The Allstate Corporation ALL recently announced that the initial loss estimate from Hurricane Beryl was at $226 million. It was expected to witness a significant impact when the hurricane made landfall in Texas (Jul 8, 2024), where the company has major homeowners and automobile insurance operations.
According to Verisk’s Extreme Event Solutions group estimates, U.S. onshore wind property losses from Beryl were within the $2-$3 billion range. Allstate also reported estimated catastrophe losses of $587 million for July alone from 20 events. In the second quarter, its catastrophe losses dropped 21.4% year over year to $2.1 billion.
Its strong second-quarter results benefited from prudent rate increases and a rise in market-based investment income and insurance premiums. Also, improved Property-Liability underwriting results, thanks to its profit improvement plan and lower expenses, aided its performance.
The company estimates July catastrophe losses at $428 million after tax. The news follows its recent announcement of a major divestment effort. It is selling its Employer Voluntary Benefits business to StanCorp Financial Groupfor $2 billion in cash. The transaction is expected to be closed in the first half of 2025. The move will help the company to exit most of its health and benefits operations, following which it will focus more on Property-Liability and Protection Services businesses.
The divestiture is expected to yield a gain of around $600 million and boost deployable capital by $1.6 billion. While catastrophe loss-related risks remain a part of ALL’s business, its focus on improving profitability with higher rates and getting rid of less-profitable operations bode well.
Price Performances
Allstate’s shares have gained 62.3% in the past year compared with the industry’s 25.1% rise.
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Zacks Rank & Key Picks
ALL currently has a Zacks Rank #3 (Hold).
Investors interested in the broader Finance space may look at some better-ranked players like Aflac Incorporated AFL, Brown & Brown, Inc. BRO and Marsh & McLennan Companies, Inc. MMC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Aflac’s current-year earnings is pegged at $6.73 per share, which indicates 8% year-over-year growth. It witnessed seven upward estimate revisions in the past 30 days against no downward movements. AFL beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 8.2%.
The Zacks Consensus Estimate for Brown & Brown’s 2024 earnings indicates 31% year-over-year growth. During the past month, BRO has witnessed six upward estimate revisions against none in the opposite direction. It beat earnings estimates in each of the past four quarters, with an average surprise of 9.8%.
The Zacks Consensus Estimate for Marsh & McLennan’s current-year earnings suggests a 9.4% year-over-year jump. During the past month, MMC has witnessed seven upward estimate revisions against none in the opposite direction. The consensus mark for current-year revenues indicates 6.7% growth from a year ago.
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