State Farm Announces 2017 Financial Results

BLOOMINGTON, Illinois, March 1 -- State Farm Companies, an auto, home and individual life insurance provider, issued the following news release:

The State Farm property-casualty (P-C) group of companies reported a combined underwriting loss of $6.5 billion in 2017 on earned premium of $63.9 billion, compared to an underwriting loss of $5.5 billion on earned premium of $61.7 billion in 2016. The 2017 underwriting loss, combined with investment and other income of $4.8 billion, resulted in a P-C pre-tax operating loss of $1.7 billion. The underwriting loss in 2017 was driven by significant catastrophe losses. Even with these operating losses, each of the State Farm companies remains financially strong.

The net worth for the State Farm group ended the year at $97.0 billion compared with $87.6 billion at year-end 2016. The increase was primarily due to an increase in the value of the P-C companies' unaffiliated stock portfolio. Valuation updates for deferred tax assets and liabilities determined using the corporate tax rate enacted as part of the U.S. Tax Cuts and Jobs Act also increased net worth for the group.

"In 2017, State Farm helped our customers recover from unexpected losses, including several catastrophic events. While we had operating losses for the year, we are built to handle these events and we continue to be 'good neighbors' and have the financial resources to be there in our customers' time of need," said Senior Vice President, Treasurer and Chief Financial Officer Jon Farney. "Our employees, agents and agent team members are making significant changes and process improvements across our company to better serve our customers. We will continue becoming a leaner and stronger company in our pursuit of helping customers recover from the unexpected and being there to help life go right."

Total revenue, which includes premium revenue, earned investment income, and realized capital gains (losses) was $78.3 billion for 2017 compared to $76.1 billion for 2016. State Farm reported net income of $2.2 billion in 2017, compared to $0.4 billion of net income in 2016. The State Farm insurance operations consist of eleven P-C companies and two life companies, each of which is managed on an individual affiliate level. The P-C companies are primarily engaged in automobile, health, homeowners, commercial multiple peril (CMP), and reinsurance lines of business. The life companies are primarily engaged in individual life insurance and annuity business. The State Farm group also provides banking products and mutual funds through affiliated companies. State Farm provides insurance and financial services products across more than 83 million policies and accounts.

Auto - The State Farm auto insurance business represented 65 percent of the P-C companies' combined net written premium. Earned premium was $41.6 billion. Incurred claims and loss adjustment expenses were $34.2 billion and all other underwriting expenses totaled $10.2 billion. The underwriting loss was $2.8 billion.

Comparable 2016 figures were: earned premium, $38.8 billion; incurred claims and loss adjustment expenses, $35.8 billion; all other underwriting expenses, $10.0 billion; underwriting loss, $7.0 billion.

Homeowners, CMP, Other - The net written premium for State Farm's remaining P-C business represented 33 percent of the P-C companies' combined net written premium. Earned premium was $21.4 billion. Incurred claims and loss adjustment expenses were $18.6 billion and all other underwriting expenses totaled $5.6 billon. The underwriting loss was $2.8 billion.

Comparable 2016 figures were: earned premium, $22.1 billion; incurred claims and loss adjustment expenses, $14.4 billion; all other underwriting expenses, $5.7 billion; underwriting gain, $2.0 billion.

Health - The individual health insurance operations for State Farm Mutual Automobile Insurance Company reported an underwriting loss of $71 million, excluding premium deficiency reserve. Net written premium was $691 million.

Comparable figures for 2016 were: underwriting loss, $84 million; net written premium, $668 million.

Life - In 2017, State Farm Life Insurance Company and State Farm Life and Accident Assurance Company reported premium income of $5.3 billion and $578 million in dividends to policyholders. Net income for 2017 was $492 million. There was $901.7 billion in total life insurance in force at the end of 2017.

Comparable 2016 figures were: premium income, $5.7 billion; dividends to policyholders, $584 million; net income, $562 million; total life insurance in force, $873.7 billion.

State Farm Bank - Net loss in 2017 was $1 million and total assets for State Farm Bank, F.S.B. were $16.7 billion as of year-end 2017.

Comparable figures for 2016 were: net income, $39 million; total assets, $18.3 billion.

Mutual Funds - Total assets under management for the retail Mutual Fund operations at the end of 2017 were $13.0 billion, compared with $12.2 billion at the end of 2016. State Farm VP Management Corp. and State Farm Investment Management Corp. reported combined net income of $6 million in 2017, following net income of $4 million in 2016.