A.M. Best Affirms Ratings of State Farm; Revises Outlook to Stable for Certain Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--April 19, 2004 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 the property/casualty and life affiliates of the State Farm Group (Bloomington, IL). (See link below.) The negative rating outlooks assigned to certain subsidiaries have been revised to stable. The rating for State Farm Group reflects its strong risk-adjusted capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , well-recognized franchise and significant presence in the U.S. property/casualty market. Despite surplus volatility over the last several years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time group maintains a significant capital base with a correspondingly modest underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. leverage position. In response to previously unfavorable operating results, management implemented a number of strategic initiatives, including a renewed focus on underwriting profitability, managed growth objectives and most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , improved rate adequacy. As a result of these initiatives, along with the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. development of prior year losses, the group's year-end 2003 results improved considerably with a 14 point reduction in the combined ratio and a more than $5 billion increase in pre-tax operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from the prior year. Despite improvement in 2003, the loss and loss adjustment expense ratios are somewhat elevated, particularly compared with those of similarly-rated peers. In addition, common stock investment leverage as a percentage of surplus is high at more than 80%. However, the portfolio is well diversified diversified (di·verˑ·s and represents less than half of overall invested assets. Based on the considerable improvement in operating performance, strong capitalization and dominant business profile, the outlook has been revised to stable. Additionally, A.M. Best recognizes the strategic role of the State Farm life affiliates, which have more than adequate levels of risk-adjusted capitalization, a long-standing record in reporting consistent operating gains and maintaining a focus on providing a broad portfolio of life and annuity products to the large State Farm Group customer base. Although results have improved considerably for State Farm Fire and Casualty Company, a wholly-owned subsidiary of State Farm Mutual Automobile Insurance Company (both of Illinois) and dedicated property writer for the group, A.M. Best continues to view the rating outlook for this entity as negative. The outlook primarily reflects the elevated premium leverage and correspondingly modest risk-adjusted capitalization relative to the current rating level. For a complete listing of State Farm Group's financial strength ratings please visit www.ambest.com/press/041901statefarm.pdf. 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. |
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