Allstate Q4 2023 Reserve Charge Near $200M

Allstate offered some preliminary details of factors that impacted fourth-quarter 2023 earnings—among them a $199 million non-catastrophe reserve charge.

The carrier said the figure representing unfavorable prior year reserve reestimates, excluding catastrophes, included roughly $148 million related to personal auto and costs for personal auto claims in litigation.

A year earlier, in fourth-quarter 2022, Allstate booked a $282 million prior-year reserve charge—$180 million for personal auto and $100 million for commercial auto. The total charge added 3.9 points to Allstate’s fourth-quarter 2022 combined ratio.

The lower dollar-figure for fourth-quarter 2023, and higher premiums stemming from rate hikes, will mean a smaller combined ratio impact for the final quarter of last year.

Yesterday’s announcement also gave an update on rate increases and an estimate of catastrophe losses On the pricing front, Allstate said that during the month of December, the Allstate brand implemented auto rate increases of 16.5% across 15 locations, resulting in total brand premium impact of 5% for the month. The figures includes the rate increases approved in December by the Departments of Insurance in California, New York and New Jersey.

According to Jess Merten, chief financial officer of The Allstate Corporation, auto rate increases for the Allstate brand for the year resulted in a premium impact of 16.4%, which are expected to raise annualized written premiums by approximately $4.3 billion.

In homeowners, 2023 rate increases for Allstate brand homeowners insurance resulted in a premium impact of 11.3%, which are expected to raise annualized written premiums by approximately $1.16 billion, he said.

Allstate’s estimated total catastrophe losses for fourth-quarter 2023 were $68 million, pre-tax, significantly lower than that $779 million reported for fourth-quarter 2022.

The company plans to announce quarterly results after close of market on Wednesday, February 7.