DOW JONES NEWSWIRES
Allstate Corp. (ALL) halved its quarterly dividend, becoming the
latest finaicial firm to take the step in efforts to preserve
capital.
Cutting the dividend to 20 cents a share will save the insurer
some $450 million a year.
Chairman and Chief Executive Thomas J. Wilson said: "Allstate
has a history of proactively and prudently managing our capital,
while consistently returning substantial amounts of capital to our
shareholders. As part of that process we calibrate our dividends to
company earnings and also ensure that Allstate's payout ratio is
competitive with the marketplace."
Allstate's dividend yield surged to 9% of late as the company's
stock has lost nearly two-thirds of its value the past five months
amid slumping results caused in part by surging investment losses.
A dividend yield approaching 10% denotes building investor doubt
that a company will continue to pay dividends at prior rates.
The nation's largest publicly held personal-lines insurer last
month said growing investment losses, market-driven charges on its
annuity business and higher-than-usual catastrophe losses resulted
in a $1.13 billion fourth-quarter loss. As such, Allstate will cut
back the size of its life-insurance business.
The three major U.S. ratings agencies subsequently downgraded
Allstate.
Shares climbed 9.7% Tuesday to $18.64 amid a broad market
rebound. There was no after-hours trading.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com