Allstate to Cut Dividend by More Than Half

 

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Copyright 2009 A.M. Best Company, Inc.All Rights Reserved BestWire

February 25, 2009 Wednesday 03:23 PM EST

349 words


Allstate to Cut Dividend by More Than Half

Chad Hemenway

NORTHBROOK, Ill

Allstate Corp. said, in light of recent earnings, it was going to cut its quarterly dividend more than 50% to 20 cents.

Allstate (NYSE: ALL) announced a quarterly dividend of 41 cents on each outstanding share of the corporation's common stock last year. The dividend of 20 cents this quarter will be payable in cash on April 1 and to stockholders of record at the close of business on March 13.

"Allstate has a history of proactively and prudently managing our capital, while consistently returning substantial amounts of capital to our shareholders," said Thomas J. Wilson, chairman, president and chief executive officer, in a statement. The dividend reduction is at "a level we believe puts Allstate's payout ration in line with our peers," Wilson said.

According to the company's records, the first dividend of 9 cents was declared in 1993 after Sears, Roebuck & Co. sold 20% of the company. The dividend remained the same until February 1995 and it has increased every year since until now.

Allstate posted a $1.13 billion loss in the fourth quarter and a loss of $1.7 billion for all of 2008. The quarterly loss compares with a $760 million profit during the same period in 2007. Allstate posted a net gain of $4.6 billion in 2007. Effecting Allstate's capital position was $1.93 billion in investment losses during the fourth quarter 2008 as well as $3.3 billion in catastrophe losses in 2008 $260 million during the fourth quarter (BestWire, Jan. 29, 2009).

In addition, the company also said it anticipated the elimination of about 1,000 job in its life insurance segment by attrition and position elimination over two years.

A.M. Best Co. in early February said the ratings and outlook of Allstate Insurance Group and Allstate Corp. remained unchanged despite fourth quarter 2008 results (BestWire, Feb. 2, 2009). Allstate Insurance Group currently has a Best's Financial Strength Rating of A+ (Superior).

On the afternoon of Feb. 25, shares of Allstate stock were selling at $17.41, down 6.6% from the previous close.

(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)

February 26, 2009

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