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Allstate Estimates Catastrophe Loss from Hurricane Harvey

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The Allstate Corporation (ALL - Free Report) recently announced estimated pretax catastrophe loss of about $593 million or $385 million after tax for August 2017. Estimated gross catastrophe losses, excluding homeowners’ flood, are $576 million, stemming from Hurricane Harvey.

The company expects reinsurance recoveries to reduce the number by $23 million. About 55% of the catastrophe losses were related to auto coverage. Allstate added that about $53 million estimated losses and expenses from commercial insurance, auto-protection contracts and loss-adjusting expenses were not covered by reinsurance.

Allstate is yet to estimate catastrophe loss from Hurricane Irma that hit regions spanning Caribbean to Florida in September. 

In July 2017, Allstate had estimated to have incurred pretax catastrophe losses of $181 million or $118 million after tax attributable to 13 catastrophic events that took place in June. Taking that into account, the company’s total estimates are $774 million pretax and $503 million after tax for the last two months.

Recently, The Travelers Companies, Inc. (TRV - Free Report) also projected its pretax catastrophe loss between $375 million and $750 million or $245 million and $490 million after tax from Hurricane Harvey. Even Assurant, Inc. (AIZ - Free Report) has projected pretax catastrophe losses between $134 million and $140 million attributable to Hurricane Harvey and expects gross losses from Hurricane Irma to exceed its retention of $125 million pre-tax. HCI Group, Inc. (HCI - Free Report) has calculated possible losses between $100 million and $300 million owing to Hurricane Irma.

Being a property and casualty insurer, Allstate is exposed to catastrophic events. These have weighed on the company’s claims and benefits, expenses, and cash flow, draining its underwriting profitability. However, the company is making efforts to lower losses through its catastrophe management strategy and reinsurance programs. It is also limiting exposure to riskier geographic markets by raising premiums. This may lead to a decline in the number of policies in force.

Zacks Rank & Share Price Impact

The Allstate carries a Zacks Rank #3 (Hold). Its shares have outperformed the industry in a year’s time. While Allstate’s shares have gained 32.4%, the industry has registered an increase of 26.3%. Strategic acquisitions and disciplined capital management are expected to drive the stock higher in the future.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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