Allstate: Still an All-Star?

Property and casualty insurance giant Allstate (NYSE: ALL) just posted some uninspiring operating results. Its investing savvy almost saved the day, highlighting that the company has plenty of ammo to maintain its status as an industry titan.

Higher catastrophe losses and reinsurance costs to protect against future calamities in hurricane-sensitive states like Florida sent quarterly operating income down almost 16%. Net premiums written -- a key insurance metric -- also fell in the property and liability and homeowners businesses.

The quarterly events sent Allstate's combined ratio up 5.1 points to 87.6 when including the higher catastrophe charges. Management pointed out that about half of these losses stemmed from last year's unfortunate events, while the rest came from remaining costs from serious hurricanes in the two previous years. Allstate referred to this as "unfavorable prior year reserve reestimates" and suggested that the near-term environment for disasters is actually quite calm.

Thanks in part to more than half a billion in realized capital gains from Allstate Financial, overall net income jumped more than 16% for the quarter. Better yet, management bought back $1.5 billion of common stock to reduce outstanding shares almost 5%.

The quarterly results disappointed analysts and investors alike, and Allstate's shares are quickly drifting toward their 52-week lows. As it stands currently, the stock is now trading at less than nine times earnings estimates for this year, and it yields a nice 2.5%. Other insurance behemoths such as American International Group (NYSE: AIG), Allianz (NYSE: AZ), Travelers (NYSE: TRV), and Hartford (NYSE: HIG) also trade at very reasonable valuations, but Allstate remains the P&C industry leader, with only privately held State Farm a larger archrival.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.