State Farm’s P&C companies see net income of US$4.6 billion in 2013

The combined underwriting gain for State Farm property and casualty companies, coupled with investment and other income, resulted in a pre-tax operating profit of US$4.3 billion and a net income of US$4.6 billion in 2013.

More specifically, State Farm reported Friday an underwriting gain of US$230 million in 2013 on earned premium of US$54.5 billion, notes a statement from the company. The underwriting gain, combined with investment and other income of US$4.1 billion – down US$0.4 billion from 2012 – resulted in a P-C pre-tax operating profit of US$4.3 billion.

Comparable 2012 figures were earned premium, US$52.3 billion; underwriting loss, US$1.7 billion; investment and other income, US$4.5 billion; pre-tax operating profit, US$2.7 billion; and net income, US$2.6 billion.

Looking at auto and home, State Farm’s auto insurance business represents 61% percent of the P-C companies’ combined net written premium. In 2013, earned premium was US$33.4 billion (up 3.9% from US$32.2 billion in 2012); incurred claims and loss adjustment expenses were US$27.0 billion (up from US$25.5 billion in 2012); and the underwriting loss was $2.4 billion (up from US$1.3 billion in 2012).

For Homeowners, CMP, Other, earned premium was US$19.0 billion (up 4.0% from US$18.3 billion in 2012); incurred claims and loss adjustment expenses were US$11.6 billion (down from US$13.5 billion in 2012); and the underwriting gain was $2.1 billion (compared to an underwriting loss of US$326 million in 2012).

The State Farm insurance operations consist of nine P-C insurers and three life insurers, each of which is managed on an individual affiliate level. The P-C insurers are primarily engaged in automobile, health, homeowners, commercial multiple peril (CMP), and reinsurance lines of business, the statement adds.

Overall, as of the end of 2013, the combined net worth for the State Farm group – which includes P-C, Health, Life, State Farm Bank® and Mutual Funds – was US$75.9 billion compared to US$65.4 billion at year-end 2012.

Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses), was US$68.3 billion for 2013 compared with US$65.3 billion for 2012. State Farm reported net income of US$5.2 billion in 2013, compared with $3.2 billion in net income in 2012.

“State Farm’s priority, as it has been throughout our 91-year history, is to focus on our customers’ needs and expectations and maintain the long-term financial strength they depend on,” Paul Smith, State Farm’s executive vice president, treasurer and chief financial officer, says in the statement.