State Farm’s Underwriting Loss Deepens in 2023 Despite Auto Insurance Recovery

State Farm experienced an unprecedented underwriting loss of $14 billion in 2023, surpassing its previous record loss. This setback was primarily due to a nearly $5 billion loss in property lines, overshadowing the nearly $4 billion improvement in auto insurance performance. Despite growth in policy numbers, the company faced substantial underwriting losses attributed to elevated claims severity and significant catastrophe activity across both auto and homeowners insurance segments.

The auto sector saw a 23% increase in earned premiums, reaching $56.1 billion, yet incurred claims and other expenses led to a $9.7 billion underwriting loss, an improvement from 2022’s $13.4 billion loss. Conversely, the property segment, including homeowners and commercial multiple peril lines, recorded a $4.7 billion underwriting loss, a stark contrast to the previous year’s $849 million gain. This was despite a 10.5% increase in earned premiums for these lines, as incurred losses surged by 40% from 2022.

Overall, State Farm’s property and casualty group reported a combined underwriting loss of $14.1 billion on $87.6 billion in earned premiums. With investment and other income of $5.6 billion, the pre-tax operating loss stood at $8.5 billion for 2023. However, total revenue rose by 16.7% to $104.2 billion, thanks to premium revenue, investment income, and realized capital gains. The net loss for the year was $6.3 billion, slightly improved from 2022’s $6.7 billion loss.

Despite these challenges, State Farm highlighted the financial strength of State Farm Mutual Automobile Insurance Company, with a year-end net worth of $134.8 billion. The company also noted significant life insurance activity, with more than $725 million in dividends paid to policyholders and a record $118 billion in new policy volume.