Allstate’s new issued applications in CA, NY, and NJ declined by ~62%

Allstate  hosted its Q2’23 earnings call on Aug 2, 2023. Select highlights:

  • Allstate’s strategy includes two components: increasing personal profit liability market share and expanding protection services.
  • Progress is being made on improving auto insurance profitability through measures such as raising rates, reducing expenses, and enhancing claim processes.
  • Severe weather in the quarter contributed to a net loss of $1.4 billion, with 42 catastrophe events impacting 160,000 customers and resulting in $2.7 billion of catastrophe losses.
  • Strong fixed income results from higher bond yields generated $610 million of investment income, and Protection Services and Health and Benefits generated $98 million of profits in the quarter.
  • The transformative growth plan to become the lowest cost protection provider is making progress, with new products and retail relationships being added under Allstate Protection Plans.
  • National General’s growth is expected to increase market share, and Allstate’s strong capital position with $16.9 billion of statutory surplus supports sustainable growth.
  • Over the last 12 months, Allstate has repurchased 3.9% of outstanding shares for $1.3 billion, but the repurchase program was suspended in July due to a net loss in the first half of the year.
  • Improving profitability, increasing property liability, organic growth, and broadening protection offerings will drive increased shareholder value.
  • Connected property liability products with sophisticated telematics pricing and differentiated direct-to-consumer capabilities are being introduced under the Allstate brand through a new technology platform.
  • Allstate Protection Plans is expanding its embedded protection through new products and retail relationships and in international markets.
  • New issued applications in California, New York, and New Jersey declined by around 62% compared to the previous year’s quarter.
  • In California, a second 6.9% rate increase was implemented in April, and a 35% increase was filed for in the second quarter, pending approval from the Department of Insurance.
  • Allstate is working closely with the California Department to secure approval for the rate increase and restore auto rates to an adequate level.
  • In New York, a 6.7% increase was approved.
  • In New Jersey, a 6.9% rate increase was approved in the first quarter, and a subsequent 29% increase was filed in the second quarter. Additional rate increases are expected for the rest of 2023 to address ongoing loss cost increases.
  • The consolidation of Encompass business into National General is reducing costs and creating a stronger business for serving independent agents.
  • The growth in the IA channel, particularly through specialty vehicle products and new products for preferred auto and homeowners insurance, is also becoming a reality.