Allstate Income Off; CEO Positive
By Mark E. Ruquet
NU Online News Service, April 17, 12:57 p.m. EST?Allstate insurance company reported a drop in net income for the first quarter over last year, but the company's head said performance is showing gradual improvement.
In its first-quarter report, ending March 31, released today, the Northbrook, Ill., insurer reported net income of $426 million for the first quarter of 2002 compared to $500 million for the first quarter of 2001, a drop of nearly 15 percent. Net income per share was off 8 cents, declining from 68 cents a share in 2001 to 60 cents a share for the first quarter of 2002.
Revenues in the first quarter increased a little more than 2 percent, going from $7.13 billion in the first quarter of 2001 to $7.3 billion for 2002.
Edward M. Liddy, Allstate's chairman, president and chief executive officer, said in a statement that the results are an improvement over previous quarters and confirmation of the company's strategy to transform itself into a "personal financial services company."
Mr. Liddy noted that the company benefited from a reduction in claims in personal lines due to mild weather and rate increases throughout the country. However, the company is still seeing cost pressures and increased reserves by $148 million after tax primarily to cover past claims in homeowner's coverage.
He said that generally while homeowners claim frequency is improving, the company is still seeing pressure, especially in mold damage claims in Texas.
Allstate reported its mold claims in Texas for the first quarter of 2002, totaling $119 million compared to the $7 million for the first quarter of 2001. The company's combined ratio was 99.2 for the first quarter of 2002 compared to 98 for 2001.
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