State Farm Is Sending Customers a Share of $5 Billion. Are You Getting a Check?

The insurance giant is beginning its largest-ever dividend payout to auto customers this month. How much you get depends on several factors.

When you hear a company is paying dividends, it usually refers to a publicly traded firm, like Apple or Nvidia, issuing quarterly payments to its shareholders. But the latest dividend making the news is different: the insurance giant State Farm Mutual, a private company, has announced it will begin issuing a one-time dividend of $5 billion to its customers.

Here’s what you need to know about the State Farm dividend, and if you can expect a check.

What is the State Farm dividend?

The State Farm dividend is a one-time cash payment the company will begin paying out to its auto insurance customers this month. While the dividend is making headlines now, State Farm Mutual actually announced it back in February.

The total amount of the one-time dividend payment equals $5 billion. 

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“This dividend is possible due to State Farm Mutual’s financial strength and a stronger than expected underwriting performance, which has been reported industry wide,” the insurer noted at the time.

In addition to the dividend announcement, State Farm also pointed out that in addition to making the cash payment to its customers, those same customers were also enjoying reduced auto insurance rates in many states—to the tune of $4.6 billion.

Why is State Farm issuing a dividend to its customers?

While State Farm Mutual is one of the largest and oldest insurers in America, it is not a publicly traded company. Instead, as its name suggests, State Farm is a mutual insurance company. That means that instead of being owned by shareholders, as a private company is, State Farm is owned by its very customers.

Source: www.inc.com