Allstate is preparing investors for a loss of up to $335 million in the fourth quarter

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Allstate Corp. said Wednesday it expects to end 2022 in the red with a net loss of between $285 million and $335 million for the fourth quarter, and a combined ratio of 109.1.

While the insurer continues to implement rate increases for auto insurance and expects written premiums to increase 11.4% compared to the fourth quarter of 2021, catastrophe losses during the last three months of last year are estimated at $779 million, before taxes. December events cost the leading personal insurer $616 million, offset somewhat by favorable reserve re-estimates from prior events.

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Winter storm Elliot in December accounted for about 80%, or $478 million, of expected December catastrophe losses.

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Aside from winter weather, Northbrook, Illinois-based Allstate said its fourth-quarter combined ratio was impacted by increases in claims reserves for the first three quarters of 2022 and additions to reserves from prior years. Prior years’ reserve re-estimates, excluding disasters, were estimated at $282 million in the fourth quarter, with about $100 million related to increases in commercial auto insurance severity of shared economy bills and states that the insurer is leaving.

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Personal car will end 2022 with a Q4 combined ratio of 112.6. As it has reiterated throughout 2022, Allstate continued to raise car rates in the fourth quarter. In December, Allstate said its brands increased car rates by 10.6% in 19 locations. For the year, rate increases are expected to add $4.1 billion to written premiums, up 17%.

Homeowners’ insurance premiums written in the fourth quarter of 2022 are expected to be 9.3% higher (to $2.9 billion) than in the same period in 2021. The fourth quarter combined homeowners’ ratio is estimated to be 92.6, said Allstate, which is in talks to move its headquarters to Chicago after selling most of the Northbrook campus.

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Allstate will have its Q4 earnings on February 2.

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