Allstate Sees Third-Quarter Net Income Drop on Lincoln Benefit Life Disposition
November 1, 2013 by Michael Buck
NORTHBROOK, Ill. – Allstate Corp.’s third-quarter net income available to shareholders fell 57.1% under the prior-year period to $310 million as the company recorded a $475 million after-tax loss related to the disposition of Lincoln Benefit Life Co., according to a written statement.
Allstate earlier this year agreed to sell Lincoln to Resolution Life Holdings Inc., a Delaware corporation formed by a United Kingdom-based financial services investor (Best’s News Service, July 18, 2013). The deal had a $600 million price tag and frees up about $1 billion of Allstate’s capital.
Allstate’s property-liability combined ratio was flat in the quarter compared to the previous one, at 90. Third-quarter catastrophe losses dropped 37.9% to $128 million. Revenues increased 4.1% to $8.5 billion. Allstate Chairman, President and Chief Executive Officer Thomas Wilson, in a written statement, called it a “strong” quarter.
“Growth improved as the strategy of serving unique consumer segments with differentiated offerings continues to be pursued,” Wilson said in the statement. “Importantly, Allstate brand standard auto policies increased compared to the prior year due to improved retention, higher new business sales and a less adverse impact from actions on homeowners policies. We also continued to grow in the consumer segments served by Esurance and Encompass.”
Allstate in the second quarter reversed a prolonged policy count slide in its namesake-branded standard auto business. The company had seen a policy count decline in Allstate-branded standard auto since the fourth quarter of 2010. The line sustained collateral damage in the past few years as the company took underwriting and rate action on its homeowners line to improve profitability, executives said previously.
Esurance, Allstate’s online insurance arm, saw a 27% increase in net written premium in the third quarter and 32% increase in policies, compared to the same period a year ago, the company said in a written statement. However, the Esurance combined ratio remained elevated at 116.8, though it improved 1.7 points from a year ago.
Esurance has been expanding its operations, both physically and geographically. Earlier this year the online insurer moved into the Massachusetts market. Esurance also said recently it was expecting to create 700 new jobs with the opening of a customer service center near Salt Lake City.
Allstate Insurance Group companies currently have a Best’s Financial Strength Rating of A+ (Superior). Shares of Allstate Corp. (NYSE: ALL) closed on Oct. 30 at $52.96, down 0.75% from the previous close.
(By Michael Buck, senior associate editor, BestWeek: Michael.Buck@ambest.com)
