Shares of Allstate Corp. rose Wednesday, after the insurance company outlined first-quarter performance and issued a strong outlook for the rest of the year.
Stock of the Northbrook, Ill.-based company rose $3.08, or 5.9 percent, to $55.03 in late trading on the New York Stock Exchange. Volume was heavy.
Executives outlined strategies that addressed two major concerns, exposure to potential losses from natural catastrophes and growing competition in the auto insurance business.
“We are better prepared than we’ve ever been from a reinsurance standpoint,” Edward M. Liddy, chairman and chief executive, said during the insurer’s Wednesday conference call. “We’re really confident about what this year holds for us.”
In areas that are prone to catastrophes, Allstate agents are turning their focus to selling auto insurance and financial services products, rather than homeowners insurance.
Company officials also spoke about the success of its auto insurance marketing strategy, including a new auto insurance policy that allows customers to choose the features of their plan. It has already sold more than 770,000 of the new policies, Allstate said.
Its advertising and marketing budget, which has been expanded in the past year, was a big help, executives said.
Donald Light, an analyst with Celent LLC, said Allstate’s 40-cent boost to its 2006 earnings outlook, to a range between $6 a share and $6.40 a share, is proof the company is confident that its earnings will be consistently strong throughout the year.
Allstate announced its outlook, along with earnings, this week. The company reported first-quarter net income of $1.42 billion, or $2.19 a share, up from $1.12 billion, or $1.64 a share, in the first quarter of 2005.
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