Allstate Advances on Surprise Profit After Sandy Costs

Allstate Corp., the largest publicly traded U.S. auto and home insurer, climbed in New York trading after posting a surprise profit for the quarter in which superstorm Sandy struck the U.S. East Coast.

Allstate advanced 1.7 percent to $45.06 at 4:15 p.m. Operating income, which excludes some investment results, was 59 cents a share in the fourth quarter, the Northbrook, Illinois-based insurer said yesterday in a statement. The insurer was expected to have a loss of 3 cents a share, according to the average estimate of 24 analysts surveyed by Bloomberg.

Allstate Chief Executive Officer Thomas Wilson, 55, is seeking to boost returns to shareholders through buybacks and a higher dividend, while raising prices to increase underwriting profit. Excluding catastrophes, margins in the main property-liability business improved by 4 cents per dollar in the fourth quarter from a year earlier.

The insurer “is an unusual franchise with pricing power, which still trades at an unchallenging valuation relative to peers,” Josh Stirling, an analyst with Sanford C. Bernstein & Co., said in a note to clients today. Allstate has a “disciplined management” that will drive the stock higher, he said, raising his price target to $50 per share.

Fourth-quarter net income fell to $394 million from $712 million a year earlier as the company paid claims tied to Sandy.