Allstate: No New Md., Va. Coastal Business

Allstate said it has stopped writing new homeowners' policies in coastal areas of Maryland and Virginia, expanding to seven the number of states in which it is limiting exposure to catastrophic losses from hurricanes and flooding.

Mike Siemienas, a spokesman for Allstate, said the decision was part of Allstate's "ongoing effort to limit our risk within our business to ensure that we can protect the assets of the 17 million households that now rely on us."

Allstate serves all states except Massachusetts, which it withdrew from several years ago because of regulatory issues.

Mr. Siemienas also said that Allstate does "not currently" plan to add to the number of states in which it is limiting exposure to catastrophic losses.

He said the policy is nothing new, and was launched in the wake of Hurricane Andrew, which devastated Florida in 1992.

"People don't realize that this is something we started after Hurricane Andrew struck Florida," he said. Allstate began re-examining its risks after the losses from Hurricane Andrew, at over $1 billion, exceeded the premiums paid by Florida Allstate customers for a lengthy period of time.

"So, we started back then," Mr. Siemienas said, "and with the 2004 and 2005 hurricane seasons, it is at that point that we realized that we were in a cycle of hurricanes hitting more often and being stronger."

The policy, he said, was prompted by the warnings from scientists that a warmer Atlantic Ocean is likely to lead to more and stronger hurricanes hitting the Northeast.

Besides Florida, Maryland and Virginia, other areas affected by the decision to limit risks in coastal areas include New York, Connecticut, Delaware and New Jersey. Allstate also decided recently to let thousands of existing homeowner policies lapse in the Carolinas, New York and Texas.

Mr. Siemienas said that besides limiting its exposure, Allstate is working to win changes in the state regulatory environment so that it can expand future restrictions on underwriting.

"We are also working very hard to win support for creation of a government-sponsored but privately funded catastrophic reserve fund," he noted.

He cited Allstate's aggressive support of ProtectingAmerica.org, which is lobbying extensively for creation of a catastrophic federal backup system for insurers' major catastrophe losses and its purchase of "significant reinsurance."

Mr. Siemienas said that Allstate will continue to offer auto insurance in all the states affected. He said also that the company is working with Allstate agencies to ensure customers, if they qualify, can purchase homeowners insurance through carriers not affiliated with Allstate.