Wednesday February 7
Allstate Reports Better than Expected 2000 Fourth Quarter Results
NORTHBROOK, Ill. -- The Allstate Corporation has reported that operating income per diluted share for the fourth quarter of 2000 increased 51.9 percent to $.79 from $.52 in the fourth quarter of 1999. The growth was driven by increases in both the Property-Liability business and Allstate Financial.
"Both the quarter and the year 2000 were marked by successful execution of our key initiatives, particularly our multi-access strategy and our profit improvement actions," said Chairman, President and CEO Edward M. Liddy. "We had a tremendous year that was filled with accomplishments despite the many challenges we faced. Execution continues to be the key and we remain focused on implementing what we know is a solid business model."
Operating income increased 43.1 percent to $584 million in the fourth quarter of 2000, compared to $408 million in the fourth quarter of 1999. Before the impact of restructuring charges incurred in both 2000 and 1999, and acquisition charges incurred in the fourth quarter of 1999, operating income for the quarter increased 12.4 percent to $589 million ($.80 per diluted share) compared to $524 million ($.66 per diluted share) for the same period in 1999. This increase reflects earned premium growth in Allstate's Property-Liability business and Allstate Financial. Consolidated revenues for the fourth quarter were $7.2 billion, an increase of 3.0 percent from the 1999 fourth quarter revenue of $7.0 billion. Consolidated net income for the quarter was $547 million or $.74 per diluted share, compared to $425 million or $.54 per diluted share for the same period in 1999, reflecting increases in operating income, partly offset by realized capital losses.
For the year ended December 31, 2000, consolidated revenues were $29.1 billion, operating income was $2.0 billion ($2.68 per diluted share), and net income was $2.2 billion ($2.95 per diluted share), compared to consolidated revenues of $27.0 billion, operating income of $2.1 billion ($2.59 per diluted share), and net income of $2.7 billion ($3.38 per diluted share) in 1999. Catastrophe losses during 2000 totaled $629 million after tax, compared to $530 million after tax in the previous year. Realized capital gains during 2000 decreased to $248 million after-tax, compared to $691 million after-tax in 1999, due to changing market conditions during both years.
"We successfully launched our multi-access strategy in several more states in the quarter," continued Liddy. "The strategy continues to be on plan and on budget. About 40 percent of the U.S. population can now reach Allstate anytime, through our agents, customer information centers or the Internet.
"We continue to see positive results from our strategic initiatives to improve the profitability of our Property-Liability business. In the quarter, we had solid written premium growth for standard auto and homeowners versus the fourth quarter of the prior year. While overall written premium is lower for the quarter compared to the same period in 1999, the decline is largely due to planned profitability actions in our non-standard auto book of business."
Fourth quarter premiums written, excluding Encompass, increased 1.9 percent in the standard auto business due to increases in policies in force, increased 10.1 percent in the homeowners business due to increases in both policies in force and average premiums, and decreased 22.6 percent in non-standard auto due to planned actions implemented during 2000 aimed at improving profitability. Operating income, excluding the impacts of restructuring charges incurred in both 2000 and 1999 and acquisition charges incurred in 1999, increased 18.6 percent to $490 million in the fourth quarter of 2000, compared to $413 million in the same period of 1999. This increase reflects increased net investment income and earned premium growth, partially offset by increased pressure on claims severity. The combined ratio for the quarter was 97.5. Excluding catastrophe losses and restructuring charges, the combined ratio was 95.1. Property-Liability realized capital losses were $3 million after-tax in the fourth quarter of 2000, compared to realized capital gains of $30 million after-tax for the same period in 1999. Net income was $482 million for the quarter, compared to $358 million for the same period in the previous year. Excluding the impacts of the acquisition of Encompass Insurance in the fourth quarter of 1999, Property-Liability written premiums totaled $4.8 billion during the fourth quarter of 2000 comparable to $4.9 billion during the same period of 1999, due to growth in standard auto and homeowners, offset by planned profitability actions in non-standard auto.
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