State Farm Insurance Cos., the nation’s largest personal lines insurer, announced yesterday that its net income dropped 60 percent in 2000 due to a combination of increased claims and reduced rates.
Net income from all sources, after federal income tax, for all State Farm affiliates (including non-insurance affiliates) was $408.1 million in 2000, down $626 million from 1999. Revenue, which includes net investment gain and other income, for all affiliates was $47.9 billon for 2000, an increase of $3.2 billion over the 1999 figure.
Meanwhile, State Farm Mutual’s net worth, after going up by $4 billion in 1999, decreased last year by $2.1 billion to $43.7 billion. The primary reason for this decline was State Farm Mutual’s pre-tax operating loss of $1.9 billion, which includes a $3.3 billion underwriting loss, an incurred dividend of $1.0 billion, and net investment income earned and other income of $2.4 billion. State Farm Mutual’s net worth is also affected by the results of operations of affiliates as reflected in the unrealized loss for the year of $711.5 million.
State Farm’s auto insurers?State Farm Mutual Automobile Insurance Company, State Farm Indemnity Company and State Farm County Mutual Insurance Company of Texas?reported 2000 earned premiums of $25.1 billion, an increase of 1.0 percent from 1999. With an underwriting loss of $3.6 billion, a record-breaking $1.0 billion dividend to policyholders and a net investment gain (including capital gains) of $5.4 billion, net income from all sources after federal income taxes was $557.6 million.
The three auto insurance companies reported 2000 incurred claims and loss expenses of $23.2 billion, up from the 1999 figure of $21.4 billion.
State Farm Mutual’s property insurance affiliates?State Farm Fire and Casualty Company, State Farm General Insurance Company, State Farm Lloyds and State Farm Florida?reported an underwriting loss of $2.0 billion on earned premiums of $9.5 billion. These results, combined with a net investment gain of $1.3 billion, resulted in a net loss (after federal income tax) of $410.1 million, compared with a $21.1 million net loss in 1999.
The State Farm group insures about 38 million cars and 15 million homes in the United States and Canada.