NEW YORK, Jan 28 (Reuters) - Allstate Corp, the largest publicly traded U.S. home and auto insurer, posted a $1.1 billion quarterly loss on Wednesday on soured investments and higher-than-expected claims for storm damage, sending its shares down 10.6 percent.
Allstate cited 'unprecedented financial market deterioration' and losses from tornadoes and hurricanes that battered the United States in 2008.
The quarterly loss equaled $2.11 a share, and compared with a profit of $1.36 a share, or $760 million, in the year-earlier period.
Allstate also said it expects to cut about 1,000 jobs in its financial division, and is targeting savings of about 20 percent.
Allstate's quarterly loss reflected realized capital losses of $1.9 billion in the quarter -- more than half of which came from $652 million in writedowns on impaired investments and $448 million in losses on interest rate swaps in a financial unit portfolio.
Operating income, excluding some investment losses, was $518 million, or 97 cents a share, but widely missed the average analyst expectation of $1.35 a share.
The insurer had operating income of $701 million, or $1.24 a share, a year ago.
Chief Executive Tom Wilson told Reuters the company had already begun to cut jobs, with the elimination of some senior executive positions. The reductions, which will amount to about one-fifth of the unit's work force, will mostly come in 2009, he added.
The Northbrook, Illinois-based insurer said that despite the disappointing results, its capital position remained strong, and that the company was keeping a close eye on risk.
'We are not just saying 'Geez, this is the market,' he added.
He expected continued economic turbulence in 2009, and that fixed-income markets would continue to be difficult until liquidity increases.
Allstate, like most other insurers, invests mostly in this market.
In the last 12 months, its shares have fallen by nearly one-half, compared with a roughly 60 percent decline in the Standard & Poor's insurance index.
The index includes American International Group Inc , whose shares have lost nearly all their value. The government took an 80 percent stake in exchange for a $150 billion rescue.
In aftermarket trading, Allstate shares fell more than 11 percent to $26.49, after rising nearly 9 percent to $29.64 in the regular New York Stock Exchange session.
(Reporting by Lilla Zuill; editing by Jeffrey Benkoe)
((lilla.zuill@thomsonreuters.com;+1 646 223 6281)) Keywords: ALLSTATE/ (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Allstate cited 'unprecedented financial market deterioration' and losses from tornadoes and hurricanes that battered the United States in 2008.
The quarterly loss equaled $2.11 a share, and compared with a profit of $1.36 a share, or $760 million, in the year-earlier period.
Allstate also said it expects to cut about 1,000 jobs in its financial division, and is targeting savings of about 20 percent.
Allstate's quarterly loss reflected realized capital losses of $1.9 billion in the quarter -- more than half of which came from $652 million in writedowns on impaired investments and $448 million in losses on interest rate swaps in a financial unit portfolio.
Operating income, excluding some investment losses, was $518 million, or 97 cents a share, but widely missed the average analyst expectation of $1.35 a share.
The insurer had operating income of $701 million, or $1.24 a share, a year ago.
Chief Executive Tom Wilson told Reuters the company had already begun to cut jobs, with the elimination of some senior executive positions. The reductions, which will amount to about one-fifth of the unit's work force, will mostly come in 2009, he added.
The Northbrook, Illinois-based insurer said that despite the disappointing results, its capital position remained strong, and that the company was keeping a close eye on risk.
'We are not just saying 'Geez, this is the market,' he added.
He expected continued economic turbulence in 2009, and that fixed-income markets would continue to be difficult until liquidity increases.
Allstate, like most other insurers, invests mostly in this market.
In the last 12 months, its shares have fallen by nearly one-half, compared with a roughly 60 percent decline in the Standard & Poor's insurance index.
The index includes American International Group Inc , whose shares have lost nearly all their value. The government took an 80 percent stake in exchange for a $150 billion rescue.
In aftermarket trading, Allstate shares fell more than 11 percent to $26.49, after rising nearly 9 percent to $29.64 in the regular New York Stock Exchange session.
(Reporting by Lilla Zuill; editing by Jeffrey Benkoe)
((lilla.zuill@thomsonreuters.com;+1 646 223 6281)) Keywords: ALLSTATE/ (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.