Good News from Our Good Neighbor …

STATE FARM FLORIDA AND FLORIDA OFFICE OF INSURANCE REGULATION REACH SETTLEMENT

Risk Exposure Reduction and Partial Rate Relief Lead to Settlement–

– Company says Challenges Remain–

Winter Haven, Fla., Dec. 16, 2009 – Following months of discussions over its January 2009 plan to withdraw from the state’s residential property insurance market, State Farm Florida and the Florida Office of Insurance Regulation (OIR) reached a settlement today. The resulting Consent Order, which replaces the OIR’s conditional approval of State Farm Florida’s filing to withdraw from the Florida property insurance market, establishes a plan for State Farm Florida to non-renew 125,000 of its more than 810,000 property insurance policies. It also provides for the implementation of a base rate increase of 14.8 percent on homeowners and condominium unit owners policies.

“This is an important step. It helps stem State Farm Florida’s deteriorating financial condition. It reduces the company’s risk exposure. It moves us closer to rate adequacy. And for most of our customers it means that State Farm Florida continues to be there for them,” said Jim Thompson, President, State Farm Florida.

“I want to acknowledge the cooperation of the Office of Insurance Regulation in working through all of this. This was not easy for any of us. We were losing $20 million a month and we both were trying to work through some tough issues,” said Thompson.

Customers with policies in the group of 125,000 to be non-renewed need not take any action now. The first non-renewal notices will not be sent out until February 2010. All customers will have at least six months to find coverage after receiving advance notice. As an example, customers to be non-renewed on Nov. 1, 2010 will receive notice of non-renewal no later than May 1, 2010. Under the Consent Order, State Farm agents will be able to assist non-renewed residential policyholders in finding property insurance with other carriers. Customers wishing to know ahead of the official advance notice as to whether their property is scheduled for non-renewal may contact their State Farm agent early in the new year.

Given these are annual contracts that require State Farm Florida to provide six months advance notice, the entire process will take 18 months to complete. For example, those with policies that are up for renewal prior to August 1, 2010 may be renewed for a year and then non-renewed in the subsequent year.

While Thompson said this order helps move the company toward its goal of stabilizing its financial condition, he cautioned it is a long-term process with many continuing challenges.

“As State Farm Florida tries to rebuild its financial strength, it still faces significant issues in order to meet its obligations to policyholders. Equally important is a stable regulatory environment that supports a viable and sustainable private property insurance market in Florida,” Thompson added.

Even after the non-renewals, State Farm Florida will remain the largest private insurer of homes in Florida. Its property and casualty lines include homes, rental dwellings, apartments, small businesses, boats, personal liability, and commercial liability. State Farm agents also offer products through State Farm Mutual Automobile Insurance Company and its affiliates, such as auto insurance, life insurance and financial services products.

About State Farm Florida

State Farm Florida Insurance Company currently services over one million residential insurance and other related property insurance policies and is headquartered in Winter Haven, with agent and operations offices throughout the state. The State Farm Insurance Companies are represented by 789 agents and nearly 4,000 agents’ team members in the state of Florida, and employ about 4,600 Floridians in various operational positions.