UPDATE 2-Allstate tops profit estimates, says rates close to sustainable
* 2nd-quarter oper earnings/share $1.12 vs est. $0.98
* Natural disaster losses down 21 percent
By Neha Dimri and Aman Shah
July 31 (Reuters) - Home and auto insurer Allstate Corp's quarterly profit handily beat analysts' estimates, and the company said it had raised prices close to a sustainable level in the last two years.
The largest publicly traded home and auto insurer in the United States has been raising rates in its homeowners business at an average of 8 percent over the last two years to offset higher disaster losses.
"There are certain locations where we're still raising prices where there are high catastrophes, but we're a lot closer to pricing sufficiency than we were even a year ago," Chief Executive Thomas Wilson told Reuters.
Losses from natural disasters such as tornados, hurricanes and floods fell 21 percent to $647 million in the second quarter. Insurers find it difficult to forecast these losses due to their unexpected nature.
"I still don't consider the overall (catastrophe) level quiet ... it's still relatively high as opposed to what it was four or five years ago," Wilson said.
Peer Travelers Cos Inc said last week it would cut jobs and reduce prices of auto insurance to battle increasing competition.
Wilson had said last quarter that he expected modest price increases in the auto insurance business.
"In terms of comparison between Travelers' comments and its impact on Allstate, the distribution channel is a bit different between the two so I am not sure one can draw a parallel," Macquarie Research analyst Amit Kumar said in a note to Reuters.
Allstate's net income rose 3 percent to $434 million, or 92 cents per share, from $423 million, or 86 cents per share, a year earlier.
The rise in profit was helped by strong premium growth across the company's businesses. Premiums earned rose 3 percent to $6.86 billion, while underwriting income doubled to $269 million.
On an operating basis, Allstate reported earnings of $1.12 cents per share.
Analysts on average had expected earnings of 98 cents per share, according to Thomson Reuters I/B/E/S.
The company said earlier this month it would sell one of its life insurance businesses, Lincoln Benefit Life Co, for $600 million as it looks to reduce its exposure to low interest rates in the sector.
Allstate shares, which last week touched their highest in more than five years, were marginally up at $51.15 in post-market trading, after closing at $50.98 on the New York Stock Exchange on Wednesday.