State Farm Financial Overview
Brief Financial Synopsis and History
Premium revenue for the State Farm group was $44.4 billion for 2002, an increase of 11% over the 2001 figures of $40 billion. Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses), was $49.7 billion for 2002, an increase of $3 billion from the 2001 fiure of $46.7 billion.
The after-tax net loss from all sources was $2.8 billion in 2002, an improvement over the results in 2001, reflecting better insurance operating results and federal income tax recoverables. Excluding $1.2 billion in write-downs for impairment of invested assets, the 2002 after-tax net loss was $1.6 billion.
Net worth for the State Farm Group declined by $6.3 billion to $31.8 billion. THe primary reason for this decline was the $4.7 billion after-tax realized and unrealized loss on the property and casualty companies' unaffiliated stock portfolio driven by the general market decline in 2002.
State Farm Mutual's health operation (including group health) in 2002 had an underwriting loss of $118 million on earned premiums of $1.1 billion. The underwriting loss in 2001 was $115.2 million on earned premiums of $1 billion. Excluding group helath results, the underwriting loss was $87.6 million on earned premiums of $657.8 million.
Nearly 16,000 more applicants for long-term care insurance were written in 2002 than 2001.
Long-term care insurance took a front seat for State Farm agents in 2002 with the introduction of the first national marketing campaign to educate customers. Our total net worth of LTCI premiums increased from $37 million in 2001 to $65 million in 2002 (State Farm Long-Term Care Insurance is offered through the State Farm Mutual Automobile Insurance Company).
State Farm entered into an agreement to fund a study through the American Society on Aging to analyze the need for long term care insurance throughout the country. The ASA study indicates that 100 million people in the United States are living with a chronic illness. By 2016, that number is expected to grow to 134 million.
Roughly three quarters of those surveyed were familiar with the major long-term care options, and 71% believe it is very important to have some type of private or government coverage for long-term care. However, only 17% said they currently have specific long-term care insurance to cover these costs.
Through the information-gathering process of the State Farm Insurance and Financial Review, agents can determine if LTCI is needed (info gathered from State Farm 2002 Year In Review)