NU Online News Service, Nov. 1, 8:41 a.m.EST

Allstate Corp. says third quarter net income dropped 55 percentto $165 million on about $1.1 billion in catastrophe losses from 23loss events.

The Northbrook, Ill.-based insurer posted 2010 third quarter netincome of $367 million and took catastrophe loss of $386million.

Catastrophes during the third quarter this year, which includedHurricane Irene and Tropical Storm Lee, contributed 16.7 points tothe company's property-liability combined ratio of 104.8—anincrease of 8.9 points from Allstate's combined ratio during thethird quarter a year ago.

Looking past catastrophe losses, Allstate is making progress onits plans to improve profit by raising rates and reducing itspresence in less-favorable areas, says Thomas J. Wilson, chairman,president and chief executive officer, in a statement.

Homeowners' insurance rate increases averaging nearly 14 percentwere approved during the third quarter in 15 states. Premiumswritten increased 1.5 percent over the same period in 2010 as a 5percent jump in average gross premium was offset somewhat by a 4.2percent drop in policies-in-force because of restrictions in newbusiness and decision not to offer renewals to some policyholders,Allstate says.

Allstate's auto insurance segment has reduced volumes in NewYork and Florida “as growth was balanced with a focus onmaintaining auto profitability,” says Allstate. For this reason,premiums written during the third quarter declined 0.8 percentcompared to the same time last year despite increasing averagepremiums.

Steps to adjust its book of business along with investmentportfolio management allowed the company to earn a profit andovercome the catastrophe losses, adds Wilson.

Allstate Financial reduced the size of fixed annuity business inits portfolio, as Allstate's consolidated investment portfolio was$97.5 billion as of September 30 compared to $100.5 billion at Dec.31, 2010.

Net investment income was $994 million, a 1.1 percent declinefrom the third quarter a year ago.

During the quarter Allstate closed on its acquisition of Esurance and Answer Financial from WhiteMountains Insurance Group. Allstate also completed a $1 billionshare repurchase program during the quarter.