Bloomington, Ill.-based State Farm Mutual Automobile Insurance Company said it will pay $1.25 billion in dividends to its mutual auto insurance policyholders in 46 states, the District of Columbia and the Canadian province of New Brunswick.
The company said the payment is a company record eclipsing the previous high of just over $1 billion paid in 2000.
The better-than-expected auto results, combined with a $4.1 billion reduction in catastrophe losses in 2006, resulted in an increase in State Farm's after-tax net income from all sources of $5.32 billion, compared to $5.31 billion in net income reported in 2004. State Farm's net income in the hurricane-laden year of 2005 was $3.24 billion.
The three consecutive years of profit follow 2001, 2002 and 2003, when State Farm lost nearly $5 billion.
Michael Tipsord, vice chairman, treasurer and chief financial officer, said: "2006 was a profitable year, but our evaluation of financial success is defined by our accomplishments over a longer period of time than one year.
"Given the potential for volatility in the insurance business, we must avoid the temptation of attributing too much significance to short-term financial results," he added.
The company is reporting a property-casualty underwriting gain in 2006 of $3 billion. It is only the third time in the last ten years a P-C underwriting gain has been achieved. That has only happened before in 2004 and 1997, the company said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.