Allstate Corp. said Wednesday its third-quarter earnings plummeted 92 percent due to heavy insurance claims from the hurricanes that battered Florida and the Southeast.
Allstate, the second-largest U.S. property casualty insurer behind State Farm and the biggest in Florida, sustained $1.11 billion in total catastrophe losses for the quarter. More than 95 percent of it, or $1.06 billion, was from the four major storms, hurricanes Charley, Frances, Ivan and Jeanne.
As a result, net earnings for the July-through-September quarter were just $56 million, or 9 cents per share, down from $691 million, or 97 cents per share, a year earlier.
Operating income was 8 cents a share, as Allstate disclosed a week ago in issuing preliminary earnings numbers. Until that announcement, analysts surveyed by Thomson First Call had expected earnings of 69 cents per share.
Revenues rose to $8.44 billion from $8.12 billion.
The storm-related losses also prompted Allstate to lower its forecast for full-year operating earnings by $1.25 per share to a range of $4.15 to $4.40, in keeping with last week's fourth-quarter warning. Analysts had estimated the company's 2004 operating earnings at $4.41 per share.
Allstate shares closed 14 cents lower at $46.34 on the New York Stock Exchange before the report was released, and are up 8 percent in 2004. In extended-hours trading, they traded 33 cents lower.
Chairman and chief executive Edward Liddy called it "an exceptionally difficult quarter," particularly for Allstate's customers, but he said the company remains in strong shape.
"Despite catastrophe losses in the quarter that are nearly four times our expected average, our business and the execution of our strategy continues to be healthy and strong," he said.
The Northbrook, Ill.-based insurer said it received $172 million in reimbursements from Florida's hurricane catastrophe fund, which helps insurance companies pay for major disasters.
Catastrophes are defined as events generating more than $1 million in claims to a company.
Through the first nine months of 2004, net earnings were $2.04 billion, or $2.90 a share, up from $1.94 billion, or $2.75 a share. Revenues increased to $25.1 billion from $23.9 billion.