First Enron

First Enron: "First Enron, Now State Farm:
The Gramm Connection !

State Farm is a 'mutual insurance company.' This means that each policyholder is a part owner of the company. Simply replace the word 'Policyholder' with the word 'Stockholder', and the words 'Premium Refunds' with the word 'Dividends' and you have a parallel correlation.

On September 11, 2002, Los Angeles Superior Court Judge Charles W. McCoy, Jr certified as 'Class Action' a lawsuit brought against State Farm, alleging the insurer had withheld as much as a $50 billion premium overcharge refund from its policyholders (Hill, et al. vs State Farm, et al. and bears case number BC-194-491). If accurate, that would mean State Farm could be required to refund $1,000 to each of its 50 million policyholders.

This complaint references financial statements, sworn to by State Farm, and filed with the Department of Insurance, wherein State Farm defines the need for a 2:1 ratio of premium to surplus in order to maintain financial stability. The complaint goes on to clearly demonstrate State Farm has maintained a 2:3 ratio of premium to surplus. In short, State Farm appears to have withheld $3 in surplus for every $1 it swore was necessary."