August 2, 2017 by Canadian Underwriter
The Allstate Corporation has reported a Property-Liability (P-L) combined ratio of 97.2% for the second quarter of 2017 ending June 30, a 3.6% improvement from 100.8% in Q2 2016.
Northbrook, Ill.-based Allstate released its financial results for the quarter and first six months of 2017 on Tuesday. Allstate’s P-L combined ratio for H1 2017 also improved to 95.4% from 99.6% in H1 2016, the insurer noted in a statement.
Consolidated revenues for the company for Q2 2017 totalled US$9.59 billion, up from US$9.16 billion in the same quarter last year. For the half-year, consolidated revenues were US$19.02 billion compared to US$18.04 billion in H1 2016.
Net income attributable to common shareholders was US$550 million for the most recent quarter, a 127.3% improvement from US$242 million in Q2 2016, Allstate said in the statement. Net income attributable to common shareholders was up 164.9% in the first half of the year to US$1.22 billion from US$459 million in H1 2016. Tom Wilson, Allstate’s chairman and chief executive officer, said in the statement that the quarterly net income gains reflected “improved auto insurance margins and strong investment results.”
For P-L, underwriting income of US$227 million was US$293 million above the prior-year quarter, due to increased auto insurance underwriting income, reflecting higher average premiums, lower claims frequency and favourable prior-year reserve reestimates, Allstate reported. This was partially offset by an increased expense ratio, which included US$52 million of restructuring expenses, the majority of which are related to Allstate brand claims process changes and office closures due to the expansion of virtual auto claim estimating capabilities.
The P-L underlying combined ratio of 85.5% for the second quarter and 85.1% for the first six months of 2017 were “significantly lower” than the prior year periods, reflecting improvement in the auto underlying combined ratio across all three underwritten brands and strong homeowners underlying margins, the insurer suggested. “Assuming current loss trends continue, we expect to be at or below the lower end of the annual outlook range of 87-89 for the full year,” the release said.
Catastrophe losses were up to US$993 million in Q2 2017 from US$961 million in Q2 2016. For H1 2017, cat losses were down to US$1.77 billion from US$1.79 billion in H1 2016.
Allstate brand auto net written premium (NWP) grew 3.3% in the second quarter of 2017, reflecting a 5.4% increase in average premium compared to the prior-year quarter, partially offset by a 2.6% decline in policies in force. The recorded combined ratio of 95.8% in the second quarter of 2017 was 5.4 points better than the prior-year quarter and was favourably impacted by increased premiums earned, lower claim frequency, and favourable prior-year reserve reestimates primarily related to injury coverages, Allstate reported.
Allstate brand homeowners NWP increased 0.9% in the second quarter of 2017 compared to the second quarter of 2017, reflecting a 1.8% increase in average premium that was partially offset by a 1.3% decline in policies in force. Homeowners policy growth has been adversely impacted by actions taken to improve auto margins, the insurer said, noting that the Q2 2017 combined ratio of 97.2% increased by 0.2% compared to Q2 2016.
Allstate brand other personal lines NWP of US$441 million increased 3% in the second quarter of 2017 compared to the second quarter 2016. The recorded combined ratio of 90.8% in the second quarter of 2017 improved by 0.4 points compared to the prior-year quarter, driven by an improved loss ratio, partially offset by a higher expense ratio.
For Esurance, NWP growth of 4.1% compared to the prior-year quarter reflects increased average premium in auto and homeowners, Allstate said in the release. The recorded combined ratio of 106.1% was 2.8 points better in the second quarter of 2017 compared to the second quarter of 2016, as a lower expense ratio was partially offset by a higher loss ratio.
Allstate subsidiary Encompass NWP declined by 9.5% in the most recent quarter and policies in force were 14.9% lower compared to the Q2 2016, as the company exited unprofitable markets and raised prices. The recorded combined ratio of 104.4% in the second quarter of 2017 was 0.5 points below the second quarter of 2016.
SquareTrade, a consumer protection plan provider that Allstate acquired at the beginning of the year, reported NWP of US$85 million in Q2 2017 and generated an underwriting loss of US$22 million. Policies in force were 31.3 million, an increase of 1.4 million policies in the most recent quarter, due to continued growth in the retail channel in the United States. During the second quarter, Allstate Insurance Company executed a 100% quota share reinsurance agreement with SquareTrade’s largest third-party insurer “which should result in higher underwriting and investment income,” the company said.
For Allstate Financial, net income was US$146 million and operating income was US$153 million in the second quarter of 2017. Operating income was US$33 million higher than the prior year quarter, largely due to higher investment returns in Allstate Annuities, the release pointed out.
The Allstate Corporation is the largest publicly held personal lines insurer in the United States with 75 million proprietary policies. The company offers a broad array of protection products through multiple brands and distribution channels, including auto, home, life and other insurance offered through its Allstate, Esurance, Encompass and Answer Financial brands. The company also provides additional protection products and services through Allstate Benefits, Allstate Roadside Services, Allstate Dealer Services, Arity and SquareTrade.