Allstate profit at $4.6 billion in 2007

Allstate Corp., the nation's second-largest property and casualty insurer, reported a 37 percent decline in fourth-quarter profit Tuesday as the Southern California wildfires and other costs cut into its bottom line.

The higher costs prevented the company from topping the prior year's record earnings, although more than $4.6 billion in income still made 2007 its second-best year ever.

Net income for the last three months of the year was $760 million, or $1.36 per share, compared with $1.21 billion, or $1.93 per share, in the fourth quarter of 2006.

Revenues declined 1 percent to $8.99 billion from $9.1 billion a year earlier.

Analysts polled by Thomson Financial had forecast fourth-quarter profit of $1.32 per share on revenue of $8.86 billion.

The Northbrook-based company's catastrophe losses for the quarter rose to $472 million from $279 million a year earlier. The insurer said the bulk of its elevated costs resulted from $318 million in catastrophe losses related to the Southern California wildfires in October.

Costs also soared in other areas. The property-liability combined ratio, which measures the amount of each premium dollar spent on losses and expenses, rose to 96 percent from 86 percent a year earlier. Allstate attributed the jump to prior-year reserve re-estimates, higher catastrophe losses and more loss costs.

The company also said fourth-quarter expenses increased on advertising, marketing and technology investments.

Chief Executive Thomas Wilson said Allstate "delivered strong results in the fourth quarter despite increased catastrophe losses and tumultuous investment markets."