(Bloomberg) — Allstate Corp. reported a larger loss in the first quarter than analysts had expected as higher insurance premiums failed to offset rising car prices and rising crash losses.
The company posted an adjusted loss of $342 million for the period compared to a profit of $730 million a year earlier, the company said in a statement on Wednesday. While auto and home insurance rate hikes helped raise property liability insurance premiums by $1.1 billion, it failed to prevent underwriting losses of roughly the same magnitude.
“However, automotive loss costs continued to rise rapidly and substantially offset higher premiums, which, combined with exceptionally high first-quarter catastrophe losses, resulted in underwriting losses of $1 billion,” said Chief Executive Tom Wilson. .
Catastrophe losses rose to $1.7 billion from $462 million in the previous period, the report said. Shares were little changed at the end of trading in New York.
Like its competitors, Allstate is struggling with increased spending on used vehicles, parts and auto repair labor. Steps have been taken to stop the bleeding, including by passing on higher costs to customers and cutting costs, but insurers have not been able to reap all of these benefits at once because they usually only kick in after customers renew policies.
“We believe our revenues will continue to grow because we are in the process of executing a plan to increase auto insurance profits,” Wilson said. “We don’t have a forecast of when, but we have no doubt that we will return to historical limits. We have been able to make money from auto insurance for a long time and we see no reason why this has changed. .”
