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Allstate (ALL) Q2 Earnings Beat Estimates on Revenue Growth

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The Allstate Corp.’s (ALL - Free Report) second-quarter 2021 earnings per share of $3.79 beat the Zacks Consensus Estimate by 26.8% and also surged 46.9% year over year.

Revenues grew 21.6% year over year to $12.5 billion, reflecting higher earned premiums from the acquisition of National General and increased net investment income. Increased contribution from Protection Services also led to this upside.

Better-than-expected earnings came on the back of revenue rise coupled with lower Shelter-in-Place Payback expense, partially offset by higher non-catastrophe losses.

Premium in the property-liability segment was up 12.5% to $10.3 billion, driven by the acquisition of National General.

The Allstate Corporation Price, Consensus and EPS Surprise

The Allstate Corporation Price, Consensus and EPS Surprise

The Allstate Corporation price-consensus-eps-surprise-chart | The Allstate Corporation Quote

The combined ratio of 95.7 deteriorated 590 basis points year over year due to wider non-catastrophe losses in auto and homeowners insurance.

The expense ratio of 24.7 decreased 7.1 year over year on lower coronavirus-related expenses from Shelter-in-Place Payback and bad debt. The company continuously invests in digitizing business processes to improve efficiency, which will ultimately decrease expenses.

In its Protection Services segment, revenues were up 27.1% to $581 million, driven by a solid contribution from all its sub-segments, such as Protection Plans, Dealer Services, Roadside, Arity and Identity Protection.
In the company’s Health and Benefits segment, premiums and contract charges increased 70% year over year to $447 million due to the addition of group health and individual accident and health businesses acquired with National General.

Financial Update (as of Jun 30, 2021)

The cash balance totaled $656 million, which more than doubled the 2020-end level. Total assets were $132.6 billion, up 5.3% from the level as of Dec 31, 2020.

Long-term debt during the quarter amounted to $8 billion, which increased 2.2% from the level at 2020 end.

Our Take    

Allstate’s strategy of increasing personal profit liability market share; and expanding protection solutions is visible in the results.  Property-Liability market share increased by approximately one percentage point owing to the buyout of National General.

Allstate Protection Plans continue to grow rapidly by broadening the product offering.

Apart from taking measures to grow its top line, the company is working to increase is operating efficiency by investing in technology to transform itself into a low-cost digital insurer.

The company is getting rid of its non-core businesses and to this end, divested its Allstate Life Insurance Company and Allstate Life Insurance units. Proceeds from the same are redeployed to high-growth areas.
The company is firing on all cylinders to drive growth and create shareholder value.

Zacks Rank

Allstate currently has a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Of the P&C insurance industry players that have reported second-quarter results so far, the bottom-line results of W.R. Berkley Corporation (WRB - Free Report) , American Financial Group, Inc. (AFG - Free Report)   and Cincinnati FinanciaI Corporation (CINF - Free Report) beat the respective Zacks Consensus Estimate.

 

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