STFC State Auto Financial Dashboard

Risks

• A downgrade in our financial strength ratings may negatively affect our business and reputation and a downgrade in our credit rating could negatively affect the cost and availability of debt financing.
• There can be no assurance that we will continue to pay cash dividends consistent with current or past levels.
• TECHNOLOGY AND TELECOMMUNICATION SYSTEMS
• Our business success and profitability depend, in part, on effective information technology and telecommunication systems. If we are unable to keep pace with the rapidly developing technological advancements in the insurance industry, our ability to compete effectively could be impaired.
• If we experience difficulties with outsourcing or other third party relationships, our ability to conduct business might be negatively impacted.
• Our independent agents, who are part of the independent agency distribution channel, are our sole distribution method for our personal and commercial insurance products. Our exclusive use of such distribution may constrain our ability to grow at a comparable pace to our competitors that utilize multiple distribution channels. In addition, consumers may prefer to purchase insurance products through other means, such as the internet, rather than through agents.
• The insurance marketplace is evolving and independent insurance agency distribution systems are growing rapidly. Our success depends on our ability and our independent agents’ ability to react to these changes.
• CONTROL BY OUR PARENT COMPANY
• State Auto Mutual owns a significant interest in us and may exercise its control in a manner detrimental to the interests of other STFC shareholders.
• If our estimated liability for losses and loss expenses is incorrect, our loss reserves may be inadequate to cover our ultimate liability for losses and loss expenses and may have to be increased.
• CATASTROPHE LOSSES AND GEOGRAPHIC CONCENTRATIONS
• The occurrence of catastrophic events could cause volatility in our results of operations and could materially reduce our level of profitability and adversely affect our liquidity and financial position.
• Our financial results depend primarily on our ability to underwrite risks effectively and to charge adequate rates to policyholders.
• Loss of key vendor relationships or failure of a vendor to perform as anticipated or to protect personal information of our customers, claimants or employees could negatively affect our operations.
• Our highly automated and networked organization is subject to cyberterrorism and a variety of other cybersecurity threats. These threats come in a variety of forms, such as viruses and malicious software. Such threats can be difficult to prevent or detect, and if experienced, could interrupt or damage our operations, harm our reputation or have a material adverse effect on our operations.
• Privacy protection requirements for consumers are expanding from simply protecting personal information to a more consumer-driven model that allows individuals in some respects to control a company's ongoing storage and use of their personal information. Our failure to comply with such privacy laws could have an adverse effect on our business.
• Our business depends on the uninterrupted operation of our facilities, systems and business functions, including our information technology, telecommunications and other business systems. Our business continuity and disaster recovery plans may not sufficiently address all contingencies.
• Reinsurance may not be available, collectible or adequate to protect us against losses, or may cause us to constrain the amount of business we underwrite in certain lines of business and locations.
• CYCLICAL NATURE OF THE INDUSTRY
• The property and casualty insurance industry is cyclical, which may cause fluctuations in our operating results.
• Economic conditions may adversely affect our business.
• Adverse capital and credit market conditions may negatively affect our ability to meet unexpected liquidity needs or to obtain credit on acceptable terms.
• Our business is heavily regulated, and changes in regulation may reduce our profitability and limit our growth.
• Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.
• CLAIM AND COVERAGE DEVELOPMENTS
• Developing claim and coverage issues in our industry are uncertain and may adversely affect our insurance operations.
• We may suffer losses from litigation, which could materially and adversely affect our operating results or cash flows and financial condition.
• Terrorist attacks, and the threat of terrorist attacks, and ensuing events could have an adverse effect on us.
• The performance of our investment portfolios is subject to various investment risks, such as market, credit, concentration, liquidity, and interest rate risks. Such risks could result in material adverse effects to our results of operations, cash flows and financial position.
• Our ability to attract, develop and retain talented employees, managers and executives, and to maintain appropriate staffing levels, is critical to our success, as is our ability to effectively plan for the succession and transition of key executives and subject matter experts.
• Changes in U.S. immigration policies and laws could impact our ability to hire and retain foreign national employees working under visas, which could adversely affect our operations.
• Our industry is highly competitive, which could adversely affect our sales and profitability.
• CHANGES IN ACCOUNTING STANDARDS
• Changes in accounting standards issued by the FASB or other standard-setting bodies may adversely affect our results of operations and financial condition.