State Auto Financial Corporation (Nasdaq:STFC) today reported fourth quarter 2013 net income of $16.4 million, or $0.40 per diluted share, versus net income of $20.9 million, or $0.51 per diluted share, for the fourth quarter of 2012. Net income from operations 1 per diluted share for the fourth quarter 2013 was $0.28 versus net income from operations 1 of $0.38 for the same 2012 period. STFC’s GAAP combined ratio for the fourth quarter 2013 was 102.1 versus 101.7 for the fourth quarter of 2012. Catastrophe losses during the fourth quarter 2013 accounted for 1.5 points of the 68.8 total loss ratio points, or $4.1 million, versus 2.2 points of the total 68.7 loss ratio points, or $5.9 million, for the same period in 2012. Non-catastrophe losses included $15.3 million, or 5.8 loss ratio points, of loss and loss expense reserve strengthening for prior accident years on program business written through Risk Evaluation & Design LLC (RED), a wholly owned subsidiary of State Automobile Mutual Insurance Company. The reserve increase related primarily to a large restaurant program and a commercial auto trucking program, both of which were terminated in 2012 and have been run off. The State Auto Group’s homeowners quota share reinsurance arrangement increased STFC’s underwriting loss by $13.3 million or 4.6 points 2 on the combined ratio. Pursuant to this arrangement, STFC ceded $41.1 million of written premium, $44.1 million of earned premium, $3.5 million of catastrophe losses and $14.5 million of non-catastrophe losses, and recognized $12.8 million of ceded commissions. This cession decreased STFC’s overall catastrophe loss ratio 1.0 points, increased the overall non-catastrophe loss ratio 5.0 points and increased the overall expense ratio 0.6 points. Net written premium for the fourth quarter of 2013 decreased 1.2% over the same period in 2012. By segment, net written premium for the fourth quarter of 2013 decreased 3.9% for personal insurance, increased 3.7% for business insurance and decreased 3.4% 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. Business insurance production remains strong, principally driven by higher average new business premium, increased renewal pricing and a recovering economy. The specialty insurance segment decline was driven by a 32.1% decline in Programs unit premiums resulting from the termination of several programs written through the former RED unit during 2012.