Form 11-K
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 11-K

 

 

(Mark One)

x

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

OR

 

¨

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 000-19289

 

 

 

A.

Full title of the plan and address of the plan, if different from that of the issuer named below:

State Auto Insurance Companies

Amended and Restated

Directors Deferred Compensation Plan

 

B.

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

State Auto Financial Corporation

518 East Broad Street

Columbus, Ohio 43215-3976

 

 

 


Table of Contents

REQUIRED INFORMATION

See the accompanying financial statements for the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan as of December 31, 2010 and 2009, and for the years ended December 31, 2010, 2009 and 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan

      By:   /s/ Steven E. English
        Steven E. English
        Chief Financial Officer of State Auto Financial Corporation, State Automobile Mutual Insurance Company and State Auto Property & Casualty Insurance Company
      By:   /s/ James A. Yano
        James A. Yano
        Vice President, Secretary and General Counsel of State Auto Financial Corporation, State Automobile Mutual Insurance Company and State Auto Property & Casualty Insurance Company

Date: March 30, 2011


Table of Contents

INDEX

 

     Page  

Report of Independent Registered Public Accounting Firm

     1   

Audited Financial Statements:

  

Statements of Net Assets Available for Benefits

     2   

Statements of Changes in Net Assets Available for Benefits

     3   

Notes to Financial Statements

     4 - 17   


Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors

State Auto Financial Corporation

We have audited the accompanying statements of net assets available for benefits of the State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan (the Plan), as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years ended December 31, 2010, 2009 and 2008. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects the net assets available for benefits of the Plan as of December 31, 2010 and 2009, and the changes in net assets available for benefits for the years ended December 31, 2010, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.

/s/ Clark, Schaefer, Hackett & Co.

March 30, 2011

Columbus, Ohio

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Statements of Net Assets Available for Benefits

 

 

 

     December 31  
     2010      2009  

Assets

     

Investments, at fair value:

     

Shares of registered investment companies (cost $2,302,249 and $1,618,965, respectively)

   $ 2,432,485         1,828,815   

Interest-bearing cash

     9,436         9,434   

Affiliated Stock (cost $304,549)

     322,013         —     
                 

Total investments

     2,763,934         1,838,249   

Net assets available for benefits

   $ 2,763,934         1,838,249   
                 

See accompanying notes.

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Statements of Changes in Net Assets Available for Benefits

 

 

 

     Year Ended December 31  
     2010     2009     2008  

Investment income (loss):

      

Dividends

   $ 68,455        39,632        28,941   

Unrealized (loss) gain

     (62,149     470,380        (577,110

Realized gain (loss)

     306,404        (123,251     81,940   
                        

Total investment income (loss)

     312,710        386,761        (466,229

Contributions:

      

Participant

     307,055        137,502        128,938   

Company

     315,000        315,000        350,000   
                        

Total contributions

     622,055        452,502        478,938   

Deductions:

      

Benefit payments

     9,080        4,844        520,772   
                        

Total deductions

     9,080        4,844        520,772   

Net increase (decrease)

     925,685        834,419        (508,063

Net assets available for benefits:

      

Beginning of year

     1,838,249        1,003,830        1,511,893   
                        

End of year

   $ 2,763,934        1,838,249        1,003,830   
                        

See accompanying notes.

 

3


Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements

December 31, 2010

 

 

1. Description of the Plan

Organization

The State Auto Insurance Companies Amended and Restated Directors Deferred Compensation Plan (the “Plan”) became effective on August 1, 1995, was amended and restated in its entirety effective as of March 1, 2001, and was further amended effective as of December 1, 2005 (First Amendment), January 1, 2009 (Second and Third Amendments), and November 1, 2010 (Fourth Amendment). The Plan provides members of the Boards of Directors of State Automobile Mutual Insurance Company (“State Auto Mutual”) and its affiliates (collectively, the “Company” or the “State Auto Insurance Companies”) a retirement savings plan in which to defer the payment of director and committee meeting fees.

In 2010, the Plan was amended to include, among other things, the following change:

 

   

For participants who are members of the Board of Directors of State Auto Financial Corporation (“STFC”), an affiliate of State Auto Mutual, a fund comprised of STFC common stock (“Affiliated Stock”) was added as an investment option under the Plan.

In 2009, the Plan was amended to include, among other things, the following changes:

 

   

A requirement was added that a participant must provide at least 30 days’ advance written notice to the Company of his or her intention to retire and receive retirement benefits under the Plan.

 

   

A provision was added to provide that an additional annual cash contribution be made by the Company to each of the members of the Board of Directors of State Auto Mutual in the amount of $35,000, or such lesser or greater amount as determined by the Company, at its discretion.

 

   

Provisions were added to bring the Plan into compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder.

The benefits provided to participants under the Plan are paid from the Company’s general assets. The Plan is intended to be an unfunded Plan for purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”) and is, therefore, exempt from certain ERISA requirements. Each participant’s right to benefits under the Plan are equivalent to the rights of any unsecured creditor of the Company.

Participants must enroll within 30 days after becoming eligible to participate. For subsequent years, participants must enroll prior to the beginning of each new plan year.

Contributions

Participants are permitted to defer on a pre-tax basis (a) from 10% to 100% of his or her director fees in the calendar year and/or (b) 0% or 100% of committee meeting fees in the calendar year. In addition, for each of the members of the Board of Directors of State Auto Mutual, State Auto Mutual makes an annual cash contribution in the amount of $35,000, or such lesser or greater amount as determined at State Auto Mutual’s discretion.

Vesting

Each participant is fully vested in his or her contributions and any State Auto Mutual discretionary contributions.

Participant Accounts

Investment funds available under the Plan are merely devices used to calculate gains and losses on the amounts deferred by Plan participants. No participant has any rights or interests in any particular funds, securities or property of the Company or the trust described in Note 6, or in any investment vehicle in which deferrals are deemed to be invested, by virtue of any investment election. Each deferral account, however, is credited or charged in accordance with the Plan with gains and losses as if the participant in fact had made a corresponding actual investment. The Directors of STFC have the option to purchase Affiliated Stock.

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

Payment of Benefits

The balance of each deferral account will be distributed upon retirement or termination of a participant from the Board of Directors of the Company. Payments will be made in cash and paid in 60 or 120 monthly installments, except for amounts deferred and fully vested prior to December 31, 2004, which can be distributed in alternative payment options as elected by the participant. The Company must receive at least 30 days written notice of the participant’s intention to retire and receive retirement benefits.

2. Significant Accounting Policies

Basis of Presentation

The accounting records of the Plan are maintained in conformity with U.S. generally accepted accounting principles.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Valuation of Investments and Related Investment Income

The investments of the Plan consisted of shares of registered investment companies, interest-bearing cash, and Affiliated Stock. The Plan’s investments are stated at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. See Note 3 for discussion on fair value measurements.

Investment income, including appreciation and depreciation in fair value of investments, is allocated to participant accounts daily based upon the ratio of each participant’s account to the total fund balance. Dividend income is recorded on the ex-dividend date. Realized gains and losses on the sale of securities are determined based on the average cost method.

Benefit Payments

Benefit payments are recognized when paid.

Administrative Expenses

Administrative expenses are paid by the Company.

Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the Plan’s statements of net assets available for benefits.

Adoption of New Accounting Pronouncements

Improving Disclosures about Fair Value Measurements

In January 2010, the FASB issued guidance to improve the disclosures related to fair value measurements. The new guidance requires expanded fair value disclosures, including the reasons for significant transfers between Level 1 and Level 2 and the amount of significant transfers into each level disclosed separately from transfers out of each

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

level. For Level 3 fair value measurements, information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements shall be presented separately on a gross basis, rather than as one net number. In addition, clarification is provided about existing disclosure requirements, such as presenting fair value measurement disclosures for each class of assets and liabilities that are determined based on their nature and risk characteristics and their placement in the fair value hierarchy (that is, Level 1, 2, or 3), as opposed to each major category of assets and liabilities, as required in the previous guidance. Disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements are required for fair value measurement that fall in either Level 2 or Level 3. The Company adopted this new guidance effective January 1, 2010, except for the gross presentation of purchases, sales, issuances and settlements in the Level 3 reconciliation, which is effective for annual and interim reporting periods beginning after December 15, 2010. The adoption of the new guidance effective January 1, 2010 had no effect on the Plan’s financial statements.

3. Fair Value Measurements

Below is the fair value hierarchy that categorizes into three levels the inputs to valuation techniques that are used to measure fair value:

 

   

Level 1 includes observable inputs which reflect quoted prices for identical assets or liabilities in active markets at the measurement date.

 

   

Level 2 includes observable inputs for assets or liabilities other than quoted prices included in Level 1, and it includes valuation techniques which use prices for similar assets and liabilities.

 

   

Level 3 includes unobservable inputs which reflect the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

The following is a description of the valuation methods used for assets measured at fair value.

 

   

Registered investment companies: Registered investment companies are public investment vehicles valued using net asset value (“NAV”) provided by the administrator of the mutual fund. The NAV is an unadjusted quoted price on an active market and classified within Level 1 of the fair value hierarchy.

 

   

Interest-bearing cash: The carrying value approximates fair value and is classified within Level 1 of the fair value hierarchy.

 

   

Affiliated Stock: The fair value is based on the unadjusted closing price reported on the active market on which the security is traded and is classified within Level 1 of the fair value hierarchy.

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

The following tables reflect the Plan’s investments within the fair value hierarchy at December 31, 2010 and 2009:

 

2010    Total      Quoted prices in
active markets for
identical assets

(Level 1)
     Significant
other observable
inputs
(Level 2)
     Significant
unobservable
inputs

(Level 3)
 

Registered investment companies:

           

Large cap equity investments

   $ 530,471         530,471         —           —     

Mid cap equity investments

     28,252         28,252         —           —     

International equity investments

     673,912         673,912         —           —     

Blended fund investments

     738,358         738,358         —           —     

Income bond investments

     461,492         461,492         —           —     
                                   

Total registered investment companies

     2,432,485         2,432,485         —           —     

Interest-bearing cash

     9,436         9,436         —           —     

Affiliated Stock

     322,013         322,013         —           —     
                                   

Total investments

   $ 2,763,934         2,763,934         —           —     
                                   
2009    Total      Quoted prices in
active markets for
identical assets

(Level 1)
     Significant
other observable
inputs
(Level 2)
     Significant
unobservable
inputs

(Level 3)
 

Registered investment companies:

           

Large cap equity investments

   $ 511,292         511,292         —           —     

Mid cap equity investments

     13,833         13,833         —           —     

International equity investments

     411,892         411,892         —           —     

Blended fund investments

     560,564         560,564         —           —     

Income bond investments

     331,234         331,234         —           —     
                                   

Total registered investment companies

     1,828,815         1,828,815         —           —     

Interest-bearing cash

     9,434         9,434         —           —     
                                   

Total investments

   $ 1,838,249         1,838,249         —           —     
                                   

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

4. Participant Accounts

Participant balances for all funds are maintained in shares. Share values are determined on a periodic basis. At December 31, 2010 and 2009, there were 13 participants in the Plan with contributions in one or more of the following funds. The total number of participants in the Plan is less than the sum of the number of participants set forth in the following table because each participant may make contributions to more than one fund. The total number of shares and share values as of December 31, 2010 and 2009, by fund, were as follows:

2010

Investment Options

 

     Total Number
of Shares
     Net Asset
Share Value
     Number of
Participants
 

Registered Investment Company

        

Calamos Growth A

     5,015         53.38         2   

FID Contrafund K

     2,283         67.70         2   

FID Diversified Intl K

     15,088         30.12         3   

FID Freedom K 2005

     8,119         12.44         2   

FID Freedom K 2010

     12,323         12.68         2   

FID Freedom K 2015

     30,169         12.72         4   

FID Freedom K 2020

     7,380         13.19         1   

FID Intermed Bond

     5,863         10.55         2   

Harbor Intl Inst

     3,625         60.55         2   

JPM Mid Cap Value A

     1,049         23.13         2   

PIM Total RT Inst

     36,833         10.85         3   

Spartan US EQ Index

     2,432         44.48         1   

VANG Mid Cap IDX

     197         20.31         1   
              

Total Registered Investment Company

     130,376         

Interest Bearing Cash

        

Fidelity US Govt Bond

     9,436         1.00         1   
              

Total Interest Bearing Cash

     9,436         

Affiliated Stock

        

State Auto Financial Corporation

     18,485         17.42         1   
              

Total Affiliated Stock

     18,485         
              

Total Investments

     158,297         
              

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

2009

Investment Options

 

     Total Number
of Shares
     Net Asset
Share Value
     Number of
Participants
 

Registered Investment Company

        

Calamos Growth A

     7,672         44.46         2   

FID Contrafund

     1,807         58.28         2   

FID Diversified Intl

     14,710         28.00         2   

FID Freedom 2005

     12,368         10.03         2   

FID Freedom 2010

     6,889         12.51         1   

FID Freedom 2015

     20,805         10.42         3   

FID Freedom 2020

     10,641         12.55         2   

FID Intermed Bond

     997         10.15         2   

JPM Mid Cap Value A

     729         18.98         1   

PIM Total RT Inst

     29,733         10.80         2   

Spartan US EQ Index

     1,645         39.43         1   
              

Total Registered Investment Company

     107,996         

Interest Bearing Cash

        

Fidelity US Govt Bond

     9,434         1.00         1   
              

Total Interest Bearing Cash

     9,434         
              

Total Investments

     117,430         
              

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

5. Investments

The Plan’s investments and related changes at December 31, 2010, 2009 and 2008 and for the years then ended, were as follows:

 

2010    Number of
Shares
     Fair Value      Dividends      Realized
Gain (loss)
    Unrealized
Gain (loss)
    Contributions      Benefit
Payments
 

Registered Investment Companies

                  

Calamos Growth A

     5,015       $ 267,713       $ —         $ 41,747      $ 32,041      $ 63,604       $ —     

FID Contrafund

     —           —           163         32,802        (16,434     20,625         —     

FID Contrafund K

     2,283         154,589         894         —          4,343        6,875         —     

FID Diversified Intl

     —           —           —           94,805        (56,895     46,250         —     

FID Diversified Intl K

     15,088         454,437         8,999         (320     1,544        20,040         —     

FID Freedom 2005

     —           —           630         23,502        (15,051     35,000         (7,489

FID Freedom 2010

     —           —           895         21,712        (11,049     35,000         —     

FID Freedom 2015

     —           —           2,048         55,864        (28,933     106,250         —     

FID Freedom 2020

     —           —           459         27,214        (20,912     36,250         —     

FID Freedom K 2005

     8,119         101,000         1,857         6        84        —           (1,591

FID Freedom K 2010

     12,323         156,260         2,914         —          612        —           —     

FID Freedom K 2015

     30,169         383,753         7,425         —          1,808        2,500         —     

FID Freedom K 2020

     7,380         97,345         1,825         —          1,105        6,250         —     

FID Freedom K 2025

     —           —           —           243        —          10,000         —     

FID Intermed Bond

     5,863         61,852         1,210         —          844        39,438         —     

Harbor Intl Inst

     3,625         219,476         3,114         —          15,879        17,500         —     

JPM Mid Cap Value A

     1,049         24,260         187         —          3,366        6,875         —     

PIM Total RT Inst

     36,833         399,639         32,107         8,829        (3,887     136,063         —     

Spartan US EQ Index

     2,432         108,169         1,796         —          11,722        29,785         —     

VANG Mid Cap IDX

     197         3,992         41         —          200        3,750         —     
                                                            

Total Registered Investment Companies

     130,376         2,432,485         66,564         306,404        (79,613     622,055         (9,080

Interest Bearing Cash

                  

Fidelity US Govt Bond

     9,436         9,436         2         —          —          —           —     
                                                            

Total Interest Bearing Cash

     9,436         9,436         2         —          —          —           —     

Affiliated Stock

                  

State Auto Financial Corporation

     18,485         322,013         1,889         —          17,464        —           —     
                                                            

Total Affiliated Stock

     18,485         322,013         1,889         —          17,464        —           —     
                                                            

Total Assets Held For Investment

     158,297       $ 2,763,934       $ 68,455       $ 306,404      $ (62,149   $ 622,055       $ (9,080
                                                            

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

2009    Number of
Shares
     Fair Value      Dividends      Realized
Gain (loss)
    Unrealized
Gain (loss)
     Contributions      Benefit
Payments
 

Registered Investment Companies

                   

Calamos Growth A

     7,672       $ 341,105       $ —         $ (55,830   $ 163,161       $ 64,375       $ —     

FID Contrafund

     1,807         105,321         357         (9,920     33,383         —           —     

FID Diversified Intl

     14,710         411,892         5,057         (62,523     154,197         37,500         —     

FID Freedom 2005

     12,368         124,050         3,618         2,769        16,310         35,000         (4,844

FID Freedom 2010

     6,889         86,176         2,758         5,245        12,317         70,000         —     

FID Freedom 2015

     20,805         216,789         6,208         3,732        30,271         87,500         —     

FID Freedom 2020

     10,641         133,549         3,790         2,193        21,435         52,500         —     

FID Intermed Bond

     997         10,117         290         —          764         9,063         —     

JPM Mid Cap Value A

     729         13,833         197         (7,919     10,581         —           —     

PIM Total RT Inst

     29,733         321,117         16,274         2,481        12,828         69,688         —     

Spartan US EQ Index

     1,645         64,866         1,048         (3,479     15,133         26,876         —     
                                                             

Total Registered Investment Companies

     107,996         1,828,815         39,597         (123,251     470,380         452,502         (4,844

Interest Bearing Cash

                   

Fidelity US Govt Bond

     9,434         9,434         35         —          —           —           —     
                                                             

Total Interest Bearing Cash

     9,434         9,434         35         —          —           —           —     
                                                             

Total Assets Held For Investment

     117,430       $ 1,838,249       $ 39,632       $ (123,251   $ 470,380       $ 452,502       $ (4,844
                                                             

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

2008    Number of
Shares
     Fair Value      Dividends      Realized
Gain (loss)
    Unrealized
Gain (loss)
    Contributions      Benefit
Payments
 

Registered Investment Companies

                  

Calamos Growth A

     5,809       $ 169,400       $ —         $ —        $ (143,465   $ 58,032       $ —     

FID Contrafund

     1,801         81,502         3,801         57,504        (122,928     —           (225,563

FID Diversified Intl

     12,908         277,661         3,962         31,674        (272,641     45,478         (123,689

FID Equity Income

     —           —           3,778         2,836        (19,456     8,334         (170,238

FID Freedom 2005

     8,486         71,197         2,456         —          (1,259     70,000         —     

FID Freedom 2010

     6,877         71,250         2,519         —          (1,269     70,000         —     

FID Freedom 2015

     10,406         89,078         3,375         (1,939     (1,811     87,500         —     

FID Freedom 2020

     5,336         53,631         1,654         —          (523     52,500         —     

FID Puritan

     —           —           —           27        (63     —           (439

JPM Mid Cap Value A

     715         10,974         515         (8,436     (4,547     1,000         —     

PIM Total RT Inst

     14,246         144,450         6,712         —          (5,872     58,063         —     

Spartan US EQ Index

     793         25,288         158         274        (3,276     28,031         (843
                                                            

Total Registered Investment Companies

     67,377         994,431         28,930         81,940        (577,110     478,938         (520,772

Interest Bearing Cash

                  

Fidelity US Govt Bond

     9,399         9,399         11         —          —          —           —     
                                                            

Total Interest Bearing Cash

     9,399         9,399         11         —          —          —           —     
                                                            

Total Assets Held For Investment

     76,776       $ 1,003,830       $ 28,941       $ 81,940      $ (577,110   $ 478,938       $ (520,772
                                                            

 

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STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

The Plan’s unrealized appreciation (depreciation) at December 31, 2010, 2009, and 2008, were as follows:

 

    

Unrealized Gain (loss)

 
     Beginning Balance     Net Change     Ending Balance  

2008

   $ 316,578        (577,110     (260,532

2009

     (260,532     470,380        209,848   

2010

   $ 209,848        (62,149     147,699   

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

The Plan’s net realized gains and losses were as follows for the years ended December 31, 2010, 2009 and 2008:

 

2010    Aggregate
Proceeds
    Cost     Net Realized
Gains (Losses)
 

Investment Options

      

Calamos Growth A

   $ 206,149        164,402        41,747   

FID Contrafund

     142,477        109,675        32,802   

FID Diversified Intl

     516,051        421,246        94,805   

FID Diversified Intl K

     90,087        90,407        (320

FID Freedom 2005

     168,132        144,630        23,502   

FID Freedom 2010

     152,734        131,022        21,712   

FID Freedom 2015

     372,019        316,155        55,864   

FID Freedom 2020

     176,560        149,346        27,214   

FID Freedom K 2005

     1,591        1,585        6   

FID Freedom K 2025

     10,243        10,000        243   

PIM Total RT Inst

     100,000        91,171        8,829   

Spartan US EQ Index

     (941     (941     —     
                        

Total

   $ 1,935,102        1,628,698        306,404   
                        

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

2009    Aggregate
Proceeds
     Cost      Net Realized
Gains (Losses)
 

Investment Options

        

Calamos Growth A

   $ 231,854         287,684         (55,830

FID Contrafund

     23,523         33,443         (9,920

FID Diversified Intl

     205,168         267,691         (62,523

FID Freedom 2005

     121,189         118,420         2,769   

FID Freedom 2010

     157,176         151,931         5,245   

FID Freedom 2015

     193,353         189,621         3,732   

FID Freedom 2020

     115,946         113,753         2,193   

Fidelity US Govt Bond

     29,812         29,812         —     

JPM Mid Cap Value A

     11,775         19,694         (7,919

PIM Total RT Inst

     352,659         350,178         2,481   

Spartan US EQ Index

     50,367         53,846         (3,479
                          

Total

   $ 1,492,822         1,616,073         (123,251
                          

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

2008    Aggregate
Proceeds
     Cost      Net Realized
Gains (Losses)
 

Investment Options

        

FID Contrafund

   $ 242,453         184,949         57,504   

FID Diversified Intl

     161,631         129,957         31,674   

FID Equity Income

     184,182         181,346         2,836   

FID Freedom 2015

     16,772         18,711         (1,939

FID Puritan

     438         411         27   

JPM Mid Cap Value A

     9,389         17,825         (8,436

Spartan US EQ Index

     843         569         274   
                          

Total

   $ 615,708         533,768         81,940   
                          

 

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Table of Contents

STATE AUTO INSURANCE COMPANIES

AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

 

 

 

6. Trust

The Company maintains a trust to provide a source of funds to assist the Company in meeting its obligations under the Plan. The rights of participants and their beneficiaries under the Plan are merely unsecured contractual rights against the Company and its participating subsidiaries. Participants and beneficiaries have no preferred claim on, or any beneficial ownership interest in, any assets of the trust. All assets of the trust are subject to the claims of the general creditors of the Company and its participating subsidiaries under Federal and state law, should the Company and its participating subsidiaries become unable to pay their debts as they become due or become subject to Federal bankruptcy proceedings.

7. Related Party

The Plan invests in shares of registered investment companies managed by Fidelity Management Trust Company, custodian of the Plan. Beginning in 2010, members of the Board of Directors of STFC may also invest in Affiliated Stock.

8. Tax Status

The Plan is not, and is not intended to be, qualified under Section 401 of the Code. Consequently, an application for a favorable determination has not been filed with the Internal Revenue Service. The Plan does not have a tax filing requirement with the Internal Revenue Service, and therefore, no liability (or asset) or disclosure is included in the Plan’s financial statements.

9. Right to Terminate

The Company may terminate the Plan at any time and for any reason. Following termination of the Plan, no additional deferrals may be made, but all existing participant accounts will continue to be administered in accordance with the Plan, unless the Company elects to accelerate distribution of all Plan accounts in accordance with Section 409A of the Code.

 

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EXHIBIT INDEX

 

EXHIBIT NO.    DESCRIPTION OF EXHIBIT

1

   Consent of Independent Registered Public Accounting Firm.