Northbrook, Ill.-based Allstate Corp. reported a rough fourth quarter to end a tough year. During the latter stages of last year, the company’s pretax unrealized loss position grew from $4.1 billion to $8.8 billion, mostly due to significantly widening credit spreads in its fixed income securities. For the year, the insurer lost $3.07 per share, compared to net income of $7.77 per share in 2007.
As a result, the company said it would work on improving efficiency, and would trim 1,000 jobs through a combination of attrition and position elimination over the next two years.
“2008 was our second-highest year for catastrophe losses in the past decade, which added to investment losses and led to a net loss for the year,” Thomas Wilson, chairman, president and CEO of Allstate, said in a statement.
Indeed, catastrophe losses helped drag the company’s financial numbers down, amounting to $3.3 billion in 2008, compared to $1.4 billion in 2007. Yet the company credits its current reinsurance program with stemming further losses.
“Our catastrophe risk management program includes reinsurance, policy changes that increased deductibles and market share reductions in high-risk coastal regions. These actions served us well,” the company noted. “Allstate’s analysis shows that our losses from Hurricanes Ike and Gustav would have been approximately twice the amount recorded without the catastrophe exposure management actions put into place beginning in 2005.”
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