Q3 combined ratio improves 0.8 points at Allstate

Despite the recent losses to the industry from multiple North Atlantic hurricanes, The Allstate Corp. has reported underwriting income is up more than 20%, from $355 million in the third quarter of 2016 to $429 million in the three months ending Sept. 30, 2017.

That increase is “due to higher premiums, a broad-based decline in the frequency of auto accidents and favourable prior year reserve releases,” Northbrook, Ill.-based Allstate said Nov. 1 in a release.

“These improvements were partially offset by elevated catastrophe losses related to Hurricanes Harvey and Irma,” added Allstate.

All figures are in United States currency.

Fitch Ratings Inc. reported Sept. 26 there are US$50 billion in “upper-end expected losses from Hurricane Irma,” to the P&C industry and US$25 billion in upper end expected losses from Hurricane Harvey. The latter made landfall Aug. 25 in Texas, causing major flooding in Houston. Hurricane Irma made two separate landfalls Sept. 10 in Florida, two days after it hit Cuba. Cities affected by major floods included Havana and Jacksonville.

Allstate reported Nov. 1 its catastrophe losses for the latest quarter were $861 million, up nearly 80% from $481 million in Q3 2016.

Property-liability insurance premiums increased 3.2%, from $7.869 billion in Q3 2016 to $8.121 billion in the latest quarter, of which $5.502 billion was from auto, $1.832 billion was from homeowners, $439 million was from other personal lines, $124 million was from commercial lines and $146 million was from other business lines.

The combined ratio was 94.7% in the latest quarter, down four-fifths of a point from 95.5% in Q3 2016.

The underlying combined ratio – which excludes catastrophes, prior-year reserve reestimates and amortization of purchased intangibles – improved 2.6 points, from 88% in Q3 2016 to 85.4% in the most recent quarter.

Allstate reported its claims and claims expense ratio improved 2.3 points, from 70.6% in Q3 2016 to 68.3% in Q3 2017. For the first nine months of the year, the claims and claims expense ratio dropped 4.1 points, from 73.2% in 2016 to 69.1% this year while the combined ratio improved 3 points, from 98.2% in 2016 to 95.2% this year.

Net income increased 28%, from $520 million in Q3 2016 to $666 million in the latest quarter.

For the first nine months of the year, Allstate reported property-liability premiums of $24.1 billion this year, up from $23.4 billion in 2016.

“SquareTrade made progress on the key criteria underlying its acquisition of growing the U.S. retail business while raising margins,” Allstate stated Nov. 1, referring to the San Francisco-based company it acquired this past January.

SquareTrade writes protection, from malfunctions and accidental damage, for consumer electronics. SquareTrade’s retailer partners include Amazon, Costco, Sam’s Club, Target, Staples, Office Depot and Toys R Us.

“Total policies in force of 34.1 million increased by 2.8 million in the third quarter of 2017 as the existing U.S. retail business continued to expand,” Allstate said Nov. 1 of SquareTrade. “Net written premium was $104 million for the third quarter of 2017.”

Consolidated revenues increased from $9.221 billion in the third quarter of 2016 to $9.66 billion in the latest quarter. Consolidated revenues for the first nine months of the year were $27.26 billion in 2016 and $28.7 billion this year.

Net income for the first nine months of the year increased from $1.037 billion in 2016 to $1.94 billion this year.

Net investment income increased from $748 million in Q3 2016 to $843 million this year.

For the first nine months of the year, net investment income increased from $2.24 billion last year to $2.49 billion this year.