Bloomington, Ill.-based State Farm Insurance announced that profit rose 3 percent last year on the strength of higher auto policyholder dividends despite a steep decline in property casualty underwriting. The company said nearly half of the 79 percent drop in underwriting, to $621 million from $3 billion in 2006, was due to a fourth consecutive year of auto rate decreases.
State Farm’s net income rose to $5.46 billion in 2007 from $5.32 billion a year earlier. It was the insurer’s fifth straight profitable year after significant losses in 2001-2002. Total revenue rose 1.8 percent to $61.6 billion from $60.5 billion.
Chief Financial Officer Michael Tipsord downplayed the P/C decline. “Because there can be significant volatility in the insurance business, we must avoid the temptation of attributing too much significance to short-term financial results – long-term sustainability is the key,” he said in a statement.
Source: State Farm Insurance Co.
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