AM Best Affirms Credit Ratings of State Farm Mutual Automobile Insurance Company; Takes Various Credit Rating Actions on Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” of State Farm Mutual Automobile Insurance Company (State Farm Mutual) and its affiliates, State Farm Fire and Casualty Company and State Farm County Mutual Insurance Company of Texas (Richardson, TX). In addition, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of HiRoad Assurance Company (HiRoad). AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of Dover Bay Specialty Insurance Company (Dover Bay). The outlook of these Credit Ratings (ratings) is stable.

At the same time, AM Best has upgraded the FSR to A- (Excellent) from B++ (Good) and the Long-Term ICR to “a-” from “bbb+” of State Farm Florida Insurance Company (State Farm Florida) (Winter Haven, FL). The outlook of these ratings has been revised to stable from positive. In addition, AM Best has revised the outlooks to positive from stable and affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of State Farm Indemnity Company (State Farm Indemnity) and State Farm Lloyds (Richardson, TX). AM Best also has revised the outlook to negative from stable for the Long-Term ICR and affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of State Farm General Insurance Company (State Farm General). The outlook of the FSR remains stable. Concurrently, AM Best has affirmed the FSR of A++ (Superior) and the Long-Term ICRs of “aa+” of State Farm Life Insurance Company and State Farm Life and Accident Assurance Company (together referred to as State Farm Life). The outlook of these ratings is stable. All companies are headquartered in Bloomington, IL, except where specified.

The ratings of State Farm Mutual reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).

Additionally, the ratings reflect State Farm Mutual’s strong net income generation despite challenging market conditions in recent years. A series of initiatives to address negative trends in the personal auto lines led to notable improvement in auto results over the past two years. State Farm Mutual, its subsidiary and affiliated property/casualty and life insurance companies, comprise the largest personal lines insurance organization in the United States based on direct premiums written and the second largest in terms of policyholders’ surplus. The State Farm group remains the leading provider of private passenger automobile and homeowners’ insurance in the United States. The organization’s personal lines products are complemented by other lines of business such as commercial multi-peril, commercial auto liability, workers’ compensation and several other lines. The ratings of the subsidiaries and affiliates of State Farm Mutual benefit from shared services, common management, cross selling of products and services, common distribution and brand name recognition. These positive rating aspects are offset in part by the State Farm group’s underwriting variability, above-average exposure to equity market volatility and susceptibility to weather-related catastrophes.

The ratings of HiRoad reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings also reflect lift, as defined within Best’s Credit Rating Methodology (BCRM), from its parent, State Farm Mutual.

The ratings of Dover Bay reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also reflect lift, as defined within BCRM, from its parent, State Farm Mutual.

The ratings of State Farm Florida reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect lift, as defined within BCRM, from its parent, State Farm Mutual.

The ratings of State Farm Indemnity reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its marginal operating performance, neutral business profile and appropriate ERM.

The ratings of State Farm Lloyds reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

The ratings of State Farm General reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect lift, as defined within BCRM, from its parent, State Farm Mutual.

The ratings of State Farm Life reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate ERM. The ratings also reflect lift, as defined within BCRM, from its parent, State Farm Mutual.

Additionally, the ratings of State Farm Life also benefit from strong brand-name recognition, sustained competitive advantages derived from an affiliated exclusive agency field force, and a diverse product portfolio of individual ordinary life and fixed annuity products. Further, State Farm Life finances its statutorily required excess reserves (Regulation XXX) related to term life insurance through capital rather than externally through either domestic captives or offshore reinsurers. The amount of these excess reserves is sizeable and is viewed favorably by AM Best, as it qualitatively enhances the group’s strong risk-adjusted capitalization ratios. Partially offsetting rating factors are ongoing spread compression within its annuity block, losses within its supplementary contracts line of business and exposure to life business with significant minimum guarantee rates.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Michael T. Venezia

Senior Financial Analyst—P/C

+1 908 439 2200, ext. 5034

[email protected]



Bruno Caron, FSA, MAAA

Senior Financial Analyst—L/H

+1 908 439 2200, ext. 5144

[email protected]



Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]



Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

[email protected]

Source: AM Best