Allstate profit beats, says under no pressure to hike rates


* 3rd-quarter operating earnings $1.53/share vs est. $1.39

* Catastrophe losses fall 37 percent to $128 million

By Aman Shah

Oct 30 (Reuters) - Allstate Corp, the largestpublicly traded home and auto insurer in the United States,reported a higher-than-expected quarterly operating profit asfewer natural disasters helped it earn more premiums.

The company, which has been aggressively raising rates inits homeowners businesses to offset higher catastrophe lossesand low interest rates on its investments, said on Wednesday itdid not see the need for dramatic rate hikes.

"We don't have a lot of need to raise our pricesdramatically from here, assuming the weather remains the same,"Chief Executive Thomas Wilson told Reuters.

Losses from natural disasters such as tornados, hurricanesand floods fell 37 percent to $128 million in the third quarter.Insurers find it difficult to forecast these losses due to theirunexpected nature.

Wilson said that the company had raised premium rates at anaverage of about 4.5 percent over the last four months in thehomeowners business, lower than levels in the past few years.

The company was also able to write more premiums in its autoinsurance division, in which it faces increasing competition.

Allstate brand standard auto policies in force rose overboth the prior year quarter and the last quarter, the companysaid in an earnings presentation.

"Investors will appreciate the continued sequentialimprovement in Allstate brand policies in force," MacquarieEquities Research analyst Amit Kumar said in an email.

Wilson said he expected price increases in the autoinsurance division to be 'relatively benign' as decliningfrequency in claims linked to safer cars and drivers would notpressure the prices to go higher.


Allstate's net income fell 57 percent to $310 million, or 66cents per share, in the third quarter as it took an estimated$475 million after-tax loss on the sale of Lincoln Benefit LifeCo.

The company said in July it would sell the business toResolution Life Holdings for $600 million.

Allstate will be able to free up about $1 billion in capitalafter the sale, which is expected to close around the end ofthis year or in the beginning of next year, CEO Wilson said.

On an operating basis, Allstate reported earnings of $1.53cents per share, easily surpassing the average analyst estimateof $1.39 per share, according to Thomson Reuters I/B/E/S.

Total property-liability insurance premiums rose 4 percentto $6.97 billion.

The Allstate brand homeowners business recorded a combinedratio of 65.3, a 7.6 point improvement, boosted by rateincreases and a decline in disasters.

An insurer's combined ratio is the percentage of premiumrevenue the company has to pay out in claims. A ratio of under100 indicates an underwriting profit.

The company's shares, which have gained about a third oftheir value this year, closed at $52.96 on the New York StockExchange on Wednesday.

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