Tags: Allstate | insurance | Internet | Warren Buffett

Allstate Profit Slides 57 Percent on Charge Tied to Sale of Life Unit

Wednesday, 30 Oct 2013 04:38 PM

Allstate Corp., the largest publicly traded U.S. auto and home insurer, said third-quarter profit declined 57 percent as it booked a loss tied to the sale of a life-insurance business.

Net income fell to $310 million, or 66 cents a share, from $723 million, or $1.48, a year earlier, the Northbrook, Illinois-based company said in a statement. Operating profit, which excludes some investment results, was $1.53 a share, beating the $1.44 average estimate of 22 analysts surveyed by Bloomberg.

Chief Executive Officer Thomas Wilson, 56, has been seeking to minimize risk from life insurance and retirement products as low interest rates pressure returns. He sold a variable-annuity business in 2006 and in July struck a deal to divest Lincoln Benefit Life Co. as the insurer works to expand its larger, more profitable auto-and-home unit.

“When Allstate’s doing its best, they tend to focus on their core operations,” Paul Newsome, an analyst at Sandler O’Neill & Partners LP, said in an interview before results were announced. He recommends buying the stock.

Allstate fell less than 1 percent to $52.96 at 4 p.m. today in New York before the statement, trimming its advance this year to 32 percent. That compares with the 24 percent gain in the Standard & Poor’s 500 Index.

Margins at the insurer’s home business have improved in recent quarters after the company bought reinsurance, raised rates and exited some markets after severe weather boosted claims costs. Those changes hurt sales of Allstate’s namesake brand of auto insurance, because the products are often bundled together, Wilson has said.

Allstate’s auto business has also been under pressure as more customers shop for policies over the Internet rather than purchasing them through agents. The insurer bought online car coverage seller Esurance in 2011 to boost its sales through that channel and to compete directly with the Geico unit of Warren Buffett’s Berkshire Hathaway Inc. and Progressive Corp.

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Allstate Corp., the largest publicly traded U.S. auto and home insurer, said third-quarter profit declined 57 percent as it booked a loss tied to the sale of a life-insurance business.
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2013-38-30
Wednesday, 30 Oct 2013 04:38 PM
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