Posted on 29 Oct 2010
Shares sharply lowered on Thursday as quarterly results from insurers including Allstate Corp., Aspen Insurance Holdings and PMI Group disappointed investors.
Allstate said late Wednesday that third-quarter operating profit was $452 million, or 83 cents a share. That was down 16% from the year-earlier period. Allstate was expected to make 95 cents a share, according to the average estimate of 19 analysts in a FactSet Research survey.
“Allstate did it again: missing earnings estimates in a light catastrophe quarter,” Bijan Moazami, an insurance analyst at FBR Capital Markets, wrote in a note to investors Thursday.
Allstate has missed profit estimates in seven of the past nine quarters, despite improving pricing and better overall conditions in the personal lines insurance market, Moazami noted.
The analyst took Allstate stock off FBR’s Top Picks list and lowered the price target to $43 from $48.
“The company is becoming more competitive on pricing in the auto segment, and it is spending more on advertising. Yet it has nothing to show for it,” Moazami wrote.
Net premiums written by Allstate’s main property-liability business fell 0.6% in the third quarter of 2010 compared to the prior-year quarter. Allstate brand growth of 0.2% was more than offset by a 16.7% decline in the Encompass brand, reflecting actions to improve profitability, Allstate said.
Allstate shares fell 6.6% to $30.34 in afternoon action Thursday.
Aspen Insurance /quotes/comstock/13*!ahl/quotes/nls/ahl (AHL 28.57, -2.92, -9.27%) said late Wednesday that third-quarter operating profit came in at $69.7 million, or 79 cents a share, down 45% from the year-earlier period.
The company was expected to make $1.04 a share, according to the average estimate of analysts polled by FactSet Research.
Gross written premiums dropped 15% to $415.8 million in the quarter, with the decline coming mainly from Aspen’s reinsurance business.
Market conditions remain highly challenging; in these circumstances our underwriters are hard at work in identifying those few segments where good profits are available and increasing our exposure to them,” Aspen Chief Executive Chris O’Kane said in a statement.
“Elsewhere, it is a question of cutting back top line volume, rigorous risk selection and maintaining a very defensive underwriting posture,” he added.
Aspen shares dropped 8.4% to $28.86 in afternoon trading on Thursday.
Mortgage insurer PMI Group /quotes/comstock/13*!pmi/quotes/nls/pmi (PMI 3.32, -0.01, -0.30%) reported a third-quarter loss from continuing operations of $281.1 million, or $1.74 a share. Analysts were expecting a loss of 74 cents a share, according to a FactSet survey.
PMI said loss development in recent periods “has been more adverse than its expectations.” PMI shares slumped 16% to $3.45 in afternoon trading on Thursday.
Old Republic /quotes/comstock/13*!ori/quotes/nls/ori (ORI 13.01, +0.01, +0.10%) reported a third-quarter operating loss of $41.4 million, or 17 cents a share. Analysts expected a loss of 10 cents a share, according to a FactSet poll.
Old Republic said it’s title insurance business was profitable in the period, but the company’s general insurance and mortgage insurance units suffered from higher claim costs.
Old Republic shares fell 5.3% to $13.13 in afternoon trading on Thursday