By Jeff Sanford
Toronto, Ontario -- August 5, 2015 -- Allstate Corporation has just reported its latest numbers. The company suggests a solid increase in company revenues as premiums increase in the wake of a broad uptick in auto accidents.
Allstate provides auto, home, life and retirement policies to customers in Canada and the US. The corporation reported operating income of US$262 million for the three months ending June 30. This is up from US$445 million in Q2 2014. Overall the company reported US$8.98 billion in revenues for the second quarter of 2015. This is an increase of 4.7 percent over the same quarter last year, reflecting a rise in insurance premiums from the same quarter in the prior year.
The increase in premiums follows on an increase in the frequency and severity of auto accidents, according to Allstate CEO Thomas Wilson.
“The increase in auto accidents is broad-based by state, risk class, rating plans and the maturity of the business, and consequently appears to be driven by external factors,” said Wilson in a press release. “While recent growth in Allstate brand auto policies in force did increase in frequency, since new business typically has higher relative frequency, this was not the primary driver of a higher combined ratio. We have responded aggressively to improve profitability with rate increases, tighter underwriting standards and expense reductions.”
Wilson said that the corporation continues to focus on achieving its 2015 goals, which “have not changed.” The priority is to deliver an underlying combined ratio of “89 or below for the full year.”
The Allstate auto loss ratio was negatively impacted by rising property damage and bodily injury claim frequency and severity. Property damage frequency and paid claim severities increased 6.9 percent and 3.7 percent, respectively, compared to the prior year quarter. Bodily injury frequency and claim paid severities increased 6.8 percent and 0.6 percent, respectively, compared to the prior year quarter.