Allstate's (ALL) Auto Rate Hiking Spree Continued in February
The Allstate Corporation ALL recently unveiled auto rate increases that it had enforced in the month of February 2024. Simultaneously, it also disclosed catastrophe loss estimates for the last month.
The implementation of rate hikes in the auto insurance business of the Allstate brand had inflicted a favorable impact of 0.1% on premiums for February 2024. The insurer seems to be on a spree to implement successive rate hikes since the beginning of 2024, which benefited premiums by 1.5% on a year-to-date basis.
In the homeowners insurance business, the Allstate brand pursued rate increases last month, resulting in a positive impact of 2.4% on premiums. Year to date, the benefit to premiums was 2.7%. Implemented rate hikes and escalating insured home replacement expenses led to 12.4% year-over-year growth in homeowners insurance average gross written premium for this February.
The rate improvements are in sync with efforts to boost the profits of Allstate’s insurance business, a dire need amid the persistent inflationary headwind and uninterrupted claim expenses, which are roadblocks in the way of insurers. To counter such challenges, insurers are compelled to increase rates that enable them to fetch higher premiums, the most significant contributor to an insurer’s top line.
Management remains optimistic to pursue additional rate hikes in 2024. On this front, the company had also remained quite active in 2023, wherein it implemented rate hikes of 17.9% for the Allstate brand across 55 locations. This had a favorable impact of 16.4% on total Allstate brand insurance premiums.
Concurrent with announcing February rate increases, ALL also disclosed its estimated catastrophe losses for the last month. The figure came below the reporting threshold of $150 million. Being a property and casualty (P&C) insurer, ALL’s underwriting results remain susceptible to catastrophe losses. Softer underwriting results lead to a deterioration in the combined ratio, an indicator of an insurer’s profitability.
The underlying combined ratio of Allstate improved 390 basis points (bps) year over year for 2023 on the back of higher premiums earned in the Property-Liability business. P&C insurance premiums earned amounted to $48.4 billion for 2023, which improved 10.3% year over year.
Other P&C insurers exhibiting impressive underwriting results in 2023 were Kinsale Capital Group, Inc. KNSL, Cincinnati Financial Corporation CINF and Chubb Limited CB.
Kinsale Capital’s operating revenues were $1.2 billion for 2023, up 45.9% year over year, on the back of higher premiums, fee income, improved net investment income and other income. Underwriting income soared 54% year over year to $270.4 million. The combined ratio was 75.4%, which improved 310 bps year over year. Subsequently, the bottom line improved 60.2% year over year.
Adjusted revenues of Cincinnati Financial amounted to $8.9 billion, which increased 10.6% year over year. In its P&C insurance business, CINF witnessed an underwriting income of $401 million, which increased nearly three-fold year over year. The combined ratio improved 320 bps year over year to 94.9%. Adjusted operating income per share improved 42% year over year.
Chubb’s core operating income for the year was $22.54 per share, up 48.5% year over year. P&C net premiums written amounted to $41.8 billion, up 9.9% year over year. Underwriting income climbed 19.9% year over year in 2023. The combined ratio improved 110 bps on a year-over-year basis to 86.5%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chubb Limited (CB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
The Allstate Corporation (ALL) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
