Catastrophes hit Allstate’s Q3 earnings

The Allstate Corporation has posted a Q3 net loss of US$923 million, compared to a profit of US$978 million in the same period of last year.Its property-liability combined ratio was 112.7% for the quarter, marking an increase from 2007 Q3’s 91.0%.Catastrophe losses for the quarter totalled US$1.8 billion (including losses from Hurricanes Ike and Gustav) compared to US$343 million in 2007 Q3, leading to an increase of 26.8 points in 2008 Q3’s combined ratio. Property-liability premiums written declined 1.5% in 2008 Q3 from 2007 Q3, an Allstate release says. Net realized capital losses for Q3 of US$1.3 billion on a pre-tax basis reduced net income by US$728 million, the release continues.Net unrealized losses, primarily reflecting depressed valuations from widening credit spreads, were US$4.1 billion as of Sept. 30, 2008. Gross unrealized losses as of Sept. 30 were US$6.3 billion, US$2.5 billion higher than June 30, 2008. “Given its current level of liquidity, the company intends and believes it has the ability to hold these assets to recovery and therefore does not anticipate significant conversion from unrealized to realized losses,” the statement says.