Technical loss exceeded $1 billion
catastrophe and flood
by Jen Frost
Allstate reported a net loss of $346 million for the first quarter of 2023 driven by catastrophes, the insurer updated today.
“Net loss applicable to common stockholders was $346 million in the first quarter of 2023 compared to revenue of $634 million in the prior-year quarter,” the insurer said in an earnings release. “The decrease was driven by a technical loss primarily due to higher catastrophic losses.”
The insurer reported a technical loss of $1 billion, compared to a technical income of $280 million for the first quarter of 2022. It reported a combined ratio of 108.6% for the quarter, a 97.3% deterioration in the first quarter. quarter of 2022.
Allstate said the underwriting loss reflected “higher catastrophic losses across all lines and higher non-catastrophic losses primarily for auto insurance,” partially offset by “higher earned premiums, fewer adverse prior-year non-catastrophic reserve restatements and lower expenses compared to the previous quarter year.”
Allstate’s total revenue for the first quarter of 2023 was $13.8 billion, up 11.8% from the prior-year quarter. Earned premium for the first quarter of 2023 increased 10.8% over the prior-year quarter to $11.6 billion.
“Allstate’s operational strength allowed us to continue to implement the auto insurance earnings improvement plan and help more than 100,000 customers recover from catastrophic losses in the first quarter while executing on the Transformative Growth initiative,” said Tom Wilson, director , CEO and Chairman of The Allstate Corporation. .
“Premiums earned for property liability increased $1.1 billion or 10.8% over the prior year due to increases in auto and home insurance rates. The profit improvement plan also includes cost reduction and new business volume reduction, both of which are being successfully implemented.”
Car loss costs “continue to rise rapidly,” Wilson said.
The insurer posted a total return on the investment portfolio of 2.4% in the first quarter, while earnings from its health services and benefits and protection businesses reduced the net loss.
“Transformational growth is critical to navigating the current operating environment and capturing future growth,” Wilson said. “The new auto insurance product is designed to be affordable, simple and connected, and will be available to approximately one-third of the US market by 2023.
“Expense reductions are partially offsetting current increases in claim severity and will support increased competitiveness when anticipated profitability is restored.”
Wilson also said the distribution transformation “is working,” noting increased productivity from Allstate’s exclusive agents, as well as increased product offerings through independent agents and “improved direct capabilities.”
“Protection Plans continues to expand product coverage and grow internationally,” Wilson said. “Health and Benefits is rebuilding its operating systems to reduce costs and support growth.”
The CEO concluded: “The combination of an aggressive strategy and Allstate’s brand, customer base and financial strength will lead to long-term growth.”
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