Allstate insurance company announced $307 million in catastrophe losses in January

Insurance company - money losses

The US primary insurer said that most of the losses were associated with nine events.

The Allstate Corporation insurance company recently announced that its January 2023 pre-tax catastrophe losses were $307 million ($243 million after tax).

The nine events that caused the majority of the January 2023 losses were mainly in Texas and California.

According to a news release issued by the insurance company, part of the losses it experienced in January 2023 were offset by favorable reserve estimates for prior events.

Insurance company - Texas and California flags

“Allstate continued to implement significant auto insurance rate actions in response to inflationary increases to loss costs,” said The Allstate Corporation Chief Financial Officer Jess Merten. “During the month of January, the Allstate brand implemented auto rate increases of 9.9% across 13 locations, resulting in total brand premium impact of 0.7% which are expected to raise annualised written premiums by approximately $182 million.”

The announcement from the insurance company followed closely on the heels of its Q4 2022 results announcement, in which it had reported a net loss of $310 million in that quarter. In that case, the loss was mainly driven by auto insurance underwriting losses.

The insurance company increased its written auto premiums by 13.3 percent that quarter.

The 13.3 percent written premiums increase for auto coverage was mainly driven by the substantial rate increases throughout the Allstate brand as well as the National General growth.

Homeowners written premiums rose by 9.3 percent. The insurer noted that this is mainly a reflection of inflation in the home replacement costs for insured properties, as well as rate increases and policies in force growth.

Allstate’s underwriting loss shows the increases to current report year auto claim severities, as well as larger catastrophe losses and adverse reserve re-estimates for the prior year. It was offset in part by reduced expenses and increased earned premiums, according to the insurer.

“While revenues increased to $13.6 billion, due to 9.5% growth in Property-Liability premiums, higher auto insurance prices were not sufficient to overcome increased loss costs and reserve increases,” said The Allstate Corporation Chair, President and CEO Tom Wilson. “The comprehensive plan to return auto insurance margins to target levels continues to be implemented in 2023 and is expected to further increase average premiums, reduce expenses and lower policy growth.”

Homeowners insurance maintained attractive margins despite higher catastrophe losses from Winter Storm Elliott. The investment portfolio had a total return of 2.5% in the quarter. Allstate Protection Plans had excellent growth from U.S.-based retailers and expansion into furniture and international markets,” added the insurance company’s CEO.

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