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Allstate (ALL) Continues Rate Hikes in October to Boost Profits
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To counter inflationary pressures and enhance profitability, The Allstate Corporation (ALL - Free Report) continued its trend of auto insurance rate hikes in October, accompanied by homeowners' insurance rate adjustments. This strategic response aligns with prevailing macroeconomic trends, reinforcing the company's commitment to navigating challenging market conditions. Its October estimated catastrophe losses were below the $150 million reporting threshold, demonstrating effective risk management.
Let’s delve deeper.
Last month, Allstate hiked auto rates by 12% in 12 locations, which provided a total premium impact of 0.9%. The auto rate hikes since 2023 beginning had a premium impact of 10.4%, which is likely to boost annualized written premiums by around $2.7 billion. It estimates the average gross written premium for October in homeowners insurance to have witnessed a 12.2% year-over-year increase.
The high inflation environment is expected to keep driving insurance prices higher for auto and homeowners insurance. Last month, it increased homeowners rates by 7.8% in four locations, which offered a total premium impact of 0.1%.
In addition to rate increases, ALL aims to bolster profitability by implementing cost-cutting measures, emphasizing digitization, enhancing efficiency, leveraging scale through strategic partnerships and enforcing stricter underwriting standards. Streamlining distribution expenses further contributes to margin enhancement.
Allstate's limited catastrophe losses in October provide relief, especially in light of the substantial $5.6 billion incurred in the first nine months of 2023, marking a significant 138.7% year-over-year increase. Comparatively, 2021 and 2022 saw catastrophe losses of $3.3 billion and $3.1 billion, respectively, showcasing a challenging trend in 2023.
The company is dedicated to minimizing losses via robust catastrophe management and reinsurance initiatives, coupled with a cautious approach to riskier markets by premium expansion. However, this is likely to affect the growth rate of policies in force for Allstate Protection Homeowners. Additionally, the first three quarters witnessed a 2.9% decline in policies in force for Allstate Protection Auto, reflecting some challenges.
Price Performances
Allstate shares have gained 1.5% in the past year compared with the industry’s 13% rise.
The Zacks Consensus Estimate for Assurant’s current year earnings indicates a 27.5% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 42.4%. Also, the consensus mark for AIZ’s revenues in 2023 suggests 5.1% year-over-year growth.
The consensus mark for Employers Holdings’ current year earnings indicates a 17.8% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 26.5%. Furthermore, the consensus estimate for EIG’s revenues in 2023 suggests 17.5% year-over-year growth.
The Zacks Consensus Estimate for Brown & Brown’s current year earnings is pegged at $2.75 per share, which indicates 20.6% year-over-year growth. It has witnessed four upward estimate revisions against none in the opposite direction during the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 12.3%.
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Allstate (ALL) Continues Rate Hikes in October to Boost Profits
To counter inflationary pressures and enhance profitability, The Allstate Corporation (ALL - Free Report) continued its trend of auto insurance rate hikes in October, accompanied by homeowners' insurance rate adjustments. This strategic response aligns with prevailing macroeconomic trends, reinforcing the company's commitment to navigating challenging market conditions. Its October estimated catastrophe losses were below the $150 million reporting threshold, demonstrating effective risk management.
Let’s delve deeper.
Last month, Allstate hiked auto rates by 12% in 12 locations, which provided a total premium impact of 0.9%. The auto rate hikes since 2023 beginning had a premium impact of 10.4%, which is likely to boost annualized written premiums by around $2.7 billion. It estimates the average gross written premium for October in homeowners insurance to have witnessed a 12.2% year-over-year increase.
The high inflation environment is expected to keep driving insurance prices higher for auto and homeowners insurance. Last month, it increased homeowners rates by 7.8% in four locations, which offered a total premium impact of 0.1%.
In addition to rate increases, ALL aims to bolster profitability by implementing cost-cutting measures, emphasizing digitization, enhancing efficiency, leveraging scale through strategic partnerships and enforcing stricter underwriting standards. Streamlining distribution expenses further contributes to margin enhancement.
Allstate's limited catastrophe losses in October provide relief, especially in light of the substantial $5.6 billion incurred in the first nine months of 2023, marking a significant 138.7% year-over-year increase. Comparatively, 2021 and 2022 saw catastrophe losses of $3.3 billion and $3.1 billion, respectively, showcasing a challenging trend in 2023.
The company is dedicated to minimizing losses via robust catastrophe management and reinsurance initiatives, coupled with a cautious approach to riskier markets by premium expansion. However, this is likely to affect the growth rate of policies in force for Allstate Protection Homeowners. Additionally, the first three quarters witnessed a 2.9% decline in policies in force for Allstate Protection Auto, reflecting some challenges.
Price Performances
Allstate shares have gained 1.5% in the past year compared with the industry’s 13% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
ALL currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space include Assurant, Inc. (AIZ - Free Report) , Employers Holdings, Inc. (EIG - Free Report) and Brown & Brown, Inc. (BRO - Free Report) , 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 Assurant’s current year earnings indicates a 27.5% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 42.4%. Also, the consensus mark for AIZ’s revenues in 2023 suggests 5.1% year-over-year growth.
The consensus mark for Employers Holdings’ current year earnings indicates a 17.8% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 26.5%. Furthermore, the consensus estimate for EIG’s revenues in 2023 suggests 17.5% year-over-year growth.
The Zacks Consensus Estimate for Brown & Brown’s current year earnings is pegged at $2.75 per share, which indicates 20.6% year-over-year growth. It has witnessed four upward estimate revisions against none in the opposite direction during the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 12.3%.