(Bloomberg) -- Allstate Corp. results missed estimates for the second quarter in a row as the highest inflation in 40 years drives up the costs of insuring and repairing automobiles.

Expenses in the fourth quarter surged 43% from a year earlier to more than $11.6 billion, the Northbrook, Illinois-based insurer said Wednesday in a statement. Costs tied to property and casualty claims made up the majority of the increase.

“Basically in auto insurance, all the costs went up,” Allstate Chief Executive Officer Tom Wilson said in a phone interview. 

The frequency and severity of auto accidents increased in the second half of 2021, Wilson said. Meanwhile used-car prices, labor costs and expenses tied to protecting customers against lawsuits all went up. 

The P&C combined ratio rose 14.9 percentage points to 98.9%, meaning the insurer spent 98.9 cents for every premium dollar taken in. In auto coverage, the ratio was 104.3% compared with 87.1% for homeowners policies. 

Wilson said the auto business is working to control costs by striking deals with parts suppliers and working more closely with body shops. He added that it would continue to prune expenses and hike prices to keep pace with higher costs, but that it will take some time for those measures to bear fruit.

“We sell six-month policies. And so if I raise your price by 5% today, and you bought a policy yesterday, you don’t get that 5% increase for six months,” Wilson said.

Allstate shares fell as much as 3.2% in extended trading after the announcement, before recovering most of the loss. They fell less than 1% to $117.69 in regular New York trading, and are little changed for the year.

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