State Farm Reports $5 Billion Loss
Associated Press
State Farm, Hit by Mounting Claims and Reduced Capital Gains, Reports $5 Billion Loss in 2001
BLOOMINGTON, Ill. (AP) -- Hit by mounting claims and drastically reduced capital gains, State Farm Insurance Co. reported on Friday a net loss in 2001 of $5 billion.
The Bloomington-based insurer said the loss was the largest in the company's 80-year history and follows a year in which it earned $400 million.
The privately held company also said its $2.8 billion stock market loss for the year contributed to a decline of $5.7 billion to the net worth of the parent company, State Farm Mutual.
State Farm's revenues from premiums rose from $37.6 billion in 2000 to $40 billion last year. But those premiums could not keep pace with the amount of money being paid out in claims, as reflected in an underwriting loss of $5.3 billion.
And after seeing $3.4 billion in capital gains in 2000, the company reported capital gains of just $300 million last year.
Unlike years past, there was not a highly publicized natural disaster, such as Hurricane Andrew and the Northridge Earthquake that could account for the scores of catastrophe claims the company paid out in 2001.
But quietly, said company spokesman Dick Luedke, 2001 was the third costliest year in terms of catastrophe claims in the company's history.
"You didn't hear much about it, but a wind and hail storm in April that hit Texas, Illinois, Missouri, Ohio, Indiana and Pennsylvania was the fifth costliest catastrophe ever," he said.
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