Banc of America downgrades Allstate (ALL) to buy from strong buy.
Allstate sees third-quarter earnings per share of $0.53 to $0.57. Analyst Brian Meredith says continuing difficulties in its homeowners business, owing to both mold-related claims, increased the frequency of weather-related claims. He notes the corrective rate and underwriting actions will take about one year to fully implement, resulting in lower homeowners premiums and a drag on earnings.
As result, he cut his 2001 EPS forecast to $2.27 from $2.43, and in 2002 to $2.85, to $3.10. Additionally, he doesn't believe these issues are unique to Allstate and are probably impacting other large homeowners carriers.