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Dec 31, 2021
Allstate Q4 2021 Earnings Report
Allstate reported mixed results for Q4 2021, with revenue growth offset by lower underwriting income.
Key Takeaways
Allstate's Q4 2021 revenues increased by 18.7% year-over-year, driven by the National General acquisition and higher investment income. However, net income decreased due to lower underwriting income, partially offset by higher net investment income. The combined ratio increased, reflecting higher non-catastrophe losses and unfavorable reserve reestimates.
Total revenues increased by 18.7% to $13.0 billion, driven by the National General acquisition and growth in Protection Services.
Net income applicable to common shareholders decreased to $790 million, primarily due to lower underwriting income.
The Property-Liability combined ratio increased to 98.9, reflecting higher non-catastrophe losses in auto and homeowners insurance.
Adjusted net income was $796 million, or $2.75 per diluted share.
Forward Guidance
Allstate is adapting to higher auto claim costs by raising premiums, reducing expenses, and managing loss costs. The company is focused on improving operational flexibility and competitive position through cost reductions. Allstate aims for a further reduction of 3 points in the adjusted expense ratio over the next 3 years.
Positive Outlook
- Allstate is taking comprehensive action to improve profitability, including rate increases.
- The company focuses on improving operational flexibility through cost reductions.
- Allstate aims to reduce the adjusted expense ratio by 3 points over the next 3 years.
- Distribution was expanded with increased sales through Allstate’s direct channel and National General’s independent agent relationships.
- Allstate Protection Plans revenue increased $51 million, or 19.4%, compared to the prior year quarter, reflecting increased policies in force.
Challenges Ahead
- Higher auto claim costs are impacting auto insurance prices and returns.
- Decreased underwriting income was primarily driven by higher non-catastrophe losses in auto and homeowners insurance.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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