Hammered by the Market, Allstate Is Set for Recovery

The "good hands" folks at Allstate were dealt a bad hand over the past five quarters: A crash in the fixed-income market battered the bond portfolio backing Allstate's life-insurance and annuity businesses, wiping out about 40% of the company's net worth.

As a result, Allstate shares were crushed, falling to below $14 in March from around $60 in late 2007. Aided by the recent rallies in the stock and bond markets, they have since bounced back into the mid-$20s.

Still, there's lots of hope for the beleaguered insurance giant. For one thing, the principal part of its business -- personal, auto and homeowners insurance -- seems to be doing fine and should continue to do so, barring any unexpectedly large hurricane or other catastrophe. This "protection business," conducted through more than 14,000 agents, typically accounts for around 90% of Allstate's earnings...

WSJ: Hammered by the Market, Allstate Is Set for Recovery