July 19, 2007 / 4:26 PM / 12 years ago

UPDATE 1-Allstate comfortable with subprime investments

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By Tim McLaughlin

NEW YORK, July 19 (Reuters) - Allstate Corp. (ALL.N) said on Thursday it is comfortable with holding about $4.8 billion in bonds backed by risky subprime loans.

Shares of Allstate fell as much as 2.4 percent after the company discussed its subprime holdings during a conference call with analysts and investors Thursday.

On Wednesday, the largest publicly traded home insurer in the United States reported lower-than-expected profit, blaming a decline in homeowner premiums.

Allstate executives said they expect continued downward pressure on the market value of subprime-related securities. Meanwhile, the company said it reduced its exposure to more speculative grade mortgage-backed bonds several years ago.

The insurer said it does not own any of the bonds recently targeted for downgrades by U.S. credit ratings agencies. Most of Allstate’s portfolio carries the highest triple-A rating, the company said.

Allstate executives said they intend to ride out the current turmoil in the credit markets and eventually make money on Allstate’s subprime-related investments.

Allstate reported that it held $7.92 billion in mortgage-backed securities at the end of 2006, part of a $98.3 billion portfolio of fixed-income investments. Most of those holdings had collateral backed by U.S. government agencies and sponsors, the company said in its annual report. (Reporting by Tim McLaughlin, editing by Gerald E. McCormick/Jeffrey Benkoe)

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