Allstate strikes it rich with post-Katrina strategy

Associated Press

CHICAGO (AP) — When a series of killer hurricanes walloped the Gulf Coast in 2005, Allstate tried to make sure it never again would see a quarterly loss as large as that $1.5 billion setback.

The Northbrook-based insurer pulled back aggressively from areas susceptible to expensive storms. It did not renew many homeowners' policies. And it dramatically increased its own insurance, or reinsurance.

Two years later, despite the continuing risk of a consumer and regulatory backlash, the strategy is paying off big despite substantial consumer criticism. Allstate is on a pace to exceed last year's record annual profit of $5 billion as it gets set to report third-quarter results on Wednesday.

The shift has made Allstate more an auto insurer. Automobile insurance now accounts for more than double its revenue from homeowners.

WTSP-TV (CBS, Tampa Bay/St. Petersburg) originally published here on October 15, 2007.


(Copyright 2007 by The Associated Press. All Rights Reserved.)

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