But Allstate said improved investment results and profit in its auto insurance segment helped offset some of the increased storm losses. Its net income was $165 million, or 32 cents per share, compared with $367 million, or 68 cents per share, a year ago.
The Northbrook, Ill.-based property and casualty insurer said its revenue rose 4.2 percent to $8.24 billion from $7.91 billion a year ago.
The company’s adjusted operating income, which excludes capital gains and unusual items, was $84 million, or 16 cents per share, compared with $452 million, or 83 cents per share a year ago.
Analysts surveyed by FactSet expected 8 cents per share on revenue of $7.99 billion.
Before Monday’s earnings, Allstate disclosed third-quarter pre-tax catastrophe losses of $1.08 billion, up significantly from the $386 million reported in the 2010 third quarter.
The company saw a significant improvement in its investments, seeing a gain of $264 million from capital gains compared with a loss of $144 million a year ago.
The company said it increased premium rates for home owners to help offset higher claims from violent storms. It also discontinued insurance coverage for homes that it believes are too risky to insure, CEO Thomas Wilson said in an interview.
Home insurance premiums are up about 5 percent compared with a year ago and there are about 4 percent fewer policies in force.
Auto premiums were increased about 1 percent on average from a year ago, Wilson said.
Overall, premiums written fell to $6.43 billion from $6.50 billion.
Allstate’s combined ratio was 104.8, reflecting the storm-related losses of $1.1 billion, which affected the ratio by 16.7 points. A ratio above 100 means that for every premium dollar taken in, more than a dollar went to cover claims and expenses. A figure below 100 means the company made a profit on its insurance operations.
Allstate said it experienced 23 catastrophe loss events, including Hurricane Irene and Tropical Storm Lee.
Excluding catastrophe losses and prior year reserve re-estimates, the combined ratio was 89.2 during the third quarter, consistent with the third quarter of 2010.
Shares fell 82 cents, or 3 percent, to close at $26.34 before the company reported results. In after-market trading shares rose $1.12, or 4.25 percent.
Shares are off 17.4 percent so far this year. They’ve traded as high as $34.40 in the past 52 weeks.
Allstate repurchased shares valued at $308 million in the quarter, completing a $1 billion share repurchase ahead of schedule, Wilson said.
It also completed on Oct. 1 the $1 billion acquisition of Esurance and Answer Financial from White Mountains Insurance Group. Esurance offers auto insurance direct to consumers online and through agents. While Answer Financial offers online price comparisons among insurance carriers for consumers.
Wilson said the companies offer a good growth market.
“This gives us the ability to leverage our insurance skills to different consumer groups to give them exactly what they want,” he said.