Company Overview
Highlights
Underwrites more than 77 million policies.
Represented by 17,800 agents.
Ranked 32nd on Fortune 500
Named one of Black Collegian’s "Top Employers" and in the Top 50 corporations for supplier diversity in Hispanic Trends Magazine in 2008.
Invests more than $4.5 million in youth-led projects; formed a partnership with Habitat for Humanity
George J. Mecherle, himself a farmer, founded State Farm in 1922 to provide discounted auto insurance to rural farmers. Today, the company provides auto, homeowners, health, and life insurance, as well as mutual funds and other investment products. State Farm's 17,000 agents and 67,000 employees serve more than than 77 million auto, fire, life and health policies, and more than 1.9 million bank accounts. It has 24 operation centers in the United States and Canada. With its 1998 federal thrift charter, the company now also provides banking services including deposit accounts, CDs, mortgages, and other loans via telephone and the Internet. State Farm established itself as a financial services provider the next year, and its mutual funds already have $3.9 billion in assets.
State Farm insures 15 percent of the automobiles on the roads and more than 20 percent of single-family homes in the United States, but stopped writing new homeowners policies in more than 15 states to improve profitability.
Hurricanes Katrina, Wilma, and Rita resulted in $6.3 billion in property and casualty losses for State Farm customers. The California wildfire of October 2007, the biggest catastrophe that year, resulted in $345 million of incurred losses. As claims continued to pour in, the company revised its underwriting guidelines to limit its risk. The result: New homeowner policies in at-risk places such as New Orleans and elsewhere on the Gulf Coast will come with steeper deductibles and less coverage; the company stopped offering new homeowners and commercial property policies in Mississippi.
State farm reported tremendous growth in 2007, however, particularly in its auto line. An increase in ad spending and consecutive auto rate decreases for four years helped agents hit their stride the same year, as evidenced in the more than 954,000 new auto policies they wrote—a 42-percent increase over 2006. State Farm also recorded a13.5-percent auto lapse/cancellation ratio, the lowest in 20 years.
In 2008, State Farm expects changes to its pricing models to regain profitability lost in 2007 and support continued growth in its core auto line. Increased advertising and new pricing capabilities have also been initiated to make State Farm a tougher competitor in growing markets.