Allstate Corp.'s (ALL) unrealized losses in its investment portfolio improved by $1.5 billion so far in the second quarter, the company's chief executive said Thursday.

Allstate had been hit harder than many property/casualty insurers by unrealized or market-value losses on mortgage-related securities it held in its investment portfolio. That position improved by $1.5 billion this quarter, Thomas Wilson said during a presentation at an investors conference sponsored by Sanford Bernstein.

The increase boosted the company's book value by 8%, Wilson said.

Wilson also said the company reduced its commercial real estate holdings by $1 billion in the quarter, for a total of more than $3 billion in reductions so far in 2009.

Allstate reported a first-quarter loss of $274 million.

Wilson said the company's capital and liquidity position made it strong enough to forego the Treasury Department's TARP program and the company wouldn't apply for the money.

Part of the problem with TARP, Wilson said, is that it has the potential to "expose risk decisions to government intervention."

Wilson said the company has no plans to sell off Allstate Financial, its life insurance operation, because the company's "middle America" customer base is interested in the fixed annuity and other products it sells.

"Even if I want to, this would be the worst time to do it," Wilson said. "Why would you want to lock in your credit losses at this time?"

Wilson said the company would "reinvent" its fixed annuity offering to reduce commissions.

"Fixed annuities won't exist in our world the way they have in the past, "Wilson said. He said customers for fixed annuities were more concerned with managing their cash flow than maximizing tax deferrals. "There are a whole bunch of things that need to be changed" in Allstate's fixed annuity offerings, Wilson said.

Another initiative for Allstate is a focus on customer retention, which had fallen to its lowest level since 2002, partly due to price shopping, Wilson said. "We are losing too many customers because they are not happy," he said.

He said Allstate "trades share" with the big auto insurers. The largest auto insurers are State Farm Mutual Automobile Insurance Co., Allstate, Progressive Corp. (PGR) and the Geico unit of Berkshire Hathaway Inc. (BRKA BRKB)

Wilson said Allstate gains most new marketshare from smaller insurers. "We get more share from them than from the big players."

Shares of Allstate recently traded up 1.3% to $25.19.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141; lavonne.kuykendall@dowjones.com