Mr. Liddy commented that, "When a market leader steps aside, the action "clearly creates an opportunity for profitable growth, but one that must be approached with discipline and care.

Allstate management reported $344 million in second-quarter net income last week, but as the second largest personal auto writer, said its net premium written growth came in at only 5.5 percent for the company overall.

Analysts repeatedly asked Mr. Liddy how he intended to take advantage of State Farm's action to restrict writings in more than 25 states, with Progressive hot on the trail of State Farm's leftovers. (Progressive reported premium growth of 29 percent for the quarter.)

"The State Farm customer looks and feels a lot like the Allstate customer," Mr. Liddy asserted, suggesting that the "first stopping point" for a former State Farm customer would not be Progressive or some other competitor.

In addition, he said, Progressive does not offer homeowners and many people want "a one-stop shop."

Mr. Liddy said Allstate plans to focus on the bottom line, rather than the top line, cautioning analysts to do the same. "We are anxious to take as much of State Farm's business as we can, but we only want the good stuff," he said, noting that Allstate wants business that it won't incur large losses on and "the stuff we can sell multiple products to."

Citing New Jersey as an example of a state where the combination of State Farm's actions to shed business and Allstate's strategy of risk management has worked to its advantage, he said that Allstate was losing $150 million in underwriting income per year there just a few years ago. Now, he reports the company's combined ratio in the state is "well below 100."

"Today in New Jersey, we are growing and taking market share from State Farm. But we've also pulled all underwriting authority away from our agents in New Jersey and we're double-underwriting everything we get," he said.

"What we want is continually increasing earnings, not earnings that spike up because we have increasing [policies-in-force] and then two years from now, we have to increase reserves because the business result was not good."

During the second quarter, Allstate reported a 100.4 combined ratio, compared to 106.3 in last year's second quarter, with lower catastrophe losses contributing to the improvement. In last year's second quarter, catastrophe losses added 9.8 points to the combined ratio, compared to only five points in second-quarter 2002.

During the conference call, Mr. Liddy also reported that the mold claim frequency trends in Texas are no longer accelerating and that Allstate did not see any evidence of the mold issue that has plagued its homeowners results in recent quarters spreading to other states.