Storms Impact Allstate 1Q Results, But Company Turns Profit

NU Online News Service, April 29, 3:15 p.m. EDT

Allstate Insurance Company reported 2010 first quarter net income of $120 million, compared to a 2009 first quarter net loss of $274 million, despite "near record" catastrophe losses.

The company attributed the improved quarterly results relative to a year ago primarily to the absence of one-time charges incurred in 2009.

In a conference call, Thomas Wilson, Allstate chairman, president and chief executive officer, said the company saw strong profitability in its auto segment, but homeowners underperformed because of catastrophes involving 11 events, including a March winter storm causing an estimated $250 million in property losses in 24 states.

Catastrophe losses in the quarter totaled $648 million, up from $516 million a year ago.

Property-liability premiums written in the 2010 first quarter were $6.26 billion, down slightly from 2009 first quarter premiums written of $6.27 billion.

Allstate said $4 billion of the written premiums were attributed to auto, while $1.2 billion was attributed to homeowners.

Premiums earned for the 2010 first quarter were $6.5 billion, down from $6.6 billion in the 2009 first quarter.

The company said its lower 2010 first quarter operating income of $375 million--compared to $454 million in the same period of 2009--reflects a decline in property-liability operating income, which was partly offset by higher operating income in the company's Allstate Financial unit.

The combined ratio for the first quarter was 98.9, a 2.1 point deterioration from 96.8 in the 2009 first quarter. Allstate said catastrophe losses in the quarter accounted for 10 points of the combined ratio, versus 7.8 attributable to catastrophe losses in the previous year's first quarter.

Allstate said its auto combined ratio was 94.4, and its homeowners combined ratio was 111.3.

The company said it is continuing to implement measures to address financial results for its homeowners business, including rate increases averaging 7.4 percent in six states that were approved during the quarter.

For Allstate Financial, the company said the segment "continues to reinvent its business model with the goals of producing higher returns, reducing concentrations in products with returns dependent on investment spread, and focusing on the Allstate customer base serviced primarily by Allstate agencies."

Allstate Financial produced 2010 first quarter net income of $4 million compared to a 2009 first quarter net loss of $327 million.

Total realized net capital losses were reported at $348 million, compared to a loss of $359 million in last year's first quarter.