INSURANCE

State Farm Units Downgraded: Ratings firm A.M. Best Co. has cut its grade on two State Farm Mutual Automobile Insurance Co. subsidiaries because of high exposure to losses. State Farm Fire & Casualty Insurance Co. and State Farm General Insurance Co. were downgraded from A++, the highest ranking, to A+. Lower ratings can hurt an insurer’s ability to sell policies. A.M. Best affirmed the A++ rating on parent company State Farm Mutual Automobile of Bloomington, Ill., the largest U.S. property and casualty insurer, because of its strong market share and financial strength. The downgrades come as insurers, weakened by major catastrophes such as the 1994 Northridge earthquake and Hurricane Andrew in 1992, scramble to reduce their exposure and rebuild their funds set aside to pay claims. State Farm Fire & Casualty is also suffering from poor underwriting results, paying out $1.28 for claims and expenses for every $1 collected in premiums over the past five years, A.M. Best said.