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DCR Assigns Initial Claims Paying Ability Rating of 'AAA' to State Farm

6 March 2000

DCR Assigns Initial Claims Paying Ability Rating of 'AAA' to State Farm Mutual Automobile Insurance Company

    CHICAGO, March 6 Duff & Phelps Credit Rating Co. (DCR) has
assigned an initial claims paying ability rating of 'AAA' (Triple-A) to State
Farm Mutual Automobile Insurance Company (State Farm Auto).  State Farm Auto
is the parent organization of the State Farm Group (State Farm).  The Rating
Outlook is Stable.
    In assigning its highest claims paying ability rating to State Farm Auto,
DCR is acknowledging State Farm's superior market share and strong
capitalization.  State Farm also benefits from a superior expense structure
and a commitment to loss reserve adequacy.
    DCR also notes that although State Farm's absolute dollar exposure to
natural catastrophes remains high, the dangers of this risk appear to be more
than offset by its healthy capital position.  Further, management has actively
reduced its largest probable maximum loss exposure by more than 60 percent in
recent years.
    DCR views the emerging trend of the consumer bypassing the agent in this
"Internet age" as the primary long-term risk to the State Farm franchise.
State Farm also has higher-than-industry average exposure to the U.S. equity
markets, and because of its prominence, remains a target for litigators
seeking "deep pockets."
    State Farm Auto, a mutual insurance company based in Bloomington, Ill., is
the nation's largest property-casualty insurance company with $45.8 billion of
policyholders' surplus as of December 31, 1999.  State Farm markets
automobile, homeowners, health and life insurance products primarily to
individuals through approximately 16,100 exclusive agents.  State Farm has
superior market penetration with approximately one in every four American
households owning a State Farm policy.
    DCR is a leading global rating agency with 34 local market offices
providing ratings and research on debt issues and insurance claims paying
ability in more than 50 countries.  DCR provides more than 600 claims paying
ability and debt ratings on life & health, property & casualty, title, bond
and mortgage insurers in 13 countries.  DCR is also one of the leading rating
agencies for insurance-linked securitizations, drawing off its well-known
expertise in insurance and structured finance ratings.
    For additional information, visit DCR's Web site at http://www.dcrco.com.
DCR's research is also available on Bloomberg at DCR, FirstCall's BondCall
Direct/Research Direct at http://www.firstcall.com and Multex at
http://www.multex.com, as well as through other third-party providers.

    NOTE: State Farm Mutual Automobile Insurance Company has declined to enter
into a formal ratings relationship with DCR. The above rating is not supported
by a contractual agreement that requires State Farm Mutual Automobile
Insurance Company to keep DCR fully informed of all future developments that
could affect the rating.  The rating is provided by DCR as a service to those
organizations and institutions that use and publish DCR ratings.