Allstate Quarterly Profit Up Sevenfold on Rate Increases

Allstate Corp., the second-biggest U.S. auto and home insurer, said Tuesday that first-quarter profit rose sevenfold on rate increases.

Net income climbed to $665 million, or 94 cents a share, from $95 million, or 14 cents, in the same quarter a year ago, the company said. The 2002 number included a $331-million expense to write down the value of companies Allstate purchased in the late 1990s.

Chief Executive Edward Liddy has bolstered profit by raising premiums faster than his rivals and dropping clients that generate the most claims.

Some investors are concerned the company is losing ground to auto insurers such as Progressive Corp. and Geico Corp. that sell policies more cheaply via the Internet and by phone.

“They are focused on increasing profit per customer,” said William Cohen, who helps oversee about $5 billion at Equinox Capital Management, including 3 million Allstate shares. “The question is, will they lose market share?”

Allstate said it expected earnings from operations, which exclude investment losses and other items, to be $3.35 to $3.50 a share this year, an increase from its previous forecast of $3.20 to $3.40 a share.

Earnings from operations in the first quarter rose to $673 million, or 95 cents a share, compared with 78 cents expected by a Thomson First Call analyst survey.

Allstate, which sells most auto and home policies through its 12,300 agents, continues to benefit from price increases that regulators approved last year. The company’s stock has fallen nearly 3% this year, in part on concern that the pace of rate increases is slowing.

Allstate shares dipped 5 cents to $35.94 on the New York Stock Exchange.