Allstate’s plan to correct its auto insurance business has “restored profitability back to target levels,” said the insurer’s head of personal insurance.
During an earnings call with analysts, Mario Rizzo, president of property-liability, said recent financial results reflect “successful execution” of actions Allstate took to turn around what not long ago was a business writing at a loss.
“Auto margins are back to where we would want them to be,” he said.
Allstate’s auto segment turned in an underwriting profit of $1.8 billion for full year 2024, reversing a loss of $1.1 billion the prior year. The business had been operating at a combined ratio above 100 for some time, dragging down the Northbrook, Illinois insurer’s overall results for multiple quarters. Allstate auto recorded combined ratios of 93.5 and 95.0 for the fourth quarter and full year 2024.
Related: Allstate Q4 Income Up 30% Despite High Hurricane-Related Losses
Part of the plan included sweeping auto insurance increases — more than 40% over the past several years, said Rizzo. The consequence has been a decline in policy count, but Rizzo told analysts Allstate is “positioned to lean into growth” in auto – taking advantage of multiple distribution channels, making advertising spend where it make sense, and building on new-business momentum seen last year.
“We’re comfortable with where our rate level is currently, and we would expect that we would need to take less price going forward,” Rizzo said, adding that Allstate’s current growth in 31 states is “indicative of having competitive prices.”
The insurer had struggled with requested rate increases in California, New York, and New Jersey, but Rizzo said good progress has been made implementing what he called “meaningful” rate increases, which is having a “drag on retention,” especially in New York and New Jersey. He said Allstate will continue to pursue rate in these states, but the insurer can “overcome that because we’ve got a lot of growth opportunity in the rest of the country.”
CEO Tom Wilson said Allstate has to increase rates dramatically to keep up with loss costs but the company is in a position now to go back to customers to help with coverage via deductibles, limits and telematics — and having exclusive, branded agents “is the best channel to be able to do what we’re talking about.”
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