CHICAGO (MarketWatch) -- Allstate Corp. (ALL) is bullish about its new Your Choice auto insurance, its progress in cutting its natural catastrophe exposure, and its potential to push through a national catastrophe bond plan designed to provide coverage for Hurricane Katrina-scale catastrophes.
 
Speaking at the Northbrook, Ill., insurer's annual shareholder meeting Tuesday, Edward M. Liddy, Allstate's chairman and chief executive, called 2005 a mixed year for Allstate but said the company is still "in good shape despite the worst hurricane season in history in 2005."

He said the company has taken steps to reduce its exposure to hurricanes by buying reinsurance, reducing its business in some areas and raising prices, but warned "resolving catastrophe exposure is probably not a single silver bullet."
Of insurance rates in Florida, where Allstate recently announced it is offloading around 120,000 homeowners policies to a partner, insurance rates are 'going to be up and up and up," Liddy said.

On its Your Choice auto insurance policies, which allow customers to pick from different coverage levels and features, he said that competitors have not yet come back with a competing product and that Allstate had a head-start.
"It took us several years," he said. Other insurers will need time to develop their own products, he said.

Your Choice, available in 39 states, accounts for two-thirds of new policies written, he said. At the end of 2005, Allstate had 17.6 million auto insurance customers, a 2.9% increase from the previous year.
 
During an interview after the meeting, Liddy said a homeowners insurance version of the auto policy was in the works but would take some time to develop.
 
Of the company's efforts to push through legislation that would establish consumer-funded catastrophe bonds that would cover the costs of large-scale catastrophes, Liddy said that he was happy with the Florida bill now before the House of Representatives but that he was still waiting for a Senate version to materialize.

That might be unlikely before the election, he said, but "if the hurricane season is bad this year, it could happen this year," he said. "Otherwise, next year."
During the shareholder presentation, Liddy said that Allstate led the charge to require airbags in cars years ago, and was taking a similar leadership role in pushing for the catastrophe bonds.
 
Also at the meeting, 71% of shareholders voted in favor of a shareholder proposal requiring that a majority vote apply on each issue that is subject to shareholder vote, instead of the current 67% vote for most issues.
"For example, in requiring a 67% vote to amend our company's bylaws, if 66% vote yes and only 1% vote no - only 1% could force their will on the overwhelming 66% majority," the proposal said.

At the meeting, Liddy said the board "will look at it and do the right thing."
Shares of Allstate traded recently at $57.27, up 17 cents.
 
-Contact: 201-938-5400

________________________________________________________

By Lavonne Kuykendall

Copyright © 2006 MarketWatch, Inc. All rights reserved.