01—Abstract
Summary
Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Allstate reported second quarter 2024 results that marked a sharp turnaround from the prior year.
Consolidated revenues rose 12.4% to $15.7 billiona, and net income applicable to common shareholders was $301 million ($1.13 per diluted share), versus a net loss of $1.4 billion a year earlier. Adjusted net income was $429 million ($1.61 per diluted share), compared with an adjusted net loss of $1.2 billion in Q2 2023. The improvement was driven mainly by Property-Liability, where the recorded combined ratio improved to 101.1 from 117.6 and the underlying combined ratio improved to 85.3 from 92.9, reflecting higher earned premiums from rate increases, lower catastrophe losses ($2.1 billion vs. $2.7 billion), and better underlying loss experience.
Book value per share rose 21.2% year over year to $62.14b, and trailing twelve-month adjusted return on common equity reached 21.6%. Growth and capital are also key themes. Premiums written rose 13.1%, with National General up 29.1% and Protection Plans policies in force up 9%.
Total Property-Liability policies in force declined 0.8%, as Allstate brand auto retention losses offset new business. Investment income rose to $712 millionc, though the total investment portfolio return was only 0.7% for the quarter, and unrealized net capital losses widened by $152 million sequentially. Management reported statutory surplus of $16.0 billion and $3.0 billion at the holding company, and said the sale of the Health and Benefits business is progressing.
The filing is an 8-K furnishing the earnings release and investor supplement under Item 2.02. Because these exhibits are furnished rather than filed, they are not subject to the liability provisions of Section 18 of the Exchange Act. The results show a clear profit recovery, but investors should watch whether the policy count decline in personal auto persists, how catastrophe losses affect future quarters, and how the planned divestiture and Transformative Growth strategy develop.
02—Key points
Key Highlights
- Net income applicable to common shareholders was $301 million ($1.13 per diluted share) versus a $1.4 billion loss in Q2 2023; adjusted net income was $429 million ($1.61 per diluted share).
- Property-Liability underlying combined ratio improved 7.6 points to 85.3, and the recorded combined ratio improved to 101.1 from 117.6, driven by higher earned premiums and lower catastrophe losses.
- Consolidated revenues grew 12.4% to $15.7 billion, supported by 11.9% growth in Property-Liability earned premiums and a $102 million increase in net investment income.
- Catastrophe losses fell 21.4% to $2.1 billion in the quarter, and homeowners underwriting turned to a $375 million loss from a $1.3 billion loss a year earlier.
- Book value per common share rose 21.2% to $62.14, and trailing twelve-month adjusted return on common shareholders' equity reached 21.6%.
- Total Property-Liability policies in force fell 0.8%, with Allstate brand auto policies down 4.5%, while National General policies grew 12% and Protection Plans policies grew 9%.
- The investment portfolio returned 0.7% in the quarter, and unrealized net capital losses widened to $1.2 billion, with the $70.6 billion portfolio and $16.0 billion statutory surplus cited as financial strengths.
03—Questions
Frequently Asked Questions
Why did Allstate swing from a large loss to a profit in Q2 2024?
The swing was driven mainly by Property-Liability underwriting. Earned premiums rose 11.9% on rate increases, catastrophe losses fell $573 million in homeowners, and underlying loss experience improved. The underwriting loss narrowed to $145 million from $2.1 billion a year earlier. Q2 2023 also included larger catastrophe and reserve charges.
Is the improvement in profitability sustainable?
Management attributes the gains to a profit improvement plan that combines rate increases, lower expenses, underwriting actions, and claims enhancements. However, the quarter benefited from lighter catastrophe losses, and catastrophe results are volatile. Investors should watch whether underlying margins hold in periods with heavier storm activity and whether auto policy count declines moderate.
What are the main risks to growth highlighted in the filing?
Total Property-Liability policies in force declined 0.8% as Allstate brand auto customer retention losses outweighed new business. Advertising expenses rose, and investment returns were modest (0.7% for the quarter), with unrealized capital losses increasing as interest rates rose. The filing also notes that results may differ from forward-looking statements, as described in the risk factors of the 10-K.
What is the status of the Health and Benefits sale and capital position?
Management said the sale of the Health and Benefits business is progressing. The company reported $16.0 billion of statutory surplus in its insurance companies and $3.0 billion of assets at the holding company, and stated it has the financial flexibility to continue accelerating its Transformative Growth strategy. Specific deal terms are not disclosed in this filing.
Is this 8-K a formal filing of the earnings results?
The earnings release and investor supplement are furnished under Item 2.02 rather than filed. Under Form 8-K instruction B.2, this means they are not subject to the liability provisions of Section 18 of the Exchange Act, though the full financial data remains publicly available.
04—Continue