State Farm General Updates on California Operations Amidst Financial Challenges
Bloomington, February 26, 2025 – State Farm General Insurance Company (State Farm General) has issued a series of updates regarding its operations in California, focusing on the financial impact of recent wildfires and ongoing discussions with the California Department of Insurance (CDI).
S&P Global Rating Action
February 25, 2025: S&P Global placed State Farm General’s Financial Strength Rating on CreditWatch – Negative. The company expressed deep concern about its financial position in the state, citing the difficulty of matching prices to risks in California. State Farm General had previously requested immediate rate increases to stabilize its financial condition, as mentioned in an emergency filing on February 3rd.
Meeting with Commissioner Lara
February 26, 2025: State Farm General representatives attended a meeting with California Commissioner Ricardo Lara to present the urgency of approving the company’s interim rate request, which the company insists is essential for its ability to serve Californian customers. The company is seeking approval for interim rate increases.
February 25, 2025: State Farm General sent a letter to Commissioner Lara ahead of their meeting. The letter outlined the financial impact of the January wildfires, showing that the company had already paid out $1.75 billion on approximately 9,500 claims related to the fires.
State Farm General estimated direct losses from the Los Angeles fires to be around $7.6 billion. The estimated retained losses after reinsurance are approximately $212 million, and its share of total FAIR Plan losses is approximately $400 million. This, combined with the company’s current surplus will decline by approximately $400 million due to the January fires.
“Immediate interim approval is an indispensable and critical first step to eventually restoring the company’s financial strength. Financial strength is necessary so an insurance company can pay for any future claims for the risks it insures.” – State Farm General
Prior Requests and Financial Concerns
State Farm General previously requested immediate rate increases, including a 22% average increase for homeowners, in a February 3, 2025, letter to the CDI. This was to address the mounting financial pressures. The company also noted that insurance costs are increasing for California customers due to the higher risk.
Over the past nine years, State Farm General has reported cumulative underwriting losses exceeding $5 billion. They have made difficult choices, including halting the writing of new policies in May 2023, and non-renewing 30,000 homeowner policies in March 2024.
Last year, one rating agency downgraded State Farm General’s financial strength rating. Additional downgrades could follow if the company’s capital base continues to deteriorate because of wildfire losses.
Sevag Sarkissian, Media Specialist for State Farm
State Farm General says that it looks forward to working with regulators, policymakers, and industry leaders.
