2nd UPDATE: Allstate 4Q Profit Doubles As Weather Cooperates

Allstate Corp. (ALL), the largest publicly traded home and auto insurer in the U.S., more than doubled its fourth-quarter profit as the company won a rare reprieve from the severe weather that has dragged down results in recent years.

Operating profit also exceeded Wall Street expectations, and Allstate shares jumped 3.9% to $30.45 in late trading after the results were released.

Nineteen catastrophes cost the company about $216 million in the fourth quarter, but the insurer also cut its estimate of costs related to disasters that struck earlier last year. The re-estimation reduced the fourth-quarter hit to the bottom line to $66 million before taxes.

"We had a bang-up quarter in homeowner insurance because there were very few catastrophes," Chief Executive Tom Wilson said in an interview after the results were released. The larger, more stable auto insurance unit also "continues to do really well," he said.

A long roster of severe natural disasters across the U.S. have plagued Allstate and its rivals in recent years, and prompted insurers to raise the price of home insurance in many areas.

Allstate's $2.34 billion in catastrophe costs in the second quarter were the most since Hurricane Katrina hit in 2005. But the $537 million from last years fourth quarter and $1.08 billion in the third quarter of 2011 were also well above average.

Overall, Allstate posted net income 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.

Analysts surveyed by Thomson Reuters had expected operating earnings of 95 cents a share, on average.

Allstates's home-insurance operation swung to an underwriting profit of $451 million from a loss of $23 million in the same period a year earlier. Underwriting income for its main auto-insurance brand was $203 million, while newly acquired online car-insurer Esurance had an underwriting loss of $37 million.

Still, the company has yet to reverse a decline in the number of drivers it insurers. Policyholders with the standard Allstate auto coverage declined for the 16th straight quarter, and the number of new customers applying for those policies fell to the lowest level since the second quarter of 2008.

Wilson said the company's efforts to raise rates in New York and Florida explained the decline in applications. Insurers have complained of widespread fraud in both states in recent years.

Because of Allstate's price increases, the two states are profitable, but "they are not as profitable as we would like yet," Wilson said. The two states will "continue to be a drag on overall growth through 2012."

Premiums written increased 2.9% to $6.43 billion, driven by the acquisition of Esurance, which had $181 million in written premiums after the acquisition closed in October.

The company kept its guidance for 2012 unchanged from 2011, predicting that its underlying underwriting profit at its property-casualty operation would be between 9 cents to 12 cents for every dollar it collects in premiums.

That underlying profit margin was 10.7 cents for all of 2011. The underlying margin excludes several factors, including catastrophes, investment returns and adjustments to reserves.

Operating income at Allstate Financial, its life insurance and retirement unit, rose 33% to $138 million as premiums and contract charges rose. Life insurance applications issues through Allstate agencies increased 43% in the fourth quarter compared to the same period a year earlier as the company pushed agents to sell the product.

In November, Allstate unveiled a new $1 billion stock buyback program. The company bought $106 million of its own shares in the quarter.

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

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