American drivers are taking advantage of low gas prices and driving more, a fact that is hurting one of America’s largest auto insurance companies — Allstate.
The insurer released its second-quarter earnings report on Monday night and reported a 38% earnings per share decline year-over-year. According to the company, earnings were down because of “increased frequency and severity of auto accidents.”
Allstate added, “The increase in auto accidents is broad-based by state, risk class, rating plans, and the maturity of the business, and consequently appears to be driven by external factors.”
Shares at the company were down 5% on Tuesday.
Check out this chart which shows the massive increase in automobile use:
Drivers are also purchasing more vehicles, auto sales in July rose to 17.55 million, marking the third straight month of sales over 17 million vehicles.
The U.S. economy also continues to improve with steady growth between 2% to 2.5% a year.
With more workers in the workforce that means more income available for vacations. New vehicles, lower gas prices, and the freedom to take a vacation have all helped lead Allstate to less than stellar numbers.