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Allstate reports 146% rise in underwriting income to $904mn

6th August 2020 - Author: Luke Gallin

The Allstate Corporation’s underwriting income improved by a significant 146.3% in Q2 2020 to $904 million, contributing to increased net income of $1.22 billion for the quarter.

Allstate logoAlongside the better underwriting income, Allstate notes that its net income in the second-quarter of 2020 also benefitted from higher net realised capital gains of $704 million, against $324 million in Q2 2019.

This increase in net realised capital gains, coupled with a 2.1% increase in Property-Liability insurance premiums earned, resulted in Allstate’s total revenue increasing by 0.5% in the quarter to $11.2 billion.

At the same time, Allstate has reported that net investment income declined by almost 57% to $409 million as a result of lower performance-based portfolio results.

When compared with the second-quarter of 2019, catastrophe losses jumped by 10.6% to $1.186 billion in Q2 2020, as previously warned.

In addition, Allstate also incurred expenses of $738 million related to its Shelter-in-place Payback scheme. This scheme was in response to the COVID-19 pandemic, and in Q2, Allstate recorded $738 million of the $948 million total expenses related to the scheme.

Premiums written jumped by 1.4% in Q2 2020 to $9.172 billion, compared with $9.043 billion a year earlier.

As at the end of the second-quarter, Allstate’s combined ratio reached 89.8%, which is an improvement of six percentage points on the prior year Q2.

Tom Wilson, Chair, President and Chief Executive Officer (CEO) of Allstate, commented: “Customer satisfaction increased as we maintained high service levels and helped customers, including almost $1.0 billion in Shelter-in-Place Payback, payment deferrals and extended coverage. The Allstate brand personal property-liability Transformative Growth Plan is gaining momentum with broader customer access and continued expense ratio reductions, excluding the impacts of customer-facing coronavirus programs. Allstate Protection Plans continued its rapid growth through major retailers with policies in force increasing 43% from the prior year to over 120 million.

“The independent agent personal property-liability business’ strategic position will be significantly improved with the pending acquisition of National General Holdings Corp., which will be accretive to earnings.”

Adding: “Financial results for the quarter were excellent, with revenues of $11.2 billion generating net income of $1.2 billion and adjusted net income* of $2.46 per common share. The Property-Liability combined ratio was 89.8 in the second quarter, which more than offset the negative pandemic impact on reported investment income and life mortality. The total return on the $89.6 billion investment portfolio was 5.0% in the quarter and 5.7% over the last 12 months. Allstate Protection Plans’ adjusted net income of $35 million in the quarter was 84% higher than the prior year quarter. Shareholders also benefited from the 17.9% adjusted net income return on equity* with $563 million of dividends and share repurchases in the quarter.”

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