State Farm posted a smaller yet healthy profit in 2019 despite higher losses and some customers paying reduced premiums, the company announced Friday.
State Farm’s property-casualty business posted a pretax operating profit of $5.7 billion last year, down from $6.3 billion in 2018, the company said. State Farm saw a combined underwriting gain of $777 million in 2019, down from $1.7 billion the year before. The company said that was a result of “higher losses and lower earned premium” compared to 2018.
“The decrease in property-casualty earned premium reflects a focus on returning value to customers in the form of lower premiums when appropriate,” the company said.
State Farm’s auto insurance business—about two-thirds of the company’s overall business—saw a big swing. The auto business posted an underwriting loss of about $764 million, compared with an underwriting gain of $1.1 billion the year before.
State Farm paid more than $3.5 billion in catastrophic loss claims in 2019.
“Our focus of putting customers first for nearly 98 years continues to underscore our position as the national leader in protecting people,” Senior Vice President, Treasurer and Chief Financial Officer Jon Farney said in a statement. “Our financial strength, along with our local presence and broad product offerings, have earned us the loyalty of our customers and are the reasons more customers are choosing State Farm.”
State Farm also touted reduced expenses in 2019. Its property-casualty expense ratio fell to 35.6% in 2019, down from 41.7% in 2015.
Meanwhile, State Farm’s net worth at the end of 2019 jumped to $116.2 billion, up from $100.9 billion a year ago. The change was “primarily due to an increase in the value of the (property-casualty) companies’ unaffiliated stock portfolio, driven by increases in the U.S. equities market.”
State Farm Bank’s net income rose to $59 million in 2019, up from $35 million a year ago.
State Farm spokesperson Roszell Gadson declined an interview request for this story.
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