Allstate offshoring strategy to automatic coverage since Katrina harvest the financial dividend
CHICAGO - if a number of Killer hurricanes walloped the Gulf Coast in 2005, Allstate Corp. will cost a record quarterly loss of 1.55 billion dollars, the company tent, make sure that his bottom line never been as hard hit .
The nation’s most personal securities publicly traded insurers to take advantage of new aggressive from areas vulnerable to storms expensive. He did not have many owners renovate the house. “It has considerably increased its own insurance or reinsurance.
Two years later, despite the continuing risk of consumers and regulation Backlash, the strategy pays off: Allstate, reports profit in the third quarter, Wednesday, at a record pace to exceed last annual profit of $ 5 billion .
Not only the company has reduced its exposure to catastrophic events, it is calculated under an abandoned homeowners risky “in the affairs of the self increasingly profitable. Motor insurance now represents 67 per cent of the property-liability and premiums of more than two times higher than the income homeowners.
“Allstate has a long way to go in more and more sophisticated in understanding the risks that underwrites, and it was very, very good financial results, given that,” said Donald Light, an analyst research and advisory Celent companies. “They highlighted a management judgement that the pieces they take, Public Relations-wise, to isolate the impact of losses.”
Critics have been harsh.
The Consumer Federation of America, said the Northbrook, Ill. promotes businesses based on investors to the detriment of consumers and price gouging. Senator Trent Lott, R-Miss., On several occasions attacked Allstate and other major insurers of what it claims, since the negligence “Katrina” and even prosecuted for farm debts of the State as regards finally resolution of the appeal. It grows to crack down on the industry through various legislative initiatives.
It’s OK for a win, but they are extracting man, “said J. Robert Hunter, consumption in the insurance business operating on the scene.” Why are they so reluctant to face risk? If it is not to take risks, what we need for insurance companies? ”
Allstate fell by an executive available for this story, citing a quiet period before publication of its merits. But the company has been very publicly, if not Blunt, about his intentions.
Less than two months after Hurricane Katrina devastated the coasts of Louisiana and Mississippi and four weeks after Rita impressed along the Texas-Louisiana border, Allstate said the leaders of analysts over $ 3 billion catastrophe losses in the third quarter of 2005 were unacceptable.
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