A.M. Best Comments On State Farm Florida's Capital Management Efforts

Business Wire, Oct 22, 2004

OLDWICK, N.J. -- A.M. Best Co. acknowledges State Farm Florida Insurance Company's (State Farm Florida) (Winterhaven FL) capital management efforts following hurricanes Charley, Frances, Ivan and Jeanne, which resulted in a significant decline in capital. These capital management efforts included the contribution of $250 million from its parent company, State Farm Mutual Automobile Insurance Company (State Farm Mutual) (Bloomington, IL) through the issuance of a surplus note. Further, State Farm Mutual is in the process of developing a new reinsurance agreement that will provide additional financial support for State Farm Florida in the case of any subsequent weather-related catastrophic events.

Although A.M. Best is encouraged by the demonstrated parental support following these events, the financial strength rating of A- (Excellent) of State Farm Florida remains under review with negative implications as its risk-adjusted capitalization is not supportive of its current rating. Accordingly, A.M. Best anticipates the need for additional, significant capital support from State Farm Mutual over the intermediate term. The rating will remain under review pending completion of this additional capital initiative. In the absence of additional support and improved risk-adjusted capitalization, the rating will be downgraded.

For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc.> A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.