Allstate First-Quarter Financial Results Show Rising Profits

Allstate 1Q 2012 profitsAllstate released its first-quarter financial statement Wednesday, which showed that the nation’s second-largest auto insurer saw rising profits when compared with both the previous quarter and the first quarter of 2011.

According to the earnings data, Allstate’s profits are up about 46 percent from the same period last year, jumping from $524 million up to $766 million.

The positive year-over-year results can be at least partly attributed to a 22 percent reduction in the amount the company lost on catastrophic claims during the first quarter, as well as to a 3.3 percent increase in revenues, which rose to $8.36 billion in the first quarter of 2012. Investment income was also up about 3 percent, increasing by $29 million.

The company also saw a large year-over-year jump in underwriting income, which went from $284 million up to $313 million, a 59 percent increase.

Allstate CEO Thomas Wilson said in the company’s financial statement that premiums were up because of the company’s purchase of Esurance, hikes in homeowners insurance premiums and “growth in emerging businesses.” Premiums would have been higher, however, if it weren’t for fallout from New York and Florida auto policyholders after the company raised rates in those states. As a result, total auto premiums declined 1.2 percent between the first quarters of 2011 and 2012.

Looking forward, the company said its underwriting results may be hurt by rising frequency and severity of auto insurance claims. The size of claims has been driven up by growth in medical and litigation costs and “inflation in auto repair costs, auto parts prices and used car prices,” the company said.

If the short-term rise in claims frequency becomes a long-term development, it “may not be sustainable.”

A report by the Wall Street Journal this week portrayed Allstate as struggling to maintain premiums and its spot as one of the top five insurers in the nation.

The report, which was sparked by the leaking of a confidential Allstate presentation, indicated that “The number of new customers buying car insurance from Allstate Corp. began ‘rapidly declining’ in the second quarter of last year,” and that the company has been scurrying to reverse the trend.

Potential customers calling to compare auto insurance quotes from the company were down about 30 percent last July, according to the report.

According to data from the National Association of Insurance Commissioners (NAIC), Allstate still has about $17.45 billion worth of auto insurance premiums in place as of April 9, 2012, making it the second-largest car coverage provider in the country. The company’s national market share is 10.32 percent, according to the NAIC.

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

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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