Profit improvement actions and mild weather benefit results

NORTHBROOK, Ill.–(BUSINESS WIRE)–The Allstate Corporation (NYSE: ALL) today reported financial results for the fourth quarter of 2023.

The Allstate Corporation Consolidated Highlights ⁽¹⁾

Three months ended

December 31,

Twelve months ended

December 31,

($ in millions, except per share data and ratios)

2023

2022

% / pts

Change

2023

2022

% / pts

Change

Consolidated revenues

14,832

13,648

8.7

57,094

51,411

11.1

Net income (loss) applicable to common shareholders

1,460

(303

)

(316

)

(1,394

)

(77.3

)

per diluted common share ⁽²⁾

5.52

(1.15

)

(1.20

)

(5.14

)

(76.7

)

Adjusted net income (loss)*

1,541

(351

)

251

(239

)

per diluted common share* ⁽²⁾

5.82

(1.33

)

0.95

(0.88

)

Return on Allstate common shareholders’ equity (trailing twelve months)

Net income (loss) applicable to common shareholders

(2.0

(7.2

5.2

Adjusted net income (loss)*

1.5

(1.2

2.7

Common shares outstanding (in millions)

262.5

263.5

(0.4

)

Book value per common share

59.39

58.12

2.2

Consolidated premiums written ⁽³⁾

13,835

12,658

9.3

54,856

50,318

9.0

Property-Liability insurance premiums earned

12,601

11,380

10.7

48,427

43,909

10.3

Property-Liability combined ratio

Recorded

89.5

109.1

(19.6

)

104.5

106.6

(2.1

)

Underlying combined ratio*

86.9

99.2

(12.3

)

91.2

95.1

(3.9

)

Catastrophe losses

779

(91.3

)

5,636

3,112

81.1

Total policies in force (in thousands)

192,781

189,071

2.0

⁽¹⁾	Prior periods have been recast to reflect the impact of the adoption of Financial Accounting Standard Board (“FASB”) guidance revising the accounting for certain long-duration insurance contracts in the Health and Benefits segment.
⁽²⁾	In periods where a net loss or adjusted net loss is reported, weighted average shares for basic earnings per share is used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.
⁽³⁾	Includes premiums and contract charges for the Health and Benefits segment.
*	Measures used in this release that are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) are denoted with an asterisk and defined and reconciled to the most directly comparable GAAP measure in the “Definitions of Non-GAAP Measures” section of this document.
NM = not meaningful

“Allstate had strong profitability in the quarter with net income of $1.5 billion due to improved auto profitability and mild weather,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation. “Improved underwriting performance and higher investment income generated adjusted net income* of $1.5 billion in the fourth quarter, or $5.82 per diluted common share. Property-Liability written premiums increased to $12.6 billion, 10.1% over the prior year quarter driven by rate increases in auto and home insurance and growth in policies at National General. Property-Liability underwriting income totaled $1.3 billion in the quarter with a combined ratio of 89.5. The investment portfolio return was 4.6% as proactive actions, including fixed income duration extension, resulted in excellent investment returns.”

“The transformation of Allstate’s personal property-liability business to generate higher growth also made significant progress by reducing expenses, expanding customer access and leveraging technology. Allstate exclusive agent bundling and productivity increased, excluding three states where profit actions reduced new business, and National General is growing through independent agents. The new affordable, simple and connected auto insurance product is now available in seven states, offering a differentiated customer experience built on an agile technology ecosystem. Allstate Protection Plans is broadening protection solutions in the U.S. and through international growth. Allstate will continue increasing shareholder value by improving profitability and generating long-term profitable growth,” concluded Wilson.

Fourth Quarter 2023 Results

Total revenues of $14.8 billion in the fourth quarter of 2023 increased 8.7%, or $1.2 billion, compared to the prior year quarter driven by a $1.2 billion increase in Property-Liability earned premium due to higher average premiums.

Net income applicable to common shareholders was $1.5 billion in the fourth quarter of 2023 compared to a loss of $303 million in the prior year quarter, due to improved Property-Liability underwriting results. Adjusted net income* was $1.5 billion, or $5.82 per diluted share, compared to an adjusted net loss* of $351 million in the prior year quarter.

Property-Liability earned premiums of $12.6 billion increased 10.7% in the fourth quarter of 2023 compared to the prior year quarter, primarily driven by higher average premiums from rate increases. Underwriting income of $1.3 billion in the quarter increased by $2.4 billion compared to the prior year quarter, due to increased premiums earned, improved underlying losses and lower catastrophe losses due to favorable weather.

Property-Liability Results
	Three months ended December 31,							Twelve months ended December 31,
($ in millions)	2023		2022			% / pts Change		2023			2022			% / pts Change
Premiums earned	$	12,601	$	11,380		10.7	%	$	48,427		$	43,909		10.3	%
Allstate brand		10,420		9,654		7.9			40,489			37,470		8.1
National General		2,181		1,726		26.4			7,938			6,439		23.3

Premiums written	$	12,640	$	11,480		10.1	%	$	50,347		$	45,787		10.0	%
Allstate brand		10,425		9,694		7.5			41,675			38,895		7.1
National General		2,215		1,786		24.0			8,672			6,892		25.8

Underwriting income (loss)	$	1,325	$	(1,035	)	NM		$	(2,184	)	$	(2,911	)	(25.0	)%
Allstate brand		1,326		(990	)	NM			(1,661	)		(2,613	)	(36.4	)
National General		3		(44	)	(106.8	)		(440	)		(177	)	148.6

Recorded combined ratio		89.5		109.1		(19.6	)		104.5			106.6		(2.1	)
Underlying combined ratio*		86.9		99.2		(12.3	)		91.2			95.1		(3.9	)

Premiums written of $12.6 billion increased 10.1% compared to the prior year quarter driven by both the Allstate brand and National General. Allstate brand increased 7.5% primarily due to higher auto and homeowners average premium, partially offset by the impact of profitability actions on personal auto and commercial lines policies in force. National General increased 24.0% reflecting higher average premium and policies in force growth.

Allstate brand underwriting income in the fourth quarter of 2023 improved to $1.3 billion compared to a $990 million loss in the prior year quarter, driven by higher earned premiums, lower catastrophe losses and improved underlying loss experience.

National General underwriting income of $3 million in the fourth quarter of 2023 increased by $47 million compared to a loss in the prior year quarter, reflecting higher earned premiums, a 6.1 point improvement in the expense ratio and lower catastrophe losses, partially offset by higher non-catastrophe losses and unfavorable prior year reserve reestimates.

Property-Liability underlying combined ratio* of 86.9 in the fourth quarter of 2023 improved 12.3 points compared to the prior year quarter, primarily driven by higher earned premiums, improved loss experience partially due to mild weather conditions and operating efficiencies. While loss trends have stabilized, claim severity increases remain elevated relative to historical levels.

Allstate Protection auto insurance results reflect the impact of inflation in loss costs and the comprehensive plan to restore margins through higher rates, lower expenses, underwriting actions and claims process enhancements. National General’s distribution capacity and a broader product portfolio is generating growth through independent agents.

Allstate Protection Auto Results
	Three months ended December 31,						Twelve months ended December 31,
($ in millions, except ratios)	2023		2022		% / pts Change		2023		2022		% / pts Change
Premiums earned	$	8,566	$	7,741	10.7	%	$	32,940	$	29,715	10.9	%
Allstate brand		7,042		6,544	7.6			27,384		25,286	8.3
National General		1,524		1,197	27.3			5,556		4,429	25.4

Premiums written	$	8,570	$	7,774	10.2	%	$	33,958	$	30,666	10.7	%
Allstate brand		7,041		6,560	7.3			27,894		25,946	7.5
National General		1,529		1,214	25.9			6,064		4,720	28.5

Policies in Force (in thousands)								25,283		26,034	(2.9	)%
Allstate brand								20,326		21,658	(6.2	)
National General								4,957		4,376	13.3

Recorded combined ratio		98.9		112.6	(13.7	)		103.4		110.1	(6.7	)
Underlying combined ratio*		96.4		109.2	(12.8	)		99.9		103.6	(3.7	)

Earned and written premiums increased 10.7% and 10.2% compared to the prior year quarter, respectively. The increase was driven by higher average premium from rate increases, partially offset by a decline in policies in force.

Allstate brand auto net written premium growth of 7.3% compared to the prior year quarter reflects a 13.8% increase in average gross written premium driven by rate increases, partially offset by a decline in policies in force from lower new business and retention.

National General auto net written premiums grew 25.9% compared to the prior year quarter driven by higher average premium and a 13.3% increase in policies in force.

Allstate brand auto rate increases were implemented in 33 locations in the fourth quarter at an average of 13.5%, resulting in an annualized total brand premium impact of 6.9% in the quarter and 16.4% for the year. National General auto rate increases were implemented in 39 locations in the fourth quarter at an average of 10.2%, resulting in an annualized total brand premium impact of 4.0% in the quarter and 12.8% for the year. Rate increases will continue to be implemented to keep pace with loss trends and improve margins in states where we have not yet achieved rate adequacy.

The recorded auto insurance combined ratio of 98.9 in the fourth quarter of 2023 was 13.7 points lower than the prior year quarter, reflecting higher earned premiums, improved underlying loss experience, operating efficiencies and lower unfavorable prior year reserve reestimates.

Prior year non-catastrophe reserve reestimates were unfavorable $148 million in the fourth quarter, reflecting adverse reserve development of $116 million in the Allstate brand, driven principally by costs related to claims in litigation, and $32 million for National General.

The underlying combined ratio* of 96.4 improved by 12.8 points compared to the prior year quarter from higher average premium, operating efficiencies and the favorable influence of milder weather conditions on accident frequency. These impacts more than offset historically elevated claim severity levels. Weighted average current report year incurred severity for Allstate brand major coverages is estimated to increase by 8-9% compared to report year 2022, a slightly lower increase from 2023 estimates as of the third quarter. The improvement in severity from claims reported in the first three quarters of the year represent a favorable impact of approximately 1.8 points on the fourth quarter underlying combined ratio. Excluding this impact, the fourth quarter underlying combined ratio* would have been 98.2.

Allstate Protection homeowners insurance growth reflects higher rates and policies in force growth, driven by National General and Allstate brand. Underwriting income was favorably impacted by lower catastrophe losses and non-catastrophe claim frequency due to the mild weather experienced in the quarter.

Allstate Protection Homeowners Results
	Three months ended December 31,						Twelve months ended December 31,
($ in millions, except ratios)	2023		2022		% / pts Change		2023		2022		% / pts Change
Premiums earned	$	3,077	$	2,720	13.1	%	$	11,739	$	10,418	12.7	%
Allstate brand		2,695		2,408	11.9			10,333		9,249	11.7
National General		382		312	22.4			1,406		1,169	20.3

Premiums written	$	3,144	$	2,775	13.3	%	$	12,584	$	11,209	12.3	%
Allstate brand		2,753		2,448	12.5			11,018		9,936	10.9
National General		391		327	19.6			1,566		1,273	23.0

Policies in Force (in thousands)								7,338		7,260	1.1	%
Allstate brand								6,652		6,622	0.5
National General								686		638	7.5

Recorded combined ratio		62.0		92.8	(30.8	)		106.8		93.6	13.2
Catastrophe Losses	$	21	$	603	(96.5	)%	$	4,537	$	2,253	101.4	%
Underlying combined ratio*		61.3		69.5	(8.2	)		67.3		70.3	(3.0	)

Earned premiums increased by 13.1% and written premiums increased 13.3% compared to the prior year quarter, primarily reflecting higher average premium and policies in force growth of 1.1%.

Allstate brand net written premiums grew 12.5% compared to the prior year quarter, primarily driven by implemented rate increases and inflation in insured home replacement costs, along with modest policies in force growth.

National General net written premiums grew 19.6% compared to the prior year quarter due to policies in force growth, driven by the new middle market and preferred product offering, and higher average premiums from implemented rate increases.

Allstate brand homeowners implemented rate increases in 20 locations in the fourth quarter at an average of 9.0%, resulting in an annualized total brand premium impact of 1.8% in the quarter and 11.3% in 2023. National General homeowners rate increases were implemented in 17 locations in the fourth quarter at an average of 18.5%, resulting in an annualized total brand premium impact of 4.5% in the quarter and 11.0% in 2023.

The recorded homeowners insurance combined ratio of 62.0 was 30.8 points below the fourth quarter of 2022, due to lower catastrophe losses and higher earned premiums.

Catastrophe losses of $21 million in the quarter decreased $582 million compared to the prior year quarter reflecting milder weather conditions and favorable development from prior events in 2023 and prior years.

The underlying combined ratio* of 61.3 decreased by 8.2 points compared to the prior year quarter, driven by higher earned premium and favorable non-catastrophe claim frequency from milder weather, partially offset by higher non-catastrophe claim severity reflecting increases in labor and materials costs. The underlying combined ratio* was 67.3 in 2023, improving 3.0 points compared to the prior year.

Protection Services continues to broaden the protection provided to an increasing number of customers largely through embedded distribution programs. Revenues increased to $719 million in the fourth quarter of 2023, 11.8% higher than the prior year quarter, primarily due to Allstate Protection Plans. Adjusted net income of $4 million decreased by $34 million compared to the prior year quarter, as a result of an increase in state income taxes and deferred tax liabilities. This tax adjustment generated a net tax benefit for the enterprise, but adversely impacted Protection Services income in the fourth quarter, particularly Allstate Dealer Services.

Protection Services Results
	Three months ended December 31,									Twelve months ended December 31,
($ in millions)	2023			2022			% / $ Change			2023			2022			% / $ Change
Total revenues ⁽¹⁾	$	719		$	643			11.8	%	$	2,773		$	2,539			9.2	%
Allstate Protection Plans		439			367			19.6			1,639			1,383			18.5
Allstate Dealer Services		146			145			0.7			588			562			4.6
Allstate Roadside		66			64			3.1			265			258			2.7
Arity		32			33			(3.0	)		133			196			(32.1	)
Allstate Identity Protection		36			34			5.9			148			140			5.7
Adjusted net income (loss)	$	4		$	38		$	(34	)	$	106		$	169		$	(63	)
Allstate Protection Plans		38			42			(4	)		117			150			(33	)
Allstate Dealer Services		(33	)		8			(41	)		(15	)		35			(50	)
Allstate Roadside		7			3			4			24			7			17
Arity		(5	)		(7	)		2			(18	)		(11	)		(7	)
Allstate Identity Protection		(3	)		(8	)		5			(2	)		(12	)		10

⁽¹⁾	Excludes net gains and losses on investments and derivatives.

Allstate Protection Plans’ expanded products and international growth resulted in revenue of $439 million, $72 million or 19.6% higher than the prior year quarter. Adjusted net income of $38 million in the fourth quarter of 2023 was $4 million lower than the prior year quarter, primarily due to the proportion of lower margin business, investments in technology and higher major appliance claim costs.

Allstate Dealer Services generated revenue of $146 million through auto dealers, which was 0.7% higher than the fourth quarter of 2022 due to higher earned premium. Adjusted net loss of $33 million in the fourth quarter was $41 million lower than the prior year quarter driven by an increase in state income taxes and deferred tax liabilities.

Allstate Roadside revenue of $66 million in the fourth quarter of 2023 increased 3.1% compared to the prior year quarter driven by price increases and new business growth. Adjusted net income was $4 million higher than the prior year quarter, primarily driven by increased pricing, improved provider capacity and lower claim frequency.

Arity revenue of $32 million decreased $1 million compared to the prior year quarter, primarily due to lower third-party lead sales. Adjusted net loss was $5 million in the fourth quarter of 2023 compared to a $7 million loss in the prior year quarter.

Allstate Identity Protection revenue of $36 million in the fourth quarter of 2023 was 5.9% higher than the prior year quarter due to growth from new and existing clients. Adjusted net loss of $3 million in the fourth quarter of 2023 compared to an $8 million loss in the prior year quarter reflects lower expenses.

Allstate Health and Benefits premiums and contract charges increased 7.1%, or $31 million, compared to the prior year quarter driven by growth in individual health and group health. Adjusted net income of $60 million in the fourth quarter of 2023 increased 3.4%, or $2 million, compared to the prior year quarter, primarily due to higher individual health results, partially offset by group health.

Allstate Health and Benefits Results ⁽¹⁾
	Three months ended December 31,						Twelve months ended December 31,
($ in millions)	2023		2022		% Change		2023		2022		% Change
Premiums and contract charges	$	467	$	436	7.1	%	$	1,846	$	1,832	0.8	%
Employer voluntary benefits		248		256	(3.1	)		1,001		1,033	(3.1	)
Group health		112		100	12.0			440		385	14.3
Individual health		107		80	33.8			405		414	(2.2	)
Adjusted net income	$	60	$	58	3.4	%	$	242	$	245	(1.2	)%

⁽¹⁾	Prior periods have been recast to reflect the impact of the adoption of FASB guidance revising the accounting for certain long-duration insurance contracts.

Allstate Investments $66.7 billion portfolio generated net investment income of $604 million in the fourth quarter of 2023, an increase of $47 million from the prior year quarter due to higher market-based income, partially offset by lower performance-based income.

Allstate Investment Results
	Three months ended December 31,									Twelve months ended December 31,
($ in millions, except ratios)	2023			2022			$ / pts Change			2023			2022			$ / pts Change
Net investment income	$	604		$	557		$	47		$	2,478		$	2,403		$	75
Market-based ⁽¹⁾		604			464			140			2,214			1,557			657
Performance-based ⁽¹⁾		60			147			(87	)		499			1,024			(525	)
Net gains (losses) on investments and derivatives	$	(77	)	$	95		$	(172	)	$	(300	)	$	(1,072	)	$	772
Change in unrealized net capital gains and losses, pre-tax	$	2,421		$	863		$	1,558		$	2,096		$	(3,643	)	$	5,739
Total return on investment portfolio		4.6	%		2.5	%		2.1			6.7	%		(4.0	)%		10.7

⁽¹⁾	Investment expenses are not allocated between market-based and performance-based portfolios with the exception of investee level expenses.

Total return on the investment portfolio was 4.6% for the fourth quarter and 6.7% for 2023.

Market-based investment income was $604 million in the fourth quarter of 2023, an increase of $140 million, or 30.2%, compared to the prior year quarter, reflecting higher yields in the $48.9 billion fixed income portfolio. Fixed income duration ended 2023 at 4.8 years compared to 3.4 years at the prior year end. Investment portfolio allocations, including duration extension and lower equity risk, are informed by expected risk adjusted returns and the enterprise risk and return position.

Performance-based investment income totaled $60 million in the fourth quarter of 2023, a decrease of $87 million compared to the prior year quarter. Current quarter results reflect lower valuation increases and less income from the sale of underlying investments compared to the prior year. The portfolio allocation to performance-based assets provides a diversifying source of higher long-term returns, despite volatility in reported results.

Net losses on investments and derivatives were $77 million in the fourth quarter of 2023, compared to gains of $95 million in the prior year quarter. Net losses in the fourth quarter of 2023 were driven by sales of fixed income securities and losses on derivatives, partially offset by valuation increases on equity investments.

Unrealized net capital losses were $791 million, reflecting an improvement of $2.4 billion compared to the prior quarter and $2.1 billion compared to prior year end, as lower interest rates resulted in higher fixed income valuations.

Proactive Capital Management

“Allstate’s financial condition and capital position remain strong, with fourth quarter results demonstrating the company’s capital generation capabilities. Statutory surplus in the insurance companies increased compared to the prior quarter to $14.6 billion⁽¹⁾, and $3.4 billion of assets are held at the holding company,” said Jess Merten, Chief Financial Officer. “We continue to make progress on the comprehensive profit improvement plan and remain confident strategic actions will generate attractive shareholder returns,” concluded Merten.

⁽¹⁾ December 31, 2023 statutory results are preliminary with final results expected to be filed by the end of February 2024.

Visit www.allstateinvestors.com for additional information about Allstate’s results, including a webcast of its quarterly conference call and the call presentation. The conference call will be at 9 a.m. ET on Thursday, February 8. Financial information, including material announcements about The Allstate Corporation, is routinely posted on www.allstateinvestors.com.

Forward-Looking Statements

This news release contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. We believe these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements may be found in our filings with the U.

Contacts

Al Scott

Media Relations

(847) 402-5600

Brent Vandermause

Investor Relations

(847) 402-2800

Read full story here