Allstate earnings rebound thanks to property-liability premium hike

Allstate Corp. rebounded from a challenging second quarter to post a profit that beat Wall Street expectations when it reported quarterly earnings results on Thursday.

The company reported adjusted net income per share in the third quarter of 2023 of $0.81, up from -$1.53 in the same period last year, and up from -$4.42 in Q2, when severe weather and climate catastrophes impacted 160,000 Allstate customers. The quarterly profit beat average analyst expectations of $0.46 per share, according to Reuters.

Allstate reported total revenues of $14.5 billion, a 9.8% increase year-over-year. Allstate president and CEO Tom Wilson attributed the bounce to higher premiums in its property-liability business, which helped increase revenues from the division 10% YOY to $12.3 billion.

The company is making progress on its plan to improve profitability, particularly in auto insurance, but still has significant work to do, Wilson said during a conference call to discuss Allstate’s quarterly earnings.

'Elevated' loss cost trends cited

“While the improvement was encouraging, loss cost trends remain elevated and require continued execution of our auto insurance profit improvement plan, particularly in California, New York and New Jersey,” Wilson said.

The company has increased auto insurance rates 26.4% over the past 21 months to combat rising loss costs, and new issued applications declined thanks to a decision to reduce growth in those states, which are unprofitable, said Mario Rizzo, Allstate’s president of property-liability.

Catastrophe losses also continued to impact Allstate’s homeowners insurance business, but net written premiums increased 12.1% YOY due to higher average premiums and a slight increase in policies in force.

Allstate to sell health and benefits businesses

The company also announced plans to sell its health and benefits businesses in 2024. The division operates three businesses – voluntary benefits, group health in the small case market and individual health products – that delivered $2.3 billion in revenue in the 12-month period ending Sept. 30.

“The growth potential of these businesses can be accelerated with greater alignment with a wide range of companies in the market,” Wilson said. “With its attractive business profile and financial results, we expect a transaction to be completed in 2024.”

Allstate also highlighted actions taken to improve its investment portfolios, including repositioning fixed income holdings into longer duration bonds and a reduction in public equity holdings to take advantage of the current high interest rate environment. The company brought in $689 million in net investment income in Q3, relatively flat from the year-ago period.

Shares of Allstate were up 1.25% in midday trading Thursday.

Ryan W. Neal has more than 14 years of experience as a reporter, including nine years covering the financial services industry. He formerly served as technology editor at Investment News. 

© Entire contents copyright 2023 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.