Allstate is seeking to purchase reinsurance on a nationwidebasis, according to an analyst's report of a management meeting thecompany held recently.

Bank of America property-casualty insurance analyst BrianMeredith quoted Allstate management officials as stating that theestimated extra cost of up to $2 billion could be passed along topolicyholders in the form of rate increases.

Mr. Meredith wrote that Allstate is also busy with efforts tolobby government officials to establish catastrophe insurance poolson both a federal and state level.

In October, the Northbrook, Ill.-based company announced itincurred $3 billion of catastrophic losses in the third quarter of2005 compared to $1.1 billion in the year-ago period.

Since that time the company has engaged in a major publicrelations effort to gain support for state and federal backstopprograms with mechanisms to establish loss reserves in advance ofany catastrophic event.

Allstate CEO Edward Liddy took part in a National CatastropheInsurance Summit last month sponsored by California InsuranceCommissioner John Garamendi that proposed such a public-privatepartnership with state and federal participation.

Mr. Meredith also noted the company is continuing efforts toreduce its exposure to both hurricane and earthquake losses in avariety of ways, including raising deductibles, non-renewing somebusiness, raising rates and transferring some policies to othercompanies.

"On the claims side, Katrina claims are tracking as expected,which gives us some comfort that the company will not see materialchanges in its loss estimate," Mr. Meredith wrote.

With plenty of cash and excess capital, Mr. Meredith said thatAllstate should be able to cover hurricane losses from currentfunding. "We do not expect a significant drop off in sharerepurchase activity, despite the paid loss activity from thehurricanes," he wrote.

Fitch Ratings analyst Doug Pawloski said Allstate's move to beefup its reinsurance cover through a nationwide program makes sense."They were working with a state-by-state approach, and with Katrinathey found some holes in that strategy," he said.