State Auto Financial Corporation (Nasdaq:STFC) today reported third quarter 2013 net income of $18.5 million, or $0.45 per diluted share, versus a net loss of $5.5 million, or $0.14 per diluted share, for the third quarter of 2012. Net income from operations 1 per diluted share for the third quarter 2013 was $0.33 versus net loss from operations 1 of $0.25 for the same 2012 period. STFC’s GAAP combined ratio for the third quarter 2013 was 101.4 versus 110.2 for the third quarter of 2012. Catastrophe losses, net of reinsurance recoveries, for the third quarter 2013 accounted for 2.4 points of the 67.2 total loss ratio points, or $6.4 million, versus 2.8 points of the total 77.1 loss ratio points, or $7.2 million, for the same period in 2012. The State Auto Group’s homeowners quota share reinsurance arrangement increased STFC’s underwriting loss by $10.0 million or 3.5 points 2 on the combined ratio. Pursuant to the arrangement, STFC ceded $48.6 million of written premium, $43.9 million of earned premium, $5.0 million of catastrophe losses and $16.2 million of non-catastrophe losses, and recognized $12.7 million of ceded commissions. This cession decreased STFC’s overall catastrophe loss ratio 1.3 points, increased the overall non-catastrophe loss ratio 4.0 points and increased the overall expense ratio 0.8 points. Net written premium for the third quarter of 2013 decreased 2.3% over the same period in 2012. By segment, net written premium for the third quarter of 2013 decreased 1.3% for personal insurance, increased 0.9% for business insurance and decreased 10.1% for specialty insurance from the same period in 2012. The decline in the personal insurance segment was driven by agency management actions associated with executing our homeowners strategy. Underlying business insurance production remains strong, principally driven by higher average new business premium, increased renewal pricing and a recovering economy. Business insurance production in the third quarter of 2012 included $7.2 million of unearned premium transferred from terminating an umbrella quota share reinsurance arrangement effective July 1, 2012. The specialty insurance segment decline was driven by a 26.8% decline in Programs unit premiums resulting from the termination of several programs written through our former RED unit during 2012.