Allstate's fourth-quarter earnings outperformed the Zacks Consensus
Estimate based on higher premiums, lower catastrophe losses and
claims expenses as well as benefits arising from changes made in
employee benefit plans, all of which boosted the operating income
across segments, operating cash flow, ROE and book value per share.
However, a depreciated investment portfolio, loss on disposition of
Lincoln Benefit along with higher operating expenses dampened
results. Yet, the debt refinancing is likely to improve leverage
and strengthen capital. The divestment of Lincoln Benefit and
business restructuring will also mitigate market risks and enhance
operating leverage. Agency expansions, healthy rating, and
efficient capital deployment further help retain shareholder
confidence. Continued synergies from Allstate's industry-leading
position, diversification and pricing discipline augur long-term
growth, justifying our Neutral recommendation.
Founded in 1931 and headquartered in Northbrook, Illinois,
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, 2012, Allstate
had approximately 38,000 full-time employees and 600 part-time
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, besides 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 individual 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
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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