Posted on 27 Feb 2009
The largest U.S. home and auto insurer, State Farm Mutual Automobile Insurance Co., was unprofitable in 2008 on losses covering cars and claims tied to hurricanes.
The net loss was $542 million, compared with profit of $5.46 billion in 2007, the Bloomington, Illinois-based company said in a statement today. The insurer is owned by its policyholders and reports results once a year.
Catastrophes last year, including Hurricanes Ike and Gustav, cost U.S. property and casualty insurers about $25.2 billion, the most since 2005, an industry group said last month. The U.S. also endured a record number of tornadoes in the first half of the year.
Ike, which slammed into Texas in September, is expected to generate industry losses of $10.6 billion and pass Wilma, of 2005, as the third-costliest hurricane, according to Insurance Services Office Inc. The most expensive storm in history, Hurricane Katrina, cost insurers $41.1 billion when it struck that same year.
State Farm reports its results based on state accounting rules for insurers. Publicly traded insurers must use U.S. generally accepted accounting principles, making comparisons inexact. Allstate Corp., the No. 2 home and auto insurer, insurer, reported a $1.68 billion loss last year, its largest as a publicly traded company.
State Farm is the largest home and auto insurer in the U.S. by premiums, according to 2007 data compiled by the National Association of Insurance Commissioners. The company has no publicly traded debt.