Allstate is addressing inflation by raising prices
Allstate has reported its financial results for Q1′ 2022.
Tom Wilson, Chair, President, and CEO of Allstate, said that the insurer is addressing inflation by raising prices, reducing expenses, and changing investment allocations. Premiums earned were $11 billion in the quarter, an increase of 6.5% over the prior year as auto and home insurance rates increased. “We made excellent progress on the Transformative Growth strategy by expanding customer access, improving pricing sophistication, and advancing expense reduction programs. Customer access was expanded as Allstate agent new business sales were maintained while direct distribution grew to 38% of new business and National General expanded through independent agents. Allstate brand auto insurance price increases of $862 million were implemented in the quarter using sophisticated pricing algorithms. While the expense ratio increased compared to prior-year quarter from higher employee-related costs, we remain committed to our three-year expense reduction goals. Transformative Growth has positioned us to quickly adapt to this inflationary environment while improving our competitive position to grow market share.”
Allstate auto rate increases were made in 28 locations in the first quarter at an average of 9.3%, or 3.6% on total premiums.
- Total revenues of $12.3 billion in the first quarter of 2022 decreased by 0.9% compared to the prior-year quarter.
- Net income applicable to common shareholders was $630 million in the first quarter of 2022 compared to a loss of $1.4 billion in the prior-year quarter, primarily due to a loss from discontinued operations in 2021 associated with the sales of Allstate Life Insurance Company and Allstate Life Insurance Company of New York.
- Adjusted net income of $726 million was below the $1.9 billion generated in the prior-year quarter. The decrease reflects higher auto accident frequency and increased inflation, unfavorable prior-year reserve estimates, and lower net investment income.
- Property-Liability earned premium of $10.5 billion increased 6.1% in the first quarter of 2022 compared to the prior-year quarter, driven by higher average premiums and item growth in both the National General and Allstate brands.
- The underlying combined ratio of 90.9 in the first quarter of 2022 was 13.8 points above the prior-year quarter, reflecting higher auto and homeowners claims severity due to increased inflationary impacts and higher auto accident frequency.
- Allstate Protection auto insurance earned premium increased 4.0% driven by higher average premiums and policies in force growth of 2.4% compared to the prior-year quarter. Policies in force growth driven by National General, including impacts from the SafeAuto acquisition, and the Allstate brand.
- Allstate Protection homeowners insurance earned premium grew 8.8%, and policies in force increased 1.1% compared to the first quarter of 2021. The improvement was driven by lower catastrophe losses.
- Protection Services revenues increased to $627 million in the first quarter of 2022, 13.6% higher than the prior-year quarter, primarily driven by Allstate Protection Plans.
- Allstate Protection Plans revenue of $329 million increased by $54 million, reflecting increased policies in force.
- Allstate Dealer Services revenue of $135 million was 9.8% higher than the first quarter of 2021, driven by a higher earned premium.
- Allstate Roadside revenue of $65 million in the first quarter of 2022 increased 10.2% compared to the prior-year quarter, as rescue volumes increased compared to the first quarter of 2021.
- Arity revenue of $62 million decreased by $2 million compared to the prior-year quarter as increased Milewise device revenue was offset by lower LeadCloud and software revenue. Adjusted net loss of $1 million in the first quarter of 2022 was $3 million worse than the prior-year quarter, primarily driven by lower revenue and increased expenses related to growth.
- Allstate Identity Protection revenue of $36 million in the first quarter of 2022 increased 16.1% compared to the prior-year quarter, and policies in force increased by 9.1% to 2.9 million. Adjusted net income was breakeven, $10 million better than a loss in the first quarter of 2021, driven by the absence of a restructuring charge and higher revenue.
- Allstate Health and Benefits premiums and contract charges increased 3.1% compared to the prior-year quarter, primarily due to growth in group health.
- Allstate Investments $61.8 billion portfolio generated a net investment income of $594 million in the first quarter of 2022, a decrease of $114 million from the prior-year quarter.