Allstate CEO: We may raise residential rates

Allstate Corp., the largest publicly traded U.S. home insurer, may raise prices after a first-quarter underwriting loss on residential coverage.

"We have work to do," in the unit that protects homes and apartments, Chief Executive Officer Tom Wilson said in a conference call with analysts today. "Our homeowners business is not performing the way we'd like it to be."

The insurer spent about $1.07 for every dollar it collected in residential premiums for its Allstate-branded home coverage in the first quarter because of an increase in claims costs tied to storms on the East Coast, the company said yesterday.

Wilson is seeking to improve results at Northbrook-based Allstate's home and life businesses and reverse investment losses to match results at the profitable auto insurance operation, which provides about two-thirds of revenue. The auto unit is facing pressure amid the recession as drivers pare back coverage and the firm pays claims for clients involved in accidents with the growing number of uninsured motorists.

"We're not happy with the performance that we have with the homeowner line," said George Ruebenson, the president of Allstate's property and casualty business. "We're taking a harder look," he said. "Which, as you could probably read between the lines, means more rates in that line."

Allstate fell $2.65, or 9.6 percent, to $24.95 at 11:36 a.m. in New York Stock Exchange composite trading. The company has dropped 24 percent this year, compared with the 6.7 percent decline in the 21-stock Standard & Poor's 500 Insurance Index.

Life Insurance

The insurer yesterday posted its third-straight loss on investment writedowns and declines in private equity and hedge fund holdings. Allstate set aside $224 million at its life insurance unit after stock declines raised the cost of meeting obligations to customers that have been promised minimum returns on retirement products.

First-quarter profit before investment losses was 84 cents a share, missing the $1.25 estimate of 14 analysts surveyed by Bloomberg.