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S&P Concerned Over State Farm Property/Casualty Group Long-Term Ratings

NEW YORK, March 5 -- Standard & Poor's said today that State Farm Property/Casualty Insurance Group's $5 billion after-tax net loss in 2001, including $9.3 billion of property/casualty underwriting losses, would not affect the ratings on the company at this time, but it does heighten concern about the long-term financial strength ratings accorded members of the group.

``Results in State Farm's automobile insurance and, particularly, homeowners insurance were weak, even when compared with the respective industry segments which have suffered for several years from declining pricing adequacy,'' said Standard & Poor's director Charles Titterton. Nevertheless, State Farm's overall net loss, while very large even for a group of this size, was within the upper range of Standard & Poor's expectations for the company's operating results.

All interactively rated units currently operate either with a negative outlook or on CreditWatch with either negative or developing implications. The fact that operating results did not exceed the high end of expectations should not be interpreted as an indication that the ratings will not change. Standard & Poor's will closely monitor developments at the companies and expects to meet with management at an early date.

A complete list of the ratings is available to RatingsDirect subscribers at http://www.ratingsdirect.com, as well as on Standard & Poor's public Web site at http://www.standardandpoors.com under Ratings Actions/Newly Released Ratings.