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State Farm Posts 56% Decline in Earnings in 2011

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Multiline insurer State Farm Mutual Automobile Insurance Co. posted a 56% decline in earnings and a slight increase in revenue in 2011, according to the company’s year-end financial results.

State Farm, Bloomington, Ill. reported an after-tax net income of $0.8 billion in 2011, down from $1.8 billion in net income in 2010.  Company revenue in 2011 (including premium revenue, earned investment income and realized capital gains) was $64.3 billion, up from $63.2 billion for 2010.

Combined net worth for the State Farm group declined in 2011 by $0.4 billion to end the year at $60.8 billion.  This includes a $0.2 billion decrease in net worth related to the property-casualty (P-C) companies’ unaffiliated stock portfolios.  The results also reflect a $0.2 billion pre-tax operating loss for the P-C companies, which includes an underwriting loss of $4.5 billion, $1.3 billion higher than the underwriting loss in 2010.  State Farms says the 2011 underwriting results were negatively impacted by catastrophic events.

“Our 2011 financial results must be viewed in the context of five catastrophe events that are among the 25 largest in our history,” says State Farm Senior Vice President, Treasurer and Chief Financial Officer Paul Smith. 

State Farm also reports that its life insurance affiliates—State Farm Life Insurance Company, State Farm International Life Insurance Company Ltd. and State Farm Life and Accident Assurance Company—added $21 billion of total life insurance in force during the year, bringing the companies’ total insurance in force to $779 billion on Dec. 31, 2011.  The life affiliates also reported $638 million in dividends to policyholders in 2011.

The life affiliates reported premium income of $4.7 billion in 2011, an increase of $52 million compared with 2010.  In 2011, after-tax net income was $625 million.  Net income was $456 million in 2010.

In other company news:

CNO Financial Group, Inc., Carmel, Ind., has approved an additional $100 million to repurchase the company’s outstanding common stock.  The amount is in addition to the approximately $30 million remaining on its previous authorization, for a combined repurchase authority totaling $130 million.

Old Republic International Corp., Chicago, (NYSE: ORI), declared a quarterly cash dividend on the common stock of 17.75 cents per share.  The dividend is payable March 20, 2012, to shareholders of record on March 12, 2012.  Subject to board approval of each quarter’s new rate, the full year’s cash dividend will amount to 71 cents per share compared to 70 cents paid in 2011. 

Colonial Life & Accident Insurance Co., Columbia, S.C., says it will donate $100,000 over the next three years to the Celebrate Freedom Foundation to avail middle and high school students of access to expanded educational opportunities. The foundation’s educational programs focus on “STEM” subjects—science, technology, engineering and math—that are considered essential to the nation’s competitiveness and leadership role in the world economy.

Colonial Life says the goal is to encourage students to learn more about and pursue careers in fields that rely on these skills.

Experts from insurance companies ranging from property/casualty to life insurance will discuss their companies’ economic position at the New York Society of Security Analysts’ (NYSSA’s) 16th Annual Insurance Conference from March 19–20, 2012.

Robert P. Hartwig, president and economist at Insurance Information Institute, will provide an outlook for the industry on day one of the conference. On the second day, Stephen L. Way, chairman and CEO at Houston International Insurance Group, will examine the industry from a private equity perspective.

Nationwide Mutual Insurance Co., Columbus, Ohio, the official insurance provider of the Central Intercollegiate Athletic Association (CIAA), has donated $120,000 donation to the CIAA college scholarship fund, as part of its ongoing support of CIAA institutions and students. To date, Nationwide has contributed more than $600,000 to the CIAA scholarship fund.

Still River Retirement Planning Software, Inc., Harvard, Mass., is offering a new software tool to help sell fixed annuities in both the qualified and the non-qualified markets.  The product, RetirementWorks with Annuities, produces a retirement analysis that illustrates hypothetical future cash flows for an individual or household both with and without the purchase of a fixed annuity. The software also evaluates the “with” and “without” alternatives under various scenarios (a “normal” scenario, as well as several financially adverse scenarios); and it produces a report card that grades the

The Principal Financial Group Inc., Des Moines, Iowa (NYSE: PFG), has entered an agreement to purchase a 60% indirect ownership of Claritas Administração de Recursos Ltda. / Claritas Investments, Ltd. The company did not disclose the purchase price.

Claritas is a Brazilian mutual fund and asset management company with more than R$3.1 billion in assets under management1 (US$1.8B). The Sao Paulo-based company manages equity funds, balanced funds, managed accounts and other strategies for affluent clients and institutions through its multi-channel distribution network.

The announcement is part of Principal Financial’s plan to deploy $800 to $900 million of capital in 2012 and is in addition to the $154 million planned for the share repurchase and quarterly common stock dividend previously announced. Principal Financial adds that the Claritas transaction is expected to be earnings per share (EPS) neutral in 2012 and accretive to EPS and return on equity thereafter. The deal is expected to close in April.

Symetra Life Insurance Company, a Bellevue, Wash.-based subsidiary of Symetra Financial Corporation (NYSE: SYA), has hired two external wholesalers and a internal wholesaling manager to drive life sales and strengthen partner support in select territories across the country. The new hires are part of the company’s ongoing strategy to expand its life distribution network and wholesaling force.

Allianz Life Insurance Company of North America, Minneapolis, has promoted Gretchen Cepek to the post of general counsel, effective February 20, 2012. Allianz says that in her new role Cepek will serve as chief legal advisor for the executive management team and will oversee litigation, corporate governance, product development, special investigations and government relations.

She also joins the company’s Executive Leadership Group and will report directly to Allianz Life President and CEO Walter White. Cepek succeeds Maureen Phillips who left the company to pursue a new opportunity, the company says.

Presidential Life Corp., Nyack, New York has declared a quarterly dividend of $.0625 per share payable April 2, 2012 to shareholders of record March 15, 2012.

The Prudential Foundation, an arm of Newark, N.J.-based Prudential Financial Group Inc., has awarded $70,000 to four nonprofit organizations, all winners of the Prudential Leadership Award Program. The non-profits include American Camp Association in Martinsville, Ind. The Champlain Housing Trust in Burlington, Vt.; Helen Keller International, in New York City; and MATHCOUNTS, in Alexandria, Va.;

Developed and hosted by BoardSource and supported by Prudential, the initiative is part of the Strength for Capacity initiative, which The Prudential Foundation launched to help nonprofits achieve long-term sustainability.

Kansas City Life Insurance Co., Kansas City, recorded net income of $5.7 million or $0.51 per share in the fourth quarter of 2011, a $1.1 million or $0.09 per share decline relative to the same quarter in the prior year. The company says the decline in earnings was primarily due to lower insurance and investment revenues, along with increased operating expenses.

Net income for 2011 was $26.1 million or $2.29 per share, an increase of $3.8 million or $0.34 per share compared to 2010.  Increased investment revenues and lower policyholder benefits were the primary factors in the improved results.  Insurance revenues declined in both the quarter and twelve-month periods by 8% and 7%, respectively, largely due to lower sales of immediate annuities. 

Laser App Software, an Ontario, Calif., provider of automated financial forms-filling and management software for the securities and insurance industries, announced that Sammons Retirement Solutions, Inc. has added the LiveWell Variable Annuity and LiveWell Mutual Fund IRA forms to Laser App Software’s library of forms.

The addition of these forms to the Laser App library will enable Sammons Retirement Solutions to expand its reach for its variable annuity and mutual fund IRA products to 100,000 financial advisors and broker/dealers using the Laser App forms filling solution.  Additionally, Sammons Retirement Solutions will streamline sales and new account processing for its LiveWell Retirement Series, while providing processing consistency for insurance agents and financial professionals. 

American United Life Insurance Company, an Indianapolis-based a OneAmerica company, has appointed three new general agents to expand its national distribution network for its extensive menu of financial products for individuals, families and small businesses. The general agencies currently employ 33 financial professionals, but plan to add 85 over the next three years.

The New York Life Foundation, New York, has awarded Comfort Zone Camp a $475,000 grant to support and expand bereavement camps in multiple markets, increase national awareness of the issue of childhood bereavement, and build the capacity of their Volunteer Advisory Councils. The Foundation’s funding of CZC now exceeds $3.6 million.

The American Society of Pension Professionals & Actuaries, Arlington, Va., has announced the addition of Michael R. Copp to their team as Chief Operating Officer (COO). Copp comes to ASPPA from National Association of Home Builders (NAHB), where he served as Senior Vice President of Education. He will join the ASPPA executive team on March 19.


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