TRENTON, N.J., November 7 – Two of the car insurance giants in New Jersey, State Farm and New Jersey Manufacturers, will be sending dividend checks just before Christmas to 600,000 policyholders, a sure sign that the car insurance business in New Jersey had a good year.

NJM has been sending out dividends each year since 1918, and is sending checks averaging $176 to 395,000 customers.

Anthony Dickson, president and CEO of NJM, said, Despite sometimes volatile market conditions, NJM has displayed remarkable consistency keeping overall rates stable since 1996, and providing dividends every year since 1918.

For State Farm, it is an entirely different story. The issuing of dividend checks signifies a financial u-turn for the company and its attitude towards New Jersey.

This year, State Farm Indemnity will be mailing checks averaging $400 to 300,000 of its New Jersey customers as a result of improved business conditions, and better than expected financial results.

Stormy Past Leads to Reforms

Six years ago, State Farm threatened to pull out of the New Jersey market because of overbearing state rules and regulations, and big losses in 1999, 2000, and 2001.

To help the company stabilize, regulators allowed State Farm to drop 4,000 policies a month, until eventually 96,000 policies were unloaded.

The drop created another problem for the state. Car insurance was not only unaffordable, it was unavailable in the voluntary market because other companies were refusing to renew as they, too, faced financial woes.

The Legislature and the former McGreevey administration then ushered in new laws to ease regulations, initiated quick responses to rate increases, phased out the take on all comers provision, and made a few other changes that shook the market open for everyone, including State Farm.

The turnaround really took hold when State Farm reported a surplus of $662 million at the end of 2003, stopped dropping policies, and then began cutting rates as the car insurance market began to be competitive again.

The last time State Farm has issued dividends in New Jersey was in 1998, and that totaled $39.8 million.

This one totals $130 million, the largest ever issued to New Jersey customers by State Farm.