State Farm reports $1.7B Loss, Investments Surge and Losses Stem from Home & Auto
Net Worth Grew $9.6B in 2017 as Markets Surge
State Farm Insurance, Bloomington-Normal's largest employer, reported a pre-tax loss of $1.7B in the 2017 fiscal year. Although State Farm is private and therefore is not required to share financial results, the company reported losses stemmed from its auto and home insurance divisions.
The 2017 pre-tax loss grew to $1.7B compared to 2016 when the company reported a pre-tax loss of $1.2B. The company's net income, however, grew tremendously from $400M in 2016 to $2.2B in 2017. Surging markets in 2017 caused the company's net worth to grow 10.7% or $9.4B to a record high of $97B.
According to reports from State Farm, the large growth in net worth can be attributed to its stock portfolio. The company also noted that the 2017 Tax Cuts and Jobs Act also contributed to its growing net worth.
"In 2017, State Farm helped our customers recover from unexpected losses, including several catastrophic events. While we had operating losses for the year, we are built to handle these events and we continue to be 'good neighbors' and have the financial resources to be there in our customers' time of need," said Senior Vice President, Treasurer and Chief Financial Officer Jon Farney. "Our employees, agents and agent team members are making significant changes and process improvements across our company to better serve our customers. We will continue becoming a leaner and stronger company in our pursuit of helping customers recover from the unexpected and being there to help life go right."
The company had an underwriting loss of $2.8B from the home insurance division and $2.8B in the core auto insurance division. This is compared to a massive $7B underwriting loss in the auto division in 2016 and $2B in underwriting gains from the home division in 2016.
State Farm's banking division saw its assets under management decline from $18.3B to $16.7B and a net loss of $1M. Health and life insurance saw similar results to 2016 with $492M in income from the life insurance division and an underwriting loss of $71M.
The company's retail mutual funds division grows 6.5% from $12.2B in assets under management to $13B in 2017. The division recorded $6M in income, up from $4M in 2016.
State Farm ended the year with more than 83 million policies and accounts from its insurance and financial products, slightly down from 2016's 84 million policies and accounts. The company reported total revenue of $78.3 in 2017 compared to $76.1B in 2016.