The Allstate Corp. (ALL): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
An appreciated investment portfolio and decent capital position reflects Allstate's strategy of minimizing market risk and maximizing returns from its industry-leading position, diversified mix, pricing discipline and divestment of redundant operations. The first-quarter earnings underperformed the Zacks Consensus Estimate and year-ago results due to higher catastrophe losses and claims expenses, which also led to weak underwriting and P&C earnings. These were partially offset by nominal premiums growth and higher earnings from Allstate Financial, boosting ROE and book value per share. While operating cash flow, investment income and combined ratio deteriorated, financial leverage improved. Continued synergies from agency expansions, healthy rating, and efficient capital deployment further help retain shareholder confidence, overall justifying our Neutral recommendation.

Overview:

Founded in 1931 and headquartered in Northbrook, Illinois, The Allstate Corporation is the second-largest property-casualty (P&C) insurer and the largest publicly-held personal lines carrier in the U.S. The company also provides a range of life insurance and investment products to its diverse customer base. Allstate provides insurance products to approximately 16 million households through more than 12,000 exclusive agencies and financial specialists in the U.S. and Canada. The company operates through its subsidiaries - Allstate Insurance Company, Allstate Life Insurance Company and affiliates. As of Dec 31, 2013, Allstate had approximately 38,800 full-time employees and 600 part-time employees.

The company primarily operates through three reportable segments: Allstate Property-Liability, Allstate Financial Group and Corporate & other.

The Property-Liability segment primarily underwrites policies relating to private passenger automobile and homeowners' insurance in the U.S. and Canada. The company sells Allstate branded policies through Allstate agencies and through the Internet, other than selling Encompass, Esurance and Answer Financial brand policies through its network of independent agencies. Allstate acquired Esurance and Answer Financial from White Mountains Insurance Group Ltd. for approximately $1.0 billion in Oct 2011, in an attempt to expand its online home-auto sales.

Allstate Financial Group provides life insurance, retirement policies and structured financial products to individuals and institutions through Allstate agencies, independent agencies, financial institutions and broker-dealers. This segment also offers banking products and services to customers through the Allstate Bank.

Corporate & Other consists of conducting holding company activities and certain non-insurance operations.

Meanwhile, Allstate ceased the operations of Allstate Bank in 2011, after receiving regulatory approval to dissolve it. In Mar 2012, the company also annulled the bank's charter and as of Jul 1, 2012, Allstate is no longer a savings and loan holding company.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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