State Farm Net Back In Black After '02 Loss
By Mark Ruquet
NU Online News Service, March 1, 11:40 a.m. EST?State Farm Insurance Companies reported its net income returned to profitability in 2003 on revenue increases of 13 percent, fueled largely by improvements in its property-casualty business.[@@]
For 2003, the Bloomington, Ill.-based insurer reported net income increased $5.6 billion, from a loss of $2.8 billion in 2002 to a profit of $2.8 billion in 2003. Revenues increased $6.4 billion from $49.7 billion to $56.1 billion.
The results were spurred on by improvements in the company's p-c business that saw a pre-tax profit of $3.1 billion on earned premiums of $45.3 billion. The company reported combined p-c losses of $281 million for 2003.
In 2002, State Farm had an underwriting loss in p-c of $6 billion on earned premium of $41 billion.
Auto, which accounts for 67 percent of the company's p-c business, had earned premiums of $31 billion and underwriting loss of $33 million, State Farm said. This compares to 2002 earned premium of $28.5 billion and underwriting loss of $4.2 billion.
State Farm will be cutting rates of more than 1 percent in 10 states in 2004, said Dick Luedke, a company spokesman. Arizona, Indiana, Kansas will see reductions of close to 6 percent. Illinois and New York will see reductions of 5 percent or more.
Rates of more than 1 percent will be raised in three states this year, he said. They are North Dakota, Pennsylvania and Alabama. The rate changes will range from less than 7 percent to less than 4 percent.
The combined ratio for the insurer's p-c business improved 14.1 points, going from 114.7 in 2002 to 100.6 percent in 2003, said Mr. Luedke.
In addition to the p-c business, the company writes health and life insurance, which also saw improvements.
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