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Allstate (ALL) Q3 Earnings Miss Estimates, Revenues Up Y/Y
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The Allstate Corporation (ALL - Free Report) reported third-quarter 2021 adjusted earnings of 73 cents per share, which missed the Zacks Consensus Estimate by 54.9%. The bottom line plunged 74.6% year over year.
The company’s results were hurt by escalating costs, elevated non-catastrophe losses in auto and homeowners insurance, and higher catastrophe losses. However, the downside was partly offset by improved earned premiums.
Revenues of $12.5 billion advanced 16.9% year over year in the third quarter driven by an uptick in earned premiums stemming from National General, premium growth in Allstate brand homeowners, increased performance-based investment income and higher Protection Services revenues.
Total costs and expenses increased 33.9% year over year to $12.3 billion due to higher property and casualty (P&C) insurance claims and claims expenses, accident and health insurance policy benefits, amortization of deferred policy acquisition costs, operating costs and expenses, and amortization of purchased intangibles.
As of Sep 30, 2021, total policies in force amounted to 191.9 million, up 12.3% from the prior-year comparable period.
Net investment income surged 64.7% year over year to $764 million in the third quarter, attributable to improved performance-based income.
The company incurred $1.3 billion of catastrophe losses in the quarter under review, which increased 28.2% year over year.
The Allstate Corporation Price, Consensus and EPS Surprise
Property-Liability insurance premiums written totaled $11 billion, which advanced 16.7% year over year aided by contributions from National General inclusion and Allstate brand homeowners. The segment incurred an underwriting loss of $534 million, which compares unfavorably with the year-ago quarter’s underwriting income of $752 million. Elevated non-catastrophe losses in auto and homeowners insurance coupled with higher catastrophe losses dampened the segment’s underwriting results, partly offset by improved premiums. Combined ratio deteriorated 1,370 basis points (bps) year over year to 105.3%.
Protection Services' revenues climbed 23.3% year over year to $597 million in the third quarter, courtesy of strong performance at Allstate Protection Plans.
Allstate Health and Benefits’ total premium and contract charges surged 60.3% year over year to $460 million. The substantial rise was due to the National General buyout leading to inclusion of group health and individual accident and health businesses.
Financial Update (as of Sep 30, 2021)
The company exited the third quarter with a cash balance of $690 million, which more than doubled from the 2020-end level.
Total assets of $133.4 billion increased 5.9% from the figure as on Dec 31, 2020.
Long-term debt during the quarter amounted to $8 billion, up 2% from the level at 2020 end.
Total shareholders’ equity declined 11.5% from the 2020-end figure to $26.7 billion.
Capital Position (as of Sep 30, 2021)
Adjusted net income return on equity came in at 21.2%, which improved 330 bps year over year.
Book value per share increased 2.7% from the prior-year quarter to $84.62 at the third-quarter end.
Debt-to-capital ratio of 23x deteriorated 340 bps year over year.
Prudent Capital Deployment
During the quarter under review, the company rewarded shareholders to the tune of around $1.5 billion via share buybacks and dividends.
Business Update
On Nov 1, 2021, the company announced the completion of divestiture of Allstate Life Insurance Company, which highlights Allstate’s strategy of streamlining business operations by intensifying focus on high-growth areas of Property-Liability and Protection Services businesses. Besides, it completed the sale of Allstate Life Insurance Company of New York last month. The joint deals have been successful in generating deployable capital of $1.7 billion and bringing down interest rate risk.
On Oct 1, 2021, the company acquired SafeAuto as a result of which the latter will be integrated into National General’s platform. The move highlights Allstate’s sincere efforts to boost its market share in personal property-liability.
Of the P&C insurance industry players that have reported third-quarter results so far, the bottom line of W.R. Berkley Corporation (WRB - Free Report) , American Financial Group, Inc. (AFG - Free Report) and Cincinnati FinanciaI Corporation (CINF - Free Report) beat the Zacks Consensus Estimate.
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Allstate (ALL) Q3 Earnings Miss Estimates, Revenues Up Y/Y
The Allstate Corporation (ALL - Free Report) reported third-quarter 2021 adjusted earnings of 73 cents per share, which missed the Zacks Consensus Estimate by 54.9%. The bottom line plunged 74.6% year over year.
The company’s results were hurt by escalating costs, elevated non-catastrophe losses in auto and homeowners insurance, and higher catastrophe losses. However, the downside was partly offset by improved earned premiums.
Revenues of $12.5 billion advanced 16.9% year over year in the third quarter driven by an uptick in earned premiums stemming from National General, premium growth in Allstate brand homeowners, increased performance-based investment income and higher Protection Services revenues.
Total costs and expenses increased 33.9% year over year to $12.3 billion due to higher property and casualty (P&C) insurance claims and claims expenses, accident and health insurance policy benefits, amortization of deferred policy acquisition costs, operating costs and expenses, and amortization of purchased intangibles.
As of Sep 30, 2021, total policies in force amounted to 191.9 million, up 12.3% from the prior-year comparable period.
Net investment income surged 64.7% year over year to $764 million in the third quarter, attributable to improved performance-based income.
The company incurred $1.3 billion of catastrophe losses in the quarter under review, which increased 28.2% year over year.
The Allstate Corporation Price, Consensus and EPS Surprise
The Allstate Corporation price-consensus-eps-surprise-chart | The Allstate Corporation Quote
Solid Segmental Performances
Property-Liability insurance premiums written totaled $11 billion, which advanced 16.7% year over year aided by contributions from National General inclusion and Allstate brand homeowners. The segment incurred an underwriting loss of $534 million, which compares unfavorably with the year-ago quarter’s underwriting income of $752 million. Elevated non-catastrophe losses in auto and homeowners insurance coupled with higher catastrophe losses dampened the segment’s underwriting results, partly offset by improved premiums. Combined ratio deteriorated 1,370 basis points (bps) year over year to 105.3%.
Protection Services' revenues climbed 23.3% year over year to $597 million in the third quarter, courtesy of strong performance at Allstate Protection Plans.
Allstate Health and Benefits’ total premium and contract charges surged 60.3% year over year to $460 million. The substantial rise was due to the National General buyout leading to inclusion of group health and individual accident and health businesses.
Financial Update (as of Sep 30, 2021)
The company exited the third quarter with a cash balance of $690 million, which more than doubled from the 2020-end level.
Total assets of $133.4 billion increased 5.9% from the figure as on Dec 31, 2020.
Long-term debt during the quarter amounted to $8 billion, up 2% from the level at 2020 end.
Total shareholders’ equity declined 11.5% from the 2020-end figure to $26.7 billion.
Capital Position (as of Sep 30, 2021)
Adjusted net income return on equity came in at 21.2%, which improved 330 bps year over year.
Book value per share increased 2.7% from the prior-year quarter to $84.62 at the third-quarter end.
Debt-to-capital ratio of 23x deteriorated 340 bps year over year.
Prudent Capital Deployment
During the quarter under review, the company rewarded shareholders to the tune of around $1.5 billion via share buybacks and dividends.
Business Update
On Nov 1, 2021, the company announced the completion of divestiture of Allstate Life Insurance Company, which highlights Allstate’s strategy of streamlining business operations by intensifying focus on high-growth areas of Property-Liability and Protection Services businesses. Besides, it completed the sale of Allstate Life Insurance Company of New York last month. The joint deals have been successful in generating deployable capital of $1.7 billion and bringing down interest rate risk.
On Oct 1, 2021, the company acquired SafeAuto as a result of which the latter will be integrated into National General’s platform. The move highlights Allstate’s sincere efforts to boost its market share in personal property-liability.
Zacks Rank
Allstate currently has a Zacks Rank #4 (Sell).
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 third-quarter results so far, the bottom line of W.R. Berkley Corporation (WRB - Free Report) , American Financial Group, Inc. (AFG - Free Report) and Cincinnati FinanciaI Corporation (CINF - Free Report) beat the Zacks Consensus Estimate.