Allstate Corp. (ALL) revealed on Thursday that it has experienced catastrophe losses exceeding $1 billion in the month of June. The company also stated that it has made the decision to raise premiums for home and auto insurance in order to enhance its profitability.
Catastrophe Losses in June
According to Allstate, the estimated catastrophe losses for June alone amount to $1.01 billion. The losses for the entire second quarter were even higher, reaching a total of $2.70 billion. Out of the losses incurred in June, 60% were attributed to four significant wind and hail events.
Measures to Improve Profitability
Chief Financial Officer Jess Merten explained that Allstate has been actively implementing substantial rate adjustments for both auto and homeowners insurance as part of their comprehensive plan to improve profitability. This includes an 11.6% increase in auto rates across 12 locations during June, resulting in a 2.6% rise in the overall brand premium. Moreover, auto insurance rates have already seen a 7.5% increase this year, while homeowners insurance rates have increased by 7.4%. These adjustments are expected to contribute to an approximate annualized written premium boost of $754 million.
Stock Performance
Allstate’s stock has experienced a decline of 22.0% year to date as of Wednesday, although it slipped 0.2% premarket following the announcement. In comparison, the SPDR S&P Insurance exchange-traded fund (KIE) has gained 2.0%, and the S&P 500 (SPX) has advanced 18.9% over the same period.
In summary, Allstate Corp. faced losses exceeding $1 billion due to various catastrophic events in June, prompting the company to raise premiums on home and auto insurance. These measures are aimed at improving profitability, as Allstate diligently works towards enhancing its financial performance.
