State Farm had a good year in 2025 and is sharing some of that with policyholders in a company record dividend.
The Bloomington-based insurer released its annual financial summaries Thursday which showed total revenue of $132.3 billion and net income of $12.9 billion. Total revenue rose $9.3 billion from 2024. And net income more than doubled in 2025 from $5.3 billion in 2024.
The net worth of State Farm ended the year at $170 billion, compared to $145.2 billion at the end of 2024. The increase came from improved operations and growth in investments.
Dividend and rate reduction
State Farm is announcing the largest dividend in company history, a $5 billion giveback to auto policyholders. CEO Jon Farney told reporters the dividend works out to an average of $100 per vehicle for 49 million vehicles, depending on the policy and on the state of residence. Those payments will begin this summer. The previous record dividend for State Farm was $1.9 billion. It came during the pandemic when vehicle owners dramatically reduced their driving.
State Farm has had “mixed operational performance” in auto lines in the last few years.
“We managed through that period with discipline, and we now have the financial strength to keep our promises and to put our results to work for customers,” said Farney.
In addition, the company has reduced auto rates by about 10% in more than 40 states. The rate reduction totaled $4.5 billion.
“We saw positive trends in auto collisions, so think low repair costs when cars have accidents. That's not just a State Farm phenomenon. It was across the entire industry, but it did drive meaningful improvement to our bottom-line underwriting results,” said Chief Operating Officer Chris Schell.
Schell also praised states like Florida that have passed legislation limiting litigation and other measures that shift the legal landscape. Florida has seen a nearly 20% drop in State Farm auto rates since 2024, said Schell.
“Other states may be a little bit more challenging, where the legal frameworks or the regulatory structures can be slower and add costs, which make it more difficult for a company to match price to risk, particularly in a timely basis,” said Schell.
Illinois lawmakers and the governor have been discussing potential limits on homeowners' insurance rate hikes.
Auto
State Farm reported its auto lines had a $4.6 billion underwriting gain, or about 6.5% of earned premium. That compares to a 2024 auto underwriting loss of $2.7 billion, about 4% of earned premium.
For home, commercial, multi, payroll, and other property and casualty lines of business, State Farm had a $3.1 billion underwriting loss last year. That is an improvement over the $3.6 billion loss in 2024, according to Treasurer and Chief Financial Officer Mark Schwamberger.
Auto policies amount to about 63% of State Farm’s property and casualty net premiums.
Catastrophes
While lauding the results on the auto side, executives were less ebullient about the home insurance landscape, describing the sectors’ results as “a tale of two cities.”
“The combined dynamics of increasing frequency and severity of storms, particularly severe convective storms, has pushed the rising cost to repair and rebuild and the cost of reinsurance up significantly. We've had to react to that,” said Schell.
The underwriting loss for non-auto property coverage was $3.1 billion on earned premiums of $39.2 billion last year. That narrowed the loss by $500 million compared to the $3.6 billion loss in 2024.
In 2025 State Farm and its affiliates paid $15 billion in claims to customers who suffered catastrophe losses. A third of that is from southern California wildfires though, and with rebuilds getting underway the California tally could rise to $7 billion across 13,000 claims. Those payments come from State Farm Mutual and State Farm General, the California affiliate.
Midwest hailstorms also played a part in the property and casualty results.
“You have all of the roofs that are exposed to a lot of the hail, and so we've just seen absolute record numbers of events and the cost to repair that has been significant. We are seeing perhaps, a different trend line with the homeowners than on the commercial side,” said Schell.
No major hurricane hit land in the U.S. last year.
Artificial intelligence
Citrini Research this week issued a widely circulated report predicting large job losses and other economic disruptions as artificial intelligence takes hold, briefly unsettling the stock markets. In the insurance sector, speculation about the impact of AI has included the potential for AI agents to erode prices by facilitating rate shopping.
The report has drawn a mixed response. Some economists dismiss the severity of its predictions. State Farm leaders had a measured response to a reporter question about the report.
“We think these kinds of tools can help them [State Farm agents] become more efficient. We ultimately think there's a really unique combination State Farm can bring to the marketplace that has a human element and a digital element, or an AI element, using data most effectively. And we think both of those things together combined are what win long term in the marketplace,” said Farney.
State Farm previously announced an exploratory partnership with OpenAI to use AI agents for better customer service.
Tariffs
Farney said State Farm tried to anticipate the impact of tariffs on the insurance sector last year.
“We sure spent a lot of time at the beginning of last year, you know, after ‘Liberation Day,’ spending our time going, how is this going to impact our business?” said Farney.” “I would say it's been reasonably moderate the impact that tariffs have had so far.”
"Liberation Day" is the Trump administration term for sweeping import duties announced on April 2, 2025.
With the Supreme Court action invalidating some tariffs and the administration moves to find mechanisms to replace those duties, Farney said the situation remains unclear.
“We always have questions as we look to the future to say what's going to happen with car accidents and repair costs. We're kind of pricing the cost of goods sold without knowing what it's actually going to come through. There's always a little bit of uncertainty in pricing auto insurance. The tariffs do add a little bit more of that uncertainty. To date, we've been able to manage that,” said Farney.
Does State Farm anticipate changes in auto cost patterns or repair and replacement costs because of the tariffs?
“We actually had a decline in those coverages year over year in terms of the pure premium, as we call it, the frequency and severity. We do expect a reversion to the mean, an increase in that going forward, but within a reasonable range, and it's really not driving any of our premium rate indications as we look forward,” said Schwamberger.
Life, Health, and Investment planning
State Farm reported $924 million in dividends to life insurance policyholders in 2025. The company had $1.2 trillion in individual life policies in effect at the end of the year, up $400 million from 2024. Health insurance operations reported a $189 million loss, an increase from 2024.
State Farm VP Management Corp. and State Farm Investment Management Corp. reported a net loss of $39 million last year, slightly more than in 2024.
