State Farm announces 2022 financial results
In 2022, State Farm’s auto insurance companies reported record underwriting losses due to rapidly increasing claims severity and significant additions to prior accident year incurred claims. While State Farm experienced unfavorable operating results in auto, State Farm Mutual Automobile Insurance Company remains financially strong. The State Farm life insurance companies paid out nearly $600 million in dividends to policyholders, and issued a record $110 billion in new policy volume bringing the year-end 2022 individual life insurance in force to $1.1 trillion. As the number one Auto and Homeowners insurer in the U.S. and a leader in individual life insurance, State Farm is committed to serving its policyholders and remains a strong choice for insurance and financial services needs.
“While 2022 was a year of significant growth at State Farm, our annual operating results were not at the level we expect as we consider each affiliate’s financial strength and long-term performance. At the same time, the organization remains financially strong,” said Senior Vice President, Treasurer and Chief Financial Officer Jon Farney. “We’re pleased we could assist our customers during the pandemic and we’re there to help them navigate the current period of high inflation. As we take actions to improve our operating performance, we look forward to helping more people in more ways as we begin our next 100 years.”
The net worth for State Farm Mutual Automobile Insurance Company ended the year at $131.2 billion compared with $143.2 billion at year-end 2021 and $126.1 billion at year-end 2020. The change during 2022 includes a noteworthy decrease in the value of the P-C companies’ unaffiliated stock portfolio, driven by decreases in the U.S. equities market, along with the P-C group of companies pre-tax operating loss. The State Farm P-C group of companies reported earned premium of $74.3 billion and a combined underwriting loss of $13.2 billion. This result compared to an underwriting loss of $4.7 billion on earned premium of $67.2 billion in 2021, along with $401 million in dividends to State Farm Mutual Automobile Insurance Company policyholders. The 2022 underwriting results reflect significantly higher auto lines incurred claims as well as higher homeowners non-catastrophe incurred claims and another year of catastrophe activity across the country. The 2022 underwriting loss, combined with investment and other income of $4.9 billion, resulted in a P-C pre-tax operating loss of $8.3 billion, which compares to the $313 million loss reported in 2021 and the $4.5 billion profit reported in 2020. Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses) was $89.3 billion for 2022 compared to $82.2 billion for 2021. State Farm reported a net loss of $6.7 billion in 2022 compared to $1.3 billion of net income in 2021.
The State Farm insurance operations consist of thirteen P-C companies and two life companies, each of which is managed on an individual affiliate level. The P-C companies are primarily engaged in automobile, health, homeowners, commercial multiple peril (CMP) and reinsurance lines of business. The life companies are primarily engaged in individual life insurance and annuity business. The State Farm group makes third party mutual funds and third party banking products available through affiliated State Farm companies that act as intermediaries between the third parties and State Farm customers. State Farm provides insurance and financial services products across over 91 million policies and accounts.
Auto – The State Farm auto insurance business represented 61 percent of the P-C companies’ combined net written premium. Earned premium was $45.7 billion. Incurred claims and loss adjustment expenses were $48.4 billion and all other underwriting expenses totaled $10.8 billion. The underwriting loss was $13.4 billion.
Comparable 2021 figures were: earned premium, $41.5 billion; incurred claims and loss adjustment expenses, $34.6 billion; all other underwriting expenses, $10.3 billion; underwriting loss, $3.5 billion. Dividends to State Farm Mutual Automobile Insurance Company policyholders totaled $401 million.
Homeowners, CMP, Other – The net written premium for the remainder of the State Farm P-C business represented 37 percent of the P-C companies’ combined net written premium. Earned premium was $27.6 billion. Incurred claims and loss adjustment expenses were $20.0 billion and all other underwriting expenses totaled $6.7 billion. The underwriting gain was $849 million.
Comparable 2021 figures were: earned premium, $24.7 billion; incurred claims and loss adjustment expenses, $19.5 billion; all other underwriting expenses, $6.3 billion; underwriting loss, $1.1 billion.
Health – The individual health insurance operations for State Farm Mutual Automobile Insurance Company reported an underwriting loss of $81 million, excluding the change in the premium deficiency reserve. Net written premium was $723 million.
Comparable figures for 2021 were: underwriting loss, $75 million; net written premium, $719 million.
Life – In 2022, State Farm Life Insurance Company and State Farm Life and Accident Assurance Company reported premium income of $6.2 billion and $603 million in dividends to policyholders. Net income for 2022 was $588 million. There was $1.1 trillion in individual life insurance in force at the end of 2022.
Comparable 2021 figures were: premium income, $5.7 billion; dividends to policyholders, $593 million; net income, $929 million; individual life insurance in force, $1.1 trillion.
Investment Planning Services – Total assets under management for the Investment Planning Services operation at the end of 2022 were $12.4 billion. State Farm VP Management Corp. and State Farm Investment Management Corp. reported a combined net loss of $43 million in 2022.
Comparable figures for 2021 were: total assets under management, $15.3 billion; net loss, $38 million.