US cat streak rolls on: Allstate’s Q2 hit now up 2.4x y/y

Catastrophe losses continue to deliver an outsized punch in the US in 2023, with market leader  Allstate saying some twelve events had cost $893 million in May, more than twice the prior year period.

"Approximately 70% of the losses related to two wind and hail events, partially offset by favourable reserve re-estimates for prior events," management said.

After two months, the second quarter is now up to a $1.76 billion gross hit, some 2.4 times the prior year period.

The Allstate experience is not necessarily borne out by weather patterns. Storm counts in the second quarter have been mercifully down, leaving rebuilding cost inflation as a likely culprit.

While total storm reports were up 70% in Q1 from the prior year, including a 3.4x increase in hail, the first two months of Q2 have been calmer on aggregate, save for a hail outbreak in April.

Total Q2 storm reports are down 28% year on year for April-May after having been up 70% year on year in Q1, storm data from the National Oceanic and Atmospheric Administration (NOAA) has indicated.

After that stormy first quarter, Allstate had also reported a massive increase in nat cat impact, including a massive $1.26 billion gross from March severe storms and a freakishly high reading for what is normally a calm month in January.

Allstate had reported 14.5 points of combined ratio impact from cats in the first quarter, well over double the prior year period.

After a fractional sum of prior period reserve releases, Allstate will book the month with a $885 million pre-tax nat cat impact which it puts at $699 million after tax.

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