Allstate shares up after smaller-than-expected loss
Allstate reports $620 million loss due to string of natural catastrophes. Allstate manages to raise insurance rates in 18 states.
BOSTON – Allstate reported a second-quarter loss Monday, hammered by $2.3 billion in catastrophe losses from waves of tornadoes, wildfires and storms.Skip to next paragraph
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Yet Allstate's numbers were better than Wall Street had expected as the property and casualty insurer's ratio for claims paid out versus dollars taken in improved. Shares rose more than 1 percent in a market that was down sharply.
The $620 million loss at the Northbrook, Ill. company amounted to $1.19 per share. That compared with a profit of $145 million, or 27 cents per share, in the same quarter a year ago.
Allstate's adjusted loss for the latest quarter was $1.23 per share. Analysts surveyed by FactSet had forecast a wider loss of $1.46 per share.
Allstate provided coverage during 33 catastrophic events during the April through June quarter, including five tornadoes, three wildfires and 25 wind and hail storms. It has been the deadliest year for tornadoes since 1950, based on an assessment of figures from the National Weather Service.
Before Monday's earnings, Allstate had disclosed pre-tax catastrophe losses of a total $2 billion combined for April and May, and another $300 million for June.
The $2.34 billion total is up from $636 million in the year-ago quarter, and tops levels hit in 2008, when Hurricanes Ike and Gustav drove third-quarter catastrophe losses to $1.8 billion. Hurricanes Katrina and Rita pushed quarterly losses to $4.7 billion in 2005.
Allstate's catastrophe losses for the latest quarter were more than twice the $1.09 billion reported recently by rival, Travelers Cos..
Allstate has pursued rate hikes to offset higher claims from violent storms. The company said increases averaging 6 percent were approved in 18 states.
Homeowner premiums written increased 2.6 percent in the second quarter, compared with a year ago. A 6 percent increase in average gross premium was partly offset by a nearly 4 percent decline in policies in force.
Allstate said its combined ratio improved to 87.5 during the second quarter, from 88.1 a year ago, excluding the impact of catastrophes as well as the previous year's re-estimate of the company's reserves. A ratio above 100 means that for every premium dollar taken in, more than a dollar went to cover claims and expenses. A figure below 100 means the company made a profit on its insurance operations.
Adding in catastrophe losses, Allstate's combined ratio in the latest quarter was 123.3 points, compared with 96.8 in the year-ago quarter.
Revenue rose nearly 6 percent to $8.08 billion from $7.66 billion in last year's second quarter.