* 4th-qtr operating profit $1.70/share vs est $1.38
* Losses from natural disasters fall 90 pct
* CEO says no need for large insurance rate hikes
* Shares up 2 percent after the bell
By Aman Shah
Feb 5 Allstate Corp aims to grow its
share of the U.S. home and auto insurance markets without the
need for "abnormally large" rate increases, its CEO said, after
the company's profit more than doubled in the fourth quarter.
Shares of Allstate, the largest publicly traded home and
auto insurer in the United States, rose 2 percent after the bell
The company, which posted a better-than-expected quarterly
profit, has increased insurance premiums aggressively in the
last few years without any significant loss to its share of the
highly competitive home and auto insurance markets.
This has allowed Allstate to compensate for uncertain
catastrophe losses and low interest rates on its investments.
Catastrophe losses fell sharply in the fourth quarter ended
Dec. 31. This, along with higher premiums across all of its
businesses, helped Allstate to race past Wall Street estimates
for the period.
With premiums already high after a series of "dramatic"
price increases, Allstate would focus this year on attracting
customers to boost its market share, Chief Executive Thomas
Wilson told Reuters.
"We do not expect to have to be taking abnormally large
price increases in the homeowners business," he said.
In the fourth quarter, Allstate's home insurance business
benefited from the decline in catastrophe losses to record a
combined ratio of 66.6 - an improvement of 27.3 points over the
corresponding year-earlier quarter.
An insurer's combined ratio is the percentage of premium
revenue that the company must pay out in claims.
The fourth quarter of 2012 included $1.12 billion in losses
from superstorm Sandy. Losses from natural disasters fell almost
90 percent to $117 million for the fourth quarter of 2013.
Wilson said it would be desirable for Allstate to maintain
its underlying combined ratio in the homeowners business in the
GROWTH IN AUTOS
In the auto business, Allstate's existing policies rose
versus both the previous quarter and the year-earlier quarter
for the second reporting period in succession.
The growth in auto policies, aided by strong increases in
new issued applications and solid retention, would likely
suggest acceleration of policy growth in 2014, UBS Investment
Research analyst Brian Meredith wrote in a note to clients.
Meredith has a "neutral" rating on the stock.
Allstate's share of the U.S. auto insurance market in 2012
was about 10 percent, only slightly lower than it was in 2011,
according to data from regulatory body the National Association
of Insurance Commissioners.
Wilson said the company, flush with about $1 billion in
excess capital from the sale of its Lincoln Benefit Life unit
last year, would look to return capital to shareholders and fund
He said the board would decide in the next two months how to
deploy this cash. Share buybacks and dividend payouts were among
the options being considered, he said.
Allstate posted fourth-quarter net income of $810 million,
or $1.76 per share.
On an operating basis, the company earned $1.70 per share,
easily beating the average analyst estimate of $1.38 per share,
according to Thomson Reuters I/B/E/S.
Shares of the company, which have fallen more than 8 percent
this year, closed at $49.55 on Wednesday on the New York Stock