Allstate Reports Significant January Catastrophe Losses Amid Auto Rate Hikes

Allstate Corp. recently disclosed its January pretax catastrophe losses of $276 million, a notable increase following several months of relatively low totals. This report comes after the Northbrook, Illinois-based insurer exceeded its $150 million threshold for reporting catastrophe losses. The consolidated catastrophe losses for the fourth quarter of 2023 were significantly lower at $68 million, compared to $779 million in the same quarter of the previous year. The January losses, which amount to $218 million after tax, were largely due to two major events that constituted about 80% of the $325 million in catastrophe losses for the month. These figures were partially offset by favorable reserve re-estimates for prior events.

In addition to catastrophe loss reporting, Allstate has been consistently updating on auto rate increases for both its Allstate brand and the National General nonstandard brand since early 2022. The January auto rate hikes are expected to generate an additional $363 million in annualized written premiums, with a premium impact of 1.4%.

During a recent earnings call, Mario Rizzo, Allstate’s president of property-liability, highlighted that Allstate-brand auto rate increases have exceeded 33% over the past eight quarters. The most significant rate increases were observed in California, New York, New Jersey, and Texas, which collectively represent 36% of Allstate’s auto written premiums in the U.S. Following recent approvals, Allstate’s strategy in these states varies, with a notable 30% rate increase in California enabling the company to comfortably continue business there, while in New Jersey, a lower-than-requested rate increase has led to more restrictive underwriting actions.

Jess Merten, Allstate’s chief financial officer, also noted an inflation-driven 12.1% increase in homeowners insurance average gross written premiums in January 2024 compared to the previous year. This reflects Allstate’s ongoing adjustments to rates in response to the changing insurance landscape, emphasizing the company’s strategic approach to managing risk and ensuring sustainability amid fluctuating catastrophe losses and economic conditions.