Advertisement
YOU ARE HERE: LAT HomeCollections

Allstate Profit Up 69% as It Raises Prices, Limits Claims

February 06, 2003|From Bloomberg News

Allstate Corp., the second-largest U.S. auto and home insurer, said Wednesday that fourth-quarter profit rose 69% after the company raised prices and limited policyholder claims from mold damage to homes.

Net income was $447 million, or 63 cents a share, compared with $264 million, or 37 cents, a year ago. Profit excluding realized investment losses was 87 cents, compared with 77 cents expected by analysts in a Thomson First Call survey.

Allstate, which was the second-best performer among the Standard & Poor's 500 Property & Casualty Index in 2002, reported earnings after trading closed on the New York Stock Exchange, where its shares fell 10 cents to $34.39.

Chairman and Chief Executive Edward Liddy has boosted earnings by raising premiums and selling more life insurance and annuities. He also has cut losses from mold by excluding it from coverage, in addition to converting salaried sales agents to independent contractors.

"They have the wind at their backs," said Legg Mason Wood Walker Inc. analyst Michael Paisan, who has a "buy" rating on the stock.

Allstate said it expected to earn $3.20 to $3.40 a share in 2003, excluding restructuring charges and investment gains and losses. The forecast is in line with analysts' estimate of $3.30.

The company sold $5.85 billion in auto and home policies during the quarter, 4.4% more than a year earlier. Claims payments were 97.8% of premium income, compared with 104.5% the previous year.

Allstate's financial services division, which sells life insurance, annuities and other products, reported that sales rose 19% to $2.76 billion.

Losses from Texas homeowners' mold damage claims fell to $14 million in the quarter from $78 million a year earlier, Allstate spokesman Mike Trevino said. Mold claims in Texas, at the center of a dispute over potentially toxic fungi, cost the company $326 million in 2002.

"They're continuing to make progress" on mold, said Craig Smith, an analyst at David L. Babson, which owns 573,000 Allstate shares.

The company said state regulators approved an average 9.9% increase in Allstate-branded homeowner policies. Allstate's standard auto premiums rose 4.4%, the company said.

Advertisement
Los Angeles Times Articles
|
|
|