Feb. 5 (Bloomberg) -- Allstate Corp., the largest publicly traded U.S. auto and home insurer, said fourth-quarter profit more than doubled as catastrophe costs declined.
Net income rose to $810 million, or $1.76 cents a share, from $394 million, or 81 cents, a year earlier, the Northbrook, Illinois-based insurer said today in a statement. Operating profit, which excludes some investment results, was $1.70 a share, beating the $1.37 average estimate of 22 analysts surveyed by Bloomberg.
Chief Executive Officer Thomas Wilson, 56, has focused on improving margins from covering cars and residences after limiting risk tied to life insurance and savings products. Wilson said last year that he would cease selling Allstate branded fixed annuities through its agencies and would instead make available retirement offerings from ING U.S. Inc.
“Allstate got its act back together,” Paul Newsome, an analyst as Sandler O’Neill & Partners LP, said in a telephone interview before the earnings report. “It went through a several-year period where it was focused on things other than its core business, and it has, I think, just refocused itself.” He rates the company a buy.
Allstate rose 1.7 percent to $50.40 at 4:52 p.m. today in extended New York trading. It has jumped 12 percent in the past year, trailing the 20 percent gain in the 21-company Standard & Poor’s 500 Insurance Index. Results were released after the close of regular trading.
Catastrophe costs fell to $117 million from $1.06 billion, Allstate said. The fourth quarter of 2012 included damages from Superstorm Sandy, which struck the U.S. East Coast in October. The storm caused about $35 billion in insured losses industrywide, according to the Insurance Information Institute.
Premium revenue in Allstate’s property and liability business advanced 4 percent to $7.01 billion from $6.74 billion a year earlier. Book value increased to $45.31 a share from $43.49 as of Sept. 30.
Allstate spent 88.7 cents on claims and expenses for every premium dollar in its property and liability unit, compared with a cost of $1.02 in the fourth quarter of 2012. Full-year profit declined 1.9 percent to $2.26 billion from $2.31 billion.
Freezing winter weather in the U.S. this year is already leading to claims at other insurers. Chubb Corp. said last month that storms from Jan. 3 to Jan. 8 could cost the company as much as $200 million before tax. Wilson said in a phone interview that Allstate will report the costs if they exceed $150 million in a month, as is the insurer’s practice.
“We obviously do claim counts on a daily basis, but it’s too hard to tell right now what the ultimate costs will be,” Wilson said. “In some cases, where an entire city is shut down like Atlanta, actually people drive less.”
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