State Farm® Remains Strong Despite Stormy 2011
Bloomington, Ill., March 1, 2012 Combined net worth for the State Farm group declined in 2011 by $0.4 billion to end the year at $60.8 billion. This includes a $0.2 billion decrease in net worth related to the property-casualty (P-C) companies' unaffiliated stock portfolios. The results also reflect a $0.2 billion pre-tax operating loss for the P-C companies, which includes an underwriting loss of $4.5 billion, $1.3 billion higher than the underwriting loss in 2010. The underwriting results in 2011 were negatively impacted by significant catastrophe activity.
Our 2011 financial results must be viewed in the context of five catastrophe events that are among the 25 largest in our history, said State Farm Senior Vice President, Treasurer and Chief Financial Officer Paul Smith. Even while making a substantial number of catastrophe claim payments to our customers, we've maintained the financial strength that gives our customers confidence we'll be there to serve them whenever they need us.
State Farm's continued financial strength is the result not only of our focus on the customer, but also our commitment to the fundamentals of our business, said Smith. This strategy has allowed us to fulfill the promises we've made during the 89 years we've been in business.
Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses), was $64.3 billion for 2011 compared with $63.2 billion for 2010. State Farm reported an after-tax net income of $0.8 billion in 2011, compared with $1.8 billion in net income in 2010.
Financial results for State Farm affiliated companies are incorporated in the State Farm group financial results. However, each affiliate's individual results vary. State Farm insurance operations consist of nine P-C insurers and three life insurers, each of which is managed on an individual affiliate level. The P-C insurers are primarily engaged in automobile, health, homeowners, commercial multiple peril (CMP) and reinsurance lines of business. The net results of State Farm Mutual Automobile Insurance Company (State Farm Mutual), State Farm Indemnity Company, State Farm Guaranty Insurance Company, State Farm County Mutual Insurance Company of Texas and Oglesby Reinsurance Company include the Auto business as well as the Health and reinsurance lines. The net results of State Farm Fire and Casualty Company, State Farm Lloyds, State Farm General Insurance Company and State Farm Florida Insurance Company reflect the Homeowners, CMP and other P-C lines of business. State Farm Life Insurance Company, State Farm International Life Insurance Company Ltd. and State Farm Life and Accident Assurance Company write the Life and Annuity business. The State Farm group also provides banking products and mutual funds through affiliated companies. State Farm provides insurance and financial services products across more than 80 million policies and accounts.
Auto State Farm auto insurance business represents 62 percent of the P-C companies' combined net written premium. Earned premium was $31.7 billion, an increase of 1.2 percent from 2010. Incurred claims and loss adjustment expenses were $26.1 billion. The underwriting loss was $1.9 billion.
Comparable 2010 figures were: earned premium, $31.4 billion; incurred claims and loss adjustment expenses, $26.8 billion; underwriting loss, $2.8 billion.
Homeowners, CMP, Other The net written premium for State Farm Fire and Casualty Company, State Farm Lloyds, State Farm General Insurance Company and State Farm Florida Insurance Company represents 35 percent of the P-C companies' combined net written premium. Earned premium was $18.0 billion, an increase of 4.5 percent from 2010. Incurred claims and loss adjustment expenses were $15.4 billion. The underwriting loss was $2.6 billion.
Comparable 2010 figures were: earned premium, $17.3 billion; incurred claims and loss adjustment expenses, $13.2 billion; underwriting loss, $0.9 billion.
Health The individual health insurance operations for State Farm Mutual reported an underwriting loss of $257 million. Net written premium was $692 million.
Comparable figures for 2010 were: underwriting loss, $52 million; net written premium, $712 million.
Property-Casualty (P-C) The combined underwriting loss was $4.5 billion on earned premium of $51.4 billion. These results, combined with investment and other income of $4.3 billion, resulted in a pre-tax operating loss of $0.2 billion. The after-tax net income for the P-C companies was $0.2 billion.
Comparable 2010 figures were: earned premium, $50.3 billion; underwriting loss, $3.1 billion; investment and other income, $4.1 billion; pre-tax operating profit, $1.0 billion; net income, $1.3 billion.
Life State Farm life affiliates State Farm Life Insurance Company, State Farm International Life Insurance Company Ltd. and State Farm Life and Accident Assurance Company added $21 billion of total life insurance in force during the year, bringing the companies total insurance in force to $779 billion on Dec. 31, 2011. The life affiliates also reported $638 million in dividends to policyholders in 2011.
The life affiliates reported premium income of $4.7 billion in 2011, an increase of $52 million compared with 2010. In 2011, after-tax net income was $625 million. Net income was $456 million in 2010.
State Farm Bank® Total assets for State Farm Bank, F.S.B. were $14.7 billion as of year-end 2011, compared with $15.1 billion at the end of 2010. The Bank reported after-tax net income of $32 million in 2011, compared with an after-tax net loss in 2010 of $35 million.
Mutual Funds Total assets under management for the retail Mutual Fund operations at the end of 2011 were $6.0 billion, compared with $5.6 billion at the end of 2010. State Farm VP Management Corp. and State Farm Investment Management Corp. reported a combined after-tax net income of $1 million in 2011, following a $17 million after-tax net loss in 2010.
State Farm Bank, Bloomington, Illinois, is a Member FDIC and an Equal Housing Lender. Insurance and securities products offered by affiliated companies of State Farm Bank are not FDIC insured, are not guaranteed by State Farm Bank and are subject to investment risk, including possible loss of principal invested.
Investing involves risk, including potential for loss. State Farm VP Management Corp is a separate entity from those State Farm Entities which provide banking and insurance products.
Securities Issued by State Farm VP Management Corp. For more information, call 1-800-447-4930. Neither State Farm nor its agents provide investment, tax, or legal advice.
About State Farm®
State Farm, founded in 1922, insures more cars and homes than any other insurer in the U.S., is the leading insurer of watercraft and is also a leading insurer in Canada. Our 17,800 agents and 66,600 employees serve 81 million policies and accounts - more than 78 million auto, fire, life and health policies in the United States and Canada, and nearly 2 million bank accounts. State Farm also offers customers banking, annuities and mutual fund products. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 43 on the Fortune 500 list of largest companies. For more information, please visit statefarm.com® or in Canada statefarm.ca®.
State Farm Bank®, Bloomington, Illinois, is a Member FDIC and an Equal Housing Lender. Insurance, annuities and securities products offered by affiliate companies of State Farm Bank are not FDIC insured, are not guaranteed by State Farm Bank, and are subject to investment risk, including possible loss of principal.