‘Real Estate Weekly’: Allstate likely to benefit from reducing La. coastal coverage

Allstate Corp. stands to benefit from its decision to scale back homeowners’ risk in Louisiana and cede market share to State Farm Mutual Automobile Insurance Co., as Hurricane Isaac threatens the U.S. Gulf Coast. Allstate’s sales of residential policies in Louisiana fell to $209 million last year, 19% less than in 2006, according to A.M. Best data compiled by Bloomberg. State Farm, the only U.S. homeowners’ carrier larger than Allstate, sold $466 million of the protection in the state in 2011, a 25% increase from five years earlier. Allstate, led by CEO Tom Wilson, has been raising prices for coverage, buying reinsurance, and shifting where it sells policies to improve homeowners’ underwriting results nationally. “They’ve cut back on coastal exposure, in general,” Paul Newsome, an analyst at Sandler O’Neill & Partners, says of Northbrook, Ill.-based Allstate. “It’s been a major strategy for them.” And it appears to be working; Allstate shares are up 37% since Dec. 31. State Farm is owned by policyholders and isn’t publicly traded. Insured losses in the United States from Isaac could be more than $800 million, with most of the costs in Louisiana, according to estimates from Kinetic Analysis Corp. compiled by Bloomberg. Access the full story and read the rest of the new Real Estate Weekly e-newsletter here.