“Our policyholders and shareholders suffered historic losses primarily from the tragic storms in April and May,” says Bob Restrepo, president, chairman and chief executive of State Auto, in a statement.

The months were laden with devastating thunderstorms and tornadoes. Restrepo says State Auto has closed about 93 percent of the 35,000 claims incurred.

To deal with historic loss trends, State Auto turned to the reinsurance market for a homeowners' quota-share treaty because price increases of 30 percent over the last three years haven't helped.

The homeowners' quota share reinsurance arrangement and amended pooling agreement was to blame for a 54.3 percent decrease in 2011 fourth-quarter net written premium because ceded unearned premium reserve amounts transferred in the two transactions are reflected in net written premium, State Auto says.

The company reports 2011 net income in the fourth quarter of $100.6 million compared to $37.6 million during the same three months in 2010.

“Large loss activity moderated as our new casualty-claim process has matured,” Restrepo says. “Price per exposure increased in personal and specialty lines and remained flat in standard commercial, but we expect to see modest increases across the board for 2012, with double-digit increases in homeowners.”

The chief executive says claim actions in property, auto physical damage, casualty, and workers' compensation should improve ex-catastrophe loss ratios.