Allstate Announces Second Quarter 2022 Underwriting Results

Provides catastrophe losses, re-estimates of prior year reserves, combined ratios and implemented auto rates

NORTHBROOK, Ill.–(BUSINESS WIRE)–The Allstate Corporation (NYSE:ALL) today announced that estimated catastrophe losses for the month of June were $356 million or $281 million after tax. June catastrophe losses included 10 events, primarily wind and hail in the Midwest, estimated at $315 million, as well as unfavorable reserve reestimates for events in prior periods. Catastrophe losses for the second quarter totaled $1.11 billion before tax.

Inflationary trends continue to have a negative impact on claims severity and estimates of current and prior year claims reserves. As a result, unfavorable prior year non-catastrophic reserve re-estimates totaled $408 million in the second quarter. This included $275 million related to personal auto insurance, primarily bodily injury and bodily injury coverage. Additionally, $91 million of additional reserves were recorded for commercial auto insurance, primarily shared economy business written in states where coverage was terminated.

Personal auto results in the second quarter reflect continued increases in claims costs across all coverages:

  • Increases in physical damage costs are geographically widespread and reflect higher parts prices, labor rates and claims settlement duration.

  • Increases in injury claims costs reflect more serious car accidents, increased medical inflation, higher consumption of medical treatments and more claims with legal representation.

  • Claims reported in 2021 but settled in 2022 were subject to higher vehicle values, parts prices and labor rates in 2022, which contributed to the unfavorable development of claims reserves.

Due to high catastrophe losses and inflationary impacts on severity, Allstate is also announcing estimated recorded and underlying combined ratios for the second quarter*:

Quarter ended June 30, 2022

Combined report

Underlying combined ratio*

Property-Liability

107.9

93.4

Allstate Protection – Car Insurance

107.9

102.1

Allstate Protection – Home Insurance

106.9

70.3

_________

* Measures used in this press release that are not based on generally accepted accounting principles in the United States of America (“non-GAAP”) are marked with an asterisk and defined and reconciled to the most directly comparable GAAP measure in the “Non-GAAP Definitions”. GAAP Measures” of this document.

Allstate continues to implement significant insurance rate increases in light of the continued inflationary effects on claims severity. In June, the Allstate brand implemented auto insurance rate increases averaging 10.7% across 8 locations, resulting in a total impact on Allstate brand insurance premiums of 1, 1%. Allstate-branded rate increases of approximately 8.3% on average across 51 locations have been implemented since the start of the fourth quarter of 2021. These rate increases are expected to increase annualized written premiums by approximately 9.0% , or $2.17 billion. For more information, please visit the Automatic Implemented Rates exposure section posted on allstateinvestors.com.

Financial information, including important announcements regarding The Allstate Corporation, is regularly posted on www.allstateinvestors.com.

Forward-looking statements

This press release contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are 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 can be identified by the use of words such as “plans”, “seeks”, “expects”, “will”, “should”, “anticipates”, “estimates”, “intends”, “believes”, “likely”, “targets” and others words with similar meanings. We believe that 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 set forth in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by the Forward-looking statements can be found in our filings with the United States Securities and Exchange Commission, including the “Risk Factors” section of our most recent annual report. on Form 10-K. Forward-looking statements speak as of the date they are made, and we assume no obligation to update or revise any forward-looking statements.

Non-GAAP Measure Definition

We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measure. Our methods of calculating this measure may differ from those used by other companies and therefore comparability may be limited.

Combined ratio excluding the effect of catastrophes, re-estimates of prior year reserves and amortization or impairment of purchased intangible assets (“underlying combined ratio”) is a non-GAAP ratio, which is calculated as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of re-estimates of reserves not related to catastrophes of the previous year on the combined ratio and the effect of amortization or impairment of purchased intangible assets on the combined ratio. We believe this ratio is useful to investors and is used by management to reveal trends in our Property & Casualty business that may be masked by catastrophe-related losses, re-estimates of prior year reserves and amortization or impairment of purchased intangible assets. Catastrophe claims cause our claims trends to vary significantly from period to period due to their impact and magnitude, and can have a material impact on the combined ratio. Re-estimates of prior year reserves are caused by the unexpected evolution of losses on historical reserves, which could increase or decrease the net profit of the current year. Amortization or depreciation of purchased intangible assets is related to the purchase price and is not indicative of the underlying results or trends of our insurance business. We believe it is useful for investors to evaluate these components separately and together when reviewing our underwriting performance. The underlying combined ratio should not be considered as a substitute for the combined ratio and does not reflect the overall technical profitability of our activities.

The following tables reconcile the respective combined ratio with the underlying combined ratio. The underwriting margin is 100% minus the combined ratio.

Property-Liability

Three months completed
June 30, 2022

Estimated combined ratio

107.9

Effect of catastrophic losses

(10.2

)

Effect of prior year non-catastrophe reserve reestimates

(3.8

)

Effect of amortization of purchased intangible assets

(0.5

)

Estimated underlying combined ratio*

93.4

Allstate Protection – Car Insurance

Three months completed

June 30, 2022

Estimated combined ratio

107.9

Effect of catastrophic losses

(1.5

)

Effect of prior year non-catastrophe reserve reestimates

(3.8

)

Effect of amortization of purchased intangible assets

(0.5

)

Estimated underlying combined ratio*

102.1

Allstate Protection – Home Insurance

Three months completed

June 30, 2022

Estimated combined ratio

106.9

Effect of catastrophic losses

(34.3

)

Effect of prior year non-catastrophe reserve reestimates

(1.7

)

Effect of amortization of purchased intangible assets

(0.6

)

Estimated underlying combined ratio*

70.3

contacts

Al Scott

Media Relations

(847) 402-5600

Marc Nogal

Investor Relations

(847) 402-2800