DOW JONES NEWSWIRES
Allstate Corp.'s (ALL) fourth-quarter earnings more than doubled
as the insurer enjoyed a reprieve from catastrophe losses.
Shares in the country's largest publicly traded home and auto
insurer were up 3.4% at $30.30 after hours as core earnings rose
more than expected. Through the close, the stock has fallen 7.3% in
the last year, while the wider market is positive.
Lately, Allstate's unadjusted bottom line has been at the mercy
of catastrophe losses because of a gamut of costly natural
disasters last year. For example, the $2.34 billion in losses in
the second quarter were the greatest amount since Hurricane Katrina
hit in 2005.
However, in the latest period, Allstate reported $66 million in
catastrophe losses, compared with $537 million a year earlier and
$1.08 billion in the third quarter. The company's
property-liability combined ratio--which measures how much of its
collected premiums were paid out as losses or expenses--improved to
90.7% from 100.8% a year earlier and 104.8% reported in the third
quarter.
Allstate has been raising home-insurance rates to keep up with
the increasing costs, while it also has been charging more for auto
coverage in an attempt to offset policyholder departures.
Overall, Allstate posted a profit of $724 million, or $1.43 a
share, in the latest period, up from $296 million, or 55 cents a
share, a year earlier. Operating profit, which excludes some
investment results, jumped to $1.48 a share from 50 cents.
Premiums written increased 2.9% to $6.43 billion.
Analysts surveyed by Thomson Reuters expected operating earnings
of 95 cents a share on written premiums of $6.45 billion.
In the auto-insurance unit, the company's largest, premiums
written declined 0.8%, while homeowners' premiums written grew
2.8%. The auto unit has been dealing with a decline in
policyholders, and the homeowner's unit has struggled to turn a
profit for years.
In November, Allstate unveiled a $1 billion stock buyback
program alongside a plan to repay its maturing notes. It planned to
issue preferred stock and new debt to help fund the measures.
Also in November, Moody's Investors Service heightened the
chance of a downgrade for Allstate because of the insurer's
profitability prospects. In lowering the outlook to negative from
stable, Moody's said Allstate's operating results continue to
reflect weak underwriting profitability.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com