Allstate Insurance Forecasts $215 Million in Sept. Catastrophe Losses

Allstate Corp. reported Thursday that catastrophes in September cost it an estimated $215 million, pushing the insurer’s pretax catastrophe loss estimates to $1.08 billion for the third quarter of 2011.

The announcement caps months of major hits caused largely by natural disasters, with Hurricane Irene accounting for $500 million of the $735 million lost in August. Tornadoes, wildfires and other severe weather events cost the insurer about $2.3 billion during the second quarter, including $2 billion in April and May.

The latest announcement is part of Allstate’s policy, adopted earlier this year, to make public monthly and quarter-to-date catastrophe losses that are greater than $150 million for a given month.

The insurance industry typically defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a large number of policyholders and coverage providers, according to the Insurance Information Institute.

This year has been a costly one for major insurers including Allstate, State Farm and Progressive, with natural disasters nationwide inflicting record-setting losses as companies paid damage claims filed by storm victims ranging from Maine auto insurance policyholders to homeowners in Kansas.

ISO and the Property Casualty Insurers Association of America (PCI) announced last week that catastrophes in the first six months of 2011 cut profits for property/casualty insurers to $4.8 billion, compared with the $16.8 billion of profit in the first half of 2010.

According to ISO, net income was slashed largely due to catastrophes, which caused $23 billion in direct insured losses for insurers, up $14.1 billion from last year and about three times the average for first-half losses over the past decade.

Progressive’s profits for this year’s third quarter were down 42 percent compared to the same period in 2010, the company announced last week. The auto and home insurer reported in September that catastrophe losses in August had totaled $37 million, slashing profits by 66 percent—from $66.5 million to $22.5 million—compared with the same month in 2010.

Irene was to blame for nearly two-thirds of those losses, according to the company.

MetLife Auto & Home estimated after-tax catastrophe losses on auto and homeowner policies as high as $100 million, far exceeding the $38 million predicted for the quarter.

State Farm reported it had paid out $5 billion on more than 970,000 weather-related claims as of Sept. 23.

To read the experiences of current and former Allstate policyholders, readers can find user-submitted Allstate auto insurance reviews online.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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