Allstate Discontinues Florida Boat Insurance

From Bloomberg News...

Allstate Limits Florida Policy Sales After Hurricanes

Allstate Corp., the second-largest U.S. auto and home insurer, is restricting sales of new homeowners policies in Florida after hurricanes weakened the financial strength of its local subsidiaries.

The Northbrook, Illinois-based insurer has cut back on sales to new customers in several counties including Orlando's Orange County, spokeswoman Deb Clouser said. Allstate also stopped selling boat insurance across the state and wind-damage insurance for new clients in several coastal counties, she said.

"We're managing the exposure of the Allstate Floridian companies,'' Clouser said in an interview. "It's about running a responsible business so that when another hurricane comes, you can pay claims from your existing customers.''

Allstate is trimming sales to protect the financial strength of its Florida units, which were downgraded last month amid losses from four hurricanes. Another insurer, American Strategic Insurance Corp., yesterday filed the first rate-increase request with regulators, a move that investors expect many insurers will follow.

"To the extent they are allowed to, it's pretty clear insurers are going to raise rates,'' said Al Copersino, a New York-based analyst at Columbia Management Advisors Inc., a unit of Bank of America Corp., which oversees about $450 billion including Allstate shares.

Hurricane Losses

Insurers lost $18.2 billion to $26.2 billion from Hurricanes Charley, Frances, Ivan and Jeanne, according to preliminary industry estimates. One Florida-based insurer, American Superior Insurance Co., became insolvent.

"Many industry players are still assessing their losses, assessing their financial situation and taking a breath before they move forward,'' said Bob Lotane, a spokesman for the Florida Office of Insurance Regulation.

American Strategic, whose largest investor is Bermuda-based XL Capital Ltd., asked for an average 8.3 percent rate increase, Lotane said. The company is based St. Petersburg, Florida, and is the state's 12th largest homeowners insurer with 1.7 percent of the market. The department has 90 days to respond to the company's request.

Insurers have begun to raise rates and limit sales as Florida legislators prepare for a special session in December to discuss insurance regulations. Florida Chief Financial Officer Tom Gallagher said he wants to change state rules that let insurers charge customers separate deductibles for each storm. The change would increase insurers' potential losses.

Allstate's restrictions on sales won't affect existing holders of homeowner insurance, Clouser said. Allstate is also selling auto insurance in Florida as usual, she said. She declined to estimate how much homeowner insurance sales may drop. Allstate agents can help new customers get wind-damage coverage from another insurer, she said.