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Letter to the Editor
Thursday October 14
Allstate Warns Q3 Profits Below Expectations Due to Hurricanes
Allstate Corp., the Number 2 U.S. home and auto insurer, has warned that its third-quarter profits would fall well short of expectations due to more than $1 billion in hurricane-related payouts.Allstate now expects to earn net income of 9 cents in the third quarter and operating income of 8 cents per diluted share. It was anticipated that the company would earn 24 cents per share.
Allstate has just announced that it would make Florida homeowner insurance policies harder to obtain after four of the ten most costly hurricanes in U.S. history slammed into the state within a span of just six weeks, causing up to $23 billion in losses industry-wide throughout the hard-hit southeast.
Allstate said it now estimates it will post a $1.06 billion after-tax loss, or $1.53 per diluted share related to the catastrophic losses. The Florida Hurricane Catastrophe fund will reimburse the company's Florida subsidiaries for 90 percent of the qualifying personal line property losses in excess of an estimated combined retention of $312 million per storm. Allstate estimated its total catastrophic payouts for the third quarter are now $1.11 billion after tax, or $1.59 per share, the company said.
The Allstate warning is the most significant yet among major U.S. insurers grappling with hundreds of thousands of hurricane-related claims.
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