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CEO Set to Retire From Columbus, Ohio-Based State Auto Financial

Posted on: Thursday, 12 May 2005, 21:00 CDT

May 12--Midway through State Auto Financial Corp.'s annual meeting yesterday, Chairman and Chief Executive Robert H. Moone told shareholders the company is making plans to fill key leadership positions.

But it wasn't until the end of the meeting that shareholders realized his job is among those that will need to be filled.

Moone, chief executive since 1999, surprised shareholders and employees by announcing plans to retire, effective at next year's annual meeting.

An emotional Moone said State Auto, which he joined in 1970, has been a major part of his life, but he and his wife, Anna, realized that there were other things they wanted to do.

''Together, we have talked and prayed about the future, and, as you've likely guessed by now, concluded that we ought to take advantage of the good health we enjoy as well as some of those remaining God-given days doing things that a pretty hectic work schedule just won't allow,'' said Moone, standing next to his wife.

Moone, 61, said he gets up at 4:45 a.m. -- a habit, he quipped, that won't be hard to break.

After the meeting, Moone said the board will conduct a search for his replacement that likely will include internal and external candidates.

His decision to leave was ''strictly personal,'' he said.

Board member William Lhota said shareholders have benefited from Moone's leadership, noting that a $100 investment in State Auto stock when he became CEO would be worth about $300 today.

''I know that the 14 folks over there sleep better at night knowing that we have someone like you running the operation,'' Lhota said, referring to State Auto board members.

Moone's next-to-last year at the helm was a good one, shareholders were told.

The Columbus-based property and casualty insurer earned a record $110 million on $1.1 billion in revenues in 2004. It accomplished that despite paying out $52.8 million in claims from the Florida hurricanes.

It has posted record profits in eight of the past 10 quarters, including this year's first quarter.

Moone said State Auto aims for another strong year in 2005 but faces challenges, including a market where competitors are slashing prices to attract customers and scandals that have tainted the industry.

He said State Auto will not write policies at unprofitable prices to gain market share.

Moone also said that State Auto has no plans to change any of its profit-sharing or profit-based incentive programs, despite regulator scrutiny of industry sales practices.

State Auto shares profits with independent agents who produce profitable business for the company but doesn't pay agents upfront to steer business its way, he said.

The latter practice ran afoul of probes by New York Attorney General Eliot Spitzer and other regulators.

Most of what Spitzer has uncovered involved insurance sold through brokers, who are paid by policyholders to find coverage for them. State Auto uses independent agents, who are paid by the company.

''We think these incentives are part of the free-enterprise system, so we have no intention of, and feel no need or pressure to change any of those profit-based programs,'' Moone said.

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Copyright (c) 2005, The Columbus Dispatch, Ohio

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STFC,

Source: The Columbus Dispatch, Ohio

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