Allstate reports significant turnaround in Q2 from prior year quarter

Main takeaway: Allstate delivered strong operational execution in Q2 2024, resulting in a significant turnaround from a net loss in the prior year quarter. This improvement was driven by higher premiums, improved underwriting results, and favorable prior year reserve estimates.

Allstate's strategy has two components, increased personal property liability market share and expanded protection provided to customers. Net income was $301 million in a quarter with elevated catastrophes. The auto profit improvement plan is being successfully executed. National General continues on a four-year profitable growth.

The homeowner's business had good results with an improved underlying combined ratio and underwriting profits for the first six months of the year. Net investment income was up almost 70% over the prior year.

Supporting reasons for main takeaway:

• Total revenue of $15.7 billion, an increase of 12.4% year-over-year (YOY).
• Net income of $301 million, compared to a net loss of $1.4 billion in Q2 2023.
• Adjusted net income of $429 million, or $1.61 per diluted common share, compared to an adjusted net loss of $1.2 billion in Q2 2023.
• Property-Liability (P&L) underlying combined ratio improved to 85.3, down from 92.9 in Q2 2023.
• Allstate Protection auto insurance recorded combined ratio of 95.9, a significant improvement from 108.3 in Q2 2023.

Management Commentary

CEO’s Statement:

Allstate’s strong execution capabilities benefited second quarter results and position us for continued success,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation. “Revenues grew by 12% from the prior year to $15.7 billion for the quarter reflecting increased insurance premiums and higher investment income. Almost 2 million customer claims were handled in the quarter to help rebuild lives after storms, accidents and device breakage. The Property-Liability profit improvement plan progressed resulting in an underlying combined ratio of 85.3. Protection Services and the Health and Benefits businesses also generated strong results. As a result, net income applicable to common shareholders was $301 million with adjusted net income of $1.61 per diluted common share.”

CFO’s Statement:

"Operating and financial performance in the second quarter reinforces Allstate’s ability to successfully execute the profit improvement plan while accelerating the implementation of the Transformative Growth strategy. Financial condition and capital position remain strong with statutory surplus in the insurance companies of $16.0 billion and $3.0 billion of assets held at the holding company. The sale of the Health and Benefits business is progressing, validating the attractiveness of these businesses. Allstate has the financial flexibility, liquidity and capital resources to continue to accelerate Transformative Growth,” said Jess Merten, Chief Financial Officer.

Segment Performance

Property and Casualty:

• P&L premiums earned increased 11.9% YOY.
• Allstate brand auto insurance policies decreased due to customer retention losses, while National General brand policies grew.
• Rate increases were implemented in various locations for both Allstate and National General brands.

Protection Services:

• Revenue increased 12.7% YOY, primarily driven by Allstate Protection Plans and Arity, the company’s mobility data and analytics company
• Allstate Protection Plans revenue grew 21.1% YOY.

Allstate Health and Benefits:

• Premiums and contract charges increased 4.6% YOY.

Allstate Investments:

• Net investment income of $712 million, an increase of $102 million YOY.
• Total return on investment portfolio was 0.7% for Q2 2024.

Future Outlook:

• Allstate is well-positioned to continue executing its profit improvement plan and growth strategy.
• The sale of the Health and Benefits business is progressing.
• The company has strong financial flexibility and capital resources to support future growth initiatives.

Additional Notes:

• A conference call to discuss these results was held on Thursday, August 1st at 9 AM ET.
• More information can be found on the Investor Relations section of Allstate's website: www.allstateinvestors.com

Company Information:

Insurance Carrier Name: The Allstate Corporation

• Quarter: Second
• Date of Earnings Call: Thursday, August 1st, 2024
• What the company specializes in: Property and casualty insurance, protection services, health and benefits

Future Outlook:

Allstate's Transformative Growth plan, broad protection offerings and extensive distribution is expected to create additional shareholder value.

Financial Overview

• Total Revenue: $15,714 million
• Net Income (gain or loss): $301 million
• Earnings Per Share (EPS): $1.13
• Stock price movement: +2.28% in mid-afternoon trading to $175.03 per share

Key Drivers and Trends

• New Products or Services: Focus on Allstate Protection Plans and expansion of mobile phone protection plans in Europe.
• Market Conditions: Challenging market conditions due to increased competition and economic uncertainty.
• Other: Strong focus on operational efficiency and cost reduction.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].