Allstate may resume share repurchases, Sandler says

Allstate Corp., the largest publicly traded U.S. home and auto insurer, and XL Group Plc may resume share repurchases after the Atlantic hurricane season, Sandler O'Neill & Partners LP analysts said.

The U.S. Climate Prediction Center forecast for the June- through-November hurricane period was scaled back on Aug. 5 to a range of 14 to 20 named storms, down from 14 to 23, on slower- than-expected activity in the first two months of the season.

Allstate halted its share repurchase program in 2008 as the insurer posted a net annual loss of $1.7 billion on investment writedowns and costs from Hurricanes Gustav and Ike. XL announced a $500 million repurchase plan in September of 2007, a year in which storm damage was less than forecast.

"Given the limited growth in the insurance business, accumulated capital likely translates to capital used for stock repurchases," said Paul Newsome, an analyst at Sandler O'Neill, in an interview after the release of today's report. "Insurers are traditionally more cautious with cash usage during the summer months because of possible weather-related losses."

Allstate declined 2.6 percent to $27.26 at 4 p.m. in New York Stock Exchange composite trading. The Northbrook-based company fell about 9.3 percent this year. XL slipped 2.7 percent to $17.68 and is down about 3.6 percent since Dec. 31.

"We've always had a track record of giving that money back to shareholders when we think the company no longer needs it," Chief Executive Officer Thomas Wilson said in a conference call on Aug. 5. "If we have a good use for the money, we'll put it to use. If we don't, we'll give it back. But at this point in the economic climate where we are this year, we feel like it's better to be long capital than to be right at the edge given that no one's really yet certain where this whole economy will move."

Maryellen Thielen, an Allstate spokeswoman, and Carol Parker Trott, a spokeswoman for XL, declined to comment.