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Tuesday, 28 February 2006 17:00

State Farm net income declines due to hurricanes

Hurricane losses and loss adjustment expenses totaling $6.3 billion (after reinsurance) contributed to a reduction in State Farm's 2005 net income. The company is reporting an after-tax net income from all sources of $3.24 billion, down 39 percent from the $5.31 billion in net income for 2004. 

Net worth for the State Farm group increased by $3.9 billion to $50.2 billion. The primary reasons for this improvement were the insurance operating results and the $759 million realized and unrealized gain (net of deferred tax) on property-casualty (P-C) companies' unaffiliated stock portfolios.

The P-C companies reported a pretax operating profit of $3.5 billion in 2005, including investment and other income of $4.3 billion and an underwriting loss of $779 million. This compares with a pretax operating profit of $5.5 billion in 2004, which included investment and other income of $3.57 billion and an underwriting gain of $1.96 billion. The State Farm group's net worth also is affected by the results of operations of non-P-C affiliates, which resulted in a gain for the year of $379 million, primarily driven by results for State Farm Life Insurance Company.

Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses), was $59.2 billion for 2005 compared with the 2004 figure of $58.8 billion. also provides banking products and mutual funds through affiliated companies.

 

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