We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Allstate (ALL) Suffers from High Auto Claims, Cat Exposure
Read MoreHide Full Article
On Jul 5, 2016, we issued an updated research report on The Allstate Corporation (ALL - Free Report) . This property and casualty insurer continues to suffer from continued stress on the auto repair industry from higher industry frequency, cost of repairing newer more complex vehicles and a higher total loss volume that has persistently increased claim severity.
It is therefore busy making progress in five operating priorities – to better serve its customers through innovation, effectiveness and efficiency; achieve target economic returns on capital; grow insurance policies in force; proactively manage investments; and build and acquire long-term growth platforms.
To achieve these objectives, the company instituted auto insurance rate increases across all of its three underwriting brands in first-quarter 2016. The company also changed its underwriting guidelines to slowdown new business and target underperforming segments. It is also organizing its claims review to achieve operating excellence. The company has also undertaken expense reduction initiatives. New marketing campaigns for Allstate and Esurance brands will soon be launched.
These initiatives will bear fruit over the long term. Presently, growing the number of customer relationships is facing headwinds as the company is adapting to the increasing cost of providing auto insurance. Property liability items in force in the first quarter of 2016 were also down from year-end 2015. Also, Allstate brand's total policies in force growth slowed in the first quarter from the prior-year quarter as a result of the company’s targeted actions to improve underlying auto profitability. Presently, growth is being impacted by profit improvement actions in both brands – Esurance and Encompass, both of which witnessed a decline in policies in force.
Also, exposure to catastrophe losses continues to weigh on the operating results of the company. In the first quarter, cat loss of $827 million drained the earnings and the company anticipates $835 million pre tax ($542 million after tax) of catastrophe-related loss for the second quarter. In addition, like other insurers Aflac Inc. (AFL - Free Report) , American Financial Group Inc. (AFG - Free Report) and MetLife Inc. (MET - Free Report) , declining net investment income is a headwind for Allstate too.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Allstate (ALL) Suffers from High Auto Claims, Cat Exposure
On Jul 5, 2016, we issued an updated research report on The Allstate Corporation (ALL - Free Report) . This property and casualty insurer continues to suffer from continued stress on the auto repair industry from higher industry frequency, cost of repairing newer more complex vehicles and a higher total loss volume that has persistently increased claim severity.
It is therefore busy making progress in five operating priorities – to better serve its customers through innovation, effectiveness and efficiency; achieve target economic returns on capital; grow insurance policies in force; proactively manage investments; and build and acquire long-term growth platforms.
To achieve these objectives, the company instituted auto insurance rate increases across all of its three underwriting brands in first-quarter 2016. The company also changed its underwriting guidelines to slowdown new business and target underperforming segments. It is also organizing its claims review to achieve operating excellence. The company has also undertaken expense reduction initiatives. New marketing campaigns for Allstate and Esurance brands will soon be launched.
These initiatives will bear fruit over the long term. Presently, growing the number of customer relationships is facing headwinds as the company is adapting to the increasing cost of providing auto insurance. Property liability items in force in the first quarter of 2016 were also down from year-end 2015. Also, Allstate brand's total policies in force growth slowed in the first quarter from the prior-year quarter as a result of the company’s targeted actions to improve underlying auto profitability. Presently, growth is being impacted by profit improvement actions in both brands – Esurance and Encompass, both of which witnessed a decline in policies in force.
Also, exposure to catastrophe losses continues to weigh on the operating results of the company. In the first quarter, cat loss of $827 million drained the earnings and the company anticipates $835 million pre tax ($542 million after tax) of catastrophe-related loss for the second quarter. In addition, like other insurers Aflac Inc. (AFL - Free Report) , American Financial Group Inc. (AFG - Free Report) and MetLife Inc. (MET - Free Report) , declining net investment income is a headwind for Allstate too.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>