NEW YORK (Bloomberg) -- Allstate Corp., the second-biggest U.S. home and auto insurer, bought reinsurance to cover $2 billion in storm and earthquake claims after Hurricane Katrina triggered its first quarterly net loss in more than a decade.

The protection would cover catastrophes in any state but Florida, where it already has reinsurance, the Northbrook, Illinois-based company said in a regulatory filing today. Allstate's total reinsurance costs are expected to increase to $600 million a year, up from $200 million, and the company will seek regulatory approvals to raise rates for policyholders, said spokesman Michael Trevino.

"They're kind of getting squeezed," said Eli Rabinowich, an analyst who helps manage almost $15 billion at Pzena Investment Management in New York, including 4.52 million shares of Allstate as of September. "Hopefully, they'll be able to pass those prices along."

Allstate's additional coverage will help protect the company if the U.S. is hit with another storm as damaging as Katrina, which stripped bare coastal Louisiana and Mississippi on Aug. 29. The company, which didn't have reinsurance in either state, reported $3.68 billion in third-quarter losses from the storm.

Shares of Allstate rose 1.09, or 2 percent, to $55.74 in New York Stock Exchange composite trading. The stock has fallen 4.3 percent since Katrina, compared with a 12 percent increase in the KBW Insurance Index.

Allstate's 2006 earnings are likely to be reduced by 40 cents a share to $5.60 before realized investment gains and losses, said Michael Paisan, an analyst at Stifel, Nicolaus & Co. in New York. Reinsurance prices on properties damaged by last year's Gulf Coast storms rose 30 percent to 100 percent, insurance broker Willis Group Holdings Ltd. said in a report on Jan. 4. Reinsurers share the premiums and claims of insurers.

The coverage supplements reinsurance the company already has in Connecticut, New Jersey, New York, North Carolina, South Carolina, Texas, and Florida. Allstate would pay the first $2 billion in catastrophe claims, getting up to another $2 billion from reinsurers under a one-year contract effective June 1.

The company also purchased reinsurance coverage for fires that may follow a California earthquake. Reinsurers will pay as much as $1.5 billion per fire, or $3 billion in total, after the company covers the first $500 million. Allstate may seek another $300 million contract in New Jersey too.

"We will aggressively seek to include reinsurance costs in our premium rates," Chief Operating Officer Thomas Wilson said in the statement.