Faced with widening losses in recent years, State Farm Insurance Cos., Bloomington, Ill., has placed a moratorium on writing new homeowners insurance policies in Arizona and California.The move will have no impact on current homeowners policyholders, who can continue to renew their policies, according to a company spokesperson.

State Farm is the largest underwriter of homeowners policies in both states, serving one in five California homeowners and one in four homeowners in Arizona.

In 2000, the latest year for which figures are available, 160 companies were writing homeowners insurance in California, says Scott Edelen, spokesperson for the state department of insurance in Sacramento. That figure has changed little. Nor, he said, has any significant number of insurers gotten out of the business.

State Farm's combined ratio for homeowners policies in California is approaching 120; in Arizona, it's 125, according to the company. As a result, reserves held by property-insurance affiliate State Farm General Insurance Co. have fallen to $425 million from $605 million.

That decline prompted insurance research and rating business A.M. Best Co. to downgrade State Farm's rating in January to B+ from A-.

State Farm received a 6.9% rate increase in California last year and has an application pending for another 6.9 percent increase.

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