State Farm Ratings Stable

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Fitch Ratings has affirmed State Farm's AA-plus financialstrength rating with a stable outlook.

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"The ratings are supported by State Farm's top-tier franchise,successful career agency distribution, strong capital base andrecently improved underwriting results," said Fitch analyst DouglasPawloski.

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But balanced against those pluses, he noted, are historicalunderwriting results below peer averages and a large allocation toequity securities that increases the volatility of the capitalbase.

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State Farm's underwriting, measured by a combined ratio of 95.6,was essentially the industry peer average during 2004, according toFitch

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The ratings on State Farm cover a wide gamut of companiesselling personal lines and life insurance products.

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Earlier this year, analysts predicted the company's switch to atiered rating approach that fine-tunes customer underwriting wouldhelp bolster profits in the future but noted the company was wellbehind pioneers in this area such as Progressive and Safeco.

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