US primary insurer Allstate Corporation has released its results for the second quarter of 2019, showing net income growth of 18.7% when compared to the same period in 2018.
This was despite the impact of heavy catastrophe losses on the company’s performance, which totalled $1.07 billion in Q2 2019, up from $906 million in the previous year.
Net income was recorded at $851 million over the previous three months and $2.7 billion over the previous six months, compared with $717 million and $1.7 billion, respectively, last year.
Allstate attributed the growth to net realised capital gains in 2019 and higher premiums earned, partially offset by higher catastrophe losses.
Insurance premiums increased across several of Allstate’s business segments during this periods, including Allstate Protection (Allstate and Esurance brands), Service Businesses (SquareTrade and Allstate Dealer Services), Allstate Life and Allstate Benefits.
Underwriting income totalled $367 million and $1.07 billion in the second quarter and first six months of 2019, respectively, decreasing from $463 million and $1.46 billion for the same periods in 2018.
The decrease in both periods was primarily due to higher catastrophe losses, claim severity and policy acquisition and renewal costs, partially offset by increased premiums earned, improved auto claim frequency and lower other costs and expenses.
Allstate’s net investment income increased by 14.3% or $118 million in Q2 2019, primarily due to higher performance-based investment results, mainly from limited partnerships, and higher income from market-based portfolios.
However, on a six-month basis, investment income decreased by 1.2% or $20 million compared to H1 2018, due to lower-performance based results, offset by higher income from market-based portfolios.
The total cost of Allstate’s catastrophe reinsurance programs during the second quarter and first six months of 2019 was $100 million and $188 million, respectively, compared to $91 million and $176 million in the second quarter and first six months of 2018.
The higher prices were due to increases in Nationwide Program costs due to growth in policies, modest rate increases and program expansion for aggregate losses, the company explained.
Catastrophe losses over the first six months of 2019 added up to $1.75 billion, compared to $1.27 billion in the previous year.
