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.
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
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
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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