What happened
There weren't many positive stories to tell in September, but not every stock lost value last month. Allstate (ALL 0.24%) actually finished the month in the black, up 3.3%, according to S&P Global Market Intelligence.
The property and casualty insurer had climbed as high as 9% in the month to over $132 per share, before ending the month up 3.3%. For the year through Oct. 6, Allstate is up 11%.
September was the worst month for the market since the pandemic with the S&P 500 dropping 9.3%, the Nasdaq Composite falling 10.5%, and the Dow Jones Industrial Average sinking 8.8% for the month.
So what
Allstate, which is the fourth-largest auto insurer, has been one of the best-performing stocks on the market this year, and a bad September for the market didn't even slow it down.
The price spiked from Sept. 14 through Sept. 19, rising to over $132 per share on the news that Allstate had raised its rates significantly in response to inflationary increases and a rise in accidents and claims. Specifically, rates increased 14.5% in August across eight locations. This has resulted in premiums going up 3.2%.
NYSE: ALL
Key Data Points
"We have implemented 72 rate increases averaging approximately 10.3% across 51 locations since the beginning of the year. Allstate brand implemented auto rate increases totaled $777 million in the month of August and $2.5 billion year to date," Jess Merten, CFO at Allstate, said.
The rate hikes have helped keep Allstate ahead of rising loss costs and losses, which investors appreciated.
Now what
However, some states are balking at the high rate increases. Illinois, for example, is considering taking legislative action next year to combat them, according to sources, saying Allstate's hikes outpace inflation and the national average. Also, in California, a consumer watchdog group is pressuring state lawmakers to reject the rate increases there.
Allstate will release its third-quarter earnings on Nov. 3. In the second quarter it had a combined ratio of 107.9, which means claims paid out were higher than premiums paid in. A combined ratio under 100 means the company was profitable, so keep an eye on where that number is in the third quarter.
