Allstate Corp., the largest publicly traded U.S. home and auto insurer, reported a third qarter profit Wednesday, the improvement from a year ago loss made possible by lower catastrophe and investment losses.
Net income was $221 million compared to a net loss of $923 million in the year-ago quarter.
A year ago, Allstate’s suffered sizable investment losses and $1.8 billion in catastrophe losses.
Excluding investment gains and losses, Allstate’s third- quarter operating profit was $538 million compared with a loss of $190 million the same quarter of 2008.
Consolidated Financial Results
Total revenues for the third quarter of 2009 were $7.6 billion, an increase of 3.6% compared to the third quarter of 2008.
Allstate’s property/ liability business produced a combined ratio of 94.7 in the third quarter of 2009; the ratio was 112.7 for last year’s quarter. The underlying combined ratio was 88.0 in the third quarter and 88.1 in the first nine months of 2009, within the company’s 87-89 outlook range for the full year. Management said it anticipates that the underlying combined ratio for the full year 2009 will be within its previous outlook range.
Allstate brand standard auto premiums written for the third quarter of 2009 were comparable to the prior year third quarter, with new issued applications increasing 12.0% and the renewal ratio increasing 0.2 points to 89.1. Policies in force declined 1.3% versus the prior year quarter as improved sales and retention were offset by fewer policies available to renew. The combined ratio was 92.7, up 1.7 points from the third quarter of 2008, primarily due to higher loss frequency, as frequency returned to historical norms following low levels in 2008. Average claim cost increases were within expectations.
Allstate brand homeowners premiums written for the third quarter of 2009 declined 0.2% compared to the same period a year ago, resulting from a 4.1% decline in policies in force. The combined ratio improved to 98.3 in the third quarter of 2009 compared to 181.3 in the third quarter of 2008, reflecting lower catastrophe losses, partly offset by higher non-catastrophe claim frequencies and severities. Allstate said it will benefit in the future from rate increases averaging 6.9% in 19 states that were approved during the quarter.
Allstate had catastrophe losses of $407 million for the third quarter and $1.7 billion for the first nine months of 2009. In comparison, the company had $1.8 billion of catastrophe losses in the third quarter and $3.1 billion in the first nine months of 2008, including $1.4 billion of losses from Hurricanes Ike and Gustav.
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