Reinsurance News

Allstate posts underwriting loss of $534m for Q3

4th November 2021 - Author: Matt Sheehan

US primary insurer Allstate has posted an underwriting loss of $534 million during the third quarter of Q3, after incurring $1.27 billion of catastrophe losses for the period.

Allstate logoAllstate warned ahead of the huge catastrophe loss bill last month, which included around $631 million of losses from Hurricane Ida, after factoring in more than $750 million of reinsurance recoveries.

For comparison, Allstate posted an underwriting income of $752 million in Q3 2020, after taking $990 million of catastrophe losses.

This year, Allstate’s overall net income for the quarter was $508 million, down 54.9% from the $1.13 billion that it recorded last year, with the decrease attributed to lower underwriting income partially offset by an increase in investment income.

However , total revenues of $12.5 billion in the third quarter of 2021 increased 16.9% compared to the prior year quarter, reflecting higher earned premiums from National General, Allstate brand homeowners premium growth and increased net investment income.

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Protection Services revenues also increased, reflecting a 23.9% increase for Allstate Protection Plans compared to the prior year quarter.

Allstate Investments’ $61.8 billion portfolio generated net investment income of $764 million in the third quarter of 2021, an increase of $300 million from the prior year quarter, driven by higher performance-based income.

“Allstate’s operational expertise enables us to address inflation in auto repair costs while executing our Transformative Growth strategy,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation.

“Auto insurance had an underwriting loss in the quarter as supply chain disruptions drove rapid price increases for used cars and original equipment parts. Auto insurance did generate attractive margins for the first nine months of the year, and we are filing for rate increases to maintain historical profitability levels,” he explained.

“Performance-based investment income increased by $308 million reflecting the strategic decision to increase these investments, which offsets some of the decline in quarterly underwriting income,” Wilson continued.

“The catastrophe risk and return strategy also benefited results as nearly $1 billion of net reinsurance recoveries offset the impact of increased severe weather, including Hurricane Ida.”

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