Provides Catastrophe Losses, Prior Year Reserve
Reestimates, Combined Ratios and Implemented Auto Rates
The Allstate Corporation (NYSE: ALL) today announced estimated
catastrophe losses for the month of June totaled $356 million or
$281 million, after-tax. June catastrophe losses included 10
events, primarily wind and hail in the Midwest, estimated at $315
million, plus unfavorable reserve reestimates for prior period
events. Catastrophe losses for the second quarter totaled $1.11
billion, pre-tax.
Inflationary trends continue to adversely impact current and
prior report year claim severity and loss reserve estimates. As a
result, unfavorable non-catastrophe prior year reserve reestimates
totaled $408 million in the second quarter. This included $275
million related to personal auto insurance, primarily from physical
damage and bodily injury coverages. In addition, $91 million of
additional reserves were recorded for commercial auto insurance,
primarily from shared economy business written in states where
coverage has been terminated.
Personal auto insurance results in the second quarter reflect
persistent increases in loss costs across coverages:
- Increases in physical damage costs are geographically
widespread and reflect higher part prices, labor rates and length
of claim resolution.
- Increases in injury claim costs reflect more severe auto
accidents, increased medical inflation, higher consumption of
medical treatment and more claims with attorney
representation.
- Claims reported in 2021 but settled in 2022 were subject to the
rising vehicle values, parts prices and labor rates experienced
during 2022, which contributed to the adverse loss reserve
development.
As a result of elevated catastrophe losses and the inflationary
impacts on severity, Allstate is also announcing estimated second
quarter recorded and underlying combined ratios*:
Three months ended June 30,
2022
Combined ratio
Underlying combined
ratio*
Property-Liability
107.9
93.4
Allstate Protection - Auto
insurance
107.9
102.1
Allstate Protection - Homeowners
insurance
106.9
70.3
_________
* Measures used in this release that are
not based on accounting principles generally accepted in the United
States of America (“non-GAAP”) are denoted with an asterisk and
defined and reconciled to the most directly comparable GAAP measure
in the “Definitions of Non-GAAP Measures” section of this
document.
Allstate continues to implement significant insurance rate
increases given ongoing inflationary impacts on claim severities.
In June, Allstate brand implemented rate increases for auto
insurance averaged 10.7% across 8 locations, resulting in total
Allstate brand insurance premium impact of 1.1%. Allstate brand
rate increases averaging approximately 8.3% across 51 locations
have been implemented since the beginning of the fourth quarter
2021. These rate increases are expected to raise annualized written
premium by approximately 9.0%, or $2.17 billion. For further
information, please visit the implemented auto rate exhibit section
posted on allstateinvestors.com.
Financial information, including material announcements about
The Allstate Corporation, is routinely posted on
www.allstateinvestors.com.
Forward-Looking Statements
This news release contains “forward-looking statements” that
anticipate results based on our estimates, assumptions and plans
that are subject to uncertainty. These statements are made subject
to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words like “plans,” “seeks,” “expects,” “will,”
“should,” “anticipates,” “estimates,” “intends,” “believes,”
“likely,” “targets” and other words with similar meanings. We
believe these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those communicated in these forward-looking
statements. Factors that could cause actual results to differ
materially from those expressed in, or implied by, the
forward-looking statements may be found in our filings with the
U.S. Securities and Exchange Commission, including the “Risk
Factors” section in our most recent annual report on Form 10-K.
Forward-looking statements are as of the date on which they are
made, and we assume no obligation to update or revise any
forward-looking statement.
Definition of Non-GAAP Measure
We believe that investors’ understanding of Allstate’s
performance is enhanced by our disclosure of the following non-GAAP
measure. Our methods for calculating this measure may differ from
those used by other companies and therefore comparability may be
limited.
Combined ratio excluding the effect of catastrophes, prior
year reserve reestimates and amortization or impairment of
purchased intangibles (“underlying combined ratio”) is a
non-GAAP ratio, which is computed as the difference between four
GAAP operating ratios: the combined ratio, the effect of
catastrophes on the combined ratio, the effect of prior year
non-catastrophe reserve reestimates on the combined ratio, and the
effect of amortization or impairment of purchased intangibles on
the combined ratio. We believe that this ratio is useful to
investors and it is used by management to reveal the trends in our
Property-Liability business that may be obscured by catastrophe
losses, prior year reserve reestimates and amortization or
impairment of purchased intangibles. Catastrophe losses cause our
loss trends to vary significantly between periods as a result of
their incidence of occurrence and magnitude, and can have a
significant impact on the combined ratio. Prior year reserve
reestimates are caused by unexpected loss development on historical
reserves, which could increase or decrease current year net income.
Amortization or impairment of purchased intangibles relates to the
acquisition purchase price and is not indicative of our underlying
insurance business results or trends. We believe it is useful for
investors to evaluate these components separately and in the
aggregate when reviewing our underwriting performance. The
underlying combined ratio should not be considered a substitute for
the combined ratio and does not reflect the overall underwriting
profitability of our business.
The following tables reconcile the respective combined ratio to
the underlying combined ratio. Underwriting margin is calculated as
100% minus the combined ratio.
Property-Liability
Three months ended June
30, 2022
Estimated Combined ratio
107.9
Effect of catastrophe losses
(10.2
)
Effect of prior year non-catastrophe
reserve reestimates
(3.8
)
Effect of amortization of purchased
intangibles
(0.5
)
Estimated Underlying combined
ratio*
93.4
Allstate
Protection - Auto Insurance
Three months ended June 30,
2022
Estimated Combined ratio
107.9
Effect of catastrophe losses
(1.5
)
Effect of prior year non-catastrophe
reserve reestimates
(3.8
)
Effect of amortization of purchased
intangibles
(0.5
)
Estimated Underlying combined
ratio*
102.1
Allstate
Protection - Homeowners Insurance
Three months ended June 30,
2022
Estimated Combined ratio
106.9
Effect of catastrophe losses
(34.3
)
Effect of prior year non-catastrophe
reserve reestimates
(1.7
)
Effect of amortization of purchased
intangibles
(0.6
)
Estimated Underlying combined
ratio*
70.3
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version on businesswire.com: https://www.businesswire.com/news/home/20220720006047/en/
Al Scott Media Relations (847) 402-5600
Mark Nogal Investor Relations (847) 402-2800
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