Regardless of tornado losses, Allstate posts better results than predicted

Allstate Insurance NewsThe largest publicly traded American home and auto insurance company, Allstate Corp., has posted its losses for the second quarter, following catastrophe expenses that broke insurance industry records; but its results weren’t as bad as had been predicted.

Allstate’s catastrophe losses reached $2.34 billion, making that quarter one of the worst in the entire history of the company. It had already been anticipating significant losses as a result of April and May’s tornado and severe weather activity in the United States.

That said, analysts had not anticipated the revenue to be as high as it was, even as the number of maintained homeowner and auto policies dropped when compared to those from 2010.

Allstate has admitted that it requires improvements in both types of policies, which necessitate increases in prices in some circumstances, as well as sacrificing the number of customers they build in the short term in favor of an improvement in their long term results.

It has concentrated most of its efforts on Florida and New York, two areas where profitability and growth have fallen behind as business has increased in other areas.

Edward Jones analyst, Tom Lewandowski, said that he anticipates that this will be an example of a turnaround over the long term. He explained that “There was a lot of pessimism priced in during the quarter. I’m not surprised to see an earnings beat here.”

The net loss reported by Allstate was $620 million, which translated to a drop in $1.19 per share. In 2010 at the same time, the company saw a $145 million profit, or an increase of $0.27 per share.

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