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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 17, 2003 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength and debt ratings of the property/casualty and life/health subsidiaries of The Allstate Corporation [NYSE:ALL] (Northbrook, IL). A positive outlook has been assigned to Allstate Insurance Company, Allstate Life Insurance Company and selected affiliates/subsidiaries.
The ratings reflect Allstate's superior financial strength, favorable operating performance and considerable market presence. The strong capital position, stable balance sheet and excellent liquidity reflect management's conservative operating and financial strategies. Management's commitment to capital discipline is reflected in the relatively low financial leverage and favorable fixed charge coverage maintained at the Corporation. Further, additional liquidity is provided through the availability of lines of credit, access to the capital markets and its commercial paper program. Allstate maintains an outstanding market presence as the second largest personal lines writer with an approximate 11% market share.
In 2002, the improvement in operating results reflected the favorable impact of price firming throughout the personal lines sector along with Allstate's tightened underwriting guidelines. In addition, recent results reflect the favorable impact of various expense reduction initiatives as well as the significant investment in technology.
Allstate continues to diversify its earnings stream through the increased presence of Allstate Financial, which offers a broad range of life insurance, annuity, investment and retirement products. Further, Allstate's scale and brand name continues to benefit Allstate Financial's life and worksite insurance businesses. Allstate Financial benefits from Allstate's extensive and well-managed investment profile and asset liability management skills, diverse distribution network and a series of marketing alliances and growth initiatives.
In an effort to further expand its market penetration, Allstate maintains a full-service thrift charter for the Allstate Bank. A.M. Best believes Allstate's strategic focus of providing a variety of financial services products to a vast customer base positions it well for future profitability.
Modestly offsetting these positive rating factors is Allstate's recently adverse reserve development patterns, particularly in the homeowners' line. Results for the homeowners' line reflects the impact of higher than anticipated loss costs along with the unexpected impact of mold related losses, particularly in Texas. Allstate has taken aggressive action to improve results for the homeowners' book including rate increases, revised underwriting guidelines and product enhancements. However, given that the homeowners' line is an annual policy, the impact of these changes will be tempered until the rate increases have been fully earned. Going forward, it is anticipated that mold losses should be mitigated given the revised policy wording and improved pricing associated with this risk and that the actions taken by Allstate will continue to drive favorable results.
Based on Allstate's superior capitalization, considerable business profile and the anticipation that operating performance as well as reserve development will continue to improve, A.M. Best has assigned a positive outlook to most of the ratings.
Additionally, A.M. Best has assigned an initial financial strength group rating of A+ (Superior) to Encompass Insurance Company.
For a complete listing of The Allstate Corporation's financial strength and debt ratings, visit Allstate.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.