Allstate profits jump despite higher cat losses

Insurer Allstate produced a strong set of results for the second quarter as profits increased by 41.5 percent, despite being hit by higher cat losses.

The insurers’ net income rose to $614 million for the quarter, compared with $434 million in the second quarter of 2013.

Allstate’s combined ratio increased slightly to 97.4 percent for the quarter, 1.3 percentage points higher than the prior year quarter due to higher cat losses. The insurer suffered cat losses of $936 million in the second quarter, a jump of 47 percent compared with $647 million in the same period of the year prior.

Thomas Wilson, chairman, president and chief executive officer of The Allstate Corporation, said: “Allstate delivered strong results in the second quarter through continued focus on our five 2014 operating priorities. Allstate Protection net written premiums increased by 5.5 percent and consolidated net income was $614 million for the quarter. Operating income was $1.01 per share, despite pre-tax catastrophe losses of $936 million. Policies in force grew in all three underwriting brands, led by increased momentum in the Allstate brand.

“Esurance’s substantial net written premium growth continued at 15.3 percent over the prior year quarter; but the rate of increase declined compared to prior quarters as we took actions to improve returns. The property-liability underlying combined ratio was 84.7 for the quarter, achieving our goal of maintaining profitability with first half results better than the full year outlook of 87 to 89. Proactively managing risk and returns of the investment portfolio generated good results as lower interest income was offset by excellent limited partnership returns.

“We also made continued progress on creating shareholder value through strategic initiatives and capital management. Allstate’s telematics offering continues to grow rapidly and the customer value proposition is being expanded. The dispositions of Lincoln Benefit Life and Sterling Collision Centers were completed in the quarter. Shareholders were also provided strong cash returns with dividends and share repurchases, which totalled $1.37 billion for the first half of the year.”