(Bloomberg) -- Allstate Corp., the largest publicly traded U.S. car and home insurer, said fourth-quarter profit fell on a surge in auto claims.

Net income declined 41% percent to $489 million, or $1.18 a share, from $824 million, or $1.86, a year earlier, Northbrook, Illinois-based Allstate said Wednesday in a statement. Operating profit, which excludes some investment results, was $1.60 a share, beating the $1.35 average estimate of 24 analysts surveyed by Bloomberg.

Allstate has struggled with a high level of car claims as lower fuel prices put more people on the road last year. Chief Executive Officer Tom Wilson’s company has been raising prices for auto coverage while cutting expenses related to professional services and advertising for its Esurance brand, he said in an interview. The insurer has also been focusing on expanding home coverage.

“Our homeowner’s business did a little better than people expected, secondly the benefits of our auto profit improvement actions are starting to come into fruition,” Wilson said by phone after results were released. “Probably not factored into as many people’s expectations were the amount by which we were able to reduce expenses.”

Allstate declined less than 1% to $59.64 as of 4 p.m. Wednesday in New York. It has slipped 4% this year, after falling about 12% in 2015.

Combined ratio

Allstate spent about 92 cents for every premium dollar taken in at its property-and-liability unit in the quarter, up from costs of 90 cents a year earlier. The underlying combined ratio, which excludes catastrophes and adjustments tied to reserves, improved to 87.4 from 89.5.

Premium revenue in the property and liability business advanced to $7.68 billion in the fourth quarter from $7.35 billion a year earlier. Catastrophe costs surged to $358 million, from $95 million.

For the full year, net income declined to $2.17 billion from $2.85 billion in 2014. Book value, a measure of assets to liabilities, slipped to $47.34 a share in the fourth quarter from $47.54 at the end of September.

Net investment income in the quarter declined to $710 million from $779 million a year earlier.

Wilson’s company and rival firms have been investing in private equity and real estate to support portfolios. Allstate may suffer from an interest-rate increase that could hurt the value of some of its credit investments, said Paul Newsome, an analyst with Sandler O’Neill & Partners. The insurer, which also invests in equities, may also be affected by volatile stock markets globally, he said.

Allstate’s board meets in February, which is when it will discuss the dividend, Wilson said. As of Dec. 31, more than $500 million was left of the insurer’s $3 billion share buyback program, which is expected to be completed by July.

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Allstate fourth-quarter profit declines 41% as auto claims rise

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