Allstate sees $779m of Q4 2022 catastrophe losses, 80% from winter storm Elliott

US primary insurer Allstate has pre-announced a heavy catastrophe loss burden for the fourth-quarter of 2022, with winter storm Elliott having driven 80% of the total.

Allstate said that its catastrophe losses for the fourth quarter are estimated to have reached $779 million, pre-tax.

For the month of December alone, the catastrophe loss burden is estimated to be $593 million, pre-tax, which was after an offset for some favorable reserve reestimates for prior events, before which the December cat loss tally was $616 million.

Allstate is the second major US nationwide insurer to report a large catastrophe loss burden for the end of 2022.

Earlier this week, Travelers announced a pre-tax catastrophe loss estimate of $459 million net of reinsurance for the fourth-quarter of 2022.

Winter storm Elliott was also the main driver of catastrophe losses for Travelers, but it did not disclose how much of the Q4 burden was from that severe winter weather and polar vortex freeze event.

Allstate has disclosed that, saying that Winter Storm Elliott has contributed roughly 80%, or $478 million, of December’s estimated catastrophe losses.

No mention of reinsurance recoveries has been made by Allstate, but the $779 million of pre-tax catastrophe losses will add to the aggregation of losses and erosion of the retention deductible beneath its various aggregate reinsurance arrangements.

Allstate’s aggregate nationwide catastrophe reinsurance arrangements all come from a range of its Sanders catastrophe bond issues, attaching at just over $2.7 billion of losses.

Allstate aggregated roughly $1.1 billion of catastrophe losses through the second-quarter of the year, but since then has not disclosed its cat losses, then announced a further $763 million for the third-quarter of the year thanks largely to hurricane Ian.

However, reinsurance protection for Florida sits in a different tower for Allstate, which the carrier has claimed on for Ian (including cat bond recoveries), but this means losses from the hurricane do not count under its nationwide aggregate reinsurance tower, that excludes catastrophes in Florida.

As a result, it’s hard to know exactly where Allstate’s aggregate cat loss run-rate sits at this time.

By excluding hurricane Ian, we can count Allstate’s $1.1 billion of Q2 losses, around $100 million of Q3 losses when Ian is subtracted, plus the newly announced $779 million of pre-tax Q4 losses.

Which gets the total to roughly $1.979 billion, so approaching the $2 billion mark, while the aggregate reinsurance tower of catastrophe bonds attaches at $2.7 billion and the annual risk period runs until the end of March 2023.

Meaning there are some months to go for Allstate to aggregate more catastrophe losses, although the first-quarter if often the most benign, in terms of losses for the carrier.

Thanks to the catastrophe losses plus elevated auto claims levels, Allstate said that it expects to report an estimated net loss between $285 million and $335 million for Q4 2022.