Hurricanes Spark Allstate Floridian Downgrade

The cumulative impact of these events has led to a surplus decline of approximately 40 percent when compared to June 30. Accordingly, the group's risk-adjusted capitalization has declined materially and is no longer supportive of an A-minus (Excellent) rating, Best said.

While the group recently purchased two reinsurance contracts to cover losses from future catastrophic events, Best noted they exclude the potential impact from Hurricane Ivan.

Best added that it remained concerned with the group's overall capital adequacy in the near term in view of the storm's projected magnitude and strength when it issued the downgrade late Friday. A significant catastrophic event would require support from the parent company to maintain the secure rating, Best said. Without the support, the rating would likely be downgraded.

Best continued that the rating would remain under review pending stabilization of the group's risk-adjusted capitalization as well as further discussions with management.

Allstate Floridian, comprised of Allstate Floridian Insurance Company and Allstate Floridian Indemnity Company, is the dedicated producer of Florida property business for the Allstate Insurance Group and is separate from the Allstate Insurance Group, thus receiving a stand-alone rating, Best said.