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

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

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

Catastrophes during the third quarter this year, which included Hurricane Irene and Tropical Storm Lee, contributed 16.7 points to the company's property-liability combined ratio of 104.8—an increase of 8.9 points from Allstate's combined ratio during the third quarter a year ago.

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

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

Allstate's auto insurance segment has reduced volumes in New York and Florida “as growth was balanced with a focus on maintaining auto profitability,” says Allstate. For this reason, premiums written during the third quarter declined 0.8 percent compared to the same time last year despite increasing average premiums.

Steps to adjust its book of business along with investment portfolio management allowed the company to earn a profit and overcome the catastrophe losses, adds Wilson.

Allstate Financial reduced the size of fixed annuity business in its 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 decline from the third quarter a year ago.

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

Special Reports /

Allstate 3Q Income Falls 55%; Turns Profit Despite $1.1B in Catastrophe Losses

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