Allstate CorporationALL reported fourth-quarter 2015 operating earnings per share of $1.60, comfortably beating the Zacks Consensus Estimate of $1.33 per share. Reported earnings were however down 7% on a year-over-year basis.
Earnings reflected superior performance by its homeowners business, partly offset by higher catastrophe loss and lower profitability in auto insurance.
Allstate's total revenue declined 0.8% year over year to $8.7 billion. This was primarily due to an 8.9% decline in net investment income and net realized capital losses of $250 million that could not be compensated by 4.5% growth in property-liability insurance premium and 5.2% growth in Allstate Financial premium and contract charges. The top line also exceeded the Zacks Consensus Estimate of $8 billion.
For full-year 2015, revenues of $35.7 billion reflected a 4.8% increase in property-liability insurance premium and a 4.2% increase in Allstate Financial premium and contract charges.
Property-liability (P&C) insurance claims and claim expenses rose 12.6% year over year to $5.2 billion in the fourth quarter, while operating expenses decreased 18.9% to $938 million.
Fourth quarter net investment income of $710 million declined 9.7% year over year primarily due to lower income from the fixed income and performance-based long-term portfolios.
During the quarter, the company incurred catastrophe losses of $358 million, wider than 95 million in the year-ago quarter.
Quarter in Detail
Property-Liability net premiums were $7.6 billion, up 3.6% from the prior-year quarter, primarily driven by a 3.9% increase in Allstate brand premium, followed by a 6.6% increase in net premium written from the Esurance brand. These were partly offset by a 2.8% decline in premium written from the Encompass brand.
The segment's combined ratio deteriorated 200 basis points year over year to 92% due to the effect of the prior-year catastrophe reserve re-estimate.
Operating income for Allstate Financial decreased 23.4% year over year to $98 million. The decline stemmed from unfavorable life mortality, the sale of Lincoln Benefit Life and lower investment income.
Investment and Capital Position
As of Dec 31, 2015, Allstate's total investment portfolio shrunk to $77.8 billion from $81.1 billion at 2014 end.
Book value of $46.20 per share increased 4.2% year over year.
Total equity declined to $20 billion from $22.3 billion at 2014 end, while total assets declined to $104.7 billion at the end of Dec 2015 from $108.5 billion at year end 2014. Long-term debt remained unchanged at $5.1 billion from the 2014-end level.
Stock Repurchase and Dividend Update
Overall, Allstate returned $691 million worth of capital through share buybacks.
Zacks Rank and Performance of Other Insurers
Allstate carries a Zacks Rank #3 (Hold). The bottom line at The Travelers Companies, Inc. TRV and Chubb Limited CB outperformed their respective Zacks Consensus Estimate, while RLI Corp. RLI missed the same during the fourth quarter.
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