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Ratings agency likes cut of State Farm's jib

Mon, 04 Jun 2012 16:51:25 CDT
By: Charlie Schlenker

An insurance ratings firm has kept a positive assessment of Bloomington insurance giant State Farm. A-M Best affirms ratings for several of State Farm's businesses and says the group is well positioned for the foreseeable future with strong capitalization, generally favorable earnings, strong policy holder surplus, premiums written, and a superior business profile. Offsetting those positives, the ratings agency says State Farm has below average profitability, average investment leverage in equities, and the low interest rate environment. Above average investment in common stocks, Best says, exposes State Farm to market volatility. In only one of the State Farm subsidiaries, State Farm Indemnity, did A-M Best list a negative outlook. That was because of unfavorable earnings over the last five years, even though analysts note the indemnity company helps State Farm offer a comprehensive package of services that may increase retention and profitability in other sectors.


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