Ratings agency - A.M. Best Co. affirmed the debt and credit
) and its subsidiaries. Accordingly, the ratings agency affirmed
the issuer credit ratings (ICR) of "a-" of the holding
Further, A.M. Best avowed the ICR of "aa-" and financial
strength rating (FSR) of "A+" (Superior) of Allstate's subsidiary
- Allstate Insurance Group. The ratings agency also affirmed the
FSR of "A+" and ICR of "aa-" of another Allstate subsidiary -
Allstate Financial Cos. and its units. The outlook for all the
ratings remains stable.
Additionally, A.M. Best upgraded its outlook on First Colonial
Insurance Co. to positive from stable, while affirming the FSR of
"A-" and ICR of "a-". The ratings agency exhibited confidence in
Allstate's core fundamental growth, which is cushioned by strong
risk-based capital, product portfolio and operating leverage.
These factors have also helped the company generate high
operating earnings over the years and have enhanced its market
position, making it the second-largest personal lines writer in
Moreover, a proactive underwriting approach, prudent capital
management and sizeable investment income have aided the
improvement of margins within the automobile and homeowners'
segment. A modest financial leverage with a debt-to-capital ratio
of 22.5% at the end of Sep 2012, adequate liquidity and lower
catastrophe losses in 2012 paved the way for Allstate to execute
cost management initiatives and technology investments.
However, A.M. Best is concerned about Allstate Financial's
fluctuating operating earnings, high investment losses,
substantial non-recurring changes as well as the impact of the
ongoing low interest rate scenario. Going ahead, a severe
economic downturn could lead to substantial asset impairments.
Nevertheless, Allstate Financial's leading brand name, wide
product portfolio and ample risk-adjusted capitalization offers
significant cross-selling and growth prospects.
Going ahead, we believe that effective capital and enterprise
risk management along with modest operating cash flow will be
able to boost Allstate's operating and competitive strength.
While Allstate carries a Zacks Rank #2 (Buy), other insurers such
The Travelers Cos.
Fidelity National Financial Inc.
) have also been performing very well. All the three stocks carry
a Zacks Rank #1 (Strong Buy).
ALLSTATE CORP (ALL): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis
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