Shares of Allstate Corp. tumbled 9 percent Thursday after the insurer said a series of severe spring storms had resulted in about $340 million in catastrophe losses.
The estimated losses in April and May would set back quarterly earnings by 30 cents a share, the nation’s largest publicly held insurance company said.
Allstate shares fell $2.50 to $23 on the New York Stock Exchange.
“This has been an active storm season in terms of frequency, with no individual storm causing significant damage,” said Edward Liddy, Allstate’s chairman and chief executive.
With one month remaining in the second quarter, pretax catastrophe losses could exceed the $382 million posted in the first quarter of 2000, and has already overtaken the $276 million of catastrophe losses in the second quarter of 1999, the Northbrook-based company said.
The projected drop in earnings means Allstate is likely to miss analysts’ average second-quarter profit forecast of 66 cents a share, although analysts said that figure already factored in most of the losses. In the second quarter of 1999, which had lower catastrophe losses, Allstate reported 75 cents per share profit.
The storms hit Allstate harder than most of its rivals, with the company’s claims equaling 34 percent of the entire industry’s $1.01 billion catastrophe losses in April and May, well out of proportion with Allstate’s 12 percent to 13 percent share of the U.S. personal property insurance market.
The unusually high number of storms earlier in the year sent first-quarter earnings 27 percent below profits for the same period of 1999, despite higher premiums. The insurer’s bottom line also has been adversely affected by stiffening competition.
Allstate provides insurance for more than 14 million households.
