Catastrophe losses up 44.7% for Allstate in second quarter

The Allstate Corp. released Wednesday its financial results for the quarter ending June 30, reporting a 44.7% increase in catastrophe losses, a 8.46% increase in property-liability claims and claims expenses, a 1.3-point increase in the property-liability combined ratio and a 41.5% increase in net income.

Northbrook, Ill.-based Allstate reported its property-liability insurance premiums earned were $7.204 billion in Q2 2014, up 5% from $6.862 billion during the same period in 2013. All figures are in United States dollars.

In Canada, Allstate reported $328 in premiums written in the Allstate brand in Q2 2014, up 2.8% from $319 million during Q2 2013. In the three months ending June 30, 2014, Allstate reported it had written, under the Allstate brand in Canada, $250 million in auto, $63 million in homeowners and $15 million other personal lines.

Company-wide, Allstate said its property-liability premiums earned were $14.268 billion in the first six months of 2014, up 4.7% from $13.632 billion for the first half of 2013.

“Policies in force grew in all three underwriting brands, led by increased momentum in the Allstate brand,” Thomas J. Wilson, Allstate’s chairman, president and CEO, said in a press release. “Esurance’s substantial net written premium growth continued at 15.3% over the prior year quarter; but the rate of increase declined compared to prior quarters as we took actions to improve returns.”

In an investor supplement filed with the U.S. Securities and Exchange Commission, Allstate noted that within property-liability, it had written $7.547 billion in premiums in Q2 2014. Of that, $6.866 billion was under the Allstate brand,

$341 million was under the Encompass brand and $340 million was under the Esurance brand.

Within the Allstate brand, the carrier recorded premiums written of $4.375 billion in auto, $1.765 billion in homeowners, $416 million in other personal lines, $130 million in commercial lines and $180  million in other business lines.

Property-liability claims and claims expenses were $5.142 billion in Q2 2014, up 8.46% from $4.741 billion in Q2 2013. Underwriting income in property-liability was $189 million in Q2 2014, down 42.3% from $269 million in Q2 2013.

Net investment income in property-liability alone was $351 million in Q2 2014, up 2.3% from $343 million in Q2 2013.

The claims and claims expense ratio was 71.4% in Q2 2014, up 2.3 points from 69.1% in Q2 2013. The property-liability combined ratio deteriorated by 1.3 points year-over-year, from 96.1% in Q2 2013 to 97.4% in Q2 2014.

For the first six months, the property-liability combined ratio was 96.1% in 2014, up 1.4 points from 94.7% in the first half of 2013.

The underlying combined ratio, which excludes catastrophes, prior year reserve reestimates and amortization of purchased intangibles, was 84.7% in Q2 2014, down 2.4 points from 86.9% in Q2 2013.

For Allstate as a whole, consolidated revenue was $8.86 billion in the most recent quarter, up 0.8% from $8.787 billion in Q2 2013. Net income available to common shareholders was $614 million, up 41.5% from $434 million in 2013. Net investment income across the entire firm was $898 million in Q2 2014, down from $984 million in Q2 2013. Life and annuity and contract charges were $898 million in Q2 2014,  down from $894 million in Q2 2013.

Catastrophe losses were $936 million in Q2 2014, up 44.7% from $647 million in Q2 2013. Allstate reported a total of 29 cat events in the latest quarter, none of which cost the firm most then $250 million. There were two cat events costing more than $101 million, with total claims and claims expenses of $322 million.

Three cat events, costing between $50 million and $100 million each, had a grand total of $208 million in claims and claims expenses. Allstate also reported 24 cat events of less than $50 million, with total claims and claims expense of $347 million. Total cat claims and claims expenses were $877 million. When factoring in prior-year reserve re-estimates of $36 million and prior quarter reserve re-estimates of $23 million, total cat losses for Q2 2014 were $936 million.

During the most recent quarter, asbestos reserves dropped from $993 million to $976 million, as Allstate reported $17 million in and claims expenses paid during the period. Asbestos reserves had stood at $1.228 billion at the beginning of 2009.

There were no asbestos claims incurred in Q2 2014, and the last period in which Allstate reported incurred asbestos claims and claims expenses – of $74 million – was in Q4 2013. Allstate reported environmental reserves of $201 million as of June 30, 2014, down from $204 million as of March 31.