State Farm® Announces 2020 Financial Results
Bloomington, IL, February 26, 2021 – In 2020 and for the second straight year, State Farm property and casualty insurance companies experienced growth in auto policies while also reporting lower auto lines earned premium. The decrease in auto earned premium reflects a focus on returning value to customers in the form of overall lower premiums. During 2020, in response to customers driving less and claims experience reflecting that change in behavior, State Farm rolled out the Good Neighbor Relief Program. As part of that program, State Farm paid approximately $2 billion in policyholder dividends to State Farm Mutual auto customers and provided premium relief for other auto customers. State Farm Mutual and the auto insurance affiliates also lowered premiums by an average of 11% nationally, saving customers another $2.2 billion over a six-month policy period.
State Farm also experienced growth in other lines of business, and the State Farm life insurance companies paid out nearly $600 million in dividends to policyholders and ended 2020 with nearly a trillion dollars of individual life insurance in force. As the number one Auto and Homeowners insurer in the U.S. and a leader in individual life insurance, State Farm is committed to serving its policyholders and remains a strong choice for insurance and financial services needs.
“We strive to help more people in more ways. In an unprecedented year like 2020, we focus on our core mission to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams,” said Senior Vice President, Treasurer and Chief Financial Officer Jon Farney. “The Good Neighbor Relief Program is a testament of our commitment to our policyholders and communities. Whether premium relief, dividends to State Farm Mutual auto customers, payment flexibility or philanthropic efforts in the communities we live and work, we're focused on relief and recovery efforts.”
The State Farm P-C group of companies reported earned premium of $65.1 billion, a combined underwriting gain of $1.9 billion, and paid $1.9 billion in dividends to policyholders. This result compared to an underwriting gain of $777 million on earned premium of $64.8 billion in 2019. The 2020 underwriting results reflect lower auto lines incurred claims offset by returns of value to customers in the form of lower premiums, along with an increase in homeowners incurred claims. The increase in homeowners incurred claims during 2020 was due to significant catastrophe activity across the country. The 2020 underwriting gain, combined with dividends to policyholders, and investment and other income of $4.6 billion, resulted in a P-C pre-tax operating gain of $4.5 billion, which was $1.2 billion lower than 2019. Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses) was $78.9 billion for 2020 compared to $79.4 billion for 2019. State Farm reported net income of $3.7 billion in 2020 compared to $5.6 billion of net income in 2019. The net worth for the State Farm group ended the year at $126.1 billion compared with $116.2 billion at year-end 2019. The change includes a significant increase in the value of the P-C companies’ unaffiliated stock portfolio, driven by increases in the U.S. equities market.
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 makes third party mutual funds and third party banking products available through affiliated State Farm companies that act as intermediaries between the third parties and State Farm customers. State Farm provides insurance and financial services products across over 84 million policies and accounts.
Auto – The State Farm auto insurance business represented 62 percent of the P-C companies’ combined net written premium. Earned premium was $41.3 billion. Incurred claims and loss adjustment expenses were $27.6 billion and all other underwriting expenses totaled $10.1 billion. The underwriting gain was $3.5 billion and dividends to policyholders totaled $1.9 billion.
Comparable 2019 figures were: earned premium, $41.5 billion; incurred claims and loss adjustment expenses, $32.0 billion; all other underwriting expenses, $10.3 billion; underwriting loss, $764 million.
Homeowners, CMP, Other – The net written premium for the remainder of the State Farm P-C business represented 36 percent of the P-C companies’ combined net written premium. Earned premium was $22.9 billion. Incurred claims and loss adjustment expenses were $18.6 billion and all other underwriting expenses totaled $5.9 billion. The underwriting loss was $1.6 billion.
Comparable 2019 figures were: earned premium, $22.4 billion; incurred claims and loss adjustment expenses, $14.8 billion; all other underwriting expenses, $5.6 billion; underwriting gain, $2.0 billion.
Health – The individual health insurance operations for State Farm Mutual Automobile Insurance Company reported an underwriting loss of $24 million, excluding the change in the premium deficiency reserve. Net written premium was $710 million.
Comparable figures for 2019 were: underwriting loss, $66 million; net written premium, $707 million.
Life – In 2020, State Farm Life Insurance Company and State Farm Life and Accident Assurance Company reported premium income of $5.5 billion and $584 million in dividends to policyholders. Net income for 2020 was $339 million. There was $994 billion in individual life insurance in force at the end of 2020.
Comparable 2019 figures were: premium income, $5.5 billion; dividends to policyholders, $578 million; net income, $673 million; individual life insurance in force, $945 billion.
Investment Planning Services – Total assets under management for the Investment Planning Services operation at the end of 2020 were $13.9 billion. State Farm VP Management Corp. and State Farm Investment Management Corp. reported a combined net loss of $33 million in 2020.
Comparable figures for 2019 were: total assets under management, $12.7 billion; net loss, $22 million.
GAINSCO, Inc. – On Dec. 31, State Farm Mutual Automobile Insurance Company acquired GAINSCO, Inc. The insurance operations for GAINSCO, Inc. are excluded from the reported results for the State Farm P-C group of companies in this release. In 2020, total revenue was $335 million, net income was $5 million and total assets totaled $421 million.
Although financial information is presented on a group/line of business basis, State Farm Mutual Automobile Insurance Company and each of its affiliates must meet solvency and regulatory requirements on an individual entity-by-entity basis without regard to the solvency or financial condition of any other affiliated entity.
Securities distributed by State Farm VP Management Corp.
State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products. Neither State Farm nor its agents provide investment, tax, or legal advice.