The primary reason for the decrease was the $9.2 billion decline in the value of the property/casualty companies' unaffiliated stock portfolio (net of deferred tax). Although this decline was driven by general market conditions, State Farm's P/C portfolio had a smaller percentage decline than the broader equity market.
The $10.4 billion decrease in net worth comes after five consecutive years of net worth increases. In spite of the 2008 decline, the State Farm group's net worth is 68 percent higher than it was at the end of 2002, after two years of significant decline.
State Farm reported an after-tax net loss of $542 million in 2008, compared with $5.46 billion of net income in 2007. The after-tax net loss in 2008 was driven by the P/C companies' pretax operating loss, which was partially offset by income tax recoveries. Extraordinary levels of catastrophe losses adversely impacted operating results in 2008.
The operating loss for State Farm follows five consecutive years of net income. The average annual amount of net income for State Farm through the first nine years of this decade is $1.6 billion.