Allstate Q4 Profits Fall

Allstate Corp., the "good-hands" insurer, is having trouble wringing out bigger earnings amid stepped-up competition: fourth-quarter profits from operations fell 7.2 percent.

The auto, home and life insurer, one of the nation's biggest, said Wednesday it earned $641 million, or 78 cents a share, down from $691 million, or 80 cents, a year earlier. That matched consensus projections of analysts surveyed by First Call Corp.

Revenue edged up 2.2 percent to $6.45 billion from $6.31 billion. Yet the combined ratio for property-liability operations, excluding catastrophes, slipped to 89.7 from 90.5 in the 1997 fourth quarter. The combined ratio is a key measure of health for insurers.

Net income dropped to $706 million, or 93 cents a share, from $871 million, or $1.01 cents, a year earlier. Results were hampered in part by larger catastrophe losses, which shot up to $108 million in the latest quarter from $8 million a year ago.

"Allstate posted strong fourth quarter results despite the competitive sales environment and higher catastrophe losses as compared to unusually low losses experienced last year," said Edward M. Liddy, Allstate's chief executive, in a statement.

Shares (ALL) rose 3/4 to 36 1/16 in trading Wednesday morning.

On a longer term horizon, investors are worried about whether Allstate can get a better grip on the competition. Rivals have gone after its customers in part by cutting out the middle man - insurance agents -and offering cheaper rates, primarily on auto premiums. That's hampered Allstate's growth rate.

Still, Allstate insures one out of every eight autos and homes in the United States, so competitors have their work cut out for them.

To boost fundamental growth and appease shareholders, Allstate is considering various measures, including more acquisitions.

Written By Jeffry Bartash, CBS MarketWatch