Allstate reports Q3 combined ratio of 93.5% after $517 million in cat losses

The Allstate Corp. released Wednesday its financial results for the three months ending Sept. 30, reporting 29 catastrophes during the quarter, a 4.8% increase in property-liability premiums and a 32% drop in underwriting income.

“Catastrophe losses were $517 million in the third quarter of 2014 compared to $128 million in the third quarter of 2013, and $1.90 billion in the first nine months of 2014 compared to $1.13 billion in the first nine months of 2013,” Allstate said in a filing with the United States Securities and Exchange Commission. All figures are in U.S. dollars.

Northbrook, Ill.-based Allstate reported earlier this month that one-third of its Q3 cat losses were from one severe weather event Sept. 29, mainly in Colorado.

The company reported property-liability premiums of $7.307 billion during the latest quarter, up 4.8% from $6.972 billion in Q3 2013. For the first nine months, property-liability premiums were $21.575 billion this year, up 4.7% from $20.604 billion in 2013.

Allstate reported its claims and claims expense ratio 67.2% in the latest quarter, up 1.7 points from 63.5% in Q3 2013. For the first nine months, Allstate’s property-liability claims and claims expense ratio was 68.6% this year, up 2.5 points from 66.1% in 2013.

During the latest quarter, Allstate’s combined ratio was 93.5%, up 3.5 points from 90.0% in Q3 2013. The effect of catastrophes on its Q3 2014 combined ratio was 7.1 points. For the first nine months, Allstate reported a combined ratio of 95.2% in the first nine months of 2014, up 2.1 points from 93.1% during the same period in 2013.

Q3 underwriting income dropped 32%, from $697 million in 2013 to $474 million this year. For the first nine months, underwriting income dropped 26.7%, from $1.42 billion in 2013 to $1.04 billion this year.

Allstate defines a catastrophe as an event “that produces pre-tax losses before reinsurance in excess of $1 million and involves multiple first party policyholders, or an event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event.”

Allstate reported 29 catastrophes in the latest quarter, none of which produced losses of more than $250 million. It had one $140-million catastrophe and one $70-million catastrophe. The other 27 catastrophes (which produced a combined total of $174 million in losses) each produced losses of less than $50 million.

“Net investment income was $344 million in the third quarter of 2014, an increase of 11.3% from $309 million in the third quarter of 2013, and $1.01 billion in the first nine months of 2014, an increase of 1.4% from $993 million in the first nine months of 2013,” Allstate reported.

Allstate recorded net income of $781 million on total revenues of $8.936 in the latest quarter, compared to net income of $316 million on total revenues of $8.465 billion in Q3 2013.

In the first nine months, Allstate reported net income of $2.026 billion on revenues of $21.575 this year, compared to net income of $1.459 billion on revenues of $20.604 billion in 2013.

Reserves for asbestos claims edged up 2.9%, from $1.02 billion as of Dec. 31, 2013 to $1.05 billion as of Sept. 30, 2014.