State Farm P&C UW loss narrows to $6.1 billion in 2024; LA wildfire payments hit $2.2 billion

By Chris Munro

Feb 28 - (The Insurer) - State Farm’s P&C business saw its underwriting loss narrow to $6.1 billion in 2024 from 2023’s deficit of $14.1 billion, due to improved performance in auto.

In an update issued on Friday, State Farm said the improved auto underwriting performance was partially offset by an increase in homeowners' incurred catastrophe claims.

State Farm’s 14 P&C businesses collectively booked earned premium of $103.0 billion in 2024, compared with $87.6 billion in the prior year.

The P&C 2024 underwriting loss, combined with investment and other income of $6.0 billion, resulted in the division booking a pre-tax operating loss of $111 million, compared with an $8.5 billion loss recorded in 2023.

“While auto and fire insurance companies within the State Farm group of companies reported underwriting losses, results improved over prior year,” the company said.

State Farm Mutual Automobile Insurance Company’s net worth totalled $145.2 billion at year end 2024, compared with $134.8 billion at the same point in the prior year.

“The change during 2024 includes an increase in the value of the P&C companies’ unaffiliated stock portfolio, driven by increases in the U.S. equities market, partially offset by the P&C group of companies pre-tax operating loss,” State Farm explained.

State Farm’s auto business reported an underwriting loss of $2.7 billion in 2024, an improvement on the prior year’s $9.7 billion.

Auto represented 65% of its P&C companies’ combined net premium written (NPW) in 2024, up one percentage point when compared with the previous year.

In the auto division, earned premium increased from $56.1 billion in 2023 to $67.5 billion last year, while the segment’s incurred claims and loss adjustment expenses (LAE) increased by $2.8 billion to $56.2 billion.

All other underwriting expenses within the auto business totalled $14.0 billion in 2024, compared with $12.4 billion in 2023.

State Farm’s homeowners, commercial multi-peril (CMP) and other division booked an underwriting loss of $3.6 billion in 2024, an improvement on the prior year’s deficit of $4.7 billion.

Homeowners, CMP and other business accounted for 34% of State Farm’s P&C combined net premiums written last year, down one point from 2023.

The segment’s 2024 earned premium increased $4.0 billion year on year to $34.5 billion, while its incurred claims and LAE went up by $2.1 billion to $30.1 billion.

All other underwriting expenses in the homeowners, CMP and other segment reached $7.9 billion in 2024, compared with the prior year’s $7.1 billion.

“After another year of catastrophe events, State Farm was there to help our customers recover from the unexpected and will continue to do so as we focus on our customers impacted by the devastating wildfires in California,” said Mark Schwamberger, State Farm’s senior vice president, treasurer and chief financial officer.

Paid out $2.2 billion in CA claims

As of February 26, Schwamberger said State Farm had received over 11,750 total fire and auto claims related to the California wildfires and paid out nearly $2.2 billion to its customers.

State Farm’s California-based business State Farm General Insurance Company (SFG) has previously estimated its direct losses from the Los Angeles wildfires at $7.6 billion, including reported and unreported claims.

“Our customer-centered approach leads us to measure success in the number of promises kept,” said Schwamberger.

“The financial strength of each affiliate is critical to our ability to keep those promises, and we will continue to take a state-specific approach in the way in which we operate.”

SFG has requested that California insurance commissioner Ricardo Lara approve a 22% rate hike for homeowners policies in the state, along with a 15% rise for tenant coverage and a 38% increase for rental dwellings.

Lara has so far deemed the insurer's request inadequate.