A.M. Best Affirms Ratings and Removes From Under Review State Farm's California and Texas Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 8, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength ratings of B+ (Very Good) for two separately rated subsidiaries of State Farm Mutual Automobile Insurance Company, State Farm General Insurance Company (both of Bloomington Bloomington. 1 City (1990 pop. 51,972), seat of McLean co., central Ill.; inc. 1839. The economy is based on farming; electrical equipment is also manufactured. , IL) and State Farm Lloyds (Dallas, TX) and removed them from under review. The outlooks for the ratings are negative. These rating actions reflect each company's strategic role as a member of the State Farm Group and the ongoing parental capital commitment. Recently, in the third quarter of 2002, the parent provided funding in the amount of $200 million for State Farm General and $400 million for State Farm Lloyds in exchange for surplus notes issued by each company. These actions by State Farm followed the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in operating results and corresponding declines in statutory surplus. In the case of State Farm General--the group's dedicated writer of property coverage in California--surplus had declined by close to 40% from year-end 2000 through the first six months of 2002. These results were driven by increasing loss costs and a corresponding increase in average severity, coupled with market share pricing decisions. In response, State Farm General increased rates where applicable and issued a moratorium A suspension of activity or an authorized period of delay or waiting. A moratorium is sometimes agreed upon by the interested parties, or it may be authorized or imposed by operation of law. on new business. As for State Farm Lloyds--the group's dedicated Texas property writer--the third quarter 2002 surplus note funding is part of a consolidated surplus note, which includes funding of $350 million in November of 2001 and $300 million during the first quarter of 2002. Like State Farm General, State Farm Lloyds has issued a moratorium on new business and increased rates substantially. Furthermore, the company was allowed to implement the State Farm countrywide coun·try·wide adv. & adj. Throughout a whole country; nationwide: launched a fundraising campaign countrywide; a countrywide search. Adj. 1. homeowners policy form effective with September 2002 renewals. The parent's commitment to these entities has been strong and the actions taken by State Farm General and State Farm Lloyds should contribute to a stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders of operating results over the long term; nevertheless, A.M. Best anticipates the need for ongoing parental support given the lackluster lack·lus·ter adj. Lacking brightness, luster, or vitality; dull. See Synonyms at dull. Adj. 1. lackluster - lacking brilliance or vitality; "a dull lackluster life"; "a lusterless performance" operating performance for both companies and the challenging market conditions in Texas and California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . The financial strength ratings of A++ (Superior) for the following members of the State Farm Group are unaffected: - State Farm County Mutual Insurance Company of Texas - State Farm Fire and Casualty Company - State Farm Mutual Automobile Insurance Company A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion