Edgar Filing: State Auto Financial CORP

Form 11-K

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

¨	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 Property & Casualty Insurance Company

Amended and Restated

Incentive 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

REQUIRED INFORMATION

See the accompanying financial statements for the State Auto Property & Casualty Insurance Company Amended and Restated Incentive 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 Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan

By:		/s/ Steven E. English
		Steven E. English
		Chief Financial Officer of State Auto Property & Casualty Insurance Company

By:		/s/ James A. Yano
		James A. Yano
		Vice President, Secretary and General Counsel of State Auto Property & Casualty Insurance Company

Date: March 30, 2011

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

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 Property & Casualty Insurance Company Amended and Restated Incentive 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

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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 $2,209,213 and $2,120,165, respectively)	$	2,374,475		2,344,114
Interest-bearing cash		659,936		577,575
Affiliated Stock (cost $92,809)		96,909		—

Total investments		3,131,320		2,921,689

Total Assets		3,131,320		2,921,689

Liabilities
Assets payable		61,150		61,150

Total Liabilities		61,150		61,150

Net assets available for benefits	$	3,070,170		2,860,539

See accompanying notes.

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE DEFERRED COMPENSATION PLAN

Statements of Changes in Net Assets Available for Benefits


	Year Ended December 31
	2010			2009			2008
Investment income (loss):
Dividends	$	71,590			53,086			72,436
Unrealized (loss) gain		(54,587	)		782,438			(800,095	)
Realized gain (loss)		258,909			(341,209	)		(46,632	)

Total investment income (loss)		275,912			494,315			(774,291	)

Contributions:
Employee		420,308			454,559			575,103
Employer		29,929			8,687			28,941

Total contributions		450,237			463,246			604,044

Deductions:
Benefit payments		516,518			355,412			340,093

Total deductions		516,518			355,412			340,093

*Net increase (decrease)*		209,631			602,149			(510,340	)

Net assets available for benefits:
Beginning of year		2,860,539			2,258,390			2,768,730


End of year	$	3,070,170			2,860,539			2,258,390

See accompanying notes.

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE DEFERRED COMPENSATION PLAN

Notes to the Financial Statements

December 31, 2010

1. Description of the Plan

Organization

The State Auto Property & Casualty Insurance Company Amended and Restated Incentive Deferred Compensation Plan (the “Plan”) became effective on August 1, 1995. The Plan was amended and restated in its entirety effective as of March 1, 2010, to incorporate amendments made to the Plan subsequent to the Plan’s prior restatement effective as of March 1, 2001, and to add as an investment option a fund comprised solely of shares of the State Auto Financial Corporation common stock (“Affiliated Stock”).

Eligible executives include high income or key management employees designated by the President, Chairman and Chief Executive Officer on an annual basis. Plan participation is voluntary. The Plan provides to those eligible executives the benefits they would otherwise earn under the State Auto Insurance Companies Retirement Savings Plan (fka the State Auto Insurance Companies Capital Accumulation Plan) (the “Qualified Plan”) if certain federal law restrictions did not apply, and the opportunity to defer designated amounts of their salary and bonuses.

Effective as of July 1, 2010, the Plan was amended to include, among other things, the following changes:

•

The Company will be required to contribute any excess portion of any nonelective contributions not eligible to be contributed to the Qualified Plan.

•

Participants will become vested in the Company nonelective contributions after three years of service or upon retirement, death or total disability prior to retirement or other termination of service.

The benefits provided to participants under the Plan are paid from the general assets of State Auto Property & Casualty Insurance Company (the “Company”). 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 is equivalent to the rights of any unsecured creditor of the Company.

Newly eligible executives who wish to participate in the Plan must enroll within 30 days after becoming eligible to participate and defer income from the current calendar year. For subsequent years, participants must enroll prior to the beginning of each new Plan year.

Contributions

Participants are permitted to defer on a pretax basis (a) from 1% to 100% of the participant’s eligible base salary received in the Plan year and/or (b) from 1% to 100% of each eligible participant’s bonus. In addition, the Company matches eligible base salary deferrals at the same rate and in the same manner that it is generally matching 401(k) deferrals under the Qualified Plan. Any limitations on the match under the Qualified Plan also apply to the Plan, with the match under the Plan being offset by the match to the Qualified Plan to the extent duplicative. For example, at the present time under the Qualified Plan, the Company matches up to 6% of compensation at the rate of 100% on the first 1% of contributions plus 50% on contributions in excess of 1%, up to a maximum of 6%. Under the Plan, the Company similarly matches up to 6% of eligible base salary, as defined above, less amounts matched under the Qualified Plan. Effective July 1, 2010, the Company is required to make nonelective contributions that are not eligible to be contributed to the Qualified Plan.

Vesting

Each participant is fully vested in base salary, bonus deferrals, and any associated earnings. After five years of service or upon attainment of age 55, retirement, death, or total disability prior to age 55 or other termination of service, each participant is fully vested in matching contributions. After three years of service or upon attainment of age 55, retirement, death, or total disability prior to age 55 or other termination of service, each participant is fully vested in nonelective contributions.

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

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.

Payment of Benefits

The balance of each deferral account is distributed in cash to the participant based on the participant’s distribution election upon a specified date certain or the later of age 55 or termination of service. If no distribution election is made, payments are made in monthly installments over a five-year period.

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. Dividends are recorded on the ex-dividend date. Realized gains and losses on the sale of securities are determined on the average cost method.

Benefit Payments

Benefit payments are recognized when paid.

Administrative Expenses

All 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.

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010

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 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.

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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	$	939,928		939,928		—		—
Mid cap equity investments		164,732		164,732		—		—
Small cap equity investments		19,309		19,309		—		—
International equity investments		217,924		217,924		—		—
Blended fund investments		453,615		453,615		—		—
Income bond investments		578,967		578,967		—		—

Total registered investment companies		2,374,475		2,374,475		—		—
Interest-bearing cash		659,936		659,936		—		—
Affiliated Stock		96,909		96,909		—		—

Total investments	$	3,131,320		3,131,320		—		—


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	$	955,521		955,521		—		—
Mid cap equity investments		106,637		106,637		—		—
Small cap equity investments		24,655		24,655		—		—
International equity investments		273,359		273,359		—		—
Blended fund investments		410,719		410,719		—		—
Income bond investments		573,223		573,223		—		—

Total registered investment companies		2,344,114		2,344,114		—		—
Interest-bearing cash		577,575		577,575		—		—

Total investments	$	2,921,689		2,921,689		—		—

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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 54 and 50 participants in the Plan, respectively, 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, and number of participants 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

ABF Sm Cap Val

995

19.41

Baron Growth

1,009

51.23

Calamos Growth A

2,655

53.38

FID Contrafund K

7,845

67.70

FID Diversified Intl K

4,299

30.12

FID Freedom K 2010

702

12.68

FID Freedom K 2015

13,004

12.72

FID Freedom K 2020

5,798

13.19

FID Freedom K 2025

375

13.40

FID Freedom K 2030

7,378

13.60

FID Freedom K 2035

371

13.78

FID Freedom K 2040

13.86

FID Freedom K 2045

236

13.96

FID Freedom K 2050

1,685

14.02

FID Freedom K Income

663

11.43

FID Intermed Bond

8,940

10.55

FID Puritan K

3,230

17.91

Harbor Intl Inst

1,461

60.55

JPM Mid Cap Value A

2,726

23.13

MFS Value Fund A

5,667

22.81

PIM Total RT Inst

44,668

10.85

Spartan US EQ Index

3,098

44.48

VANG Mid Cap IDX

2,461

20.31

Total Registered Investment Companies

119,269

Interest Bearing Cash

Fidelity US Govt Bond

659,936

1.00

Total Interest Bearing Cash

659,936

Affiliated Stock

State Auto Financial Corporation

5,563

17.42

Total Affiliated Stock

5,563

Total Investments

784,768

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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
ABF SM Cap Value PA		1,591		15.50		5
Baron Growth		1,163		41.31		8
Calamos Growth A		2,843		44.46		14
FID Contrafund		9,442		58.28		25
FID Diversified Intl		8,945		28.00		19
FID Freedom 2010		1,647		12.51		2
FID Freedom 2015		15,637		10.42		6
FID Freedom 2020		3,982		12.55		7
FID Freedom 2025		913		10.39		3
FID Freedom 2030		6,062		12.39		6
FID Freedom 2035		27		10.26		1
FID Freedom 2050		2,463		8.35		1
FID Freedom Income		966		10.74		3
FID Intermed Bond		9,252		10.15		7
FID Puritan		3,822		16.06		11
Harbor Intl Inst		418		54.87		4
JPM Mid Cap Value A		2,740		18.98		7
MFS Value Fund A		7,086		20.77		12
PIM Total RT Inst		44,381		10.80		14
Spartan US EQ Index		3,340		39.43		10
VANG Mid Cap IDX INV		402		16.36		2

Total Registered Investment Companies		127,122
Interest Bearing Cash
Fidelity US Govt Bond		577,575		1.00		17

Total Interest Bearing Cash		577,575

Total Investments		704,697

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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

ABF Sm Cap Val

995

19,309

(4,159

)

6,307

2,899

—

Baron Growth

1,009

51,706

—

(3,593

)

12,301

4,323

(76

)

Calamos Growth A

2,655

141,742

—

5,430

14,761

7,092

(19,319

)

FID Contrafund

—

679

131,557

(74,768

)

20,813

(50,132

)

FID Contrafund K

7,845

531,117

3,092

199

14,890

(150

)

(10,648

)

FID Diversified Intl

—

21,896

(19,326

)

9,332

(14,367

)

FID Diversified Intl K

4,299

129,486

2,577

(789

)

415

862

(2,501

)

FID Freedom 2010

—

3,042

(2,641

)

—

(18,007

)

FID Freedom 2015

—

888

32,674

(17,544

)

35,398

—

FID Freedom 2020

—

382

11,286

(5,630

)

15,199

—

FID Freedom 2025

—

1,868

(1,568

)

678

—

FID Freedom 2030

—

535

21,027

(13,262

)

11,860

(92

)

FID Freedom 2035

—

335

3,614

—

FID Freedom 2045

—

245

—

2,361

—

FID Freedom 2050

—

123

5,905

(4,067

)

—

FID Freedom Income

—

986

(504

)

14,574

—

FID Freedom K 2010

702

8,898

166

—

FID Freedom K 2015

13,004

165,414

3,171

(348

)

725

(6,934

)

—

FID Freedom K 2020

5,798

76,479

1,422

823

3,197

—

FID Freedom K 2025

375

5,019

—

FID Freedom K 2030

7,378

100,335

1,862

1,864

1,507

(81

)

FID Freedom K 2035

371

5,108

—

116

670

—

FID Freedom K 2040

—

FID Freedom K 2045

236

3,289

—

545

—

FID Freedom K 2050

1,685

23,622

362

—

731

—

FID Freedom K Income

663

7,573

104

—

(65

)

—

FID Intermed Bond

8,940

94,321

4,103

2,713

2,129

18,341

(32,289

)

FID Puritan

—

1,062

8,703

(4,177

)

4,011

(11,625

)

FID Puritan K

3,230

57,842

288

1,856

585

(2,524

)

Harbor Intl Inst

1,461

88,438

1,255

(2,241

)

6,086

20,594

(2,032

)

JPM Mid Cap Value A

2,726

63,046

485

(2,878

)

11,920

1,661

(10

)

MFS Value Fund A

5,667

129,258

1,659

6,226

3,364

11,411

(10,427

)

PIM Total RT Inst

44,668

484,646

42,240

11,479

(6,749

)

143,603

(92,239

)

Spartan US EQ Index

3,098

137,809

2,374

5,423

10,041

10,103

(12,174

)

VANG Mid Cap IDX

2,461

49,980

522

1,493

3,083

5,581

(756

)

Total Registered Investment
Companies

119,269

2,374,475

69,845

258,557

(58,687

)

343,768

(279,299

)

Interest Bearing Cash

Fidelity US Gov Bond

659,936

149

—

107,381

(235,152

)

Total Interest Bearing Cash

659,936

149

—

107,381

(235,152

)

Affiliated Stock

State Auto Financial Corporation

5,563

96,909

1,596

352

4,100

(912

)

(2,067

)

Total Affiliated Stock

5,563

96,909

1,596

352

4,100

(912

)

(2,067

)

Total Assets Held For Investment

784,768

3,131,320

71,590

258,909

(54,587

)

450,237

(516,518

)

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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
ABF SM Cap Val. PA		1,591	$	24,655	$	72	$	(3,215	)	$	9,818		$	3,430	$	(217	)
Baron Growth		1,163		48,048		46		(2,769	)		16,331			10,529		(51	)
Calamos Growth A		2,843		126,395		—		(22,145	)		66,513			17,760		(13,653	)
FID Contrafund		9,442		550,255		1,877		(73,279	)		202,706			35,964		(49,533	)
FID Diversified Intl		8,945		250,448		3,086		(59,909	)		122,275			48,109		(16,280	)
FID Equity Income		—		—		1,065		(78,766	)		87,277			12,391		(7,527	)
FID Freedom 2010		1,647		20,599		656		1,454			3,085			13,586		—
FID Freedom 2015		15,637		162,934		4,749		(18,916	)		42,684			40,822		—
FID Freedom 2020		3,982		49,977		1,487		(7,828	)		17,751			9,240		(400	)
FID Freedom 2025		913		9,489		337		6,351			2,854			20,649		—
FID Freedom 2030		6,062		75,111		2,023		(380	)		16,607			23,491		(24	)
FID Freedom 2035		27		274		3		—			(1	)		272		—
FID Freedom 2050		2,463		20,569		494		(6,057	)		10,805			2,634		—
FID Freedom Income		966		10,379		235		420			504			7,035		—
FID Intermed Bond		9,252		93,911		4,338		(1,478	)		11,741			19,529		(16,385	)
FID Puritan		3,822		61,387		1,910		(18,248	)		32,048			2,493		(15,101	)
Harbor Intl Inst		418		22,911		287		(2,813	)		8,308			2,381		(270	)
JPM Mid Cap Val. A		2,740		52,010		695		(13,063	)		23,540			9,931		—
MFS Value Fund A		7,086		147,181		1,728		(3,650	)		21,537			4,875		(1,375	)
PIM Total RT Inst		44,381		479,311		22,143		6,364			15,399			91,674		(58,197	)
Spartan US EQ Index		3,340		131,691		2,702		(43,174	)		69,343			9,107		(12,560	)
VANG Mid Cap IDX		402		6,579		68		(108	)		1,313			2,373		—

Total Registered Investment Companies		127,122		2,344,114		50,001		(341,209	)		782,438			388,275		(191,573	)
Interest Bearing Cash
Fidelity US Gov Bond		577,575		577,575		3,085		—			—			74,971		(163,839	)

Total Interest Bearing Cash		577,575		577,575		3,085		—			—			74,971		(163,839	)

Total Assets Held For Investment		704,697	$	2,921,689	$	53,086	$	(341,209	)	$	782,438		$	463,246	$	(355,412	)

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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
ABF SM Cap Val. PA		1,496	$	17,231	$	233	$	(91	)	$	(7,810	)	$	2,520	$	(373	)
Baron Growth		820		25,265		10		(284	)		(14,533	)		9,083		(432	)
Calamos Growth A		2,050		59,767		—		(7,400	)		(56,289	)		22,752		(32,589	)
FID Contrafund		9,570		433,142		6,600		18,930			(251,209	)		54,752		(39,301	)
FID Diversified Intl		9,001		193,618		2,718		(29,125	)		(182,916	)		51,912		(27,271	)
FID Equity Income		4,022		124,150		8,291		(9,142	)		(96,898	)		19,468		(30,247	)
FID Freedom 2010		175		1,818		86		—			(444	)		2,176		—
FID Freedom 2015		8,577		73,417		4,148		(212	)		(25,251	)		36,259		—
FID Freedom 2020		2,958		29,726		2,120		—			(14,550	)		11,435		—
FID Freedom 2025		342		2,813		178		—			(1,275	)		2,527		—
FID Freedom 2030		782		7,636		455		(455	)		(3,564	)		8,715		—
FID Freedom 2050		1,965		12,693		737		—			(6,738	)		16,537		—
FID Freedom Income		2		19		2,067		(8,698	)		2,684			67,235		(6,803	)
FID Intermed Bond		9,529		86,622		9,666		(10,639	)		(9,275	)		12,492		(3,383	)
FID Puritan		5,064		66,140		2,609		(2,713	)		(28,541	)		12,811		(18,733	)
Harbor Intl Inst		404		16,216		309		(152	)		(7,670	)		170		(437	)
JPM Mid Cap Val. A		2,068		31,729		1,479		(15	)		(15,731	)		10,041		(28	)
PIM Total RT Inst		11,307		114,656		7,019		(82	)		(4,108	)		436		(2,554	)
Spartan US EQ Index		3,778		120,514		3,532		3,446			(75,977	)		39,925		(49,172	)

Total Registered Investment Companies		73,910		1,417,172		52,257		(46,632	)		(800,095	)		381,246		(211,323	)

Interest Bearing Cash
Fidelity US Gov Bond		898,317		898,317		20,179		—			—			222,798		(128,770	)

Total Interest Bearing Cash		898,317		898,317		20,179		—			—			222,798		(128,770	)

Total Assets Held For Investment		972,227	$	2,315,489	$	72,436	$	(46,632	)	$	(800,095	)	$	604,044	$	(340,093	)

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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			During Period			Ending Balance
2008	$	241,606			(800,095	)		(558,489	)
2009		(558,489	)		782,438			223,949
2010		223,949			(54,587	)		169,362

The Plan’s assets payable at December 31, 2010 and 2009 were as follows:


	2010 Payable		2009 Payable
FID Contrafund	$	—	$	3,898
FID Contrafund K		4,507		—
FID Freedom 2015		—		15,556
FID Freedom K 2015		14,687		—
Fidelity US Gov Bond		30,575		30,575
PIM Total RT Inst		7,255		6,649
Spartan US EQ Index		2,757		4,472
State Auto Financial Corporation		1,369		—

	$	61,150	$	61,150

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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

ABF Sm Cap Val

34,462

38,621

(4,159

)

Baron Growth

29,568

33,161

(3,593

)

Calamos Growth A

66,240

60,810

5,430

FID Contrafund

691,087

559,530

131,557

FID Contrafund K

18,999

18,800

199

FID Diversified Intl

344,515

322,619

21,896

FID Diversified Intl K

28,911

29,700

(789

)

FID Freedom 2010

26,704

23,662

3,042

FID Freedom 2015

221,850

189,176

32,674

FID Freedom 2020

71,214

59,928

11,286

FID Freedom 2025

10,495

8,627

1,868

FID Freedom 2030

95,272

74,245

21,027

FID Freedom 2035

4,236

3,901

335

FID Freedom 2045

2,606

2,361

245

FID Freedom 2050

22,530

16,625

5,905

FID Freedom Income

25,534

24,548

986

FID Freedom K 2015

30,847

31,195

(348

)

FID Freedom K 2020

178

176

FID Freedom K 2030

FID Intermed Bond

75,566

72,853

2,713

FID Puritan

70,986

62,283

8,703

FID Puritan K

4,320

4,246

Fidelity US Govt Bond

543,949

—

Harbor Intl Inst

26,510

28,751

(2,241

)

JPM Mid Cap Value A

13,883

16,761

(2,878

)

MFS Value Fund A

49,305

43,079

6,226

PIM Total RT Inst

204,307

192,828

11,479

Spartan US EQ Index

70,071

64,648

5,423

State Auto Financial Corporation

2,067

1,715

352

VANG Mid Cap IDX

40,346

38,853

1,493

Total

2,826,639

2,567,730

258,909

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010


2009	Aggregate Proceeds		Cost		Net Realized Gains (Losses)
Investment Options
ABF SM Cap Value PA	$	10,722		13,937		(3,215	)
Baron Growth		39,178		41,947		(2,769	)
Calamos Growth A		94,061		116,206		(22,145	)
FID Contrafund		429,534		502,813		(73,279	)
FID Diversified Intl		328,478		388,387		(59,909	)
FID Equity Income		155,659		234,425		(78,766	)
FID Freedom 2010		18,691		17,237		1,454
FID Freedom 2015		386,196		405,112		(18,916	)
FID Freedom 2020		188,381		196,209		(7,828	)
FID Freedom 2025		95,328		88,977		6,351
FID Freedom 2030		67,620		68,000		(380	)
FID Freedom 2050		18,212		24,269		(6,057	)
FID Freedom Income		11,905		11,485		420
FID Intermed Bond		116,245		117,723		(1,478	)
FID Puritan		130,821		149,069		(18,248	)
Fidelity US Govt Bond		3,960,357		3,960,357		—
Harbor Intl Inst		25,715		28,528		(2,813	)
JPM Mid Cap Value A		30,424		43,487		(13,063	)
MFS Value Fund A		60,355		64,005		(3,650	)
PIM Total RT Inst		375,173		368,809		6,364
Spartan US EQ Index		249,750		292,924		(43,174	)
VANG Mid Cap IDX INV		15,720		15,828		(108	)


Total	$	6,808,525		7,149,734		(341,209	)

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE DEFERRED COMPENSATION PLAN

Notes to the Financial Statements (continued)

December 31, 2010


2008	Aggregate Proceeds		Cost		Net Realized Gains (Losses)
Investment Options
ABF SM Cap Value PA	$	373		464		(91	)
Baron Growth		3,316		3,600		(284	)
Calamos Growth A		32,589		39,989		(7,400	)
FID Contrafund		147,229		128,299		18,930
FID Diversified Intl		163,255		192,380		(29,125	)
FID Equity Income		62,586		71,728		(9,142	)
FID Freedom 2015		11,805		12,017		(212	)
FID Freedom 2030		7,461		7,916		(455	)
FID Freedom Income		216,161		224,859		(8,698	)
FID Intermed Bond		162,656		173,295		(10,639	)
FID Puritan		18,733		21,446		(2,713	)
Fidelity US Govt Bond		190,453		190,453		—
Harbor Intl Inst		442		594		(152	)
JPM Mid Cap Value A		932		947		(15	)
PIM Total RT Inst		2,554		2,636		(82	)
Spartan US EQ Index		64,705		61,259		3,446


Total	$	1,085,250		1,131,882		(46,632	)

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

AMENDED AND RESTATED INCENTIVE 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, participants 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 Internal Revenue Code of 1986, as amended (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.

Deferred amounts are subject to FICA and Medicare taxes and most local income taxes at the time of the deferral. Deferred amounts (and the earnings thereon) are not subject to Federal and most state income taxes until distributed from the Plan. Such distributions and the related taxes are the responsibility of the participants.

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.

EXHIBIT INDEX


EXHIBIT NO.		DESCRIPTION OF EXHIBIT

1		Consent of Independent Registered Public Accounting Firm

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