Allstate Says Losses from California Fires $670M, CEO Wants to Address Climate Change
Allstate this week announced estimated catastrophe losses for the month of November 2018 of $685 million, pre-tax ($541 million, after-tax).
Catastrophe losses occurring in November comprised six events at an estimated cost of $679 million, pre-tax ($536 million, after-tax), plus unfavorable reserve reestimates of prior reported catastrophe losses.
Allstate previously announced $202 million pre-tax ($160 million, after-tax), in estimated catastrophe losses for the month of October 2018, bringing catastrophe losses for the months of October and November 2018 to $887 million, pre-tax ($701 million, after-tax).
Allstate’s net losses in November related to the Camp and Woolsey Fires are estimated at $670 million, pre-tax ($529 million, after-tax), and reflect the impact of reinsurance recoveries and reinstatement premiums.
“It’s time to address the impact that more severe weather is having on Americans instead of fighting about climate change,” said Tom Wilson, chairman, president and CEO of The Allstate Corp., said in a statement. “This year there have been approximately 7,500 wildfires in California, Hurricanes Florence and Michael and a swath of severe weather across the United States, putting our customers in danger and at risk of losing their homes and hard-earned money. We are grateful for the support of first responders and government officials in dealing with these events. It is now time to come up with longer term solutions, such as ensuring power lines are properly maintained, homes have natural fire barriers and building codes reflect increased severe weather.”
During the third quarter, the company concluded that benefit payments from its qualified employee pension plan would exceed a threshold of service and interest cost, resulting in a pension settlement loss of $61 million, pre-tax.
Pension settlement losses represent an acceleration of unrecognized pension benefit costs and have no impact on shareholders’ equity or book value, as they represent income statement recognition of balances previously included in accumulated other comprehensive income.
The company expects to record an additional pension settlement loss, based on current market conditions, of approximately $100 million to $125 million, pre-tax, in the fourth quarter of 2018 within the corporate and other segment.
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