Allstate Corporation has reported a Q2 net loss applicable to common shareholders of $1.4 billion, chiefly driven by increased underwriting losses due to a massive catastrophe hit, which totalled $2.7 billion for the quarter.
Compared, Allstate’s catastrophe losses in Q2 last year were $1.1 billion, marking a substantial increase of 143.3% in 2023. For the first six months of this year, Allstate’s catastrophe losses stand at $4.39 billion, up 179.4% from 2022.
According to Allstate, the adjusted net loss in Q2 2023 was $1.2 billion, or $4.42 per diluted share, compared to an adjusted net loss of $207 million in the same quarter last year.
Allstate’s underlying combined ratio for Q2 was 92.9%, down slightly from 93.4% in Q2 of 2022.
Meanwhile, the firm also disclosed that total revenues grew 14.4%, or $1.8 billion, to $14 billion for Q2 2023 compared to the prior year quarter.
Allstate suggested that this was driven by a $1 billion increase in Property-Liability earned premium and net gains on equity valuations in Q2 compared to losses in 2022.
Indeed, Property-Liability earned premium increased 9.6% to $11.9 billion in Q2, due to higher average premiums.
Allstate noted the “$2.1 billion underwriting loss in Q2 increased by $1.2 billion compared to last year, driven by a $1.6 billion increase in catastrophe losses.”
Premiums written of $12.6 billion increased 9.7% compared to the prior year quarter driven by both the Allstate brand and National General.
Allstate brand increased 6.7% primarily due to higher auto and homeowners average premium, partially offset by the impact of profitability actions on personal auto policies in force and commercial lines.
National General increased 27.2% reflecting higher average premium and policies in force growth.
The Property-Liability underlying combined ratio in Q2 improved 0.5 points to 92.9, which Allstate said reflects higher earned premiums and lower expenses which were partially offset by higher claim severity and auto accident frequency.
Elsewhere, Allstate Protection auto insurance earned and written premiums increased 10.5% and 10.7% compared to the prior year quarter, respectively.
The firm said the increase was driven by higher average premium from rate increases, partially offset by a decline in policies in force.
The Q2 recorded auto insurance combined ratio of 108.3% 3 was 0.4 points above the prior year quarter, which Allstate said reflects higher catastrophe losses, which were partially offset by lower unfavourable non-catastrophe prior year reserve reestimates.
Commenting on the results, Tom Wilson, Chair, President and CEO of The Allstate Corporation, said, “Allstate’s excellent operating capabilities enabled us to navigate a difficult external environment while building long-term value.
“Severe weather resulted in 42 catastrophe events, where we remediated losses for 160,000 customers, causing net catastrophe losses of $2.7 billion in the quarter.
“The auto insurance profit improvement plan is being successfully implemented and we continue to increase homeowners’ prices in response to higher severity and catastrophes, although price increases and operating efficiency gains were largely offset by increased claim frequency and severity in the quarter.
“Net income for the quarter was a loss of $1.4 billion as catastrophe and underwriting losses more than offset higher investment income and profits from Protection Services and Health and Benefits.”
Wilson continued, “Our strategy to become the lowest cost protection provider and broaden customer relationships is supporting near-term profit improvement while building a foundation for growth.
“Sustainable cost reductions are being implemented, lowering current and future costs. Distribution programs have improved productivity, expanded reach, and lowered costs, which will drive accelerated growth as auto and homeowners insurance margins improve.
“Affordable, simple, and connected property-liability products with sophisticated telematics pricing are being introduced through a new technology platform. Protection Plans are expanding with new products and retail relationships and in international markets.
“Allstate will improve results while building an enhanced business model to better serve customers, generate attractive returns for shareholders, and create an opportunity for the Allstate team.”
