Allmerica Posts Narrower Profit

NU Online News Service, April 29, 3:29 p.m. EDT?Allmerica Financial reported that its first-quarter profit shrank by 22 percent to $37.1 million, or 70 cents per share, driven down by a smaller investment income and a decreased profit from its financial services unit.

In the corresponding period last year, the insurer posted $47.9 million, or 90 cents on a per-share basis.

Looking at individual business units, the Worcester, Mass.-based company showed a profit improvement in its property-casualty segment, which reported a $44.2 million income for the 2003 first quarter, compared to $39 million in the first quarter of last year.

The insurer said earnings in the p-c segment were higher in the quarter thanks to rate increases in all lines and favorable development on prior years’ reserves in most lines. These items were somewhat offset, however, by increased current year frequency of losses and poor weather.

But the net investment results took a bite out of the company’s bottom line. The insurer posted a first-quarter net investment profit of $118.7 million, compared to $150.5 million in the same period one year ago.

The company also fared worse in its Allmerica Financial Services unit, which had a segment income of $2.4 million in the first quarter, as compared to $29.7 million a year ago. Income for the quarter decreased mainly due to higher amortization of deferred policy acquisition costs, the company said.

Allmerica Financial Corporation is an insurance and financial services holding company. The firm provides personal automobile, homeowners, workers’ compensation, commercial automobile and commercial multiple-peril insurance coverage. The company posted $3.32 billion in sales last year.