Insurer's Profits Rise 90% in 2004

Wipe away those tears you've been shedding for State Farm Insurance. Friday, the carrier announced that 2004 was a banner year for profits -- even for its property casualty business.

As the Kansas City Star reports:

State Farm Insurance Co. posted a $5.3 billion profit in 2004, up nearly 90 percent from the year before despite four hurricanes that pounded Florida and other southern states last year.

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Overall, State Farm's claims dipped about 5 percent last year even though payouts for hurricanes and other disasters were up 13 percent, spokesman Dick Luedke said. The net decline helped the company post an underwriting gain of about $2 billion, compared with a loss of $281 million in 2003.

Luedke also said the company saved nearly $630 million on hurricane claims through a special fund in Florida that protects insurers against weather-related losses. Insurers pay into the fund, then draw from it as needed.

In a State Farm company press release, it was revealed that the "underwriting gain" from its subsidiary property casualty group that includes State Farm Florida Insurance Company was $700 million -- compared with only $13 million the year before. Overall profits from the group totalled 31 percent of the company's 2004 profits.

"The 2004 underwriting results include losses and loss adjustment expenses totaling $2.9 billion (after reinsurance) related to the four hurricanes that made landfall in August and September."

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Total revenue for State Farm, which includes premium revenue, earned investment income and realized capital gains (losses), was $58.8 billion for 2004 compared with the 2003 figure of $56.1 billion. State Farm reported an after-tax net income from all sources of $5.3 billion in 2004 compared with a net income of $2.8 billion in 2003.

According to State Farm, thanks to 2004 profits, the company's "net worth for the State Farm group increased by $6.0 billion to $46.3 billion."

Now, what was it you were saying about the insurance crisis?