Allstate Corp., the largest publicly traded U.S. car and home insurer, tumbled the most in six years after profit missed analysts’ estimates as claims costs swelled for auto coverage.
Allstate fell 12 percent to $61.06 at 11:10 a.m. in New York, the most intraday since May 2009 and the worst performance in the Standard & Poor’s 500 Index. The shares have slid 13 percent this year, compared with the 1.8 percent advance of the 88-company index.
Second-quarter net income slipped to $355 million, or 79 cents a share, from $645 million, or $1.39, a year earlier, the Northbrook, Illinois-based insurer said Monday in a statement. Operating income, which excludes some investment results, was 63 cents a share, missing analysts’ estimates by 33 cents.
“Throughout the second quarter, management had been announcing elevated catastrophe losses, and analysts, including us, responded by raising loss forecasts,” Jim Shanahan, an analyst at Edward Jones, said in a note. “However, reported claims expenses still exceeded those higher estimates.”
The insurer announced in May that it would charge customers more after auto claims pressured margins and said after second-quarter results that it would extend the push.
“We are broadly increasing rates to catch up, and then keep pace, with increased loss costs,” Allstate President Matt Winter said Tuesday during a conference call. “Those rate actions and underwriting changes are taken in conjunction with our ongoing correct-classification programs to ensure we are adequately matching price and risk.”
Competitor Progressive Corp. reported in July that second-quarter profit advanced 24 percent after an acquisition. The Mayfield Village, Ohio-based car insurer has advanced 13 percent this year and was little changed from Monday’s close.