(Bloomberg), Allstate Corp. reported a larger first-quarter loss as analysts had expected, as rising auto costs and increasing catastrophe losses failed to offset higher premiums.
In a Wednesday statement, the company said it had reported a loss of $342 million on an adjusted basis, compared with a profit of $730 millions a year ago. The company reported a $342 million loss on an adjusted basis for the period, compared to profit of $730 million a year earlier.
“Auto loss costs continued to rise rapidly, and offset the higher premiums. This, combined with extraordinarily high catastrophe losses in the first quarter, resulted a $1.0 billion underwriting loss,” said Chief Executive Tom Wilson.
It said that catastrophe losses increased to $1.7 billion, up from $462 millions in the previous period. In late New York trading, the shares were not much changed.
Allstate, like its competitors, is facing rising costs for used cars, parts, and labor. The company has taken measures to stop the bleeding. It has passed on higher costs and reduced expenses to its customers. However, insurers are not able to enjoy these benefits immediately because they usually kick in after policy renewals.
Allstate has also made progress in implementing its plan to improve auto insurance profits, according to a statement.
Wilson stated that “the combination of Allstate’s brand and customer base, along with its aggressive strategy will lead to long term growth.”