State Farm Ratings Stable

State Farm Ratings Stable

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

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

But balanced against those pluses, he noted, are historical underwriting results below peer averages and a large allocation to equity securities that increases the volatility of the capital base.

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

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

Earlier this year, analysts predicted the company's switch to a tiered rating approach that fine-tunes customer underwriting would help bolster profits in the future but noted the company was well behind pioneers in this area such as Progressive and Safeco.