State Farm has announced that although they faced a significant number of payments for catastrophe claims from some of the largest events in the quarter century history of the company, it has been able to maintain its financial strength.
In 2011, State Farm’s combined net worth fell by $0.4 billion by the end of the year, bringing it to $60.8 billion. This includes the drop by $0.2 billion in the insurance company’s net worth in connection with the unaffiliated stock portfolios of the property and casualty companies.
Moreover, those figures also include the property and casualty companies’ pre-tax operating loss of $0.2 billion, as well as a $4.5 billion underwriting loss that was greater than 2010’s underwriting loss by $1.3 billion. The 2011 underwriting results were hurt by the very large number of catastrophic events.
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Paul Smith, the senior vice president, treasurer, and chief financial officer at State Farm, said that when looking at the financial results from last year, they must be examined in the context of the five catastrophic occurrences that occurred within that one year and that were among the largest 25 destructive events in the company’s history.
Smith added that at the same time that many of these large payments for catastrophe claims were being made to customers, “we’ve maintained the financial strength that gives our customers confidence we’ll be there to serve them whenever they need us.”
According to Smith, the ongoing financial strength of State Farm is because of their customer focus as well as their commitment to the business fundamentals.