Allstate sees net income and revenue growth despite higher cat losses in Q3’24

The Allstate Corporation has reported it was able to generate “excellent” returns in the third quarter of 2024 despite higher catastrophe losses, seeing its net income applicable to common shareholders improve to $1.2bn, compared to a net loss of $41mn loss seen in the same quarter last year.

Catastrophe losses for Q3 2024 were $1.7bn, 44.2% higher compared to the $1.1bn seen in Q3 2023. Underlying combined ratio (which excludes major claims) for the quarter was 83.2%, an improvement from the 91.9% seen in Q3 2023.

The recorded combined ratio in this year’s third quarter was 96.4%, a massive improvement from the 103.4% seen in the same period last year.

Total revenues of $16.6bn in this year’s third quarter were 14.7% above the prior year quarter driven by increased Property-Liability earned premiums, which were $13.7bn in the quarter.

Property-Liability underwriting results also saw improvement, to $495mn, compared to the $414mn loss seen in Q3 2023.

Earned premiums for Allstate Protection auto grew 11.1%, to $9.2bn, compared to the prior year quarter. The increase was driven by rate increases, partially offset by a decline in policies in force of 1.5%.

The line’s combined ratio of 94.8 in the third quarter of 2024 was 7.3 points lower than the prior year quarter, reflecting higher average earned premiums, improved underlying loss experience and favourable prior year reserve reestimates, according to Allstate.

The insurer noted that the Allstate Protection auto insurance results reflect successful execution of a comprehensive plan to restore margins. Profitability improvement supported increased growth investments in rate adequate states and risk segments.

Tom Wilson, Allstate’s Chair, CEO and President, commented: “Allstate’s focus on near-term performance while implementing our long-term growth plan resulted in strong financial returns and an improved strategic position. Revenues increased by almost 15% from the prior year, net income was $1.2 billion for the quarter and adjusted net income return on equity was 26.1% for the prior twelve months.

“Successful execution of the auto insurance profit improvement plan benefited results generating $486 million of auto insurance underwriting income. The homeowners insurance business is also generating good returns with an underwriting profit in the quarter despite $1.2 billion of catastrophe losses, 40% higher than the prior year quarter.”

He highlighted: “Third quarter results included Hurricanes Beryl, Debby, Francine and Helene where we deployed over 5,000 people to handle more than 100,000 claims. Hurricane Milton impacted customers shortly after the quarter with estimated losses of approximately $100 million. Strong performance from Protection Services, Health and Benefits and Investments contributed to adjusted net income of $3.91 per share.”

Wilson concluded: ““Progress was also made on implementing the strategy to increase market share in personal Property-Liability and expand protection solutions. Allstate Protection auto insurance new business sales increased 26% with increased advertising and expanded distribution. However, retention losses reflecting the impact of significant price increases over the last several years offset this growth resulting in a decline in auto policies in force. Homeowners insurance margins improved and policies in force are 2.5% higher than the prior year.

“Protection Plans expanded internationally and acquired Kingfisher to enhance mobile device protection capabilities. Operational excellence and implementation of the growth strategy will continue to create shareholder value.”

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