U.S. primary insurer, The Allstate Corporation, has revealed that catastrophe results for the month of July generated pre-tax income of $334 million ($264mn after-tax), as previously announced PG&E subrogation recoveries more than offset the impacts of catastrophe events in the period.
After investigations in 2019 found that PG&E’s equipment was responsible for igniting a series of major wildfires, the firm confirmed an $11 billion agreement to resolve all insurance subrogation claims arising from the 2017 Northern California wildfires and the 2018 Camp Fire.
In July 2020, Allstate recorded its recoveries from PG&E of $450 million, pre-tax, ($356mn after-tax), net of expenses and reinsurance adjustments.
During the same month, the insurer recorded pre-tax catastrophe losses of $145 million ($115mn after-tax), of which roughly 65% came from Hurricane Hanna and two severe wind and hail events.
Additionally, the firm reports $29 million, pre-tax ($23mn after-tax), of favourable prior period catastrophe reserve reestimates not related to the aforementioned PG&E recoveries.
So, despite recording cat losses of $145 million, some favourable prior period reserve developments coupled with $450 million of recoveries from PG&E, meant that catastrophe results for July actually generated income of $334 million for Allstate.
This announcement from Allstate follows the insurer’s second-quarter 2020 financial results, in which it recorded a substantial rise in net income despite a 10.6% rise in cat losses, year-on-year, to $1.186 billion.