BestWeek: Allstate's Coastal Retreat Highlights Industry's Post-Katrina Dilemma.

OLDWICK, N.J. -- After posting a third-quarter loss of $1.55 billion, Allstate Corp. said it would scale back its coastal exposure. The loss resulted from catastrophes--particularly Hurricane Katrina, for which the company had little reinsurance recoverables, according to a story in the Oct. 24 BestWeek.

Backing away from business could hurt the personal-lines giant in the long run, an equity analyst cautioned. Craig Weber, a senior equity analyst with research and consulting company Celent, cautioned insurers are "walking a fine line" in reacting to Katrina. While the natural reaction is to pull out of high-risk areas, that makes insurers an "easy target for politicians and a skeptical public," Weber said in a statement.

Morgan Stanley Equity Research said it believes Allstate "is caught in an operational vise with competitive forces and regulators on the front end, unwanted press and plaintiff attorney attention in the middle, and reinsurers looking to extract value on the back end."

Also in BestWeek:

--How Egypt's decade-long effort to privatize its state-owned insurance companies is picking up steam.

--How private equity's influence has been quietly expanding in the corporate world. It's been growing since stock markets took a beating around the turn of the century, hit by deflation in high-tech speculation and a series of epic accounting scandals.

--How changes the federal government recently proposed to regulations could ultimately make it less costly and easier for doctors to adopt electronic health records and electronic prescription technology. Among the biggest hurdles facing most health insurers is getting physicians to invest in electronic health records.

Also featured is Best's Insurance Composite Index, which finished the week ended Oct. 20, 2005 at 1,073.49, up 25.71% compared with a year ago, reflecting the beating insurance stocks took this week a year ago as New York state Attorney General Eliot Spitzer filed suit against Marsh & McLennan Cos., alleging widespread wrongdoing throughout the industry. The composite index reflects the performance of 138 insurance stocks. The week's top performers include National Interstate Corp., RLI Corp., Harleysville Group Inc., United America Indemnity Ltd. and WellPoint Inc.

BestWeek is published by A.M. Best Co. for insurance professionals, including home office executives, agents and brokers.

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