Allstate Q1 Revenue Soars 26% on National General, Premium Gains
Allstate reported an overall $1.4 billion net loss in the first quarter due to the sales of its life and annuity businesses, compared to net income of $513 million in the first quarter of 2020.
However, net income adjusted to exclude the subsidiary transactions was $1.9 billion, up 55% from the $1.2 billion in the first quarter in 2020, reflecting increased underwriting income and higher net investment income.
Total revenues reached $12.5 billion in the first quarter, an increase of 26.2% compared to the prior year quarter, primarily reflecting the $4 billion acquisition of National General that closed in early January. Higher earned premiums from Protection Services and net realized capital gains also contributed to revenue growth in the quarter.
Results were buoyed by net investment income totaling $708 million, $462 million higher than the prior year.
“Our long-term approach to investing, reinsurance and building a digital insurer is creating shareholder value and positively impacted results this quarter,” said Tom Wilson, chair, president and CEO of The Allstate Corp.
The company sold its Allstate Life Insurance Co. and Allstate Life Insurance Company of New York as part of its strategy to focus on its property/liability business.
Gross catastrophe losses of $1.67 billion for the quarter were nearly eight times greater than 2020 but were offset by $1.08 billion of reinsurance and subrogation recoveries.
Property/liability written premium of $9.8 billion increased 13.7% compared to the prior year quarter, largely driven by the acquisition of National General, which contributed $1.3 billion.
Allstate brand written premium increased 0.6% to $8.4 billion. The recorded combined ratio of 83.3 in the first quarter of 2021 generated underwriting income of $1.7 billion, an increase of $309 million (including $138 million from National General), compared to the prior year quarter. Income increased primarily due to the addition of National General results and lower auto insurance losses in the Allstate brand, partially offset by higher catastrophe losses.
The property/liability expense ratio of 23.2 decreased 2.5 points compared to the prior year quarter, due to the curtailment of Shelter-in-Place payments made in 2020 plus other cost reductions. Those decreases were partially offset by increased advertising.
Allstate Protection auto insurance net written premium increased 12.9% and policies in force increased 14.1% compared to the prior year quarter, driven by the acquisition of National General.
Allstate brand net written premium declined slightly, primarily due to lower average premiums from approved rate decreases. This more than offset new issued applications growth, primarily in the direct channel, driven in part by increased advertising.
The recorded combined ratio of 80.5 in the first quarter of 2021 was 8.8 points below the prior year quarter.
Allstate Protection homeowners insurance net written premium grew 20.3% and policies in force increased 7.6% compared to the first quarter of 2020, due to the acquisition of National General and growth of Allstate brand policies.
Revenues from the Protection Services segment increased by 21.6% from 2020, reflecting continued expansion of Allstate Protection Plans and higher revenue from dealer services and the mobility and driver data platform Arity that reflected by the inclusion of Transparent.ly and LeadCloud from the National General acquisition. Adjusted net income for Protection Services of $49 million increased by $12 million compared to the prior year quarter.