Covid-19 Shutdowns Shore Up Allstate, MetLife Earnings
February 03 2021 - 6:45PM
Dow Jones News
By Leslie Scism
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
Evan Greenberg 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 leslie.scism@wsj.com
(END) Dow Jones Newswires
February 03, 2021 18:30 ET (23:30 GMT)
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