Allstate facing $1.1bn CA wildfire hit as Q4 P&C UW income soars 38%

By Chris Munro

Feb 5 - (The Insurer) - Allstate expects its California wildfire losses will total $1.1bn before tax and net of reinsurance, with the disclosure coming as the US personal lines giant reported a Q4 2024 earnings beat that included a 38.3 percent increase in P&C underwriting income to $1.83bn.

• P&C CR improves 2.6 pts YoY to 86.9% in Q4

• Cat losses contribute 2.9 pts – up 240 bps YoY – to Q4 P&C CR

• P&C premiums written up 8.8% YoY to $13.8bn

• Q4 adjusted net income per diluted share of $7.67 beats consensus

In commentary accompanying the results, Allstate’s chairman, president and CEO Tom Wilson revealed the predicted extent of the company’s losses from the wildfires that hit Southern California earlier this year.

“We rapidly supported customers impacted by the January California wildfires and related losses are expected to be about $1.1bn, pre-tax, net of reinsurance, reflecting a decision to reduce market share beginning in 2007 and a comprehensive reinsurance program,” the executive said.

The update came as Allstate reported fourth quarter 2024 results that also saw its P&C combined ratio improve by 2.6 percentage points year on year to 86.9 percent.

Catastrophe losses contributed 2.9 points to Allstate’s P&C combined ratio in Q4 2024, compared with 50 basis points in 2023’s fourth quarter, while the effect of prior year non-catastrophe reserve re-estimates added another 60 basis points.

Allstate said the effect of prior year catastrophe reserve re-estimates added 40 basis points to the P&C combined ratio, while the effect of amortisation of purchased intangibles contributed a further 40 basis points.

Within its P&C business, Allstate Protection homeowners insurance suffered $315mn of catastrophe losses in 2024’s fourth quarter, up $294mn year on year. The Q4 catastrophe losses largely comprised Allstate’s hit from Hurricane Milton and re-estimates for Hurricane Helene.

Allstate’s underlying P&C combined ratio for Q4 2024 was 83.0 percent, an improvement of 3.9 points from the final quarter of 2023.

P&C premiums earned increased 10.6 percent year on year, from Q4 2023’s $12.6bn to $13.9bn for the final three months of last year.

The unit’s premiums written grew 8.8 percent year on year to $13.8bn.

During the quarter Allstate faced catastrophe losses of $410mn, up from the prior-year period’s $68mn.

The Northbrook, Illinois-based company posted adjusted net income of $2.1bn for 2024’s fourth quarter, an increase of 33.8 percent from Q4 2023’s $1.5bn.

On a per diluted share basis, Allstate reported adjusted net income of $7.67, an improvement on the prior-year period’s $5.82 and ahead of the $6.28 consensus forecast of 16 analysts, as compiled by S&P Capital IQ.

For the full year, Allstate’s P&C business swung to an underwriting profit of $3.1bn for 2024, compared with a loss of $2.2bn in 2023.

Its P&C combined ratio fell 10.2 points year on year to 94.3 percent, while its underlying P&C combined ratio improved 6.6 points to 84.6 percent.

Allstate’s P&C premiums earned increased 11.2 percent year on year to $53.9bn, and the segment’s premiums written grew 11.1 percent to $55.9bn.

Consolidated premiums written across Allstate’s operations hit $15.1bn in the final quarter of 2024, up from the prior year period’s $13.8bn.

“Allstate finished 2024 with another excellent quarter both financially and strategically,” said Wilson.

“Fourth quarter revenue reached $16.5bn and net income was $1.9bn, 11.3 percent and 30.1 percent above the prior year quarter, respectively.

“Operational excellence resulted in solid profitability in auto and homeowners insurance and protection services.

“Adjusted net income for the full year was $4.9bn which represents an adjusted net income return on equity of 26.8 percent.

“This performance reflects successful risk and return management,” Wilson declared.