November 4, 2016 by Canadian Underwriter
The Allstate Corporation has reported consolidated revenues of US$9.22 billion for the three-month period ending Sept. 30, up 2.1% from US$9.03 billion in Q3 2015.
For the first nine months of the year, consolidated revenues were up 1.1% to US$27.3 billion from US$27 billion in 9M 2015, Northbrook, Ill.-based Allstate said in a statement on Wednesday.
Allstate brand auto written premium growth of 4.1% in the third quarter of 2016 reflected a 7.7% increase in average premium, which more than offset a 2.5% decline in policies in force, the statement said. The recorded combined ratio of 99% in the third quarter of 2016 was 0.2 points higher than the prior-year quarter and was adversely impacted by 3.1 points of catastrophe losses.
Allstate brand homeowners net written premium (NWP) declined slightly in the third quarter of 2016 compared to the third quarter of 2015, as average premium increased by 2% while policies in force declined by 0.9%, Allstate reported in the statement.
Esurance NWP growth of 5.4% compared to the prior-year quarter reflects a slight decline in policies in force, which was more than offset by a 6.4% increase in auto average premium. The recorded combined ratio of 109.8% was 3.3 points higher in the third quarter of 2016, primarily driven by higher catastrophe losses.
Encompass NWP declined by 9.7% and policies in force were 12.6% lower in the third quarter of 2016 compared to the prior-year quarter, “reflecting the continued focus on improving returns in this business,” Allstate said. The combined ratio improved from 101.3% in Q3 2015 to 98.3% in Q3 2016.
Allstate Financial net income was US$80 million and operating income was US$94 million in the third quarter of 2016. Operating income was US$44 million lower than the prior-year quarter, primarily due to lower limited partnership income and reduced interest income from the portfolio repositioning in the company’s annuity business.
As for net income applicable to common shareholders in the third quarter, Allstate reported US$491 million compared to US$621 million in the third quarter of 2015. Operating income was US$474 million in the third quarter of 2016, compared to US$610 million in the third quarter of 2015. “Net income applicable to common shareholders was US$491 million in the third quarter, reflecting strong profitability from homeowners insurance and an improvement in underlying auto insurance margins,” explained Tom Wilson, chairman and chief executive officer of the Allstate Corporation, in the statement.
Property-liability net income of US$483 million was US$46 million higher than the third quarter of 2015. Underwriting income of US$355 million was US$136 million below the prior-year quarter, driven by an increase in catastrophe losses and unfavourable prior-year reserve reestimates in the Discontinued Lines and Coverages segment, partially offset by higher earned premium.
“Catastrophe losses increased by US$211 million (78%) in the third quarter and US$908 million (67%) for the first three quarters, which led to a US$457 million decline in year-to-date operating income versus 2015,” Wilson said. “The property-liability underlying combined ratio of 88.0 for the first three quarters was at the favourable end of our annual outlook range of 88 – 90.”
“Results on our five operating priorities for 2016 also reflect a balanced approach to adapting to the external environment,” Wilson concluded.
The Allstate Corporation is the largest publicly held personal lines insurer in the United States, providing coverage to approximately 16 million households through auto, home, life and other insurance.