Nonetheless, adjusted earnings per share beat the market estimate by a dime, and the stock rose 2.2 percent Wednesday.
In the quarter ended Mar. 31, the Northbrook, Ill.-based company earned $587 million, or $1.30 per diluted share, down 17 percent from $709 million, or $1.35 per diluted share, in the year-ago period.
The nation’s third-largest car and home insurer said thesevere winter weather drove catastrophe losses of $445 million, 24 percent higher than in the prior year quarter.
Revenues in the first quarter rose 2.6 percent to $8.68 billion from $8.46 billion in the previous year. Allstate Chairman, CEO and President Tom Wilson attributed the growth to the expansion of local Allstate agencies and a new advertising program for online auto insurer Esurance.
Esurance raised car insurance premiums in the first quarter as its advertising program flooded the market.
Wilson explained on the conference call Wednesday that the doubling of spending on Esurance’s ad campaign was part of a normal pattern of investing more heavily upfront.
William Blair & Co analyst Adam Klauber said the 10-cent earnings per share beat was driven by higher investment income and good Allstate Financial performance – the life insurance arm of Allstate Corp.
“Allstate has the ability to continue improving its core earnings..with improving top-line figures, stable loss trends (excluding weather), and substantial capital returns to shareholders” Klauber said in a research note following the after-market earnings release Tuesday.
Klauber, who has a positive rating on Allstate, said he sees further significant upside potential even though the shares have already risen 17 percent in the past year.
Allstate shares closed at $57.82, up $1.25 from Tuesday’s close of $56.57.