Allstate Corp. said Thursday that severe weather drove up catastrophe losses to $2 billion so far in the second quarter.
That tops a recent quarterly high set in 2008, when Hurricanes Ike and Gustav drove up that year's third-quarter catastrophe losses to $1.8 billion. The company reported $4.7 billion in losses as a result of Hurricanes Katrina and Rita in the third quarter of 2005.
The home and auto insurer said that its pretax losses for May were about $600 million as a result of seven weather-related events. That's in addition to the $1.4 billion in catastrophe losses the company previously announced for April, as a result of tornadoes that ripped through the South. The second quarter ends June 30.
Allstate announced last month that it would begin releasing updates on catastrophe losses whenever a monthly estimate exceeds $150 million. Over the last decade, the company said that level of loss has occurred about a third of the time.
Severe weather-related incidents are becoming a growing concern for the company. CEO Tom Wilson has said he believes there have permanent changes in weather patterns, with a growing number of incidents such as hurricanes, floods and hailstorms.
As a result, the company has been pursuing rate hikes in several states to improve returns in its homeowners units to make up for the uptick in payouts
Following Allstate's announcement Thursday, Citi Investment Research analyst Keith Walsh lowered his second-quarter expectations for Allstate to a loss of $1.55 per share, from his previous estimate for a loss of 95 cents per share. He lowered his full-year estimate to a profit of 78 cents per share, down from his previous estimate for a profit of $1.37 per share.
The $36 price target was maintained.
Shares of Allstate, based in Northbrook, Ill., rose 2 cents to $29.50 in midday trading.
A string of other insurers have already said they expect a spike in losses as well.
Last week, The Travelers Companies Inc. said that severe weather in April and May will likely cost it between $1 billion and $1.05 billion in after-tax losses. The New York company said it will limit share repurchases in the quarter as a result.
United Fire & Casualty Co., based in Cedar Rapids, Iowa, said last month that it expects to post catastrophe losses of $30 million to $35 million for the quarter as a result of recent storms. That's compared to an average of $8 million for the second quarter over the past decade.