On Friday, the nation’s largest insurer, State Farm, reported an after-tax net profit of $3.2 billion for 2012, compared with $0.8 billion in net income in 2011, attributing the jump primarily to improved underwriting results.

The Bloomington, Ill.-based insurance group said combined net worth for the State Farm group increased $4.6 billion in 2012 to $65.4 billion.

The year-end earnings announcement said that the rise in net worth was primarily related to $2.7 billion of pre-tax operating profits in the property/casualty affiliates and a $1.9 billion increase in the value of P/C affiliates’ unaffiliated stock portfolio.

Providing further insight into the P/C results, State Farm said the underwriting result for the year was an underwriting loss was $1.7 billion on earned premium of $52.3 billion. When combined with investment and other income of $4.5 billion, the result was a pre-tax operating profit of $2.7 billion.

The after-tax net income for the P/C companies was $2.6 billion.

Comparable 2011 figures were: earned premium, $51.4 billion; underwriting loss, $4.5 billion; investment and other income, $4.3 billion; pre-tax operating loss, $0.2 billion; after-tax net income, $0.2 billion.

Analyzing the numbers by major P/C insurance lines, State Farm presented the following key figures from its year-end financials:

  • Auto: Earned premium was $32.2 billion, an increase of 1.4 percent from $31.7 billion in 2011. Incurred claims and loss adjustment expenses were $25.5 billion, down from $26.1 billion in 2011. The underwriting loss was $1.3 billion, an improvement over the $1.9 billion loss recorded for the auto segment in 2011.
  • Homeowners, CMP, Other: Earned premium was $18.3 billion, up 1.5 percent from $18.0 billion in 2011. Incurred claims and loss adjustment expenses were $13.5 billion, down from $15.4 billion in 2011. The underwriting loss was $0.3 billion for 2012, compared to $2.6 billion in 2011.

Source: State Farm