State Farm CEO gets 82% raise for record profit|[03/06/07]

Published 12:00 am Tuesday, March 6, 2007

State Farm Insurance’s leader received an 82 percent raise after the company posted a record profit last year, a statement from the insurer said Monday.

The increase comes less than a month after the insurance giant said it would suspend writing new homeowners and commercial insurance policies in the state.

Chairman and Chief Executive Officer Ed Rust Jr. got a $5.26 million raise. He received $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million, said the statement from the Bloomington, Ind., office. Rust made $6.4 million in 2005 and $5.5 million in 2004.

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The absence of a major catastrophe helped the insurer generate a record $5.32 billion profit last year, compared with $3.24 billion in 2005 when Hurricane Katrina hit the Mississippi Gulf Coast.

An insurer of about 31 percent of Mississippi homeowners, State Farm announced in February it would stop writing policies in the state.

The move came after the company settled lawsuits with 640 policyholders on the coast whose claims were denied after Katrina. The original settlement was $80 million.

U.S. District Judge L.T. Senter is considering terms of a settlement that would have State Farm pay at least $50 million to about 36,000 policyholders who did not sue but can still have their cases reopened.

Another pending case involving State Farm will be heard March 21 before U.S. District Court Judge William A. Acker Jr. in Birmingham.

In it, two Ocean Springs women will stand trial on contempt of court charges over records from an independent adjusting firm that employed the women that the pair turned over to Mississippi attorney Richard &#8220Dickieā€ Scruggs. The records concerned Katrina claims made by residents denied coverage by State Farm.

Company officials have said policyholders will keep their coverage, but may not have them renewed once they expire.

State Farm employs about 79,000 and writes policies for more than 70 million customers in the United States and Canada. It is the nation’s largest automobile insurance provider in the United States, covering one in every five vehicles.