Property and casualty insurer Allstate said Wednesday it was profitable in the fourth-quarter, reversing a steep year-ago loss, as it reduced losses in its investment portfolio.

For the final three months of last year, the company based in Northbrook, Ill., earned $518 million, or 96 cents per share. That compares with a loss of $1.13 billion, or $2.10 per share, in the fourth quarter of 2008.

Operating income, which excludes investment gains and losses, rose 14 percent to $592 million, or $1.09 per share, versus a profit of $518 million, or 96 cents per share, a year ago.

Total revenues for the most recent quarter were $8.06 billion, an increase of nearly 23 percent from the fourth quarter of 2008.

Results exceeded Wall Street's expectations for earnings of $1.01 per share, according to a poll by Thomson Reuters. Analysts typically exclude investment gains and losses from their estimates.

Allstate's shares dropped 10 cents in after-hours trading, after having closed the regular session down 13 cents at $28.60.

The insurer's net investment income declined 19 percent to $1.08 billion.

Net capital losses for the period, before taxes, totaled $33 million, and included $270 million of impairment write-downs and $215 million of write-downs related to the intent to sell securities that primarily have commercial real estate exposure.

A year-ago the company recorded net realized losses of $1.9 billion.

Catastrophe losses in the quarter totaled $328 million, up 26 percent from the year-ago period. They included losses of $210 million from 13 events during the October to December period, and $148 million related to re-estimates of events during the first nine months of 2009.

Property and liability premiums written slipped 0.4 percent during the fourth quarter to $6.28 billion.

Allstate's combined ration for the quarter fell slightly to 93.2 percent from 96.4 percent in the same period in 2008.

Combined ratios measure the amount of money insurers pay out in claims and expenses compared with how much they receive from writing new business. A ratio above 100 means the insurer pays out more in claims and expenses than it takes in from writing new premiums.

For the full year, the company earned $854 million, or $1.58 per share, compared with a net loss of $1.68 billion, or $3.06 per share, in 2008.