State Farm General Insurance Company’s financial strength rating (FSR) and issuer credit rating (ICR) have been revised by A.M. Best Co., upgrading them from their previous “A-“ (Excellent) to a current “A” (Excellent), in both cases.
State Farm Group and State Farm Life Group and their members have also received an FSR and ICR of “A++” (Superior) by Best. State Farm Fire and Casualty Company in Dallas, State Farm Indemnity Group, and State Farm International Life Insurance Company, Ltd, also had had their FSR and ICR affirmed by Best. All of those outlooks were also given a stable outlook rating, except in the case of the negative outlook assigned to State Farm Indemnity Group.
The upgrades received by the State Farm General ratings are, according to Best, “based on its strong risk-adjusted capitalization, favorable earnings trend, excellent business profile and the company’s strategic importance to its parent.”
Among the factors that were cited by Best for partial offsetting, was the California homeowners’ insurance market risk concentration by State Farm General. It added notable opportunity for loss as a result of earthquakes and extreme weather, in addition to the volatility of the California economic and regulatory environment. This exposure was also present in terms of the competitive market pressure within that state.
Best explained that over previous years, State Farm General has been able to improve its capitalization by way of powerful operation outcomes brought about by the supplementation of profitable underwriting of their net investment income. This is indicative of the insurer’s tighter underwriting guidelines, rate adequacy improvement, and absence of significant catastrophe occurrences.