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Press release content from Business Wire. The AP news staff was not involved in its creation.

AM Best Downgrades Issuer Credit Rating of State Farm General Insurance Company

December 22, 2020 GMT

OLDWICK, N.J.--(BUSINESS WIRE)--Dec 22, 2020--

AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a+” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of State Farm General Insurance Company (State Farm General) (Bloomington, IL). The outlook of the Long-Term ICR has been revised to stable from negative while the FSR outlook is stable.

The Credit Ratings (ratings) reflect State Farm General’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The ratings also consider State Farm General’s catastrophe reinsurance program and the benefits associated with the services, common distribution and brand name recognition provided to State Farm General by its parent, State Farm Mutual Automobile Insurance Company (State Farm Mutual).

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The Long-Term ICR downgrade reflects a revision of the company’s operating performance assessment to marginal from adequate. This revision considers deteriorating trends in State Farm General’s operating performance over the past several years, when the company’s underwriting performance has been pressured by losses related to wildfires in California. Through the first nine months of 2020, the company reported a combined ratio of 133.1 and negative net earnings of $31.4 million, putting State Farm General on pace to report significant underwriting losses and negative net income for the third time in the last four years, due to continued wildfire losses in California.

The stable outlooks reflect AM Best’s expectation that State Farm General will take steps to curb volatility and improve the company’s underwriting performance. The stable outlooks further consider the historical financial support that State Farm Mutual has provided to other entities within its organization and AM Best’s opinion that State Farm Mutual would provide similar support, if necessary, to maintain the company’s risk-adjusted capitalization at levels that are supportive of the current ratings.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com:https://www.businesswire.com/news/home/20201222005465/en/

CONTACT: Gregory Dickerson

Associate Director

+1 908 439 2200, ext. 5161

gregory.dickerson@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Raymond Thomson, CPCU, ARe, ARM

Director

+1 908 439 2200, ext. 5621

raymond.thomson@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

KEYWORD: NEW JERSEY EUROPE UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: INSURANCE PROFESSIONAL SERVICES

SOURCE: AM Best

Copyright Business Wire 2020.

PUB: 12/22/2020 10:28 AM/DISC: 12/22/2020 10:28 AM

http://www.businesswire.com/news/home/20201222005465/en