10-QPeriod: Q2 FY2022

ALLSTATE CORP Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 3, 2022For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation (ALL) reported a net loss attributable to common shareholders of $1.04 billion ($3.81 per diluted share) for the second quarter of 2022, a significant decrease from a net income of $1.63 billion ($5.26 per diluted share) in the same period of 2021. This downturn was primarily driven by substantial increases in property and casualty insurance claims and claims expense, and unfavorable changes in investment valuations, including significant net losses on investments and derivatives. Total revenues saw a slight decrease, impacted by lower net investment income and investment gains. For the first six months of 2022, the company reported a net loss attributable to common shareholders of $359 million ($1.49 per diluted share), compared to a net income of $244 million ($0.61 per diluted share) in the first six months of 2021. While property and casualty insurance premiums earned showed an increase, this was more than offset by higher claims expenses and unfavorable investment results. The company's Allstate Protection segment experienced a significant underwriting loss, reflecting increased non-catastrophe losses and unfavorable reserve reestimates, particularly in auto insurance. Management is implementing a plan to improve profitability, including rate increases and expense reductions.

Financial Highlights

37 data points
Beta

Revenue

$12.22B

Net Income

-$1.01B

-8.3% Net Margin

EPS (Diluted)

$-3.80

Total Assets

$96.35B

Cash & Equivalents

$766.00M

Free Cash Flow

$1.57B

Financial Statements
Beta
Revenue$12.22B
Operating Income-$353.00M
Interest Expense$83.00M
Net Income-$1.01B
EPS (Basic)$-3.80
EPS (Diluted)$-3.80
Shares Outstanding (Basic)273.80M
Shares Outstanding (Diluted)273.80M

Key Highlights

  • 1Net loss attributable to common shareholders of $1.04 billion in Q2 2022, a reversal from a $1.60 billion net income in Q2 2021.
  • 2Total revenues decreased slightly to $12.22 billion in Q2 2022 from $12.65 billion in Q2 2021.
  • 3Property and Casualty insurance premiums earned increased by 8.8% to $11.36 billion in Q2 2022.
  • 4Property and Casualty insurance claims and claims expense significantly increased by 30% to $9.37 billion in Q2 2022.
  • 5Allstate Protection segment reported an underwriting loss of $861 million in Q2 2022, compared to an underwriting income of $431 million in Q2 2021.
  • 6Net investment income decreased by 42.4% to $562 million in Q2 2022.
  • 7Allstate shareholders' equity decreased to $20.12 billion as of June 30, 2022, down from $25.18 billion as of December 31, 2021, impacted by net unrealized capital losses and share repurchases.

Frequently Asked Questions

The primary drivers of the net loss in the second quarter of 2022 were a significant increase in property and casualty insurance claims and claims expense, which rose by 30% to $9.37 billion, and unfavorable investment performance, including substantial net losses on investments and derivatives. These factors, combined with higher non-catastrophe losses and unfavorable reserve reestimates in the Allstate Protection segment, led to a net loss attributable to common shareholders of $1.04 billion.

The Allstate Protection segment reported an underwriting loss of $861 million for the second quarter of 2022, a significant deterioration compared to an underwriting income of $431 million in the same period of 2021. This was mainly due to higher non-catastrophe losses, particularly in auto insurance, and unfavorable reserve reestimates, which were only partially offset by an increase in premiums.

Allstate is executing a comprehensive plan to improve profitability. Key actions include broadly raising auto and home insurance rates, reducing expenses, making investments in advertising and growth, implementing underwriting restrictions in underperforming states, and executing claims operating actions to manage loss costs. Management anticipates these measures will help address current profitability challenges.

Allstate's investment portfolio saw a decrease in value, with total investments at $61.06 billion as of June 30, 2022, down from $64.70 billion at the end of 2021. This decline was primarily attributed to lower fixed income and equity valuations, along with share repurchases and dividends. Net investment income decreased significantly, largely due to lower performance-based investment results from limited partnerships. The company experienced net losses on investments and derivatives totaling $1.00 billion in the first six months of 2022, contrasting with net gains of $713 million in the same period of 2021.