The Northbrook, Illinois-based insurer surpassed its $150 million threshold for reporting catastrophe losses after experiencing several months of relatively low totals.
In contrast to the same quarter the previous year, consolidated catastrophe losses for the fourth quarter of 2023 totalled $68 million, a significant decrease from $779 million. Allstate disclosed that January’s catastrophe losses amounted to $218 million after tax, with two specific events in the month contributing to approximately 80 percent of the $325 million total, partially offset by favourable reserve re-estimates for previous events.
According to reports, in addition to catastrophe loss updates, Allstate routinely provides monthly information on its auto rate increases. In January, the Allstate auto rate hikes resulted in a premium impact of 1.4 percent, expected to generate annualised written premiums of approximately $363 million.
During a recent call with analysts discussing fourth-quarter earnings, Mario Rizzo, President of Property-Liability, highlighted that Allstate-brand auto rate increases have surpassed 33 percent over the last eight quarters, with the highest hikes observed in California, New York, New Jersey, and Texas—states accounting for 36% of auto written premiums in the U.S. Allstate had received approvals for auto rate increases in California, New York, and New Jersey in December.
Rizzo informed analysts that the 30% rate increase approved in California enables Allstate to feel assured about underwriting business in the state. Conversely, he noted that New Jersey presents a different scenario, where Allstate applied for a 29% increase but was granted slightly less than 17%.
“As a result of that, we are going to continue to take the more restrictive underwriting actions that we have been taking in New Jersey, which means we will continue to get smaller in New Jersey,” said Rizzo, who explained that Allstate has two rate filings pending in the state.
Speaking about New York, he said the recent 14.6% rate increase approval helped, but that Allstate would file for its full rate need in the near furture.
Jess Merten, Allstate chief financial officer, added, “Implemented rate increases and inflation in insured home replacement costs resulted in a 12.1 percent increase in homeowners insurance average gross written premium in January 2024 compared to the prior year.”
