Allstate Corp, the largest publicly traded U.S. home and auto insurer, posted a second-quarter loss on record-breaking catastrophe expenses, although the results were better than expected.
Catastrophe losses totaled $2.34 billion, making it one of the worst quarters in the company's history. Allstate had warned of losses in that range, largely because of record U.S. tornado activity in April and May.
Revenue was higher than analysts expected, even as the number of policies in force fell compared with last year on both the auto and homeowner sides. Allstate has said it needs to improve profitability in both areas, which would mean raising prices in some cases and sacrificing customer numbers in the short term to improve results over the long term.
The company's shares rose 2.8 percent in premarket trading after touching an 11-month low last Friday.
"This is a long-term turnaround story," said Tom Lewandowski, an analyst at Edward Jones. "There was a lot of pessimism priced in during the quarter. I'm not surprised to see an earnings beat here."
Allstate reported a net loss of $620 million, or $1.19 per share, compared with a year-earlier profit of $145 million, or 27 cents per share.
On an operating basis, excluding investment gains and losses, Allstate lost $1.23 per share. That compares with the average loss estimate of $1.56 per share among analysts polled by Thomson Reuters I/B/E/S.
Allstate management has been under pressure to show a turnaround amid heavy competition in the auto segment and continued weakness in the homeowner business. Lewandowski said a return to growth in autos in particular was key to the company's revival.
Last month, after a top Allstate executive left, a Langen McAlenney analyst said management was "under the gun to report improved results," and Barclays Capital said the company was fairly valued even though it was trading at a discount to book value.
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