Rating agency downgrades State Farm

Rating agency downgrades State Farm



By BRENT KALLESTAD
Associated Press Writer
Publication Date: 06/19/09

TALLAHASSEE--State Farm Florida's financial strength rating has been downgraded.

The A.M. Best Co. said Thursday that it reduced its rating on State Farm based on the company's significant deterioration in earnings in Florida and the expectation that the downturn will continue.

State Farm's outlook in Florida was revised to negative by the New Jersey-based rating agency.

State Farm spokesman Justin Glover called the newest rating unfortunate but understandable considering the challenges facing the state's property insurance marketplace.

"From our standpoint, our claims, losses and expenses continue to outpace our premiums and we have not received any regulatory or rate relief," Glover said.

State Farm Florida filed a plan in January to stop writing property insurance in Florida where it has more than 1 million property insurance policyholders.

Although its A.M. Best rating was downgraded, State Farm Florida remains in compliance with minimum surplus requirements of Florida law based on its most recent filings with the state's Office of Insurance Regulation, OIR spokesman Ed Domansky said Thursday.

"It is important to point out that since 1992, State Farm has received nearly 530 percent in approved rate increases," Domansky said. "Most recently, an increase of more than 52 percent in late 2006."

State Farm Florida was established in 1998 as a subsidiary of State Farm Mutual Automobile Insurance Company to underwrite the state's high-risk property market.

And while it plans to leave the property insurance market, State Farm will continue to sell auto, healthy and other lines of insurance in Florida, where the Bloomington, Ill.-based company employs more than 5,000 people in Florida, including 800 agents.

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