ALL Allstate Corporation

Allstate Corp. said its fourth-quarter operating earnings fell 15% amid sharply higher catastrophe losses and elevated auto claims.

Operating earnings are a widely watched benchmark for the insurance industry because they exclude realized capital gains and losses from companies' investment portfolios, among other items that aren't considered recurring on a quarterly basis.

Allstate, one of the largest auto insurers in the U.S., has been among the insurers that has reported an increase in the number of auto claims in recent quarters as stronger economy has put more cars on the road, resulting in more accidents.

The company has been implementing plans to improve the performance of its auto segment, which includes raising prices, tightening underwriting standards and managing loss costs. Allstate is also among the insurers that is promoting plug-in devices and smartphone applications, as well as cutting deals to piggyback on auto makers' in-car computers.

In the latest quarter, Allstate brand auto losses remained elevated, continuing trends seen throughout 2015. Property damage frequency rose 7.5% and paid claim severities increased 4%.

Pretax catastrophe-related losses increased to $358 million from $95 million a year earlier.

Insurers earn a substantial portion of their income by investing customers' premiums until the money is needed to pay claims. Low interest rates have pressured insurers' profitability for many quarters, and analysts now also are paying close attention to companies' exposure to high-yield bonds and energy stocks that have suffered amid a slide in oil prices.

During the fourth quarter, Allstate reported realized capital losses of $250 million, compared with gains of $106 million a year earlier. Also in the latest period, investment write-downs were $118 million and losses on sales were $75 million. The company's energy-related investments had write-downs of $82 million and losses on sales of $47 million.

Allstate reported an operating profit of $625 million, or $1.60 a share, down from $736 million, or $1.72 a share, a year earlier.

Property-liability premiums written increased 3.6% to $7.55 billion amid policy growth of 1.3% and higher average premiums.

Analysts polled by Thomson Reuters expected a per-share operating profit of $1.34 and net premiums written of $7.6 billion.

Over all, Allstate reported net income of $489 million, down from $824 million, a year earlier. On a per-share basis, which reflects preferred dividends, earnings fell to $1.18 from $1.86.

The property-liability combined ratio—a measure of the portion of premiums used to cover claims and expenses—rose to 92% from 90%. However, excluding catastrophe losses and other items, the underlying property-liability combined ratio decreased to 87.4% from 89.5%.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

February 03, 2016 18:05 ET (23:05 GMT)

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