Allstate reported a net loss of $346 million for Q1 2023 driven by catastrophe hits, the insurer updated today.
“Net loss applicable to common shareholders was $346 million in the first quarter of 2023 compared to income of $634 million in the prior year quarter,” the insurer said in a results release. “The decrease was driven by an underwriting loss primarily due to higher catastrophe losses.”
The insurer reported an underwriting loss of $1 billion, compared to an underwriting income of $280 million for Q1 2022. It reported a combined ratio of 108.6% for the quarter, a deterioration on 97.3% in Q1 2022.
Allstate said that the underwriting loss reflected “higher catastrophe losses across lines and higher non-catastrophe losses primarily for auto insurance”, partially offset by “higher earned premiums, less adverse non-catastrophe prior year reserve reestimates and lower expenses compared to the prior year quarter.”
Allstate’s total revenues for Q1 2023 were $13.8 billion, up 11.8% on the prior year quarter. Earned premium for Q1 2023 was up 10.8% on the prior year quarter, at $11.6 billion.
“Allstate’s operating strength enabled us to continue implementing the auto insurance profit improvement plan and help over 100,000 customers recover from catastrophe losses in the first quarter, while executing the Transformative Growth initiative,” said Tom Wilson, chair, CEO and president of The Allstate Corporation.
“Property liability earned premiums increased by $1.1 billion or 10.8% over the prior year due to rate increases on auto and home insurance. The profit improvement plan also includes expense reductions and reduced new business volume, both of which are being successfully implemented.”
Auto loss costs “continue to increase rapidly”, Wilson said.
The insurer saw an investment portfolio total return of 2.4% for Q1, while profits from its health and benefits and protection services businesses cut down the net loss.
“Transformative growth is critical to navigating the current operating environment and capturing future growth,” Wilson said. “The new auto insurance product is designed to be affordable, simple and connected and will be available to about one-third of the U.S. market in 2023.
“Expense reductions are partially offsetting current increases in claims severity and will support increased competitiveness when targeted profitability is restored.”
Wilson also said that distribution transformation “is working”, and pointed to higher Allstate exclusive agent productivity, in addition to greater product offerings through independent agents and “enhanced direct capabilities”.
Allstate agent numbers recently dropped to what has been reported as a record low, as per a February 2023 SEC filing.
“Protection Plans continues to expand product coverage and grow internationally,” Wilson said. “Health and Benefits is rebuilding its operating systems to lower costs and support growth.”
The CEO concluded: “The combination of an aggressive strategy and Allstate’s brand, customer base and financial strength will lead to long-term growth.”
