Allstate Pegs June Disaster Costs At $300 Million, Capping Costly Quarter
July 13 2011 - 8:41AM
Dow Jones News
Allstate Corp. (ALL) said it had about $300 million of
catastrophe losses in June, adding to what had already been an
expensive quarter for natural disaster claims.
Combined with previously announced losses from April and May,
Allstate is now estimating catastrophe costs of $2.3 billion before
taxes for the second quarter, the largest disaster tally for the
company since Hurricane Katrina struck the U.S. in 2005.
The quarterly spike in claims comes primarily from a series of
severe tornadoes that killed hundreds of people and caused
extensive damage in Alabama, Missouri and more than a dozen other
states. Disaster-modeling company AIR estimates a cluster of
twisters in late April and another in late May were the two largest
tornado losses on record, and caused up to $12.5 billion in insured
losses combined.
Allstate said in a statement Wednesday that the June losses were
the result of 13 separate events.
Other insurers have also warned of substantial losses in the
second quarter. Travelers Cos. (TRV) said last month it was
curtailing its stock-buyback program as it estimated after-tax
losses of about $1 billion for April and May.
For Allstate, the second quarter promises to be its most
expensive for natural disasters since Hurricanes Katrina and Rita
caused the company to report $4.71 billion in catastrophe costs in
the third quarter of 2005. The company is scheduled to report
complete second-quarter results Aug. 1.
While the record-breaking hurricanes of 2005 caused the
insurance industry to boost its expectations of losses along the
East Coast and Gulf of Mexico, the increasing severity of
thunderstorms, hailstorms and tornadoes across the Midwest in more
recent years has also caused many insurers to raise prices,
increase deductibles and limit new sales.
Allstate has been among the most vocal about its efforts to
limit its losses from such events.
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com
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