How State Farm’s financial peril could upend the entire California insurance market

Companies often create single-state subsidiaries in places like California and Florida — states where they’re worried about large financial losses, according to Birny Birnbaum, executive director of the Center for Economic Justice and former chief economist for the Texas Department of Insurance. Doing so means they can separate their financial losses in a specific state from the overall company. Another common metric is loss ratios. Last year, State Farm reported a loss ratio of 89.61% in California — meaning it paid $89.61 in claims for every $100 it took in...