American insurer Allstate has announced pre-tax catastrophe losses for the month of November of $685 million ($541 million, after-tax), of which $670 million ($529 million, after-tax) is attributable to California’s Camp and Woolsey wildfires and reflect the impact of reinsurance recoveries and reinstatement premiums.
Allstate has said it has already provided gross insurance payments of over $1.2 billion, despite reducing policies in force in California by approximately 50% over the last ten years.
Allstate’s current nationwide excess catastrophe reinsurance tower can attach at $500 million of losses, this has likely been triggered by the wildfire losses, with each layer of the tower 95% placed so reinsurers take the bulk of losses above that level for the insurer.
Tom Wilson, Chairman, President and Chief Executive Officer of The Allstate Corporation, said it’s time to address the impact that more severe weather is having on Americans instead of fighting about climate change.
“This year there have been approximately 7,500 wildfires in California, Hurricanes Florence and Michael and a swath of severe weather across the United States, putting our customers in danger and at risk of losing their homes and hard-earned money,” said Wilson.
“We are grateful for the support of first responders and government officials in dealing with these events. It is now time to come up with longer term solutions, such as ensuring power lines are properly maintained, homes have natural fire barriers and building codes reflect increased severe weather.”
This total loss figure includes unfavourable reserve re-estimates of prior reported catastrophe losses.
Allstate previously announced $202 million pre-tax ($160 million, after-tax), in estimated cat losses for the month of October 2018, bringing cat losses for the months of October and November 2018 to $887 million pre-tax ($701 million, after-tax).
Additionally, during the third quarter, Allstate concluded that benefit payments from its qualified employee pension plan would exceed a threshold of service and interest cost, resulting in a pension settlement loss of $61 million, pre-tax.
Allstate expects to record an additional pension settlement loss, based on current market conditions, of approximately $100 million to $125 million, pre-tax, in the fourth quarter of 2018 within the Corporate and Other segment.
