Allstate rating outlook downgraded by Fitch due to COVID-19 impact

Fitch Ratings has revised the rating outlook for US personal lines insurer Allstate Corporation and its core insurance subsidiaries to stable from positive.

The rating action is based on the significant uncertainty created by the global coronavirus pandemic, which has resulted in high levels of volatility in capital markets.

The COVID-19 outbreak has resulted in a sharp drop in interest rates, as well as significant variability in stock, bond and derivative prices.

"Life insurers, which include Allstate's core life insurance subsidiaries, are also exposed to spikes in mortality," Fitch said. "The combination will likely create some pressure on earnings and variability in capital levels, the severity and duration of which is impossible to predict at this time. Fitch believes the totality of these conditions no longer support a Positive Outlook."

Fitch noted that the affirmation of the ratings and revision of the outlook to stable from positive for Allstate's core insurance subsidiaries reflects Allstate's "very favorable business profile with market leading underwriting expertise and significant operating scale, strong risk-based capital position and very strong financial performance with consistently favorable underwriting margins and operating returns, offset by its higher than peer average allocation to risky investment assets".

The agency said that it will continue to monitor the potential impact of the coronavirus on ratings, including development of appropriate base case ratings assumptions.