Earlier this week, A.M. Best Co. assigned indicative ratings of
"a-" to the Senior Debt, "bbb+" to Subordinated Debt, "bbb" to
Junior Subordinated Debt and "bbb" to preferred stock of
The Allstate Corporation
) recently filed shelf registration. The rating agency also rated
the preferred securities of Allstate Financing VII, VIII, IX and X
as "bbb." The outlook for all assigned rating is stable.
The new shelf registration replaces the former registration that
expired on May 8, 2012. Subsequently, the rating agency called off
all previous ratings assigned therein.
The ratings reflect Allstate Insurance Group's strong
risk-adjusted capitalization, dominant position in the market and
its strong operating performance. The rating agency noted that
Allstate's debt-to-capital ratio as of March 31, 2012 stood at
24.5%. This number is almost same as 2011-end debt-to-capital
Even though debt increased over the prior quarter, there was no
material impact on the ratio as shareholder equity also increased
during the same period. The debt-to-tangible capital stood at
25.8%. The company also maintains a decent interest coverage ratio
of 26% that is supportive of its current rating as higher ratio
enables the company to better meet the interest expenses.
In a separate development, Moody's Investor Service also
provided ratings for Allstate's senior debts at (P) A3. The outlook
Allstate recently declared its first quarter 2012 earnings. The
operating earnings per share of $1.42 outpaced the Zacks Consensus
Estimate of $1.12 as well as the year-ago quarter earnings of 93
cents. A prudent capital management coupled with an impressive
liquidity position resulted in considerable improvement in book
value per share and combined ratio excluding the effect of
The Progressive Corporation
), a prime competitor of Allstate, received Issuer Default Rating
("IDR") of 'A+', Senior debt ratings of 'A' and Junior subordinated
debt of 'BBB+' from Fitch Ratings. The rating agency also
reaffirmed the Insurer Financial Strength ("IFS") rating of 'AA' on
Progressive's subsidiaries. The outlook is stable.
We retain our long-term Neutral recommendation on Allstate.
Currently, it carries a Zacks #3 Rank, implying a short-term Hold
ALLSTATE CORP (ALL): Free Stock Analysis Report
PROGRESSIVE COR (PGR): Free Stock Analysis
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