Associated Press | Property and casualty insurer Allstate Corp.
said Wednesday it was profitable in the fourth-quarter, reversing a
steep year-ago loss, as it staunched hemorrhaging in its investment
portfolio.

For the final three months of last year, the company based in
Northbrook, earned $518 million, or 96 cents per share. That compares
with a loss of $1.13 billion, or $2.10 per share, in the fourth quarter
of 2008.

Operating income, which excludes investment gains and losses, rose 14
percent to $592 million, or $1.09 per share, versus a profit of $518
million, or 96 cents per share, a year ago.

Total revenues for the most recent quarter were $8.06 billion, an increase of nearly 23 percent from the fourth quarter of 2008.

Results exceeded Wall Street’s expectations for earnings of $1.01 per share, according to a poll by Thomson Reuters. Analysts typically exclude investment gains and losses from their estimates.

Allstate’s shares closed Wednesday down 13 cents at $28.60.

The insurer’s net investment income declined 19 percent to $1.08 billion.

Net realized capital losses for the period, before taxes, totaled $33 million, and included $270 million of impairment write-downs and $215 million of write-downs related to the intent to sell securities that primarily have commercial real estate exposure.

A year-ago the company recorded net realized losses of $1.93 billion.

“I can’t say that was all us, because the markets are substantially better,” said Tom Wilson, Allstate’s chairman, president and chief executive, in an interview with The Associated Press. A proactive approach to risk management, also helped improved the value of Allstate’s investment portfolio, Wilson added.

Catastrophe losses in the quarter totaled $328 million, up 26 percent from the year-ago period. They included losses of $210 million from 13 events during the October to December period, and $148 million related to re-estimates of events during the first nine months of 2009.

The company’s financial arm, Allstate Financial, saw operating income increase nearly 7 percent during the fourth quarter to $95 million from $89 million. Allstate said it continues to reduce expenses in the unit.

Also in the most recent quarter, property and liability premiums written slipped 0.4 percent to $6.28 billion.

Allstate’s combined ratio for the quarter fell slightly to 93.2 percent from 96.4 percent in the same period in 2008.

Combined ratios measure the amount of money insurers pay out in claims and expenses compared with how much they receive from writing new business. A ratio above 100 means the insurer pays out more in claims and expenses than it takes in from writing new premiums.

For the full year, Allstate earned $854 million, or $1.58 per share, compared with a net loss of $1.68 billion, or $3.06 per share, in 2008. The company’s combined ratio stood at 96.2 percent, down from 99.4 percent in 2008. Excluding the effects of catastrophes, Allstate estimates a combined ratio of between 88 percent and 90 percent in 2010.

At year end, Allstate held $14.9 billion in capital, compared to a statutory surplus of $13 billion at the end of 2008.

“We had enough capital going into the year and we came out stronger at the end of the year,” Wilson said.

When asked about potential acquisitions, Wilson said his company is always looking at things to buy.

“We don’t think we need to buy anything to grow our businesses,” he said. “If something is priced well, and we think it’s a good fit for us, we’ll buy it.”