Losses on credit insurance policies led to a small drop in operating income at Allstate Financial during the second quarter.[@@]
Allstate Financial is a unit of The Allstate Corp., Northbrook, Ill. The large multiline insurer is reporting a total of $1 billion in net income for the latest quarter on $8.3 billion in revenue, up from $588 million in net income on $7.9 billion in revenue for the second quarter of 2003.
Premiums and deposits at the Allstate Financial unit, which sells life insurance, annuities and other life and health products, increased 30%, to $4.3 billion, thanks to a big expansion in a program that uses funding agreements to back medium-term notes.
When an insurer sells a funding agreement, it is promising that it will pay the holder a fixed rate of return for a specified period of time. Funding agreements and funding agreement-backed notes have been popular with customers who are looking for a safe investment that offers a relatively high rate of return.
The boom in the FA program helped increase Allstate Financial sales through specialized brokers to $1.6 billion, from $791 million during the second quarter of 2003.