Two of the nation’s best-known sellers of insurance—Allstate Corp. and MetLife Inc.—delivered fourth-quarter results bolstered partly by Covid-19 business shutdowns and stay-at-home directives.
Allstate’s net income surged 52% to $2.6 billion, while net income at the big New York life insurer fell 77% to $124 million. MetLife’s decline was primarily related to mark-to-market losses on the financial hedges it buys to protect the company from falling interest rates and stock markets.
When rates and equities rise, as they did in the fourth quarter, the value of that protection falls. Wall Street analysts treat those declines as noneconomic and focus on adjusted earnings, which were nearly flat at $1.838 billion at MetLife from $1.834 billion in the year-ago period.
Allstate became the latest car insurer to report robust auto-insurance underwriting profit as the pandemic, and resulting weak U.S. economy, continued to hold down the number of miles motorists drove.
Fewer miles led to a sharp reduction in wrecks—and has prompted criticism from some consumer advocacy groups that springtime premium-refund programs weren’t generous enough. In those refund programs, insurers typically slashed 15% to 20% of customers’ premium bills for a couple months.
Allstate said its property-liability business, which includes car insurance, had underwriting income of $1.42 billion for the most-recent quarter, up 42% from the year-earlier period, despite higher catastrophe costs.
Allstate Chief Executive Tom Wilson said in an interview that traffic volumes have rebounded significantly since last year’s depths but that the company expects “commuting miles will be down for a while” as many people continue to work from home.
He said Allstate has implemented “small, single-digit percentage decreases” in premium rates in many states. Allstate believes it is treating policyholders fairly, he said, noting the company had put in place its “Shelter In Place Payback” premium-refund program early last year “before anybody asked us, so I feel good about that.”
At MetLife’s core in the U.S. is a business that provides life insurance and other products for employee-benefits programs. Its U.S. business enjoyed a 51% increase in adjusted earnings, to $1.02 billion. Not only have Americans driven less during the pandemic, but they have visited their dentists less frequently, lifting results in MetLife’s dental-insurance business.
MetLife said favorable results in its dental business and some other products had more than offset higher mortality from Covid-19 deaths.
In general, U.S. life insurers have been paying out fewer Covid-19 death claims than initially expected, largely because the coronavirus at least initially disproportionately killed people with little to no insurance. People dying prematurely has in some cases also meant that life insurers will pay out less for annuities and long-term-care insurance.
The earnings reports from Allstate and MetLife came on the heels of Chubb Ltd.’s better-than-expected quarterly results announced Tuesday afternoon. Its quarterly net income more than doubled, to $2.42 billion from $1.17 billion. The company’s shares jumped 3.1% Wednesday.
A major seller of insurance to businesses world-wide, Chubb cited continued profit-margin improvement and double-digit percentage rate increases in many product lines. Those rate increases follow years of fierce industrywide price competition.
In an earnings call Wednesday morning, Chubb Chief Executive
said he expected the favorable underwriting conditions to continue this year.
All together, the various insurers’ fourth-quarter showings indicate that the pandemic, civil unrest and weather-related catastrophes during a tumultuous year didn’t have nearly as harsh an impact on the industry as originally expected, analysts said.
Industrywide, property-casualty insurers have posted large but not crippling losses from Covid-19’s toll on the U.S. economy. Early estimates put the cost of Covid-19 claims to property-casualty carriers as high as $100 billion, but some analysts say the high end now is about $80 billion.
So far, property insurers have been winning most of the Covid-19 business-interruption coverage disputes that have reached decision stages in state and federal courts. Hundreds of those lawsuits are pending.
MetLife and Allstate share in common that both are divesting units to streamline operations. In December, Swiss insurer Zurich Insurance Group AG said it would acquire MetLife’s car and home insurance business for $3.94 billion in cash. MetLife has been expanding offerings in its employee-benefits business.
The MetLife car and home insurance unit posted fourth-quarter adjusted earnings of $112 million, up 348% from the year-earlier quarter, benefiting from the Covid-19-related reduction in wreck volume.
In January, private-equity giant
Blackstone Group Inc.
agreed to buy Allstate Life Insurance Co. from Allstate.
Write to Leslie Scism at [email protected]
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