In a conference call this morning, company chairman Edward Liddy made much the same point when he said he did not see the wholesale price-cutting evident in the previous soft market at the end of the last decade.

Rather, he said, increased advertising efforts from those companies who can afford the kind of purchases required to make a difference are becoming the norm to gain advantage today.

Bear Stearns analyst David Small said a continued decline in auto accident frequency, along with Allstate's ability to attract higher-end customers, helped drive better than expected auto profits, which rose 23 percent.

The company's premium “Your Choice Auto Program” performed better than anyone had expected, Mr. Small said, driving policies in force and premium per policy figures up 2.8 percent and 1.2 percent, respectively.

“In our view, this result again highlights the fact that Allstate has successfully differentiated itself from competitors, who appear complacent in lowering price to chase growth,” Mr. Small wrote.

Bank of America securities analyst Brian Meredith noted two-thirds of newly issued applications for standard auto are Your Choice Auto policies, and half of those are for the higher priced premium options.

But, Mr. Meredith saw a cloud on the auto insurance horizon with an increase in claim severity that led the spread between auto pricing and loss costs to turn modestly negative to minus 0.1 versus a positive 2.8 points in the previous quarter.

In addition, the trend was evident in the industry overall in March, he wrote in a separate report.

Allstate's new catastrophe management program of cutting back exposure in storm-prone areas has had the effect of cutting back new auto applications in those states with the exception of Florida, where such applications rose 31 percent, the company noted.