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BLOOMINGTON - State Farm Insurance Cos. announced a third-straight year of profit, despite facing the nation's most costly natural disaster of all time - Hurricane Katrina.

The big news of 2005, however, wasn't Katrina, State Farm Chairman and Chief Executive Officer Ed Rust Jr. told The Pantagraph. It was Hurricane Rita's last-minute turn away from the heavily populated area of Galveston, Texas, he said.

"Katrina, all considered except for those people directly impacted, would not be a mega-event," Rust said.

With 150-mile-an-hour winds heading straight toward Galveston, Texas, Rita "could easily have been a much more severe mega-event," he added. "Galveston would be gone. The storm-surge wind damage would have been far more extensive than what we saw in Mississippi and Louisiana. You have a population center that is the fourth-largest in the country. You have a significantly higher concentration of the infrastructure for oil and gas distribution, refinery, chemical manufacturing in that area."

State Farm would have faced a $15 billion tab, Rust predicted.

But none of that happened.

Instead, the 2005 hurricane season cost State Farm $6.3 billion, though another $5 billion hangs in legal balance.

After being denied coverage for flood damage, policyholders throughout Mississippi and Louisiana filed suit against State Farm and other insurers, claiming the "comprehensive hurricane coverage" they bought should foot the bill, according to court documents. State Farm's customers suffered about $5 billion in flood damage, Rust said.

Flood coverage, however, is covered by the federal government, and many people didn't buy that coverage, Rust said.

"As tremendous empathy for people along the Gulf Coast, no one envisioned this," Rust said. "A lot of people felt - 'One, I don't need flood insurance. It's not going to be that bad, and I'm willing to clean things up. We don't have a basement down here so there won't be flooding with that, so why worry.' This was a record-setting storm, and people were not prepared."

Despite what the New York-based Insurance Information Institute called a year of record-high payouts, State Farm posted a $3.2 billion profit in 2005, down from $5.3 billion in 2004.

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