UPDATE 2-Allstate misses forecasts as expenses rise

* Q3 operating EPS $0.83 vs analysts’ estimate $0.98

* Declines at property liability, gains at financial

* CEO says company missed opportunities

* Shares drop 4.5 percent after earnings report
(Recasts with customers lost, adds CEO interview, shares)

NEW YORK, Oct 27 (BestGrowthStock) – Allstate Corp (ALL.N: ) on
Wednesday reported that quarterly operating income fell 16
percent, missing analysts’ forecasts, as the largest publicly
traded U.S. home and auto insurer lost existing customers and
ramped up spending to try to attract new ones.

Allstate’s chief executive said the company had missed
opportunities to improve its relative position against
competitors and had work to do to improve growth in its autos
business and profits in the homeowners’ segment.

Allstate said retention, a measure of how many existing
customers it keeps, dipped in both automotive and homeowners
insurance, in part on rate increases in some states. Measures
of customer loyalty also declined.

“The challenge for us in growth this quarter was on the
retention side,” Allstate Chairman and Chief Executive Tom
Wilson said in a phone interview.

Allstate shares fell 4.5 percent to $31.02 after closing at
$32.48 on the New York Stock Exchange.

Allstate reported a net profit of $367 million, or 68 cents
per share, compared with a year-earlier profit of $221 million
or 41 cents per share.

But operating earnings, excluding investment gains and
losses, fell to $452 million, or 83 cents per share, from $538
million a year ago. Analysts polled by Thomson Reuters I/B/E/S
expected 98 cents per share on that basis.

Wilson said Allstate’s declines in customer loyalty were in
line with others in the industry, but he was not satisfied with
the result.

“I see it as a missed opportunity to improve our relative
position,” he said. “When you look at our customer service
levels, they’ve held steady but they haven’t gone up and they
need to go up.”

Marketing spending rose in the quarter, as Allstate moved
to attract younger customers in the period. Wilson said the
company also wanted to diversify its message, as people could
tire of its ads, which have run for years, featuring actor
Dennis Haysbert.

Allstate’s results are in contrast with property and
casualty insurer Ace Ltd (ACE.N: ), which posted a higher profit
on growth in premiums and raised its 2010 outlook.
[ID:nN27213393]
(Reporting by Ben Berkowitz; Editing by Richard Chang, Gary
Hill)

UPDATE 2-Allstate misses forecasts as expenses rise