Tags: Allstate | ALL | insurance | stocks

Allstate Weathers Stormy Times

By    |   Friday, 05 Aug 2011 09:12 AM

A stormy spring in the United States, complete with tornadoes, hailstorms, and wildfires, burned profits at insurer Allstate Corporation (ALL). In the second quarter of fiscal 2011, consolidated revenue hit $8.1 billion, up 6 percent from the same period a year ago.

The bottom line wasn't so sunny. The company reported a $620 million loss during the quarter compared with a $145 million gain a year earlier. Natural disasters clearly took their toll on an otherwise healthy company. Five tornadoes, three wildfires, and 25 wind and hailstorms result in policyholders filing a mountain of claims.

Plus the company is taking on less auto-insurance customers in New York and Florida to improve profitability down the road. Still, Allstate says over the longer term, the numbers will look good again, especially thanks to recent acquisitions.

"We will continue to make progress on our commitment to shareholders to improve overall returns. I’m confident the actions we took during the quarter, including our pending acquisition of Esurance and Answer Financial, position us well for our longer-term focus of delivering unique value propositions to each customer segment and improving shareholder value," says Chairman, President and CEO Thomas J. Wilson.

Eye of the storm

Don't rule out more natural disasters, experts say. The Atlantic Basin Hurricane Season kicks into peak season in August and September and doesn't officially end until Nov. 30.

Moody's Investors Service predicts a rocky second quarter due to weather before the company announced earnings in early August, even when taking hurricanes into account.

"Risks remain in higher industry catastrophe losses in 2Q11 due to elevated activity from storms and tornadoes. Allstate's catastrophe reinsurance program does not provide cover for these frequent, low-severity events," the ratings agency says in a statement.

The company is in relatively good financial health, weather notwithstanding, Moody's says.

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A stormy spring in the United States, complete with tornadoes, hailstorms, and wildfires, burned profits at insurer Allstate Corporation (ALL). In the second quarter of fiscal 2011, consolidated revenue hit $8.1 billion, up 6 percent from the same period a year ago. The...
Allstate,ALL,insurance,stocks
301
2011-12-05
Friday, 05 Aug 2011 09:12 AM
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