Allstate Corp. said this week that growth in premiums and stronger property-liability underwriting helped the insurer increase second-quarter profit by 5 percent.
The nation’s largest publicly traded home, car and life insurer reported net income of $1.21 billion (euro970 million), or $1.89 per share, from $1.15 billion, or $1.71 per share, in the year-ago period. Operating income, which ignores realized gains and losses on investments, was $1.27 billion (euro1.02 billion), or $2 per share.
Results topped Wall Street projections for earnings of $1.61per share, according to analysts polled by Thomson Financial.
“This was a very strong quarter for Allstate driven by excellent performance of our automobile insurance line of business,” said Chairman and Chief Executive Edward M. Liddy in a statement. “Overall, we are growing our business and generating strong profitability while at the same time we are managing down our exposure to catastrophes in the lines of business and areas of the country where the risk is the greatest.”
Besides beating analyst expectations, Allstate also lifted 2006 operating earnings projection to between $6.70 and $7 a share, from a previous range of $6 to $6.40 per share. Wall Street was expecting full-year profit of $6.57 per share.
The strong results come as Allstate and other insurers continue to recover from massive payouts due to last year’s hurricane season. Results this quarter show a major rebound from last year, and Allstate said it is shoring up its business to prepare for future disasters.
In April, Allstate announced that it bought billions of dollars in reinsurance to cover the costs of future natural disasters and claims. The company said the cost of the reinsurance would be partly offset by higher premiums.
Liddy said the company continues to “aggressively seek recovery of our reinsurance cost.”
During the second quarter, the company reported stronger underwriting income helped push consolidated revenue to $8.88 billion (euro7.11 billion) from $8.79 billion a year earlier.
Property-Liability premiums written grew 1.2 percent over the second quarter, driven by an Allstate brand standard auto increase of 3.7 percent. Property-Liability underwriting income increased $205 million (euro164.24 million) to $1.2 billion (euro0.96 billion), compared to $994 million a year earlier.
The company’s Allstate Financial operating income for the quarter was $160 million (euro128.18 million), compared to $137 million in the year-ago period.
Shares of Allstate rose 72 cents, or 1.3 percent, to $56.15 on the New York Stock Exchange, then tacked on another 98 cents in after-hours electronic trading on the INET.
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