State Farm Returns $1 Billion in Dividends to Auto Insurance Policyholders

State Farm, the largest personal lines insurance company in the United States, has announced a return of $1 billion in premium paid by its auto insurance policyholders across 49 states, the District of Columbia, and three Canadian provinces. This marks a significant milestone in the company's policyholder dividends program, which was approved by the State Farm Mutual board of directors. The dividend will be paid to policyholders via check or credit to their accounts over the next renewal cycle, eclipsing the previous high of $892 million set in 1998. This move brings the total amount of dividends paid by State Farm to auto insurance policyholders since 1991 to approximately $3.3 billion.

Key Takeaways:

• The $1 billion dividend is a one-time return of premium based on recent financial results, which indicate better-than-anticipated business conditions.
• Policyholders in 49 states, the District of Columbia, and three Canadian provinces will receive the dividend, excluding policyholders in Ohio, who received a separate dividend in 1994.
• The dividend announcement builds on State Farm's commitment to returning surplus funds to its customers, a practice that has been in place since 1991.
• The reduction of 15.7 percent in Ohio auto insurance rates since 1997 reflects changes in financial results that indicate long-term trends.
• The dividends are not planned for when setting prices, but are returned to customers when financial results are better than anticipated.
• Ohio customers will receive a separate dividend of $15.9 million, in addition to the main dividend.

Statistics:

• $1 billion: Total dividend return to auto insurance policyholders across 49 states, the District of Columbia, and three Canadian provinces.
• $892 million: Previous high of dividends returned to policyholders in 35 states and the District of Columbia, set in June 1998.
• $3.3 billion: Total amount of dividends State Farm has paid to auto insurance policyholders since 1991.
• $15.9 million: Dividend received by Ohio customers in 1994.
• 15.7%: Reduction in Ohio auto insurance rates since 1997.

Sources:

• State Farm Mutual Automobile Insurance Company, PRNewswire, June 12