Executive summary
Property/casualty insurers offer a diverse line of products, but the most popular are auto, homeowners, business and workers’ compensation insurance. Of them all, the most troubled sector is workers’ comp; bigger-than-expected payouts have decreased reserves for many of the state’s workers’ comp insurers. As a result, rating service A.M. Best recently downgraded three large carriers in this market.
One of them is No. 7 on this week’s list, State Compensation Insurance Fund of California, whose credit rating was downgraded from A- to B++. According to A.M. Best, this reflects the continued deterioration of the fund’s operating performance in the volatile California market.
The list ranks companies by the value of 1999 direct premiums written in the state. This value is the total amount of premiums written for all insurance policies. The “earned value,” by comparison, is the total amount that the insurance company has collected so far on the premiums issued in that year. All information was compiled by A.M. Best.
The pacesetter
State Farm Group
It’s no surprise that State Farm tops this year’s list of L.A. County’s biggest property/casualty insurers, since it’s the largest U.S. insurer of autos, homes and pleasure boats. Founded in 1922 in Bloomington, Ill., State Farm specializes in personal lines of insurance in the United States and Canada.
In 78 years, the State Farm Insurance Cos. has grown from a small auto insurer into one of the world’s largest financial institutions, with almost 80,000 employees and more than 16,000 agents. California alone accounts for 8,175 of those employees, and there are 1,795 agents to assist the state’s 2.55 million policyholders. L.A. County has 14 State Farm claims service centers and 421 agents.
State Farm auto insurance policyholders will be receiving dividends totaling just over $1 billion within the next six months. California policyholders will receive $182.6 million of that largesse, with the average amount per vehicle around $65. The company returns money to customers when financial results are better than anticipated and business conditions permit. State Farm attributes the current windfall to better-built vehicles, the widespread use of safety belts and generally better drivers, as well as a reduction in fraud. With this dividend, the company will have returned more than $3.3 billion to policyholders through seven dividend payouts since 1991.
The company is currently developing an online bank that will offer a full line of banking services, including checking and savings accounts as well as mortgage loans. People will be able to open accounts either through the Internet or through a State Farm agent.
