Allstate Corp, the largest publicly traded U.S. home insurer, said on Wednesday net income plunged in the second quarter, hit by the highest level of second-quarter catastrophe losses in its 77-year history.
Catastrophe losses for the quarter rose more than 60 percent to $698 million, fueled by unusually high tornado activity, similar to the first quarter, as well as a surge in wind and hail storms, Chief Executive Tom Wilson told Reuters.
After a respite in 2006 and 2007, the United States has been pummeled by natural disasters so far in 2008. Insurance trade group ISO earlier this week said second-quarter catastrophes alone were expected to cost insurers more than $6 billion.
The worst may be yet to come with the third quarter typically the most active period for U.S. catastrophes. Wilson said Allstate had already deployed 3 mobile response units to Texas where the second hurricane of the season, Dolly, came ashore earlier on Wednesday.
Dolly, the second hurricane this year, is stirring concern that the 2008 season could be more active than usual since hurricanes typically form later in the season, which runs through November.
Modeling firm AIR Worldwide on Wednesday said insured losses from hurricane Dolly were, based on early information, estimated at between $300 million and $1.2 billion.
Allstate, which sells insurance to 17 million American households, said net income slid to $25 million, or 5 cents a share, from $1.4 billion, or $2.30 a share, in the year-ago quarter. Operating earnings at the Northbrook, Illinois-based insurer fell about 36 percent to $683 million, or $1.24 a share, short of Wall Street expectations.
Allstate said its standard brand auto policy sales were comparable with the same period a year ago, and homeowner policies fell about 0.8 percent.
Excluding catastrophe claims, the company’s combined ratio was 94.4 percent for the quarter, up from 87.6 percent in the second quarter of 2007.
Since January, Allstate shares have fallen roughly 10 percent, compared with a decline of more than 23 percent in the Standard & Poor’s insurance index.
(Editing by Mark Porter, Gary Hill)
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