Allstate reports strong Q3 earnings despite hurricane losses

Main Takeaway: Despite huge losses from catastrophes, including hurricanes Beryl, Debby, Francine, and Helene, Allstate reported strong earnings and improved strategic position for the third quarter 2024, focusing on near-term performance and implementation of its long-term growth plan. The homeowners business generated good returns and underwriting profits, with more than 100,000 claims from storms. Hurricane Milton affected customers shortly after the quarter with estimated losses of about $100 million,

Nevertheless, the company reported a 14.7% increase in total revenues ($16.6 billion) compared to 2023 Q3, primarily driven by property-liability earned premiums. Net income recovered to $1.2 billion from a net loss of $41 million in the year-ago quarter.

Additional takeaways:

• Property-Liability Segment: Earned premiums grew by 14.6% compared to the prior year quarter, driven by higher average premiums and a 2.5% growth in policies in force, which reflects improved retention and increased new policy sales. Property-Liability earned premiums totaled $13.7 billion, an 11.6% year-over-year increase. Underwriting income reached $495 million, a $909 million improvement from the prior year's $414 million loss.
• Auto Insurance: Generated $486 million in underwriting income, benefiting from a profit improvement plan.
• Homeowners Insurance:

◦ The Allstate brand recorded a 3.1% annualized total brand premium impact for the quarter and a cumulative 7.6% increase for the first nine months of 2024, resulting from rate increases. These, along with inflation in insured home replacement costs, drove a 10.8% increase in average gross written premium compared to the prior year.
◦ The National General brand achieved a 2.2% annualized premium impact in the quarter, with a 6.1% increase over the first nine months of 2024.
◦ Catastrophe losses reached $1.2 billion, up $353 million year-over-year, largely due to hurricanes. The recorded homeowners insurance combined ratio of 98.2 improved by 6.2 points from the prior year, receiving help from higher earned premiums and favorable underlying loss costs, partially offset by increased catastrophe losses. The underlying combined ratio of 62.1 marked a 10.8-point improvement from Q3 2023.

Strategic Progress

• Market Share Expansion: Allstate Protection auto insurance new business sales rose by 26%, supported by increased advertising and distribution. However, retention losses due to recent price increases resulted in a slight decline in auto policies in force.
• Homeowners Insurance Policies: Policies in force grew by 2.5%, supported by rate increases and stable retention.
• Protection Plans: International expansion continued, with the acquisition of Kingfisher strengthening mobile device protection offerings.

Leadership Commentary: Our goal is to increase personal property liability market share, and also broaden our protection offerings,” said Tom Wilson, Allstate’s chair, CEO, and president. “Operational excellence and implementation of the growth strategy will continue to create shareholder value.”

“Allstate continues to be strongly capitalized while generating attractive returns with adjusted net income return on equity of 26.1% over the last twelve months,” said Jess Merten, chief financial officer. “Total estimated statutory surplus in the insurance companies increased to $17.3 billion and $3.0 billion of assets are held at the holding company. The divestiture of the Employer Voluntary Benefits business is expected in the first half of 2025.”

Financial Overview
Total Revenue : $16.6 billion
Net Income: $1.2 billion
Earnings Per Share (EPS): $3.91

Key Segments:
Property-Liability
Revenue: $13.7 billion premium, +11.6% compared to the prior year quarter,
Net Income: $495 million vs. $414 million loss in the prior year quarter.

Auto:
Revenue: Earned premiums grew 11.1%, to $9.2 billion, compared to the prior year quarter

Homeowners:
Revenue: Premiums earned increased to $3.4 billion with combined ratio of 98.2.

Allstate Protection Plans
Revenue: $512 million, or 23.1% increase compared to the prior year quarter
Net income: Adjusted net income of $39 was $19 million higher than the prior year quarter.

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