BLOOMINGTON - After a year in which an absence of major catastrophes was offset by an increase in routine claims, State Farm Insurance Cos. still reported record earnings of $5.46 billion in 2007.

The company's net income increased by 3 percent last year, up from a record $5.32 billion in 2006, according to information released Friday.

"We did well this year, but we try to not put too much weight on one year of successful results," spokesman Dick Luedke said.

State Farm also released annual salary information for its top leader.

Chairman and Chief Executive Officer Ed Rust earned $11.71 million in 2007. His base salary of $1.77 million stayed the same as 2006, but his results-based bonus increased slightly, from $9.89 million in 2006 to $9.94 million last year.

Last year was the company's fifth consecutive year of profit, after a $1.6 billion loss in 2002 and a $5 billion loss in 2001.

Its 2007 results were influenced by a variety of factors.

On the plus side, an absence of serious hurricanes or other disasters meant State Farm avoided the major payouts it had seen in years like 2005, when it handed out $6.3 billion to policyholders affected by hurricanes Katrina, Rita and Wilma.

Despite that, its property-casualty underwriting gain - the bread-and-butter division that includes home and auto lines - still dropped 79 percent, from $3 billion in 2006 to $621 million last year.

About half of the $2.4 billion drop was the result of the company's fourth-straight year of auto rate decreases.

The remainder was due to an increase in non-catastrophe claims - everything from auto accidents to small windstorms and theft, Luedke said. State Farm's most significant claims were from the California wildfires in 2007, Luedke said.

Still, any gain at all in property-casualty underwriting is rare, he said.

Cutting into dividends

The company also decreased its dividend payment from 2006 to 2007, which helped its bottom line. Last year, State Farm returned $78 million to policyholders, a far cry from the $1.4 billion returned in 2006.

The company's total revenue was $61.6 billion, a slight rise from the $60.5 billion reported in 2006. That figure includes premium revenue, earned investment income and capital gains.

State Farm now ranks 31st on the Fortune 500 list.

And when the final tally is accrued, State Farm's net worth jumped nearly 10 percent, from $58.1 billion in 2006 to $63.7 billion last year.

The primary reason for the bump was a $2.5 billion pre-tax gain on investments, as well as the small gain in property-casualty underwriting. The $2.5 billion gain was down from a $3.6 billion gain in 2006, the result of a volatile stock market.

"As we all know, sometimes it performs great and sometimes it doesn't," Luedke said. "Our philosophy is a long-term approach. … It's a buy-and-hold investment approach. It's served us well for a long, long time."

State Farm's average annual earnings so far this decade is $1.8 billion, but a full decade of results gives a better barometer for success, Luedke said.

The company's 2007 increase is also on par with the industry as a whole. Insurance companies last year saw slight increases or decreases in profit or remained flat, said Robert Hartwig, president and chief economist of the Insurance Information Institute in Washington, D.C.

"Generally speaking, 2007 was the second consecutive strong year for insurers," Hartwig said. "That was in part because of low catastrophe losses for the second year in a row."