Mr. Dale said in a statement, "This decision will not affect the market conduct examination of State Farm this office is currently conducting." He said last November that the company was conducting an exam of State Farm's Katrina claims handling record.

Mr. Trippel did not specify any particular action that prompted the move, such as a recent federal jury's $2.5 million punitive damage award to a policyholder who sued State Farm for refusing to cover 2005 hurricane storm surge damage.

State Farm, the largest homeowners insurer in Mississippi with more than 30 percent of the market, agreed to settle hundreds of lawsuits by policyholders and to re-open and pay thousands of other disputed claims.

The landmark deal is potentially worth hundreds of millions of dollars for Mississippi homeowners devastated by Katrina.

Mr. Dale said he will continue "to do everything in our power to encourage all insurance companies, State Farm included, to continue to provide insurance to state residents.

"It is my hope that by continuing to work with State Farm, they will at some time in the future reverse this decision," he said.

Later that afternoon, Mississippi Attorney General Jim Hood issued a statement saying he was disappointed but not surprised by the company's actions, noting the company writes 25 percent of the state's homeowners insurance on the coast. He said the hope was that a settlement would have stabilized the state's insurance market and allow the rebuilding to continue.

"I still contend that if there is a dime left on the ground on our Gulf Coast, there will be an insurance company there to pick it up," said Mr. Hood. "In the most catastrophic year in history, State Farm increased their profits by $3.9 billion to increase their net worth to over $50 billion. In other words, they didn't lose a dime. It is not the legal or political environment as they allege, it's an environment they created by not paying what they owe."

(This story was updated on Feb. 15 at 9:15 a.m.)