Allstate Corp.’s shares fell Thursday after the economic reopening prompted a jump in car accidents that sent insurance claims soaring.
The Northbrook, Illinois-based insurance company said auto property damage gross claim frequency in the second quarter was up 47% compared to the same quarter last year. The stock fell as much as 3.2% intraday even as second-quarter earnings per share topped Wall Street expectations, and is essentially unchanged from early May when the company reported first-quarter results.
People eager to roadtrip and return to the office have led to the increase in claims, said Paul Newsome, Piper Sandler analyst. He added that inflation -- which pushes up the price of fixing cars -- has also pressured the company’s margins. Allstate plans to implement targeted price increases, according to the company’s earnings presentation.
Fellow auto-insurance provider Progressive Corp. also saw its share prices plunge last month after it reported an increase in car insurance claims. Progressive’s share price dipped just over 1% on Thursday.
“The world won’t look exactly the same after the pandemic than before,” Glenn Shapiro, president of Allstate’s personal property-liability operations, said on an earnings call. “And that will mean that people drive and move differently.”
