Allstate Corp. (ALL), the insurer whose home-protection unit lost money in the first quarter, raised the cost of protecting homes in six states by an average of 7% so far in the second quarter, Chief Executive Officer Tom Wilson said on a conference call today.

The price increase comes as the insurer is trying to counteract the rising cost of claims tied to natural disasters. Massive U.S. storms contributed to $648 million in catastrophe costs in the first quarter. The latest rate increase comes after a price jump of 7.4% in six states in the first quarter and 6.5% in 22 states in the last three months of 2009.

On one level, the strategy is showing shows that it's starting to pay off: revenue from the home-insurance business rose 1.5% in the first quarter, according to results announced Wednesday, even as the number of policyholders fell. But for every dollar it collected from home-insurance customers, Allstate spent $1.11 on claims and expenses.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com
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