State Farm Navigates Financials Amidst California Rate Controversy
Despite ongoing controversy regarding potential policy cancellations in California, State Farm reported a robust financial performance in 2024. The company’s Chief Financial Officer (CFO), Mark Schwamberger, announced that State Farm will continue to adopt a “state-specific approach” to its operations.
State Farm achieved a net income of $5.3 billion in 2024, a significant turnaround from the $6.3 billion net loss reported in 2023. This financial improvement was fueled by capital gains and a substantial reduction in its pretax operating loss.
The company processed over 11,750 claims and paid nearly $2.2 billion in losses related to the Los Angeles wildfires in January.
While the combined underwriting loss narrowed to $6.1 billion from $14.1 billion the previous year, automobile underwriting showed notable improvements. However, the company noted increased claims related to homeowners’ catastrophes. Earned premiums for State Farm’s property and casualty companies also increased, rising from $87.6 billion to $103 billion.
The auto insurance underwriting loss, which accounts for 65% of the company’s property and casualty net written premium, dropped to $2.7 billion in 2024 from $9.7 billion a year earlier. Schwamberger emphasized that the financial strength of each affiliate is key to maintaining commitments to policyholders.
State-Specific Approach
Schwamberger’s remarks followed a meeting with California Insurance Commissioner Ricardo Lara and other officials to address the company’s request for emergency action on interim property rate increases, proposed to range from 15% to 38%. However, Lara stated that State Farm had not provided sufficient justification for the proposed emergency property rate hikes.
The insurer has warned regulators that a denial of its request for increased rates could lead to the cancellation of numerous policies. State Farm is seeking an immediate 22% increase in homeowner premiums. Additionally, the company is pursuing rises for rental and condo policies, citing substantial losses related to the wildfires.
In January, State Farm reported paying nearly $500 million in claims following the Los Angeles wildfires. The company processed 10,100 claims for home and auto damage caused by the fires.
State Farm Life Insurance Co. and State Farm Life and Accident Assurance Co. saw a net income increase to $1.7 billion from $1.2 billion, with $1.18 trillion in individual life insurance in force at year-end.
