Allstate reports $1 billion net loss in second-quarter results

Allstate reported a second-quarter net loss applicable to common shareholders of $1.04 billion, compared with revenue of $1.60 billion in the year-ago quarter.

The company noted that the loss was mainly due to lower underlying underwriting income, higher catastrophe losses, lower equity valuations and losses on sales of fixed income securities.

At the same time, Allstate also reported an adjusted net loss of $209 million in the second quarter of 2022, compared to adjusted net income of $1.15 billion generated in the year-ago quarter. The decline reflects higher claims severity and unfavorable re-estimates of prior year reserves, as well as lower net investment income and higher catastrophe losses.

Additionally, P&C earned premiums of $10.9 billion increased 8.6% in the second quarter of 2022 compared to the prior year quarter, primarily due to higher average premiums and in-force business growth.

The recorded combined ratio of 107.9% generated an underwriting loss of $864 million compared to income of $429 million in the second quarter of 2021.

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Additionally, Allstate Auto Protection Earned insurance premiums increased 6.8%, driven by higher average premiums resulting from rate increases and 2.3% growth in policies in force compared to the prior year quarter.

Allstate noted that in-force business growth was driven by National General, which includes the impacts of the SafeAuto acquisition, and the Allstate brand.

At the same time, premiums earned from Allstate Protection home insurance increased 11.4% in Q2-22, and policies in force increased 1.2% from the second quarter of 2021.

Allstate brand net written premiums increased 15.2% from the prior year quarter, driven by average premium increases of 13.2% due to insured home valuation inflation and rate increases implemented, combined with 1.7% growth in in force policies.

“Allstate has a long history of successfully navigating challenging environments, and we are confident in our ability to restore profitability to target levels while continuing to innovate and transform our business,” said Tom Wilson, president, president and chief of the management of The Allstate Corporation.

“The impact of higher claims repair costs and the upward development of claims reserves from prior years led to a recorded combined ratio of 107.9 in the second quarter. The underwriting loss combined with declines equity valuation and losses on sales of fixed income securities resulted in a net loss of $1.04 billion and an adjusted net loss* of $209 million in the quarter.

“As a result, we are further accelerating insurance price increases, implementing underwriting restrictions in underperforming states and reducing advertising spend, which should improve profitability and slow policy growth. Insurance premiums earned of $10.9 billion increased 8.6% primarily due to higher average auto and home insurance premiums.

“While the current operating environment necessitates a focus on improving insurance margins, progress has been made in the transformative growth strategy, including the launch of beta versions of a new auto insurance product and shareholders also benefited from strong capital management with cash returns of $919 million from common shareholder dividends and share buybacks.

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Ann J. Cox