US primary insurer Allstate has announced that it expects to incur a net loss between $675 million and $725 million for the third quarter of 2022, largely due to the impacts of Hurricane Ian.
Catastrophe losses for the third quarter, net of reinsurance, are estimated to be $763 million, pre-tax.
Gross catastrophe losses due to Hurricane Ian, excluding National Flood Insurance Program losses, totalled $671 million pre-tax, but Allstate says this total will be reduced by $305 million, or 45%, in anticipated reinsurance recoveries, for a net estimated loss of $366 million.
Net of reinsurance, Ian accounted for 80% of Allstate’s catastrophe losses in the month of September, making up $348 million of the $440 million after-tax total.
Allstate notes that its enterprise risk and return management actions and comprehensive reinsurance programs, including its stand-alone Florida property coverage with a $40 million retention, significantly mitigated net losses from Hurricane Ian.
Given these actions, and 2.6% personal property market share in Florida, approximately 25% of net estimated losses from the storm relate to Allstate’s property lines and 75% to its auto coverages.
Allstate also attributed part of its Q3 loss to increases in property-liability insurance loss costs for both bodily injury and physical damage coverages, which have resulted in higher claims settlements and accordingly higher reserves for current and prior years.
Unfavorable prior year reserve re-estimates, excluding catastrophes, totaled $875 million for the third quarter, consisting of $643 million for personal auto, $120 million for run-off property-liability, and $112 million for all other non-catastrophe reserves.
Allstate’s net investment income for Q3 is estimated at $690 million, including performance-based investment income estimated at $335 million, of which 97% was generated by just three individual investments.
Net losses on investments and derivatives was $167 million, primarily due to lower valuation on equity investments and losses on sales of fixed income securities, partially offset by a valuation and settlement of derivative gain of $299 million for the third quarter of 2022.