Allstate

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turned in a hefty third-quarter loss -- substantially worse than Wall Street's expectation -- after the Gulf Coast hurricanes slammed the insurer with more than $3 billion in catastrophe losses.

As a result, the company slashed its full-year earnings forecast by more than half.

Allstate posted a third-quarter loss of $1.55 billion, or $2.36 a share, compared with a year-earlier profit of $56 million, or 9 cents a share. Catastrophe losses nearly tripled to $3.06 billion, cutting EPS by $4.67, as Hurricane Katrina alone contributed $2.39 billion to the damage.

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The company reported an operating loss, which exclude investment gains, of $1.65 billion, or $2.52 a share. Analysts expected an operating loss of 68 cents a share, according to Thomson First Call.

"For Allstate, pre-tax catastrophe losses, including claims from Hurricanes Katrina, Rita, Dennis and Ophelia, were more than $4.7 billion net of reinsurance in the quarter," said Edward Liddy, chairman and chief executive, in a statement. "This represents nearly a ten-fold increase from what we would normally expect in catastrophe losses in a quarter."

The insurer's revenue rose to $8.94 billion from $8.44 billion a year earlier, missing analysts' mean estimate of $9.4 billion. The company attributed the top line growth to higher property-liability premiums earned, investment income and capital gains, partially offset by lower life and annuity premiums and contract charges.

For 2005, Allstate cut its operating earnings forecast to $2.35 to $2.50 a share from its July projection of $6 to $6.40, citing the huge third-quarter catastrophe losses. Analysts had predicted full-year earnings of $4.34 a share.

Allstate shares gained 60 cents, or 1.1%, to $55 in after-hours trading.