A.M. Best Downgrades Rating for State Farm General.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 28, 2002 A.M. Best Co. has downgraded the financial strength rating to B+ (Very Good) from A- (Excellent) for State Farm General Insurance Company, Bloomington, Illinois Bloomington is a city in McLean County, Illinois, United States that is its county seat as well. A 2006 special census indicated that the population was 74,975 [1]. . State Farm General is a multi-line property and casualty carrier that operates predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. in the state of 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). . This downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. reflects the company's marginal stand-alone capital position, elevated premium leverage and 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 trends over the last two years. Although State Farm General is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of the Superior rated State Farm Mutual Automobile Insurance Company, its current capital position is marginal and does not support an Excellent rating. Since year-end 1999, State Farm General's surplus has declined by 20% due to unfavorable operating performance, which reflects increased homeowner's severity brought about by rising construction costs along with State Farm General's overall market share growth pricing. As a result, State Farm General's loss and loss adjustment expense ratio has deteriorated with a corresponding increase in the overall combined ratio. Although the company has recently received permission for a 6.9% rate increase, A.M. Best anticipates operating performance and capital will continue to be pressured in the near-term due to ongoing severity trends, as well as the annual term of the homeowner policy and the California regulatory environment. Despite the declines in surplus and unfavorable operating performance trends, State Farm General has maintained a Secure A.M. Best rating due to the anticipated ongoing support of its parent. 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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