FIRST-HALF INCOME ROUGHLY FLAT AT ALLSTATE

Illinois-based insurer Allstate has reported net income available to common shareholders of $1.14bn for the first half, down from $1.19bn in H1 2012, on consolidated revenues of $17.25bn, up from $16.6bn. Property-liability premiums rose to $13.6bn from $13.3bn. The combined ratio improved to 94.7%, from 95.1% in the corresponding period last year. For Q2 the combined ratio improved 1.9pp year on year to 96.1%. Chairman, president and CEO Thomas Wilson said that the underlying combined ratio for the quarter was 86.9%, 0.6pp higher than the prior year quarter, but better than the full-year outlook of between 88% and 90%. "Should trends continue, the underlying combined ratio could be at the low end or below the full year outlook range", said Allstate, which operates under the consumer brands Allstate, Encompass and Esurance. Total returns on the investment portfolio were negative for H1, with the consolidated portfolio falling to $92.32bn on June 30, from $97.28bn as of December 31 2012. The "significant" increase in interest rates in Q2 caused a $2.73bn decline in net unrealized capital gains. Allstate said that it had maintained motor profitability in the second quarter The standard motor combined ratio was 97.0%, slightly better than the prior year quarter. The Allstate brand, which makes up the majority of the auto earned premium, managed a combined ratio was 94.9%. "Frequency was essentially flat while severity increased modestly", Allstate said. The Encompass standard auto combined ratio was 104.4%, although this was 4.8pp better than in Q2 2012, a reductionmainly achieved through price increases. At Esurance the standard auto combined ratio rose by 2.8pp year on year to 119.5% "due to the increased volume of new business, higher bodily injury severities and increased utilization of price discounts". Allstate said that Esurance was adjusting pricing and underwriting. In homeowners Allstate recorded a combined ratio of 95.3%, a 9.1pp year on year improvement, primarily due to reduced catastrophe losses. The combined ratio was 62.7%, a 1.9pp improvement from Q2 2012. Rate increases continued to positively impact results, but both frequency and severity exhibited modest increases in the quarter, Allstate said.