The insurer’s fourth quarter catastrophe losses were about $528 million in total last year.
The Allstate insurance company has reported its catastrophe losses for last year’s fourth quarter. Its total was a pre-tax $528 million, with a substantial impact from the loss events that occurred in December, particularly the Marshall Fire in Colorado.
December 2021 was a particularly impactful month on the insurer’s total catastrophe losses.
Allstate’s pre-tax catastrophe loss estimates were $411 million for December 2021 alone. After tax, that translates to $325 million. The $411 million is a calculation comprised of $381 million in fresh catastrophe losses and severe weather occurring that month, in addition to loading from loss creep, unfavorable reserve re-estimates.
The insurance company said that about 78 percent of the month’s catastrophe loss total was directly related to the tornado outbreak in the US and the Marshall Fire that affected segments of Colorado.
The Marshall Fire was easily the largest fourth quarter loss event for the Allstate insurance company.
Current estimates are that Allstate lost $218 million to the Marshall Fire. Allstate didn’t report its monthly catastrophe losses specific to October and November. That said, with the data from December, it looks as though those months must have been relatively typical for the insurer in comparison.
Before December, the insurer also experienced a substantial catastrophe loss from the claims left behind by hurricane Ida. There were other third quarter events as well, which were the drivers of nearly $1 billion in reinsurance recoveries for Allstate.
The insurance company obtained the recoveries through its excess-of-loss reinsurance. That said, its aggregate reinsurance deductible will also have been eaten away by the substantial catastrophe loss activity that Allstate experienced. When combined with the Q4 losses, the total increases Allstate’s catastrophe bonds risk over the rest of their risk period, which extends to April 2022. Additional deductible erosion has also likely occurred. Tallying the pre-tax catastrophe losses that the insurer reported since April 2021 – which aligns with the Sanders Re catastrophe bond coverage risk period the company has in place, the loss run rate was $2.78 billion after December 2021.