March 1 (Bloomberg) -- State Farm Mutual Automobile Insurance Co., the biggest U.S. home and car insurer, said full-year profit fell by more than half on costs tied to natural disasters.
Net income for 2011 slumped to about $800 million from $1.8 billion a year earlier, the Bloomington, Illinois-based company said today in a statement. Revenue rose to $64.3 billion from $63.2 billion in 2010. State Farm is owned by its policyholders and reports results once a year.
U.S. insurers incurred catastrophe losses totaling $35.9 billion in 2011 from disasters including the tornado in Joplin, Missouri, in May and Hurricane Irene in August, according to the Insurance Information Institute. That exceeds the average of $23.8 billion from 2000 to 2010.
“Results must be viewed in the context of five catastrophe events that are among the 25 largest in our history,” Chief Financial Officer Paul Smith said in the statement.
State Farm’s net worth, a measure of assets minus liabilities, slumped $400 million to $60.8 billion. Chief Executive Officer Ed Rust’s compensation decreased 9.3 percent to $9.25 million in 2011, a figure tied to results spanning three years including customer retention, employee satisfaction and growth, said Dick Luedke a spokesman for the company.
The underwriting loss at the property-casualty division widened to $4.5 billion from $3.1 billion, fueled by claims on residential properties. The underwriting loss narrowed at the auto unit to $1.9 billion from $2.8 billion in 2010. Auto claims fell 2.6 percent to $26.1 billion on lower claims expenses.
The insurer was profitable because of investment returns. State Farm is among the top five shareholders of International Business Machines Corp., Johnson & Johnson, and Caterpillar Inc., with holdings in each of more than $2 billion, according to data compiled by Bloomberg.
Allstate Corp., the second-biggest home and auto insurer in the U.S., said annual profit fell to $788 million last year from $928 million in 2010. Property-casualty insurers including Travelers Cos. and Chubb Corp. posted reduced profit in 2011 on losses from natural disasters.
State Farm, which has no publicly traded debt, reports results based on state accounting rules for insurers. Publicly traded insurers must use U.S. generally accepted accounting principles, making comparisons inexact.
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