Allstate Corp. on Thursday became the latest insurance company to boost its estimated losses from the Northridge earthquake, which is proving to be the most frustrating as well as the costliest quake in U.S. history.
The company raised its loss estimate from the January quake 37% to $1.3 billion, from $950 million.
Based on this estimate, Allstate, parent of Allstate Insurance Co., the nation’s largest publicly held property and casualty insurance firm, said its 1994 earnings will be cut by about $845 million after taxes.
Allstate said the revised losses will cut its third-quarter earnings by about $228 million.
The company still expects to make a profit in the quarter and in the year, helped by fewer auto insurance claims, expense reductions and annuity sales.
The increased estimate reflects extensive additional damage discovered as rebuilding efforts progress.
Rising costs associated with construction and new claims also contributed to the higher estimate. Total Allstate claims are now estimated at about 45,000.
“It has been difficult for Allstate and the industry to assess the magnitude of this quake because of its unusual and complex nature,” Allstate Chief Executive Jerry Choate said in a statement.
Allstate stock closed unchanged at $24.125 on the New York Stock Exchange.
Allstate is the fourth major insurer to raise its estimated losses in the past few weeks--almost nine months after claims adjusters began climbing through the rubble. These continuing financial aftershocks have prompted almost half of California’s property and casualty insurers to try to raise their prices on earthquake policies.
“Insurance companies haven’t seen any quake with the relative severity of this one,” said John Hall, an analyst with Northington Partners in Avon, Conn. “It’s pretty clear now that the earthquake policy prices may be a little low and they’ll be going up.”
The Jan. 17 quake was the nation’s costliest, with an estimated $7.2 billion in total insured damage for the entire insurance industry. Estimates of total damage, including non-insured property, range from $13 billion to $20 billion.
The quake was unusual because most of the ground motion was vertical rather than horizontal, causing buildings to be thrown off their foundations.