This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

State Auto Financial’s Second Quarter Results To Include Non-Cash Charge For Deferred Tax Valuation Allowance

State Auto Financial Corporation (NASDAQ:STFC) today announced that its second quarter 2011 financial results will include a non-cash charge of approximately $115 million to establish a valuation allowance against its net deferred tax asset.

Deferred income tax assets and liabilities represent the tax effect of the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. In accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 740, Income Taxes (ASC 740), STFC periodically evaluates its deferred tax assets, which requires significant judgment, to determine if they are realizable weighing all available evidence, both positive and negative, including historical and anticipated future taxable income. In making such judgments, significant weight is given to evidence that can be objectively verified. Given the significance of STFC’s previously announced catastrophe losses for the second quarter, STFC considered both positive and negative evidence and concluded a valuation allowance should be established as of June 30, 2011.

“The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude the company from using its loss carryforwards or realizing other deferred tax assets in the future,” said STFC President, Chairman and CEO Bob Restrepo.

“It’s also important to note that the establishment of a valuation allowance does not reflect a change in our long-term financial outlook,” Restrepo added. “We will continue to implement initiatives to strengthen our underwriting profitability and financial strength and preserve our terrific reputation. At the same time, we will continue to build upon our long-standing and profitable agency relationships, develop and deploy products and technology that make us an even more responsive partner, and ensure the quality claim and customer service operations that will continue to distinguish State Auto as a superior regional agency company.”

The valuation allowance against net deferred tax assets will reverse when, in STFC’s judgment, available positive evidence outweighs negative evidence. However, given the inherent uncertainty in predicting future performance, which is impacted by such things as severity and frequency of catastrophe losses, current and projected pricing actions, investment market conditions, and planned loss ratio and expense control initiatives, it is uncertain as to when that might occur.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,987.51 -61.49 -0.36%
S&P 500 1,985.54 -11.91 -0.60%
NASDAQ 4,567.5980 -24.2080 -0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs