Allstate’s Q4 Excelled With Underwriting, Investment Income and Tax Cut Gains

The Allstate Corp., like many carriers, faced an enormous hit from natural catastrophe losses in the 2017 fourth quarter. Investment returns soared by double digits, however, and the Trump tax cuts gave it a one-time gain, helping to ensure the insurer turned a substantial profit.

Tom Wilson, Allstate’s chairman and CEO said in prepared remarks that the insurer showed it “excelled at delivering strong current results and implementing multiple initiatives to drive long-term profitable growth.”

Allstate booked net income of $1.2 billion, or $3.35 per share, during the 2017 fourth quarter. Thanks to the Trump tax cuts, Allstate saw its net income jump by $506 million. Without the tax reform or goodwill impairment related to changes in reportable segments, net income during Q4 was at $762 million.

In Q4 2016, Allstate produced $811 million in net income, or $2.18 per share.

Other Q4 result highlights:

• Catastrophe losses during Q4 came in just under $600 million, nearly double the $303 million Allstate booked over the same period a year ago.

• Allstate’s recorded property liability combined ratio was 91 during Q4, compared to 89.7 in the 2016 fourth quarter.

• Net investment income for the fourth quarter was $913 million, 14 percent higher than the $801 million generated in the same, year-ago period.

• Property-liability underwriting income was $715 million, $86 million lower than the same period in 2016. Allstate blamed higher catastrophe losses and more expensive compensation costs.

• Allstate brand auto net premium written grew 4.2 percent in the 2017 fourth quarter, thanks to a 4.5 percent increase in average premium versus the previous year, though policies in forced declined slightly.

• Allstate’s homeowners net written premium jumped 3.4 percent in Q4 compared to the previous year, but policies in force dipped 0.5 percent over the previous year.

• Allstate’s Esurance brand saw net written premium grow 2.8 percent versus the previous year, due to higher average premium in both auto and homeowners insurance. That was partially offset by a dip in policies in force. Allstate said that a push to drive higher growth across all lines of business made continued progress, with homeowners insurance policies in force jumping 36.2 percent for the year, with $79 million in written premium. Esurance’s combined ratio was 100.2, 4.8 points better than the same, year-ago quarter, driven mostly by a lower expense ratio.

Source: Allstate