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Allstate reports $1bn net loss in Q2 results

4th August 2022 - Author: Jack Willard

Allstate has announced a second quarter net loss applicable to common shareholders of $1.04 billion, compared to an income of $1.60 billion in the prior year quarter.

Allstate logoThe company noted that the loss was primarily due to lower underlying underwriting income, higher catastrophe losses, equity valuation declines and losses on fixed income sales.

At the same time, Allstate also reported an adjusted net loss of $209 million in the second quarter of 2022, compared to an adjusted net income of $1.15 billion generated in the prior year quarter. The decline reflects increased claims severity and unfavourable prior year reserve re-estimates, as well as lower net investment income and higher catastrophe losses.

Additionally, Property-Liability earned premium of $10.9 billion increased 8.6% in the second quarter of 2022 compared to the prior year quarter, which was driven primarily by higher average premiums and policies in force growth.

The recorded combined ratio of 107.9% generated an underwriting loss of $864 million compared to an income of $429 million in the second quarter of 2021.

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Furthermore, Allstate Protection auto insurance earned premium increased 6.8%, driven by higher average premiums from rate increases and policies in force growth of 2.3% compared to the prior year quarter.

Allstate noted that policies in force growth was driven by National General, which includes impacts from the SafeAuto acquisition, and the Allstate brand.

Meanwhile, Allstate Protection homeowners insurance earned premium grew 11.4% in Q2 22, and policies in force increased 1.2% compared to the second quarter of 2021.

Allstate brand net written premium increased 15.2% compared to the prior year quarter, driven by average premium increases of 13.2% due to inflation in insured home valuations and implemented rate increases, combined with policies in force growth of 1.7%.

“Allstate has a long history of successfully navigating challenging environments, and we are confident in our ability to restore profitability to target levels while continuing to innovate and transform our company,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation.

“The impact of rising claim repair costs and upward prior year loss reserve development led to a recorded combined ratio of 107.9 in the second quarter. The underwriting loss combined with equity valuation declines and losses on fixed income sales resulted in a net loss of $1.04 billion and an adjusted net loss* of $209 million in the quarter.

“As a result, we are further accelerating insurance price increases, implementing underwriting restrictions in underperforming states and reducing advertising spend, which is expected to improve profitability and slow policy growth. Insurance premiums earned of $10.9 billion increased 8.6% primarily due to higher average premiums in auto and homeowners insurance.

“While the current operating environment necessitates focus on improving insurance margins, progress was made on the Transformative Growth strategy including launching beta versions of a new auto insurance product and technology ecosystem. Shareholders also benefited from strong capital management with cash returns of $919 million through common shareholder dividends and share repurchases.”

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