State Farm reports $5.3B profit
BLOOMINGTON, Ill. --State Farm Insurance, the nation's largest insurer, said Thursday that profits climbed 65 percent in 2006 as claims dipped amid a relatively tranquil year for hurricanes and other natural disasters.
The Bloomington-based insurer posted earnings of $5.3 billion, up from $3.2 billion the year before when pay-outs soared after a flurry of hurricanes including Katrina, the costliest disaster in U.S. history.
State Farm said catastrophe losses dipped by $4.1 billion from 2005, when the company paid out a record $6.3 billion for claims and expenses in the aftermath of Katrina, Rita and other tropical storms.
Revenue, which includes premium revenue, earned investment income and realized capital gains, totaled $60.5 billion in 2006, up from $59.2 billion a year earlier.
The company also said Thursday that it will pay a record $1.25 billion in dividends to auto policyholders after posting better-than-expected profits in its auto insurance lines.
Dividends will vary widely, but will average about $35 per insured vehicle for policyholders in 46 states, the District of Columbia and the Canadian province of New Brunswick, the company said.
Analysts say lower claims were the norm for insurers in 2006, which was the lightest year for catastrophe losses since 2002, according to the New York-based Insurance Information Institute.
Northbrook, Ill.-based Allstate Corp., the nation's second biggest insurer behind State Farm, earlier reported that 2006 earnings rose to a record $5 billion, nearly triple its $1.8 billion in profits the year before.
State Farm notched its third straight year of profits in 2006 after two years of losses that reached a record $5 billion in 2001.
The company said its net worth rose to about $58.1 billion in 2006, up from $50.2 billion the year before.
State Farm is a privately held mutual company, owned by its policyholders. Its holdings include auto, property, health and life insurance companies, as well as banking and mutual fund operations.
On the Net: