Allstate's Q1 combined ratio deteriorates for property-liability and homeowners lines, improves for auto

By Isha Marathe

May 1 - (The Insurer) - Allstate's property-liability combined ratio deteriorated by 4.4 percentage points to 97.4% in Q1 due to higher catastrophe losses driven by the California wildfires, but the underlying result improved by 3.8 points to 83.1%.

Allstate reported adjusted net income of $949 million, or $3.53 per diluted share, which was comfortably ahead of analysts' consensus forecast of $2.52 per diluted share, as compiled by MarketWatch.

Property-liability earned premiums increased 8.7% year on year to $14 billion in the first quarter of 2025, primarily driven by higher average premiums.

Underwriting income was $360 million compared to $898 million in the prior-year quarter, reflecting the impact of increased catastrophe losses.

Premiums written increased 8.5% on the prior-year quarter driven by rate increases.

The deterioration in the combined ratio was primarily due to higher catastrophe losses, partially offset by higher average earned premiums and favourable non-catastrophe prior year reserve estimates.

Gross catastrophe losses in the quarter of $3.3 billion were partially offset by $1.1 billion of reinsurance recoveries. Net catastrophe losses of $2.2 billion were three times the $731 million reported in the prior-year period.

HOMEOWNERS

Allstate's homeowners combined ratio deteriorated by 30 points to 112.3% during the first quarter.

The deterioration reflected catastrophe losses of $2.8 billion in the quarter, mostly attributed to the California wildfires and March wind events, offset by $1 billion of recoveries from Allstate's reinsurance program.

Net losses of $1.8 billion were $1.3 billion greater than in the same period of the 2024.

Allstate Protection homeowners insurance fell to an underwriting loss of $451 million compared to income of $564 million in the first quarter of 2024.

Written premiums and earned premiums increased by 20.1% and 15.9% year on year, respectively, during 2025's first quarter. The increase was driven by higher average premium and policies in force growth of 2.5%.

The underlying combined ratio improved by 3.1 points compared to the prior year quarter to 62.4%.

AUTO

The group's auto combined ratio improved by 4.7 points to 91.3% in the first quarter, or by 3.9 points to 91.2% on an underlying basis.

Written and earned premiums grew 5.2% and 6.5%, respectively, compared with last year's first quarter. The increase was driven by rate increases, partially offset by a 0.4% decline in policies in force, as a 31.2% increase in new business applications was offset by lower retention.

Auto rate increases resulted in an annualised premium impact of 1.4% in the first quarter.

The improvement in the combined ratio reflected favourable physical damage loss costs and favourable prior year reserve releases.

Prior year non-catastrophe reserve re-estimates were favourable $238 million in the first quarter, reflecting improvement in physical damage severity trends.

Allstate generated net investment income of $854 million in the quarter, up from $764 million, with a total return on its investment portfolio of 1.4%, up from 0.5% in Q1 2024.