Hurricane Andrew expected to cut Allstate profits

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Allstate Insurance Company of the United States has increased its estimate of the cost of Hurricane Andrew to dollars 1.73bn from an expected 159,000 claims.

This would cut Allstate's after-tax profits by about dollars 1.15bn.

Allstate made its initial estimate on 1 September - eight days after Hurricane Andrew devastated parts of Florida and Louisiana. That estimate, totalling dollars 1.05bn or dollars 700m after tax, was based on the company's use of hurricane modelling techniques and its experience with initial on- site catastrophe evaluations.

While the number of claims is tracking the company's expectations, average losses from dwelling and contents claims have been higher than expected.