Allstate Corp., the largest publicly traded U.S. car and home insurer, said third-quarter profit slipped 17 percent as claims rose and policy growth slowed in the automobile-coverage business.

Net income decreased to $650 million, or $1.54 a share, from $781 million, or $1.74, a year earlier, the Northbrook, Illinois-based company said Monday in a statement. Operating income, which excludes some investment results, was $1.52 a share, exceeding the average estimate of $1.32 from 24 analysts surveyed by Bloomberg.

Chief Executive Officer Tom Wilson has said that the insurer would raise rates for drivers to help alleviate pressure from mounting claims. More people have traveled on U.S. highways in the past few months amid lower gas prices and an improving economy, increasing the risk of accidents.

“They will get auto pricing right, they know how to do that,” Robert Glasspiegel, an analyst at Janney Montgomery Scott, said in an interview before results were announced. “The question is, what quarter will they fix it? And what will their top-line growth be when they fix it?”

Rate Increases

Allstate said that rate increases of 3.4 percent for its namesake auto brand had been approved this year through September, which could mean an increase in premiums of about $600 million. Property-damage frequency at the auto unit increased 8.9 percent in the quarter. Slower growth in auto policies is partly attributable to the rate increases, Wilson said.

“That growth is probably likely to go down even more over the next couple of quarters” at the Allstate-brand auto business, Wilson said in a phone interview after results were released. “You should expect to see continued rate increases in auto insurance, although I would point out that they’re relatively modest when you look over the last three years.”

The insurer had declined 12 percent this year as of 4 p.m. in New York, compared with a 3.2 percent gain by the Standard & Poor’s 500 Insurance Index. Results were released after the close of regular trading.

Allstate spent about 93.6 cents for every premium dollar taken in at its property-and-liability unit in the quarter, up from 93.5 cents a year earlier. The underlying combined ratio, which excludes catastrophes and adjustments tied to reserves, climbed to 89.3 from 86.1. Premium revenue in the property-and- liability business rose 4.7 percent to $7.65 billion.

Catastrophes cost the insurer $270 million in the quarter, compared with $517 million a year earlier.

Book Value

Book value, a measure of assets minus liabilities, decreased to $47.54 a share from $47.96 at the end of June. Net investment income fell 1.9 percent from a year earlier to $807 million.

The insurer sold some bonds backing long-term annuity liabilities in the quarter, reinvesting proceeds in higher- returning assets that could include real estate, private equity, timber and infrastructure, according to Wilson.

“We harvested the gains and we’ll be investing those assets in more performance-based equity-like investments so they get a higher return,” Wilson said in the interview.

The insurer repurchased $798 million of shares in the quarter, and had about $1.1 billion remaining on its current buyback plan at the end of September.

Distance traveled on U.S. roads in August was up 2.3 percent, or 6.3 billion vehicle miles, compared with a year earlier, according to the most recent monthly report from the Federal Highway Administration.