Allstate Corp. says its financial services unit is letting sales of some products drop in an effort to protect profit margins on fixed-rate products.[@@]
Allstate, Northbrook, Ill., is reporting a $1.5 billion net loss for the third quarter on $8.9 billion in revenue, compared with $56 million in net income on $8.4 billion in revenue for the third quarter of 2004.
The company’s property-casualty operations were hit hard by Hurricane Katrina and Hurricane Rita, and the company says it will be trying promote efforts to improve the way the United States responds to major catastrophes.
The company’s Allstate Financial unit is reporting $154 million in net income for the latest quarter on $1.5 billion in revenue, up from $88 million in net income on $1.3 billion in revenue for the third quarter of 2004.
Although profits and revenue were up, premium and deposits fell to $2.4 billion, from $4 billion.
Allstate stayed out of the market for fixed-rate products for institutions during the third quarter, and it let deposits in traditional fixed annuities fall 53%, to $875 million, the company says.
Deposits in equity indexed annuities increased 27%, to $187 million, Allstate says.
Variable annuity deposits increased 37%, to $452 million.
Allstate notes that 58% of the fixed annuity contracts and interest-sensitive life policies on its books have fallen to a minimum guaranteed level that is at 3% or higher.