Allstate Swings to Loss, Cutting Jobs

Allstate (ALL Quote) shares fell 22% Thursday after the insurer reported a $1.1 billion fourth-quarter loss and said it would eliminate 1,000 jobs in its financial services unit.

Allstate's $2.11-a-share loss was driven by weakness in its property-liability sector, decrease in investment income and realized investment losses. It compares to a $760 million profit, or $1.36 a share, in the fourth quarter 2007. The insurer is another in the steady stream of companies in the sector reporting investment losses with realized losses of $1.9 billion for the quarter and $5.1 billion for the full year.

Investment income was down to $1.3 billion, vs. $1.6 billion in the fourth quarter of 2007. The company moved more of its portfolio to cash and short-term liquid investments available to pay claims, also allowing it to hold on to its long-term investments until recovery. Allstate now holds 21.3%, or $20.6 billion, of its invested assets in cash and liquid investments.

Unlike Travelers (TRV Quote), which has seen shares rise 6% since on Tuesday reporting improved underwriting results and a profit for the year, Allstate's underwriting results continue to suffer. Allstate shares recently were down 22% to $23.13, its low of the day.

Written premiums on its property-liability sector for the quarter were down 3.9% to $6.3 billion, from $6.6 billion a year ago. The company cited "declining new car sales, weakness in the housing market and a highly competitive environment" for the decline in policies in force.