Allstate sees profits sink on disaster losses

ALLSTATE shares rose four per cent in after hours trading yesterday after the second largest US home and auto insurer posted a better than expected third quarter operating profit.

Net profits, however, fell 55 per cent to $165m from $367m a year earlier after the company said it lost more than $1bn due to catastrophes, including Hurricane Irene.

“Maintaining auto insurance profitability and proactively managing our investment portfolio enabled us to overcome an increase of $691m in catastrophe losses from the third quarter of 2010 and still earn a profit,” chief executive Thomas Wilson, said in a statement.

Allstate, which has been trying to improve its profitability by raising pricing, as well as reducing coverage in less-favorable markets such as New York and Florida, said there were about four per cent fewer policies in force.

Shares fell three percent, to close at $26.34 before the company reported results.