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.
Will Allstate's (ALL) April Cat Loss be a Cause for Concern?
Read MoreHide Full Article
The Allstate Corporation (ALL - Free Report) estimates a headwind of $430 million after tax related to catastrophe loss for April.
The havoc was caused by five weather-related events. One large hail event, primarily impacting Texas and Oklahoma, induced nearly 60% of the above-mentioned losses.
Allstate’s exposure to property and casualty insurance makes its prone to losses due to cat occurrences. In the first quarter, it suffered gross catastrophe losses worth $1.67 billion, nearly eight times greater than the 2020 reading. These losses were, however, offset by $1.08 billion of reinsurance and subrogation recoveries.
This shows that Allstate can effectively deal with catastrophe losses via its catastrophe management strategy and reinsurance programs. It also aims at limiting its exposure to riskier geographies by raising premiums. This may, however, reduce the number of policies in force.
Other property and casualty insurers that incur catastrophe losses due to their exposure to property and casualty insurance are Chubb Limited (CB - Free Report) , RLI Corp. (RLI - Free Report) , Arch Capital Group (ACGL - Free Report) among others.
Despite Allstate’s vulnerability to Mother Nature’s wrath, our confidence in its ability to deliver impressive underwriting results is intact.
This property and casualty insurer has been witnessing annual revenue growth since 2011 and also tided over the pandemic-ravaged 2020 with a 0.3% revenue rise. The company’s ability to stay in a positive territory against the backdrop of a tough operating environment is quite impressive. In the first quarter of 2021, the top line grew a good 14% while the bottom line was up a whopping 73%.
Allstate’s long-term strategy of boosting its personal property-liability market share and expanding protection offerings will fuel growth.
While increasing its personal property-liability market share, the company acquired National General in January 2021. The transaction will expand its market share in the said space by more than one percentage point and enhance its independent agent-facing technology.
It will significantly fortify its distribution footprint, thus leading the company to be one of the top five personal lines carriers in the independent agency distribution channel. Additional expansion opportunities through independent agents also exist in the standard auto and homeowners insurance realm.
Extension of its Protection Services segment is another key catalyst. A number of acquisitions from 2017 to 2019 led to the segment’s rapid growth and its revenues rose 21.6% in the first quarter.
Allstate also sold its Life insurance businesses in the March quarter to focus on its core growth areas, namely the auto and homeowners insurance.
The company is also overhauling by investing in technology. This should increase its efficiency and save operational costs. We believe, the company is firing on all cylinders for growth and that the catastrophe losses will not mar its profitability.
Year to date, Allstate has gained 23.8% compared with the industry's growth of 19.9%.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Image: Bigstock
Will Allstate's (ALL) April Cat Loss be a Cause for Concern?
The Allstate Corporation (ALL - Free Report) estimates a headwind of $430 million after tax related to catastrophe loss for April.
The havoc was caused by five weather-related events. One large hail event, primarily impacting Texas and Oklahoma, induced nearly 60% of the above-mentioned losses.
Allstate’s exposure to property and casualty insurance makes its prone to losses due to cat occurrences. In the first quarter, it suffered gross catastrophe losses worth $1.67 billion, nearly eight times greater than the 2020 reading. These losses were, however, offset by $1.08 billion of reinsurance and subrogation recoveries.
This shows that Allstate can effectively deal with catastrophe losses via its catastrophe management strategy and reinsurance programs. It also aims at limiting its exposure to riskier geographies by raising premiums. This may, however, reduce the number of policies in force.
Other property and casualty insurers that incur catastrophe losses due to their exposure to property and casualty insurance are Chubb Limited (CB - Free Report) , RLI Corp. (RLI - Free Report) , Arch Capital Group (ACGL - Free Report) among others.
Despite Allstate’s vulnerability to Mother Nature’s wrath, our confidence in its ability to deliver impressive underwriting results is intact.
This property and casualty insurer has been witnessing annual revenue growth since 2011 and also tided over the pandemic-ravaged 2020 with a 0.3% revenue rise. The company’s ability to stay in a positive territory against the backdrop of a tough operating environment is quite impressive. In the first quarter of 2021, the top line grew a good 14% while the bottom line was up a whopping 73%.
Allstate’s long-term strategy of boosting its personal property-liability market share and expanding protection offerings will fuel growth.
While increasing its personal property-liability market share, the company acquired National General in January 2021. The transaction will expand its market share in the said space by more than one percentage point and enhance its independent agent-facing technology.
It will significantly fortify its distribution footprint, thus leading the company to be one of the top five personal lines carriers in the independent agency distribution channel. Additional expansion opportunities through independent agents also exist in the standard auto and homeowners insurance realm.
Extension of its Protection Services segment is another key catalyst. A number of acquisitions from 2017 to 2019 led to the segment’s rapid growth and its revenues rose 21.6% in the first quarter.
Allstate also sold its Life insurance businesses in the March quarter to focus on its core growth areas, namely the auto and homeowners insurance.
The company is also overhauling by investing in technology. This should increase its efficiency and save operational costs.
We believe, the company is firing on all cylinders for growth and that the catastrophe losses will not mar its profitability.
Year to date, Allstate has gained 23.8% compared with the industry's growth of 19.9%.
Allstate currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>