The Allstate Corporation
(
ALL
) has announced that its pre-tax current accident year catastrophe
(CAT) loss for the month of June is estimated to be $440 million.
It also expects CAT losses of $820 million for the second quarter
of 2012, which is considerably lower than $2.34 billion recorded in
the year-ago quarter.
CAT loss estimates for the second quarter are based on losses
incurred due to 30 catastrophes. The estimated cost for the same is
$960 million. However, Allstate is looking ahead to certain
re-estimates that will neutralize the negative impact of these
estimated CAT losses.
The company reported CAT losses of $259 million in the first
quarter of the current year, plunging 22.2% from $333 million in
the year-ago period. The decline led to improvements in combined
ratio and book value. In addition, the company announced its
pre-tax CAT loss estimates for April 2012 in May, which is expected
to be about $280 million including the effect of about 10 natural
disasters.
Escalating losses from catastrophes have been weighing on the
company's claims and benefits expenses for quite some time now. It
has led to a significant decline in Allstate's combined ratio,
bottom-line and cash flows.
The company is focused on reducing losses through its
catastrophe management strategy. Management expects to
maintain the profitability of the auto business and improve
homeowners' profitability, resulting in an underlying combined
ratio outlook of 88% to 91% for 2012.
In addition to Allstate, other insurers including
Hartford Financial Services Inc.
(
HIG
) and
Cincinnati Financial Corp.
(
CINF
) recently revealed their estimated CAT losses.
Allstate Corporation is scheduled to release its second quarter
results after the closing bell on July 31. The Zacks Consensus
Estimate for the second quarter earnings is currently pegged at 84
cents per share, representing an estimated year-over-year increase
of 168.3%.
Allstate currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we are
maintaining our long-term Neutral recommendation on the stock.
ALLSTATE CORP (ALL): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis
Report
HARTFORD FIN SV (HIG): Free Stock Analysis
Report
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