Allstate has upped its projected losses from Superstorm Sandy to about $1.12 billion, but the insurer's CEO says the company has paid about 98 percent of submitted claims.
Thomas J. Wilson, CEO, president and chairman, said during a conference call to discuss 2012 fourth-quarter earnings that Allstate has received about 170,000 claims from Sandy, which struck the Northeast in late October.
Wilson said Sandy losses would have been "higher if we did not take actions to reduce [catastrophe] exposure" in the Northeast over the last several years.
Allstate's fourth-quarter profit fell 44.7 percent to $394 million compared to the same time in 2011, as catastrophe losses during the period were about $1.06 billion.
But the company's strategy in recent years to reduce catastrophe exposure, get homeowners insurance rate increases and improve margins in its auto book has worked, Wilson says.
Fourth-quarter net-written premiums for Allstate-branded products increased 1.9 percent to $6.1 billion compared to the same period in 2011. It was the first time in 11 quarters that Allstate posted a quarterly positive net-written-premium increase in this category, according to one analyst on the call.
Total net-written premiums grew 3.3 percent to $6.64 billion during the fourth quarter.
For the year, net income increased dramatically to $2.3 billion from $787 million for all of 2011. Net-written premiums for property liability increased 4 percent to $27.03 billion in 2012, compared to 2011. Results were driven by Allstate's acquisition of Esurance.
Wilson said Allstate has dropped about 1.2 million homeowners policies in the last four years, which has had some impact on the company's auto-insurance book.
Matthew Winter, president of home, auto and agencies for Allstate, said recent years were "stabilization years," as the insurer concentrated on improving risk selection and getting rate to achieve an adequate return. But for the first time in 2012, new business in homeowners was up nearly 6 percent during the fourth quarter. In addition, retention in the line improved.
Winter said there has been a "change in momentum"—enough for him to be "cautiously optimistic" about growth.
The fourth-quarter combined ratio was 101.7, with an underlying combined ratio of 86.7. Allstate predicts an underlying combined ratio of between 88 and 90 for 2013, based on its assumption weather frequency will return to normal.
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