The insurer experienced significant improvements in its home and auto markets.
Allstate Corp. has announced that the net income for the first quarter of 2012 had increased by approximately 46 percent to $766 million, in a news release from the company.
The chief executive officer of the insurer, Thomas J. Wilson, stated that the strategy of the carrier for improving their margins in the homeowners and auto insurance sectors had been paying off.
The property-liability segment at Allstate generated a $523 million underwriting profit within that quarter
This was notably higher than the first three months of 2011, which saw $328 million. The operating income during the first quarter of this year rose to $601 million, which was also significantly better than last year’s $427 at the same time.
Equally, last year’s catastrophe losses were $333 million where this year’s were much lower at $259 million.
In comparison to 2011’s written premiums, there was an increase of four percent. This increase was credited primarily to the recent purchase of Esurance by Allstate.
The first quarter’s combined ratio was driven down to 80.2 in the homeowners segment, compared to last year’s 91.4. The reason for this was a decline in the costs from losses in combination with the approved rate increases. According to the president of auto, home, and agency at Allstate, Matthew Winter, the insurer feels that it will be able to proceed forward with additional rate increases in the high single digits.
Homeowners insurance rate increases, as well as the policies agents have been writing in New York and Florida’s personal injury protection systems have been negatively affected by the intentions in those states to improve their auto results. According to Winters, there has been a “chilling effect on our ability to grow” by these rating actions. However, he still stated that “growth in the absence of profit is the wrong strategy.”
Now, other insurers have been following suit with Allstate’s intentions to raise the rates for homeowners insurance in order to help to offset the increasing claims costs in states such as New York, where severe weather have been causing significant losses for the carriers.
For more insurance news headlines.