Allstate has announced a net loss of $694 million for the third quarter of 2022, compared to a net income of $508 million in the prior year quarter, primarily due to an underwriting loss and equity valuation declines.
The company’s adjusted net loss for the quarter was $420 million, compared to an adjusted net income of $217 million generated in the prior year quarter. Allstate noted that the decline reflects increased claims severity, higher unfavorable prior year reserve re-estimates and lower net investment income.
At the same time, total revenues of $13.2 billion in Q322 increased 5.8% compared to the prior year quarter reflecting a 9.8% increase in Property-Liability earned premium, partially offset by net losses on investments and derivatives in 2022 compared to net gains in 2021 and lower net investment income.
Additionally, Property-Liability earned premium of $11.2 billion increased 9.8% in the quarter compared to the same period last year. Allstate noted that this was driven primarily by higher average premiums and policies in force growth.
The recorded combined ratio of 111.6% was 6.3 points higher than the prior year quarter and generated an underwriting loss of $1.3 billion.
Furthermore, Allstate Protection homeowners insurance earned premium grew 10.1% in the quarter, and policies in force increased 1.4% compared to the third quarter of 2021.
“Allstate’s operational excellence and financial strength enabled us to navigate a difficult economic environment while serving customers, adapting to significant cost increases and executing profitable growth strategies,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation.
“Revenues increased to $13.2 billion for the quarter due to a 9.8% growth in Property-Liability earned premiums largely due to higher average premiums for auto and home insurance and a 7.2% increase in Protection Services revenue. Auto and home insurance prices continue to be increased, reflecting cost inflation with Allstate brand increases of 10.4% and 13.3% respectively, being effective in 2022. Plans to reduce personal lines insurance in states with unacceptable auto and home insurance margins are being expanded.
“Additionally, we are exiting commercial and shared economy insurance markets that comprise 55% of commercial premiums. The net loss of $694 million reflected a small underlying underwriting margin that was more than offset by prior year reserve increases and a $199 million valuation decline in public equity related investments in the quarter. Prior year reserves, excluding catastrophes, were increased by $875 million, primarily due to higher expected settlements with non-customer claimants reflecting more severe accidents and higher medical and litigation costs. Adjusted net income was a loss of $420 million for the quarter.”
Wilson also added that excellent progress was made in executing the strategy to increase Property-Liability market share and expand protection offerings to customers.
“Customer value for auto and homeowners insurance will be increased through further cost reductions and sophisticated pricing. Expanded customer access is being achieved with growth through independent agents.
“While Allstate branded direct sales and marketing investment have been reduced given current auto insurance profitability, execution capabilities were improved. Growth strategies for Health and Benefits, Protection Plans and Identity Protection also advanced. Allstate’s capital position is strong, enabling us to provide cash returns to shareholders of $2.8 billion year-to-date through dividends and share repurchases,” concluded Wilson.