BLOOMINGTON -- State Farm Insurance Cos. rebounded along with the financial markets in 2009, posting a $777 million profit and boosting its net worth by 9 percent to $58.1 billion, the company said Friday.
In 2008, when the markets collapsed, the value of the Bloomington-based company's property-casualty stock portfolio fell $9.2 billion, and the company posted a net loss of $542 million.
In 2009, as the recovery began, the portfolio's value increased by $3.8 billion, which the company cited as the primary reason for the boost in its net worth last year.
That increase came after 2008's net worth drop of $10.4 billion to $53.3 billion, after five straight years of growth for the country's largest car and home insurer that has 15,400 employees in the Twin City area.
In a statement, the company said 2009 capped a turbulent decade full of major hurricanes and recessions.
"In the face of all of that, State Farm remained financially strong, thanks to our unwavering focus on the customer and the fundamentals of our business," said State Farm Senior Vice President and Treasurer Paul Smith.
The company also reported Friday that the total earnings of Chairman and CEO Ed Rust Jr. fell from $13.66 million in 2008 to $9.44 million last year, largely due to the company's performance in 2006-08.
The property-casualty companies -- State Farm's core business -- did post $3.7 billion in underwriting losses last year, an improvement on the $6.3 billion in losses in 2008. Catastrophe losses in 2009 were $3.6 billion, down from $6.3 billion in 2008, said State Farm spokesman Dick Luedke.
While there were no headline-grabbing hurricanes in 2009, Luedke said thunderstorms, tornadoes and winter storms that don't get national exposure led to the higher-than-expected losses.
He pointed to a 10-year record of volatile underwriting gains and losses.
"Over the long term, that volatility will tend to even out," he said, adding that investment gains help offset underwriting losses, allowing the company to still post a profit and keep prices competitive.
A 2.1 percent increase in earned auto premiums in 2009, to $30.9 billion, stemmed from small increases in the company's total number of auto policies and rate level, Luedke said.
"It's encouraging to see they managed to post an increase in premium in what is highly competitive auto-insurance market," said Robert Hartwig, president of the New York-based Insurance Information Institute.
The market rebound and fewer catastrophes have helped the industry as a whole, said Hartwig, noting, "One of the primary beneficiaries of that would be State Farm, the largest home insurer in the country."
The economy continued to cause trouble for State Farm Bank, which has total assets of $16.2 billion. Like other banks across the country, the company said the bank's high provisions for loan losses -- money the bank sets aside to cover for troubled loans -- were to blame in 2009, as it lost $158 million.
Meanwhile, Rust's total earnings of $9.44 million include guaranteed salary of about $1.75 million, with the rest based on the performance of the three previous years. In this case, that included a poor 2008, leading to a total earnings decline of around $4.22 million for Rust, said Luedke.
A look at State Farm Insurance Cos. combined net worth, 2000-09:
2000: $43.7 billion
2001: $38.1 billion
2002: $31.8 billion
2003: $40.3 billion
2004: $46.3 billion
2005: $50.2 billion
2006: $58.1 billion
2007: $63.7 billion
2008: $53.3 billion
2009: $58.1 billion
SOURCE: State Farm spokesman Dick Luedke