State Farm Profit Plunges $7 Billion
State Farm Mutual Automobile Insurance Co., the largest U.S. property-casualty insurer, said annual profit fell 94 percent on car insurance claims costs. Net income dropped to $400 million from $6.2 billion in 2015, when results included one-time gains in the stock portfolio tied to pharmaceutical deals, the Bloomington, Illinois-based company said in a statement. The underwriting loss from auto insurance widened to $7 billion from $4.4 billion.
State Farm is among property-casualty insurers pressured by rising costs on auto policies as smartphones distract drivers and repair costs climb.
“Loss costs throughout the auto-insurance industry have been increasing at an unexpected pace,” Berkshire Chairman Warren Buffett said in his annual letter to shareholders.