OREANDA-NEWS. February 29, 2016. Fitch Ratings has published an Unrated Issuer Report (UIR) on State Farm Mutual Automobile Insurance Company. UIRs provide analytical perspective and transparency on key issues that impact an organization's creditworthiness but without providing a credit rating or rating-like opinion.

In addition to highlighting what Fitch considers to be State Farm's main credit issues and trends, the report takes a closer look at the company's long-term competitive position and profitability and capital formation.

State Farm has an extremely strong market position as the largest U.S. property/casualty insurer with annual written premium volume in excess of \\$50 billion, and personal lines market share near 20%. The company's career agency distribution system provides vast operational scope and scale and great brand awareness, but changes in technology, shifting consumer buying preferences and advances by direct insurance distributors present future threats to State Farm's longer-term market share.

State Farm historically has generated underwriting losses, relying on investment earnings to grow surplus. This strategy has led to below industry norm return on surplus levels averaging 4.1% from 2010 to the first nine months of 2015. State Farm's statutory combined ratio in personal auto traditionally lags industry norms and personal lines peers, while homeowners results have markedly improved since an inordinate level of natural catastrophe losses were experienced in 2011.
The UIR includes a peer analysis comparing State Farm with other large personal lines underwriters on several important financial metrics.

UIRs are not solicited by the issuer, and Fitch receives no compensation from the issuer for the provision of an UIR. While an UIR is typically based primarily on public information, Fitch analysts may ask questions of an issuer's management while preparing an UIR. The level of management participation, if any, can vary significantly from case to case.