Claims and catastrophes caused a drop in Allstate profits


shutterstock_57001013Catastrophes, coupled with increasing number of auto insurance claims from policy holders has pulled down the net profit of Allstate Insurance by 43%. The total for the fourth quarter of 2010 stood at just $296 million as compared to the net profit of $518 million that this insurance provider had announced in the final quarter of 2009. The operating income for the last quarter of 2009 was reported at $592 million while the operating income for the corresponding period in 2010 was $271 million.

Despite the huge difference in the profits for the last quarter, Allstate declared an overall net profit of $928 million in 2010 as compared to $854 million in 2009. The increase, company officials said, was because of better results in terms of investment and Allstate Financial’s operating income. The total operating income in 2009 was $1.9 billion as compared to $1.5 billion in 2010.

The combined ratio for the casualty/property business for Allstate in was 98.1 for the year 2010, an increase of 1.9 points when compared to 2009. In the final quarter for 2010, the p/c ratio stood at 92.0 as compared to 88.1 during the corresponding time frame in 2009.

Allstate Insurance Corporation’s President, Chairman and CEO, Thomas Wilson, said that the profits of the company were being pulled down due to the increase in the losses reported due to catastrophes and also increasing number of auto insurance claims.

He also went on to say that the company had put in a lot of efforts to bring in more business in the auto insurance sector, but still they could not offset the fall in the customer renewals across various states. He  said that the primary goal of the company was to increase the profitability for home owners and also to increase the profits in the auto insurance sector.

The premiums for auto insurance coverage underwritten by Allstate in the final quarter of the year 2010 fell  by 0.4% when compared to the same quarter in the year 2009. During the fourth quarter, approximately twenty catastrophes, which also include the hailstorm in Arizona caused a loss of $537 million, out of which $355 million was just due to the hailstorm.

The combined ratio for Allstate auto stood at 99.7 for the final quarter of 2010, which is an increase of 6 point from the corresponding quarter in 2009.