Allstate Sees $202M Pre-Tax Catastrophe Loss For October

Allstate Corp ALL expects to incur $202 million pre-tax ($160 million after tax) catastrophe loss for the month of October. These losses can be attributed to eight events at an estimated cost of $174 million, pretax. The rest of the loss pertains to unfavorable reserve re-estimates of prior-reported catastrophe losses.

Hurricane Michael, a Category 4 storm that made landfall in October 2018, accounted for $136 million pretax, or 78 percent of the month's catastrophe losses.

Catastrophe modeling firms have estimated that the total cost of Hurricane Michael claims will range from $4.5 billion to $10 billion.

Catastrophe risk modeling firm AIR Worldwide said its industry insured loss estimate, resulting from Hurricane Michael's winds and storm surge, will range from $6 billion to $10 billion.

Being a relatively large property insurance business, Allstate is significantly exposed to catastrophic events. Weather-related losses for the past many years have weighed on the company's claims and benefits plus expenses and cash flow, draining its underwriting profitability.

In 2016 and 2017, the company's cat loss widened 51 percent and 26 percent annually, respectively. Allstate has incurred $1.89 billion of catastrophe loss in the first nine months of 2018, down 28.2 percent year-over-year.

The company is focused on reducing losses through its catastrophe management strategy and reinsurance programs along with limiting exposure to riskier geographic markets via premium hikes. This, in turn, might cause a decline in the number of policies in force.

Related Links:

Hurricane Michael Getting Stronger, Damage Could Be Catastrophic

Hurricane Michael Aftermath: Localized Damage, Regional Supply Chains Intact