State Auto Financial Corporation

Welcome, and thank you for standing by. At this time, all parties are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Today's call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Investor Relations Director Natalie Schoolcraft. Please go ahead.

Thank you, Nicole. Good morning, everyone. Welcome to our fourth quarter 2020 Earnings Conference Call. Today I'm joined by our Chairman, President and CEO, Mike La Rocco, Senior Vice President and CFO, Steve English, Senior Vice President of Personal and Commercial Lines and Managing Director of State Auto Labs, Kim Garland, Senior Vice President of Data and Analytics, Jason Berkey, Chief Actuarial Officer Matt Rosick and Chief Investment Officer Scott Jones. After our prepared remarks, we'll open the lines for questions. Our comments today may include forward-looking statements, which by their nature involve a number of risk factors and uncertainties, which may affect future financial performance. Such risk factors may cause actual results to differ materially from those contained in our projections or forward-looking statements. These types of factors are discussed at the end of our press release, as well as in our annual and quarterly filings with the Securities and Exchange Commission. Financial schedules containing reconciliations of certain non-GAAP measures, along with other supplemental financial information, are included as part of our press release. Additional material titled Monitoring Our Progress has been made available on our website, stateauto.com, And along with the press release can be found under the investor section. Now I'll turn the call over to SDSC's chairman, president and CEO, Mike Larocco.

Thanks, Natalie. And good morning, everyone. Before I begin, I just want to say, I hope everyone on this call and your families are safe and healthy as we continue to battle this virus. I do believe we're in the final phase of this challenge, but we have many difficult days ahead of us. I could not be more proud of State Auto and our team as we look back on 2020. My pride is based on both our results and how the team responded to a year in which we had so many challenges. Let me begin with the response of this team of associates. In a year where we faced a pandemic, the reality of ongoing racial injustice, a near record level of catastrophic claims, and a divisive political election, our team did not turn away from one another. Rather, we came together. It began with our transition to a primarily work from home organization, which took place overnight. Thanks to our outstanding digital platform, not a day was lost. More importantly, our culture, putting family and community first, allowed our team to work through the personal challenges of making this change while dealing with the realities of shelter in place, ill family members, kids at home, school challenges, and more. We dealt with the issues of racial injustice head on. We had open and candid discussions about race and bias, both conscious and unconscious. They were difficult and emotional, but it was the right thing to do as our culture also requires a workplace where all are welcome and all are treated fairly. The weather required our teams to meet our customers' needs under difficult and challenging circumstances made worse by the reality of a pandemic. Words cannot properly express my pride in the way our team delivered our product, which at the end of the day is a promise to be there for our customers in their moment of need. They delivered with speed, fairness, and empathy. Now to the results. The fourth quarter really told the story of the entire year. We demonstrated where we are as a company. We made a profit and we grew. That is who we are. The first three quarters were disproportionately impacted by catastrophic weather. That happens and we accept the overall results. But we know that the fourth quarter results are the reality of 2020, a solid year. Now, when I say the fourth quarter told the story of the year, that does not mean the story did not have some bad news. In our case, it was our personal auto results. We spent the year continuing our work to get this product line back to profitability, and I'm happy with the progress you made. However, for the year, this product line was unable to return to profitability. I will say I'm confident that our personal auto product will be profitable in 2021. Kim will cover this in detail. Other than personal auto, I'm pleased with all other lines of business. Many suffered from the unusual high level of CATs, but in those cases, the underlying non-CAT loss ratios were at levels we expect will produce a profit in years where we do not experience the very high level of CATs we saw in 2020. A workers' compensation product was adversely impacted by COVID. Even with that effect, I'm pleased with where this line finished the year and how they are positioned now that we have workers' compensation on our digital platform. Our expense ratio continued to be impacted by our investment in technology. Now that we've completed the big build by getting all our products on Connect, we'll begin to see the transition to more competitive expense ratios for all our lines of business. Our vision over just five years ago is being delivered. We knew that we could not get to a competitive expense ratio without investing in technology. We did what we committed to, and now we're focused on continuing the journey to efficiency. I want to take a moment to talk about that success story in 2020, our IT department. Our strategy for the last five years has been to gain the scale needed to offer more competitive rates and to ensure the long-term viability of state auto. Everything we've done has been in support of this strategy, including a complete digital transformation. We've invested in creating an updated technology environment that is truly cloud native and has already enabled two very tangible results. First, as we've grown over the last four years, we've been able to do so without adding staff. This is a huge productivity lift, and we believe we'll continue to see these benefits As we continue to intelligently deliver technology solutions for our agents and customers on top of the platform we've built. Second, investments in our digital platform and transformation allowed us to accelerate our business success through a global pandemic. We seamlessly shifted to a work from home environment and continue to meet our agents and customers needs. Our digital transformation is far from over. And it's my expectation that the benefits of these investments and continued productivity will flow through to the bottom line. Again, in the face of this pandemic, we did not miss a single technology release all year. Not only do we deliver our final products, farm and ranch, as well as workers' compensation on Connect, but we continue to bring the digital platform to our claims, service, sales, and finance organizations. Our move to digital will be felt throughout the entire organization, not just sales, quoting, and policy issuance. We also completed several changes to our pricing models, improved our underlying architecture, and continued to improve our information security. Working remotely did not faze this team. They got even better. Finally, a quick comment on business interruption claims. Our teams, working alongside our outside counsel, have done extraordinary work Defending the requirement of a physical loss is not met by closure or virus, and the additional virus exclusion further limits the potential for coverage in those situations where the exclusion is specified. To date, the vast majority of court rules support our position, and I remain cautiously optimistic that precedent will prevail. Now, let me pass the call along to our esteemed CFO Steve English. Steve?

Okay, thanks, Mike, and good morning, everyone. SCFC reported net income for the fourth quarter of 2020, which exceeded the same period from a year ago, driven by increased net investment gain and a much improved gap combined ratio on a growing book of business. Net investment gain reflects greater unrealized gains in 4Q 2020 than a year ago, along with marginally more net realized gains. This caps a year in which catastrophe losses along with COVID-19 dominated the headlines for the first three quarters of 2020. On an operating basis, SDFC reported 66 cents income per diluted share for the fourth quarter of 2020 compared to 30 cents in the fourth quarter of 2019. On a year-to-date basis, SDFC reported 19 cents loss per diluted share compared to 59 cents income per diluted share for all of 19. Fourth quarter 2020 operating earnings reflected improved underwriting results, while year-to-date operating earnings were negatively impacted by greater losses from catastrophes, including additions to specialty cash-only loss reserves related to Hurricane Irma from 2017, as well as reduced net investment income. The fourth quarter 2020 GAAP combined ratio of 93.8 was 6.2 points better than the fourth quarter a year ago, with improvement reported in all three metrics. cat loss ratio, non-cat loss ratio, and the expense ratio. For the year, our gap combined ratio of 105.3 is 2.3 points higher than 2019. A higher full-year cat loss ratio could not be overcome by improvements in the non-cat loss ratio and the expense ratio. Fourth quarter cats at 4.3% were down 3.4 points from a year ago, which was elevated due to specialty Irma and Harvey loss development along with storms in late October of 2019 impacting Dallas-Fort Worth. For the year, our CAT loss ratio of 14.9% was 6.9 points higher than all of 2019. The non-CAT loss and ALE ratio for the fourth quarter of 2020 improved 1.8 points compared to the fourth quarter of 2019, and the GAAP expense ratio declined a point when comparing the same two periods. On a year-to-date basis, the non-CAT loss ratio improved 4.1 points with the expense ratio improving half a point. Net favorable development of prior year loss reserves in the fourth quarter of 2020 was consistent with the recorded amount in the fourth quarter of 2019 and primarily related to mortgage compensation and small commercial products. For the year, net favorable development of prior year loss and daily loss reserves totaled $51.5 million compared to $72.4 million for 2019. Specialty experienced adverse development in 2020 with 5.2 million primarily due to one claim from 2016 relating to the former E&S Casualty product line compared to 1.1 million of favorable development in 2019. Personal lines also shifted from overall net favorable development of 12.5 million in 2019 to overall net adverse development of 21.7 million in 2020. This shift was primarily related to personal auto or multiple accident years experience unexpected severity increases from bodily injury claims. Commercial lines net favorable development continues to be strong with 78.4 million in 2020 compared to 58.8 million in 2019. Workers' compensation along with small and middle market commercial products drove the favorable development. The Q4 GAAP expense ratio of 34.8 improved one point compared to the fourth quarter a year ago. On a year-to-date basis, the GAAP expense ratio of 34.9 was down half a point. For our combined personal and commercial segment results, the statutory expense ratio for the quarter of 35.3 and year-to-date 34.3 were essentially flat with 2019 levels. The expense ratios reflect increases in agent variable compensation and IT-related costs. offset by the impact of scale from growth. Overall, net written premiums grew 7.9% in the quarter and 10.7% for the year when comparing 20 to 19. Personal lines finished the year with net written premium growth of 9.4%, while commercial lines grew 12.7. Fourth quarter investment valuations continue to be on the rise with major stock indexes up for the quarter. This, along with higher fixed income values and operating income in the quarter of 29.2 million, helped finish the year with book value per share of $23 compared to $22.19 at December 31, 2019. Net investment income for the quarter and year-to-date was lower than the same periods a year ago, exiting our MLP investment class, a lower interest rate on notes receivable for State Auto Mutual, and a lower interest rate environment all contributed to this decline. To follow up on what Mike mentioned, I will provide an update on business interruption cases since we last commented regarding this during the second quarter earnings call, which at that time we had 15 active lawsuits, four of which were proposed class actions. As a reminder, we have recognized $3.4 million of loss adjustment expenses for the year ended December 31, 2020 for defending these cases. Through today, we have had 21 lawsuits filed with 14 currently pending. Of the seven no longer pending, three motions to dismiss while the remaining four suits were withdrawn by the plaintiffs. The 14 currently pending cases include three class actions. For two cases, our motion to dismiss was not granted and we have moved to targeted discovery. Cases involving situations where policies require a direct fiscal loss or damage, as well as policies that have the virus exclusion and the requirement of direct physical loss or damage. Of the approximately 2,100 business interruption claims we've received, 98% are closed. Before I turn it over to Kim Garland, I wanted to briefly point out some immaterial revisions to the 2018 and 2019 income statements, primarily for underreported seeded premiums, and to the 2019 balance sheet for premiums receivable, which was reflected last quarter, and a revision to recognize an actuarial gain, which reduced our post-retirement medical liability while increasing shareholders' equity. The actuarial gain was a result of future cost savings by moving to a Medicare Advantage funding strategy beginning in 2020 for our closed retiring medical plan. And with that, I will turn the call over to Kim.

Thanks, Steve, and good morning, everyone. Our overall personal lines and commercial lines statutory results are the following. The 4Q20 combined ratio is 94.5% compared to 97.1 for 4Q19. Personal auto added 8.9 points to the overall personal and commercial lines combined ratio for the quarter. Our 2020 combined ratio is 103.6 compared to 101.4 for 2019. Written premium growth was 7.8% for 4Q20 versus 4Q19, excluding personal auto, written premium growth for the remainder of personal and commercial lines was 16.9% for 4Q20 versus 4Q19. Written premium growth is 10.7% for all of 2020 compared to 2019. For the quarter, commercial lines had a combined ratio of 87.6 and written premium growth of 10.6%. And personal lines had a combined ratio of 99.3 and written premium growth of 6%. Our 4Q20 combined ratio for personalized and commercial lines is 2.6 points better than 4Q19. Our CAT loss ratio is 1.4 points lower than 4Q19, with personal lines being 3.9 points lower and commercial lines being 2.3 points higher. Our non-CAT loss and ALAE ratio was 0.6 points lower than 4Q19. Prior year reserve development was relatively consistent with 4Q19. The prior year accident year loss ratio impact is 0.6 points less favorable than 4Q19. Our current action year loss ratio is a bit better than 4Q19, at 1.2 points lower than 4Q19. Our expense ratio is consistent with the fourth quarter of 19, at .3 points higher than 4Q19. To understand our overall results for the quarter, one should look at our personal auto results, very poor, separately from the remainder of our results, very solid. A year ago on this call, I spoke to you about the poor condition of our personal auto business. I told you that our struggles in personal auto predominantly came from not effectively managing our non-standard personal auto business and the things that we were going to do to address this situation. We were going to shift the mix of our personal auto book of business away from non-standard and more towards preferred auto. We were going to implement a new rating structure that made us more competitive on preferred risks and more rate adequate on non-standard risks, and we were going to address underwriting leakage issues that we had identified in our personal auto business. We have done each of these things. The policies and force mix shift of our personal auto connect business has changed in the following ways. For ultra preferred and preferred, as of December 2018, 15% of our connect policies and force were ultra preferred and preferred. December 2019, 19% of our connect business was ultra preferred and preferred. And by the end of December 2020, 24% of our connect business was ultra preferred and preferred. Our PIF growth in 2020 for Ulta Preferred and Preferred Connect was 40%. For non-standard, as of December 2018, 34% of our Connect personal auto business was non-standard. By December 2019, that had dropped to 26% of our Connect business being non-standard. And by the end of December 2020, 20.5% of our Connect business was non-standard. In the year 2020, non-standard PIFs shrunk by 14%. The implementation of personal AutoConnect version 2.1 pricing model, 22 states have now been approved and implemented, and we are seeing the impact from Connect 2.1 that we anticipated. And addressing underwriting leakage issues, we have overhauled both our data verification and agency management processes this year to improve in this area. But the harsh reality of the economics of insurance is that these actions only had a small impact on our 2020 financial results, and the majority of the impact of these actions will be seen in our 2021 personal auto financial results. The other question that needs to be asked about our personal auto results is, why did state auto's 2020 personal auto combined ratio not improve when the rest of the industry's results improved in 2020? Our personal auto 2020 combined ratio of 104.7 is a point higher than our 2019 combined ratio of 103.7. This is clearly an outlier result in the industry. The driver of our outlier result is pretty straightforward. Our non-CAT loss and ALAE ratio only decreased 1.1 points in 2020, but this was made up of a prior accident year impact that was 7.5 points worse in 2020 than it was in 2019, and a current accident year impact that was 8.6 points better in 2020 than it was in 2019. We believe that the improvement in our current accident year results are in line with what other personal auto carriers are seeing, and that adverse prior year reserve development is the driver of our outlier personal auto results. I'll end this section as I opened it. Our 2020 personal auto results are horrible, but we are confident that we have identified and addressed the root causes, and our results reflect two headlines, adverse prior year development and the reality of the economics of insurance. The impact of our 2020 actions will primarily be seen in our 2021 financial results, not our 2020 results. But the facts that made our 2020 personal audit results poor also give us great optimism going forward. We believe that we have now paid the majority of the price for our past sins, and the impact of our 2020 actions will show up in our 2021 personal audit results. We enter 2021 with our personal and commercialized business positioned as a mid-90s combined ratio business in an average CAT year with a rehabilitated personal auto business having completed the build-out of all of our products on Connect and coming off our third consecutive year of double-digit growth. We are excited about how we are positioned as we enter 2021. Here are brief updates on the rest of our individual product lines. For homeowners, 4Q20 had a combined ratio of 84.5% and written premium growth of 22.6%, a terrific result. We had a CAT loss and ALAE ratio of 6.6% compared to 15.5% in 4Q19. Growth continues to be strong in homeowners, with homeowners becoming our largest product line after a third straight year of 20% growth. A third rate increase in a 13-month period in Texas is now beginning to slow our growth in Texas as expected, and we continue to focus on accelerating our growth in other states to continue balancing our geographic footprint. Commercial auto. Our commercial auto results continue to be terrific, with four Q20 results of a combined ratio of 99.3 and written premium growth of 39.9%. 2020 represented the second consecutive year of plus 40% growth with a combined ratio for 2020 of 95.0%. The commercial auto expense ratio continues to improve as we achieve scale in this product line, with a 33.8% 2020 expense ratio, representing a 6.3 point improvement over 2019. It was a historically great year for our commercial auto product line. Small commercial, 4Q20, had a combined ratio of 55.5%, with 20.4 points of favorable prior year development, written premium growth of 6.6%, and PIF growth rate of 12%, another terrific result. Growth continues to accelerate in our small commercial product line, and the combination of accelerating growth and our more efficient platform produced a 2020 expense ratio of 35.2%, representing a 3.4 point improvement over 2019. Our small commercial business is very well positioned for the future. Middle market had a combined ratio for the quarter of 101.5% with 17.9 points of CATs in 4Q20 compared to 7.0 CAT loss ratio in 4Q19, and a written premium growth rate of 1.5%. There are a number of moving pieces with respect to our middle market business. It was a horrific CAT year in 2020 with a CAT loss and ALAE ratio of 27.4%, which is 21.3 points higher than 2019. An excellent non-CAT loss ratio in 2020 of 46.1, our best middle market non-CAT loss ratio in six years. A continuing slowdown in middle market submissions. Agents are telling us that COVID has made middle market policyholders more hesitant to move carriers until things return to a more normal state. Our 4Q20 middle market new business written premium declined 40% from a year ago, and our 2020 middle market new business written premium is flat from a year ago. An expense ratio of 40.5%, relatively flat versus the 2019 expense ratio of 40.1% as 2020 was another year of heavy investment in Middle Market Connect for state rollouts. Middle Market Connect is now live in 16 states with the remainder of states to be rolled out in the first half of 2020. Our middle market business is currently well positioned from a profit perspective. But we need to leverage Middle Market Connect to reverse the COVID-driven decline in submissions to grow and gain expense ratio benefit. Workers' compensation. Workers' comp had a combined ratio for the quarter of 99.0% with 53.1 points of favorable prior year development and a written premium growth of minus 24%. Workers' comp is another product line with a number of moving pieces. A poor current accident year loss ratio for 2020 of 78.5%, 8.8 points higher than our current accident year loss ratio for 2019 of 69.7. This higher loss ratio has been driven by COVID losses from nursing homes. Entering 2020, nursing homes were our largest class of business in workers' compensation. In May of 2020, we made the decision to non-renew our nursing home workers' compensation business. but that process takes a year and we have still been exposed to COVID workers' comp losses from nursing homes this year. Prior accident year loss ratio for 2020 of minus 35.1%, 8.3 points of more favorable reserve development than we saw in 2019. A 2020 workers' comp expense ratio of 47.6%, which is 12.1 points higher than our 2019 expense ratio. This expense ratio increase was driven by two things. 2020 being the highest investment year for workers' comp connect and workers' compensation premium continuing to shrink. 2020 workers' comp written premium shrank by 18% versus 2019. This was driven by the non-renewal of our nursing home business and the completion of the runoff of our monoline small workers' comp business written through wholesalers, which was a segment of business that historically lost money for state auto. In 4Q20, the first Workers' Comp Connect states launched. For the first time in over a decade, Workers' Comp is now on the same system as the rest of our Workers' Comp products. After years of hard work, getting out of unprofitable segments of business, navigating a soft workers' compensation market, and building the Workers' Comp Connect system, our workers' compensation business is now positioned to start their profitable growth journey. I am incredibly excited about the future of our Workers' Comp business. For farm and ranch, 4Q20 had a combined ratio of 109.8% and written premium growth at 34.1%. The progress of our farm and ranch business continues to be terrific. 2020 had a combined ratio of 105 with 16 points of CAT losses, which is 11.1 points higher than the 2019 CAT loss ratio, and 2020 written premium growth at 28.4%. On a group direct written premium basis, our Farm and Ranch product line broke the $100 million barrier in 2020. The 2020 non-CAT loss and ALAE ratio of 41.2% was under 45 for the fifth time in the last six years. The 2020 expense ratio of 44% should start to decline now that the Farm and Ranch Connect investment has been completed. Farm and Ranch had a new business written premium growth rate of 150.5% in 2020. Farm and Ranch entered eight new states in 2020, and Farm and Ranch Connect is now implemented in 27 states. An absolutely great performance by our Farm and Ranch team in 2020. We entered 2021 well positioned in every single one of our product lines. And with that, we'll open the lines for questions.

As a reminder, in order to ask an audio question, please press star and the number one on your telephone keypad. We'll pause for just a moment. The first question will come from the line of Marla Backer. Marla Backer Thank you.

So, can you provide any kind of color on severity increases that we're seeing? And I think that's a trend we're seeing across the board. Can you talk about, you know, what you think behind it and whether you see it as something that is short-term or sort of something we should think of as a component of the industry?

Tim, you want to start?

Yeah, so I'm going to assume this is a personal auto question, and if it's not, you can reframe me.

I'm sorry, yes, I should have specified.

That's fine. Yeah, we're seeing severity up, but not abnormally high. I mean, we're seeing some severity increases, but clearly dwarfed by the decline in frequency. So I think, again, it varies by coverage. I think collision severities are pretty stable from our perspective. We're seeing sort of more of the severity increases in bodily injury. Will they continue to stay at those levels? Maybe. I think the biggest unknown at this point is There's just been a slowdown in the court system. And the longer BI claims stay open, the sort of more expensive they get. So if the speed of that cycle declines, we may see bodily injury severities, sort of the rate of increase go down a bit. I don't know if you want to add anything, Mike.

Yeah, no, I think you really covered it. But I will add, just And it really goes both to auto and, quite frankly, all of our coverages. I think we're going to continue to see some inflationary pressure. I know that sounds strange because we're not particularly suffering there. But, you know, the cost of paint and materials and, you know, on the repair side of our business, whether it's on the property side or whether it's automobiles, I think it really bears worth watching, so I think your question is super important, and obviously it's something we keep a very close eye on. And coming out of COVID, there's just going to be a whole lot of things changing, and it really bears watching. But, you know, obviously Kim hit the nail on the head on the auto side. Appreciate the question.

Okay. Thank you for that answer. In terms of what we saw in 2020 with very severe weather patterns in certain markets, we're continuing to see unusual and very harsh weather into 2021. Does this in any way impact your strategy in terms of writing new business where you might put the brakes on in the near term or not?

Yeah, I'll start and then Kim could agree or quite frankly disagree. That's what's lovely about us. But again, another important question I want to having opened with that I wanted to say that, you know, we're obviously monitoring things right now with with a very severe winter weather we're experiencing, particularly for the folks in Texas and We spent some time making sure our associates are safe and we're reaching out to our customers and hoping they're safe. This is really a very severe event for people that aren't accustomed to this and the power outages. So we're asking prayers going out to everybody to be safe and I know our team is all over this situation and watching it carefully. Having said that, my view is strategically other than what Kim has already said, which is that we would like our property business to be more geographically diverse. And our position in a state like Texas, while it's our largest property state, we're not that big in Texas. And so our problem isn't necessarily the size of our book in Texas. It's the fact that we need more business in Arizona and Illinois and Colorado, Kentucky, and all the other states that we're in. Now having said that, the weather patterns are something that we watch very carefully, and so it will affect kind of what we consider as cat loads and how we that, but that's something that Kim could probably address, so I'll turn it over to him.

Yeah, I think Mike nailed it on the head, and how we think about it is just are we doing a good job managing cat risk, weather risk, those sorts of things. And so he mentioned one of like, don't be over-concentrated, have spreader risk. And so the discussions we've had over the past few quarters about what we're doing in Texas, especially with rate increases, address that. I would say, you know, you asked sort of if it changed our strategy. Probably the biggest changes that I think is, the other part of this is you have to price the risk appropriately, and so you have to price the weather load and the cat load. And so I think, you know, we will continue to see, like, reinsurance costs go up, and that gets loaded into the price that we charge consumers. So that's going to put upward pressure on rates. And then every year, we like everybody else, when we set rates, we put in how much do we load in for cats. And given pricing is both art and science, we probably smidged up the cat load a little more than maybe the math said this year, just to have a little extra margin of safety. I think those are the pitfalls. Two biggest things we probably did strategy-wise are just sort of we upped the catload in our rates a little bit.

Okay, thanks very much for those answers.

Thank you.

The next question will come from the line of Ron Bobman.

Hi, thanks a lot, and congrats on the quarter. I had a question about sort of the current, you know, bitter cold and sort of snowstorm that's across the south and particularly as texas could you um uh because you've got you know obviously a lot of experience could you talk about the types of claims the industry is going to sort of experience do you think it's more of a personal lines event typically when you have severe weather of this nature in this part of the country be curious to get your sort of a little bit of a crystal ball um not necessarily state autos you know unique exposure but sort of the broader insurance industry. Thanks.

Yeah, I'll start, and then Kim or Steve can tag on. I literally, right before this call, got off a conversation with our head of claims and risk engineering. And in events like this, I think this is going to be much more of a personal lines effect. That does not mean that there won't be some impact, obviously, on small businesses and even larger size commercial risks. But these types of events where you get a lot of ice and, quite frankly, wind and heavy snow, the impact on roofs and the impact on the home structures I think tends to be a little bit more significant. I can tell you that I can give you some state auto information in that I can tell you that this will definitely be much more of a personal lines event for us. I know enough at this point. The challenge that we face in events like this is we just can't get into the area and start helping our customers, which is super frustrating for our team. And the key is really power outages, and that's going to create other losses through the power as well. These are broad strokes, but I appreciate the question, and I can say that my position and my view is that it'll definitely impact personal lines much more than commercial lines. But Kim or Steve, do you guys want to add to that at all?

This is Steve. I don't have anything to add to that. Yeah. Clearly more a personal lines event from what we're seeing so far.

And when you say personal lines, because I You mentioned homeowners. So within personal lines, is it the kind of thing where basically people are sort of hunkered down at home and the cars are probably not that in any great effect impact? It's much more of a homeowners cohort within personal lines? Is that what you're saying without specifically saying?

Yeah, I mean, you know, it's always hard to, you know, again, early on assume a whole lot that tends to happen in the early part of the storm is You get some rather significant amount of auto losses because people are trying to see where they can hunker down, right? So there's a lot of ice and very difficult driving conditions. But in a case like this where you have this kind of ongoing weather event, in most cases people are exactly as you suggest. They're not going anywhere. And the event really and the trauma of the event happens when they have issues with their homes, and that's where the power outages add a high level of complexity and challenge to folks. And it's a very difficult situation. But, yes, I think it moves from early days of being some auto losses to becoming much more of a residential challenge.

Okay. Hey, thanks for the color. Best of luck and be well. Thank you.

Again, to ask an audio question, you may do so by pressing star and the number one on your telephone keypad. We are showing no further audio questions at this time.

Okay, Nicole, thank you very much for that. Natalie, you want to close us out then?

Yeah, Mike. Thanks, everyone, for your questions, for participating in our conference call, and for your continued interest in and support of State Auto Financial Corporation. We look forward to speaking with you again on our first quarter earnings call, which is currently scheduled for Thursday, May 6, 2021. Thank you, and have a wonderful day. Thank you.

That concludes today's fourth quarter 2020 earnings conference call. Thank you for participating. You may disconnect at this time.