Allstate Corp. (ALL), the largest publicly traded U.S. auto and home insurer, said fourth-quarter profit more than doubled on lower costs tied to catastrophes. The company advanced in extended trading.
Net income rose to $724 million, or $1.43 a share, from $296 million, or 55 cents, a year earlier, the Northbrook, Illinois-based insurer said today in a statement. Operating income, which excludes some investment results, was $1.48 a share, beating the 96-cent average estimate of 23 analysts surveyed by Bloomberg.
Insurers benefited from milder weather in the U.S. in the last three months of 2011 after facing $21.3 billion in costs from U.S. storms in the second quarter and more than $4 billion from Hurricane Irene in the third, according to the Insurance Information Institute. Allstate Chief Executive Officer Thomas Wilson, 54, is raising rates and said in December that the homeowners’ business hasn’t generated acceptable returns for “some time.”
“You didn’t have a lot of really nasty weather during the fourth quarter,” Paul Newsome, an analyst at Sandler O’Neill & Partners LP who advises clients to buy the stock, said before the results were announced. Allstate has struggled with claims costs, “so they could use a little good luck,” he said.
The insurer climbed 2.4 percent to $30.01 at 4:17 p.m. in New York. The company had lost 7.2 percent in the 12 months through today’s close, compared with the 10 percent drop in the 24-company KBW Insurance Index.
Catastrophe costs in the fourth quarter fell to $66 million from $537 million a year earlier, when the insurer faced claims from an Arizona hailstorm. Allstate made 9.3 cents for every premium dollar in its property-and-liability coverage unit compared with a loss of 0.8 cents a year earlier.
Full-year net income fell to $788 million, the lowest for the insurer since 2008, when writedowns contributed to an annual loss of $1.68 billion. That compares with a profit of $928 million in 2010. Property-casualty insurers including Travelers Cos. and Chubb Corp. posted lower profit in 2011 tied to losses from natural disasters…
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