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Q1 claims and claims expense ratio improved 5.6 points for Allstate


May 10, 2017   by Canadian Underwriter


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For the second year in a row, hail in Texas in March has cost The Allstate Corp. millions of dollars in claims and claims expenses.

Northbrook, Ill.-based Allstate released May 2 its financial results for the first three months of 2017, reporting a combined ratio on property-liability of 93.6% in the most recent quarter, a 4.8-point improvement from 98.4% in the first quarter of 2016.

“Catastrophe losses were $781 million in the first quarter of 2017, a decrease of 5.6% from $827 million in the first quarter of 2016,” Allstate said in a securities filing with the U.S. Securities and Exchange Commission. All figures are in U.S. dollars.

Allstate announced April 20 it estimated its pre tax cat losses for the quarter were $777 million. At the time, Allstate reported that a severe hail event, “primarily affecting the state of Texas in March, accounted for over one-third of the catastrophe losses for the quarter.”

In its global recap report for March, Aon plc’s Impact Forecasting unit reported that severe weather “left extensive damage” in the U.S. March 26 to 28.

“Among the hardest-hit areas included Texas, Oklahoma and Kansas after up to softball-sized hail left homes, vehicles, and business with shattered windows and dented roofs,” Impact Forecasting reported in April. The Insurance Council of Texas cited insurable losses of $300 million “for the March 26 storms alone,” Impact Forecasting added.

Allstate reported May 2 that its claims and claims expense ratio dropped 5.6 points from 73.6% in Q1 2016 to 68% in the latest quarter.

In its Q1 2017 financial results, Allstate reported one catastrophe event with $267 million in claims and claims expenses and three events – costing the insurer between $50 and $100 million each with a combined total of $230 million in claims and claims expenses. Another 24 catastrophe events in Q1 2017 cost Allstate a combined total of $280 million.

In its Q1 2016 financial report, Allstate reported 64.8% ($536 million) of its claims and claims expenses from catastrophes were from two events, one of which cost $340 million and the other costing $196 million.

In April, 2016, Allstate reported that “two severe hail events, primarily impacting the state of Texas in March, accounted for two-thirds of the catastrophe losses” for Q1 2016.

On May 2, 2017, Allstate reported property-liability insurance premiums of $7.959 billion in the latest quarter, up 3% from $7.723 billion in Q1 2016.

Broken down by segment, Allstate reported insurance premiums of $5.39 billion in auto (up from $5.22 billion in Q1 2016), $1.815 billion in homeowners (up from $1.810 billion in Q1 2016), $431 million in other personal lines (up from $421 million in Q1 2016), $125 million in commercial lines (down from $129 million in Q1 2016) and $141 million (down from $143 million in Q1 2016) in other business lines.

Also for the latest quarter, Allstate reported $59 million on premiums from SquareTrade, a San Francisco-based firm that writes protection – from malfunctions and accidental damage – for consumer electronics.

Allstate announced Nov. 28, 2016 that it agreed to acquire SquareTrade for about $1.4 billion from a group of shareholders including Bain Capital Private Equity and Bain Capital Ventures. SquareTrade has relationships with retailers including Amazon, Costco, Sam’s Club, Target, Staples, Office Depot and Toys R Us.

Allstate reported May 2 a 7.4% increase in net income, from $851 million in Q1 2016 to $914 million in the latest quarter.

Net investment income increased from $419 million in Q1 2016 to $426 million during the three months ending March 31, 2017.