DOW JONES NEWSWIRES
Allstate Corp.'s (ALL) second-quarter earnings soared as the
insurer's investment results benefited from the rally on Wall
Street.
But shares fell 3.5% after-hours to $27.50 as operating earnings
were far below expectations as claims costs jumped. The shares have
doubled in the past five months but remain down more than 40% from
their 52-week high last September.
Allstate, harder hit that most insurers by losses on
mortgage-related securities, has seen conditions improve in the
second quarter as equity markets rallied, perhaps easing worries
that the company would have to raise capital. The company, which
declined to take a capital injection from the U.S. Treasury, ousted
its life-insurance chief as it scaled back those operations and
halved its dividend earlier this year.
The nation's largest publicly held personal-lines insurer posted
a second-quarter profit of $389 million, or 72 cents a share,
compared with year-earlier earnings of $25 million, or 5 cents a
share. Operating earnings, which exclude investment gains and
losses, fell to 55 cents a share from $1.24.
Revenue jumped 15% to $8.49 billion.
Analysts surveyed by Thomson Reuters expected operating earnings
of $1.12 a share on revenue of $8.2 billion.
The property and liability segment's combined ratio, the
percentage of premiums paid out on losses and expenses, increased
to 100% from 94.4%. Excluding catastrophes and prior-year reserve
re-estimates, the ratio climbed to 87.2% from 84.1%. Overall
catastrophe losses rose 17%, while premiums written dropped
2.8%.
Allstate's investment portfolio rose $2.6 billion during the
quarter to $96.5 billion.
The company noted its restructuring of Allstate Financial
remains on track to hit $90 million in annual savings by 2011,
having already reached a $65 million run rate in expense cuts.
-By Jay Miller, Dow Jones Newswires; 212-416-2355;
jay.miller@dowjones.com