Allstate Net Up 5 Percent

Allstate Corporation credited its marketing campaign for helping it to a “strong start” for the year as the company reported first-quarter net income rose 5 percent.

The insurer reported yesterday that net income rose $250 million to $1.5 billion compared with $1.4 billion for the same quarter last year.

Consolidated revenues for the quarter rose 2.8 percent to $9.3 billion from $9 billion.

“Allstate is off to a strong start in 2007,” said Thomas J. Wilson, the company's president and chief executive officer. “Our highly successful marketing programs continue to distinguish us from our competitors and deliver quantifiable results for our auto insurance business.”

Morgan Stanley analyst William Wilt noted the company beat the consensus estimate by two cents per share with encouraging underlying metrics.

“This bolsters our view that Allstate is the personal insurer most effectively executing on its branding-advertising strategy and product differentiation,” he wrote.

Mr. Wilt said that unit growth in personal auto was stable at 2.6 percent and premiums per auto policy held ground against competitive pressure.

The Northbrook, Ill.-based company's return on earnings rose to 23.5 percent from 9.8 percent in the same 2006 period.

The combined ratio rose 2.7 points to 84.6, which the company attributed to higher claims frequencies.

Catastrophe losses rose 50 percent to $161 million from $107 million in 2006.

Property-liability premiums written declined 1.7 percent from the first quarter of 2006. This was attributed to the increased cost of its catastrophe reinsurance program, which rose to $216 million compared with $73 million in the same 2006 period.

Standard auto premiums written grew 2.5 percent stemming from a similar increase in policies in-force and a 7.3 percent rise in new issued applications.

Mr. Wilt wrote that cross-selling life and home policies proved challenging this quarter, which he attributed to the cutbacks in the home book of business.

David Small, an analyst for Bear Sterns, said that while the auto book performed well in the quarter, one damper was property damage frequency. While some may believe this could be the beginning of a trend, it is too soon to assume so, he said.