DECEMBER 22, 2020 09:55 AM (EST)
AM Best Downgrades Issuer Credit Rating of State Farm General Insurance Company
FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 22, 2020 09:55 AM (EST)
The Credit Ratings (ratings) reflect State Farm General’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The ratings also consider State Farm General’s catastrophe reinsurance program and the benefits associated with the services, common distribution and brand name recognition provided to State Farm General by its parent, State Farm Mutual Automobile Insurance Company (State Farm Mutual).
The Long-Term ICR downgrade reflects a revision of the company’s operating performance assessment to marginal from adequate. This revision considers deteriorating trends in State Farm General’s operating performance over the past several years, when the company’s underwriting performance has been pressured by losses related to wildfires in California. Through the first nine months of 2020, the company reported a combined ratio of 133.1 and negative net earnings of $31.4 million, putting State Farm General on pace to report significant underwriting losses and negative net income for the third time in the last four years, due to continued wildfire losses in California.
The stable outlooks reflect AM Best’s expectation that State Farm General will take steps to curb volatility and improve the company’s underwriting performance. The stable outlooks further consider the historical financial support that State Farm Mutual has provided to other entities within its organization and AM Best’s opinion that State Farm Mutual would provide similar support, if necessary, to maintain the company’s risk-adjusted capitalization at levels that are supportive of the current ratings.
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 Guide to 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.