Allstate’s Third-Quarter Profit More Than Doubles

Allstate Corp., the largest publicly traded U.S. home and auto insurer, said third-quarter profit more than doubled as premium revenue increased.

Net income rose to $750 million, or $1.74 a share, from $310 million, or 66 cents, a year earlier, the Northbrook, Illinois-based company said today in a statement. Operating income, which excludes some investment results, was $1.39 a share, beating the $1.34 average estimate of 22 analysts surveyed by Bloomberg.

“The auto business continues to increase its growth. Homeowners is becoming less of a drag,” Chief Executive Officer Thomas Wilson, 57, said in a phone interview after results were released. “We’ve finally got that business where we’re hoping to turn it into a competitive advantage, versus a growth drag.”

Profit in last year’s third quarter was cut by a loss of about $475 million tied to the sale of the Lincoln Benefit life insurer. Wilson reversed a decline in premium revenue after raising homeowner’s rates, and Allstate has boosted quarter-over-quarter property-casualty premium revenue for the past 12 periods.

Allstate fell less than 1 percent to $62.98 at 4 p.m. in New York. The insurer has advanced 15 percent this year, beating the 7.1 percent gain in the Standard & Poor’s 500 Financials Index.

Premium Revenue

Premium revenue in the property and liability business increased to $7.31 billion from $6.97 billion a year earlier, as the company attracted more customers through agency and direct channels.

Allstate-branded policies grew by 1.9 percent. Esurance, the online business that has begun offering homeowner’s coverage in addition to auto, saw its policies in force advance by 14.1 percent.

The insurer spent about 94 cents for every premium dollar in its property-and-liability unit, compared with 90 cents a year earlier.

Book value, a measure of assets minus liabilities, rose to $48.28 from $47.97 at the end of June. Net investment income narrowed to $823 million from $950 million a year earlier.

Allstate hired Russell Mayerfeld this month to oversee $10 billion of investments, including private-equity, infrastructure and real estate holdings.

Expanding Economy

The industry “benefits from the growing U.S. economy along with rising auto and home insurance rates, although we expect smaller rate increases in the year ahead,” Ji Liu, a Moody’s Investors Service analyst, said in an Oct. 16 note. Insurers have shown “good underwriting discipline, solid balance sheets and enhanced risk management, tempered by low market interest rates and significant catastrophe risk.”

Travelers Cos., the lone property-and-casualty insurer in the Dow Jones Industrial Average, reported Oct. 21 that profit climbed 6.4 percent on investment results and reduced claims from natural disasters. Progressive Corp., the fourth-largest U.S. auto insurer, said Oct. 10 profit increased 27 percent from a year earlier.

Allstate announced that pretax costs tied to catastrophes were about $517 million. That’s the highest third-quarter total since $1.08 billion in 2011, driven by Hurricane Irene. A late September hailstorm in Colorado accounted for about one-third of losses in this year’s third quarter, Allstate said.

“The storm was high in severity: There were totaled vehicles, windows broken, and homes and roofs hit,” Carole Walker, a spokeswoman from the Rocky Mountain Insurance Information Association, said in a phone interview before earnings were released. “Hail continues to be Colorado’s most common insured catastrophe.”

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