AM Best has revised the outlooks to negative from stable for State Farm and certain subsidiaries, citing recent adverse underwriting experience in the private passenger auto insurance line of business, the challenging regulatory environment, and continued elevated catastrophe-related loss experience in many parts of the country.
Spelt out, the rating agency has revised the outlooks to negative from stable for State Farm Mutual Automobile Insurance Company and its affiliates, State Farm Fire and Casualty Company and State Farm County Mutual Insurance Company of Texas.
In addition, AM Best has revised the outlooks to negative from stable for State Farm Florida Insurance Company, MGA Insurance Company, Inc. and State Farm General Insurance Company.
Finally, the rating agency has also revised the outlooks to negative from stable for State Farm Life Insurance Company and State Farm Life and Accident Assurance Company, collectively referred to as the State Farm Life Group.
According to AM Best, the negative outlooks on the property/casualty rating units primarily reflect “recent adverse underwriting experience in the private passenger auto insurance line of business and the challenging regulatory environment that have constrained the ability of State Farm (as well as its industry peers) to increase premium rates in a timely fashion, along with continued elevated catastrophe-related loss experience in many parts of the country.”
Back in May, State Farm said it plans to stop underwriting commercial and residential property in the State of California, citing exposure related issues and a challenging reinsurance market environment.
At the time, the firm noted that State Farm General Insurance Company, its homeowners insurer in California, will “cease accepting new applications including all business and personal lines property and casualty insurance, effective May 27, 2023.”
AM Best observed that the weather-related losses, particularly from hurricane, winter and convective storms, as well as wildfires, have put further pressure on the group’s operating performance assessment.
Meanwhile, the rating agency said that the negative outlooks on State Farm Life reflect the negative outlook on State Farm Group, given the consideration of ratings lift for State Farm Life on the basis of implicit support from State Farm Group.
