State Auto Financial Corporation (Nasdaq:STFC) today reported a first quarter 2012 net loss of $2.0 million, or $0.05 per diluted share, versus net income of $12.8 million, or $0.32 per diluted share, for the first quarter of 2011. Net loss from operations* per diluted share for the first quarter 2012 was $0.16 versus net income from operations* of $0.18 for the same 2011 period. STFC’s GAAP combined ratio for the first quarter 2012 was 109.4 versus 103.0 for the first quarter of 2011. Catastrophe losses, net of reinsurance recoveries, for the first quarter 2012 accounted for 7.8 points of the 75.0 total loss ratio points, or $20.0 million, versus 4.6 points of the total 69.3 loss ratio points, or $16.0 million, for the same period in 2011. The State Auto Group’s recently implemented homeowners quota share reinsurance arrangement reduced STFC’s underwriting loss by $7.1 million or 1.1 points on the combined ratio. Pursuant to the arrangement, STFC ceded $36.2 million of written premium, $41.7 million of earned premium, $17.4 million of catastrophe losses and $19.3 million of non-catastrophe losses, and recognized $12.1 million of ceded commissions. This cession reduced STFC’s overall catastrophe loss ratio 4.8 points, increased the overall non-catastrophe loss ratio 2.9 points and increased the overall expense ratio 0.8 points. Net written premium for the first quarter of 2012 decreased 30.2% over the same period in 2011. The homeowners’ quota share reinsurance arrangement and the year-end pooling change collectively contributed the entire amount of this decline. By segment, net written premium for the first quarter of 2012 decreased 40.4% for personal insurance, 15.3% for business insurance and 24.5% for specialty insurance from the same period in 2011. Excluding the impact of the quota share reinsurance arrangement and pooling change, net written premium for the first quarter of 2012 increased 7.5%** from the same period in 2011, with the specialty insurance segment contributing primarily to the overall growth. The specialty segment growth was principally driven by the Rockhill and RED business units. Excluding the impact of the quota share and pooling change, net written premium for the first quarter decreased 3.1%** for the personal insurance segment and increased 4.3%** for the business insurance segment from the same period in 2011.