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State Auto Financial announces record fourth quarter earnings


COLUMBUS, Ohio -- February 28, 2003 -- State Auto Financial Corporation (NASDAQ: STFC) today reported record fourth quarter net earnings of $19,331,000. Net reported earnings were $0.49, per diluted share, versus $(0.27) for the same period last year. Net operating earnings for the quarter were $0.40 per diluted share, versus $(0.26) for the same period 2001.

STFC's fourth quarter revenue was $254,335,000, up 12.7% from $225,582,000 a year earlier. Quarterly written premium increased 10.5% over the fourth quarter 2001. The Company's GAAP combined ratio for the fourth quarter was 98.5 versus 115.8 for the fourth quarter 2001.

"We believe the strong fourth quarter financial results represent a validation of the traditional State Auto focus on profitable operations and discipline in executing our underwriting, pricing, growth and expense management strategies," said STFC Chairman and CEO Bob Moone. He added, "The historically profitable State Auto business segment continues to benefit from substantial rate nourishment and emphasis on adherence to our new and renewal risk selection guidelines. It is very gratifying to note that the underwriting profiles of the Meridian segment continue to improve, which has predictably, led to far better financial performance."

For 2002, net reported earnings were $36,995,000, or $0.93 per diluted share, up from the prior year's $20,615,000 or $0.52 per diluted share, a 79.5% increase. Revenue for the year 2002 was $967,479,000, up 55.2% from $623,287,000 for 2001. This year's GAAP combined ratio of 102.4 was a solid improvement over the 107.o posted in 2001.

"We are pleased to be able to show significant growth along with improving underwriting results. As revenues approach $1 billion, our commitment is to continue to implement our proven corporate strategies to maximize shareholder value," said Mr. Moone. STFC shareholders' book value per share increased by a healthy 15.7% during 2002 to $11.89 per share.

State Auto Financial Corporation is a regional property and casualty insurance holding company engaged primarily in writing personal and commercial automobile, homeowners, commercial multi-peril, general liability, workers' compensation and fire insurance. The company currently markets its products through more than 22,000 independent agents associated with approximately 3,500 agencies in 26 states and the District of Columbia. Products are marketed primarily in the central and eastern United States, excluding New York, New Jersey and the New England states.

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in State Auto Financial's Form 10-K and Form 10-Q reports and exhibits to those reports, and include (but are not limited to) legislative changes at both the state and federal level, state and federal regulatory rule making promulgations and adjudications, class action litigation involving the insurance industry and judicial decisions affecting claims, policy coverages and the general costs of doing business, the impact of competition on products and pricing, inflation in the costs of the products and services insurance pays for, product development, geographic spread of risk, weather and weather-related events, and other types of catastrophic events. State Auto Financial undertakes no obligation to update or revise any forward-looking statements.

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