Rieder, president, Ward Group, which is a consulting and research firm in Cincinnati.

Part of the aim is to get homeowners to protect their properties and take better care in order to help limit the losses in the future and to handle small claims on their own, stated Rieder.