NU Online News Service, Feb. 11, 3:10 p.m. EST
The Allstate Corporation reported a 2009 fourth quarter net income of $518 million, up sharply from a 2008 fourth quarter net loss of $1.1 billion. The company attributed the turnaround to lower realized capital losses and improved operating income.
Total realized capital losses totaled $33 million in the quarter compared to $1.9 billion in the previous year's fourth quarter. Operating income improved to $592 million from $518 million over the same time period.
For all of 2009, Northbrook, Ill.-based Allstate reported net income of $854 million compared to a 2008 net loss of $1.7 billion.
Allstate Chairman, President and Chief Executive Officer Tom Wilson, said in a conference call that all major lines generated underwriting profits in the fourth quarter.
The company's property-liability combined ratio was 93.2 in the quarter, down 3.2 points from the 2008 fourth quarter combined ratio of 96.4. Excluding catastrophes, the combined ratio was 88.1, which Mr. Wilson said was within the range of the company's target of 87-89.
For the year, the combined ratio improved by 3.2 points to 96.2 compared to 2008.
For its auto business, Allstate reported a fourth quarter combined ratio of 93.7, improving by 5.7 points from the 2008 fourth quarter, due to lower average claim costs and lower expenses, which were partly offset by higher loss frequency, Allstate said.
Allstate's homeowners business in the quarter saw a combined ratio of 89, up from 84.6 in the 2008 fourth quarter. The deterioration, Allstate said, was due to higher catastrophe losses and non-catastrophe claim frequency.
Mr. Wilson said the company is taking steps to improve homeowner returns, and the company noted that it will benefit from rate increases in 22 states averaging 6.5 percent.
Premiums earned for property-liability in the 2009 fourth quarter fell to $6.5 billion compared to $6.7 billion in the previous year's fourth quarter.
For the year, premiums earned dropped to $26.2 billion compared to $27 billion in 2008.
Allstate said it remains focused on returning Allstate Financial to profitable growth. Lower realized net capital losses led to a 2009 fourth quarter net loss of $137 million for Allstate Financial, compared to a 2008 fourth quarter net loss of $1 billion.
Allstate's 2009 fourth quarter net investment income fell $253 million to $1.1 billion compared to the 2008 fourth quarter due to lower yields and reduced average investment balances, the company said.
"We successfully executed our first priority of keeping Allstate financially strong by achieving excellent underwriting margins and improving our capital position. Our focus on the customer resulted in improvements in customer loyalty and enabled us to share that success with employees through a maximum contribution to the Allstate 401(k) Savings Plan, Mr. Wilson said in a statement.
"We also made progress in laying the foundation to reinvent protection and retirement for the consumer," he added.
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