State Farm Indemnity announced its intention to stop writing automobile business in New Jersey, pending approval from state regulators, which could take years to complete. Last October, the company applied for a 16.8 percent jump in rates. State Farm Indemnity, which keeps separate books from its parent, reported losses of $6 to $9 million a month, noting it mainly ran into trouble because it was among the companies with the lowest rates and was not able to turn away risky drivers. Immediately following the announcement, A.M. Best Co. downgraded the financial strength rating of the Wayne, N.J.-based insurer from “A-” to “B+” and placed the rating under review with developing implications, citing the continued deterioration in the company’s overall operating performance and further erosion of its capital base. Since 1998, the company’s results have deteriorated significantly, as evidenced by substantial underwriting losses. These poor results have been driven by rate inadequacy as well as the company’s unfavorable loss experience.
Topics Auto New Jersey
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