Here is a link to Allstate's own Third Quarter Results Press Release. Here are some interesting results revealed in its 33 pages.
First, it is good to know independently that there were few if any Catastrophe Claims in the Third Quarter 2007. Certainly, none were identified by Allstate that occurred during that time. However, the Allstate Press Release attributes its Third Quarter 2007 economic results in part to the increased cost of catastrophe reinsurance. See page 3 of the Allstate Third Quarter Results Press Release.
Second, Allstate made a mistake in estimating reserves for CatClaims in past years. Its Press Release does not actually say that it made that mistake, of course. However, Allstate "restates" the reserves for CatClaims in past years, and inputs them as a deficit against its performance in the Third Quarter 2007. Thus, Allstate's results for the quarter just past in 2007, are made less by Allstate's mistaken estimates in past years, including as far back at least as 2005. See id. page 4.
2005 was the year of Katrina and Rita. So, in Allstate's own words, its "increased claim expense reserves for 2005 events", i.e., its increased claim expense reserves for Hurricanes Katrina and Rita and other Catastrophes in 2005, were the "primary" cause of Allstate's own "prior year reserve reestimates" in The Third Quarter of 2007. See id. at 5. This does not mean that anything wrong was done here; in fact, all of this accounting may be in accordance with Generally Accepted Accounting Principles or "GAAP" and thoroughly lawful. This does mean, however, that it is not accurate for anyone to read or report based on these numbers that Allstate's reported results in the Third Quarter of 2007 are principally caused instead by Catastrophes this year.
Third, it is interesting that Allstate has a list of what it calls "Hurricane Exposure States," and that Allstate breaks them out not only for Homeowner's Premiums, as might be expected, but that Allstate also breaks out the same "Hurricane Exposure States" for Standard Auto Premiums: Alabama, Connecticut, Delaware, Florida, Georgia, Louisiana, Maine, Maryland, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, and Washington, D.C. (Each of these States on the Eastern Seaboard has a coastline, of course, but how does that affect Standard Auto Premiums? Remembering that this breakout of certain locales is for a report on economic results by a large and successful corporation, perhaps this breakout reflects not just the results but some of the thinking that shapes the reporting of those results. In this instance, it is known that it is more lucrative for Agents to write both Homeowner's Insurance Coverage and other Coverages offered by Allstate, too, perhaps the biggest line by far and thus the line of greatest interest among those other Coverages being Standard Auto.)
Postscript on Sunday, October 21, 2007: Orlando Sentinel Reporter Anika Myers Palm has this to say, after reading the above Third Quarter Results Press Release: "Allstate's results for the quarter, which include all its lines of business, stand in contrast to the results of the property-insurance industry." Anika Myers Palm, "Allstate OK With 16% Drop in Profits" P.C1, Col. 5 (Orlando Sentinel Central Florida Business, Thurs., October 18, 2007).
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