Allstate Operating Profits Slip - TheStreet

Allstate Operating Profits Slip

Earnings miss Wall Street's targets amid higher reinsurance and catastrophe costs.
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Allstate (ALL) - Get Report missed analysts' second-quarter earnings forecast as increased reinsurance and catastrophe costs weighed on operating profits.

The Northbrook, Ill., insurer said Wednesday that its net income rose to $1.4 billion, or $2.30 a share, from $1.21 billion, or $1.89 a share, a year earlier.

Operating income -- which excludes investment gains -- fell to $1.07 billion, or $1.76 a share, from $1.27 billion, or $2 a share, a year earlier. The operating earnings per share were 4 cents short of analysts' average forecast, according to Thomson Financial.

"We are driving profitable growth in the competitive auto insurance business, while mitigating our exposure to mega-catastrophes in higher-risk geographic areas," said President and CEO Thomas Wilson in a statement. "While operating income declined due largely to increased reinsurance and catastrophe costs, the underlying run-rate of our business continues in line with our expectations."

Allstate's revenue for the period rose 6.5% to $9.46 billion from $8.88 billion.

The company's property-liability premiums written fell 1.9%, which Allstate said reflected the increased cost of catastrophe reinsurance. The cost of its catastrophe reinsurance program in the quarter more than doubled to $231 million from $114 million a year earlier.

Allstate brand standard auto premiums written grew 2.1%. Homeowners premiums written declined 4.8%.

At Allstate Financial, net income surged to $200 million in the quarter from $73 million a year earlier.

Shares of Allstate were down 74 cents, or 1.2%, to $59.82 in after-hours trading.