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Can Auto Insurance Rate Hikes Aid Allstate's (ALL) Q3 Earnings?
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The Allstate Corporation (ALL - Free Report) is scheduled to release third-quarter 2023 results on Nov 1, after the closing bell.
Q3 Estimates
The Zacks Consensus Estimate for Allstate’s third-quarter earnings per share is pegged at 39 cents. A loss of $1.56 per share was reported in the prior-year quarter.
The consensus mark for revenues is $14.7 billion, which indicates an improvement of 10.2% from the prior-year quarter’s reported figure.
Earnings Surprise History
Allstate’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 4.74%. This is depicted in the chart below:
Allstate’s revenues are likely to have benefited on the back of improved net premiums earned, attributable to rate increases. We estimate net premiums earned to grow 10.7% year over year to $12.9 billion in the third quarter. Net investment income is anticipated to have received an impetus from higher fixed income yields and increased duration of bonds.
Strong segmental contributions are also expected to have driven ALL’s quarterly performance. The Property-Liability segment is likely to have been aided by higher earned premiums, which in turn, are likely to have stemmed from rate increases in the auto and homeowners insurance business. Our estimate for the unit’s premiums earned is $12.3 billion, which indicates an improvement of 9.9% year over year.
The auto insurance business is expected to have been aided by expanding earned premiums, lower expenses and reduced adverse non-catastrophe prior year reserve re-estimates in the third quarter.
Meanwhile, the homeowners insurance business is likely to have received a boost from improved average gross premium per policy in the Allstate and National General brands coupled with a rise in policies in force. However, the continued incidence of catastrophe losses is expected to have acted as a partial offset for both the business’ quarterly performance.
Inevitably, catastrophe losses are likely to have hurt the overall underwriting results of Allstate in the to-be-reported quarter and led to a deterioration in the combined ratio. Management forecasts pre-tax catastrophe losses to be $1.18 billion in the third quarter.
The Protection Services segment is expected to have been aided by the strength in Allstate Protection Plans and Allstate Dealer Services coupled with expanding international operations. We expect the unit’s revenues to rise 24.5% year over year to $780.4 million.
Additionally, improved premiums and contract charges, as well as higher revenues derived from group health products, are likely to have contributed to the performance of the Allstate Health and Benefits segment in the to-be-reported quarter. However, the upside is likely to have been partly offset by a decline in individual health and employer voluntary benefits and, escalating expenses linked with system investments. Our estimate for the unit’s revenues is $586 million, up 3.9% year over year.
Besides, an elevated catastrophe loss level is expected to have increased property and casualty insurance claims and claims expenses in the third quarter, which in turn, are likely to have acted as a drag on ALL’s margins. We expect the abovementioned cost to increase 5.6% year over year to $10.6 billion.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Allstate has an Earnings ESP of -53.74% because the Most Accurate Estimate of 18 cents is pegged lower than the Zacks Consensus Estimate of 39 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: ALL currently carries a Zacks Rank of 3.
Stocks to Consider
While an earnings beat looks uncertain for Allstate, here are some companies from the insurance space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for AIG’s third-quarter 2023 earnings is pegged at $1.55 per share, which has more than doubled from the prior-year quarter’s reported figure.
American Equity’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 13.45%.
Aflac Incorporated (AFL - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for AFL’s third-quarter 2023 earnings is pegged at $1.44 per share, suggesting 17.1% growth from the year-ago quarter’s reported figure.
Aflac’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 7.76%.
American Equity Investment Life Holding Company (AEL - Free Report) has an Earnings ESP of +1.44% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for AEL’s third-quarter 2023 earnings is pegged at $1.67 per share, indicating a 68.7% surge from the prior-year quarter’s reported figure.
American Equity’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 6.54%.
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Can Auto Insurance Rate Hikes Aid Allstate's (ALL) Q3 Earnings?
The Allstate Corporation (ALL - Free Report) is scheduled to release third-quarter 2023 results on Nov 1, after the closing bell.
Q3 Estimates
The Zacks Consensus Estimate for Allstate’s third-quarter earnings per share is pegged at 39 cents. A loss of $1.56 per share was reported in the prior-year quarter.
The consensus mark for revenues is $14.7 billion, which indicates an improvement of 10.2% from the prior-year quarter’s reported figure.
Earnings Surprise History
Allstate’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 4.74%. This is depicted in the chart below:
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Factors to Note
Allstate’s revenues are likely to have benefited on the back of improved net premiums earned, attributable to rate increases. We estimate net premiums earned to grow 10.7% year over year to $12.9 billion in the third quarter. Net investment income is anticipated to have received an impetus from higher fixed income yields and increased duration of bonds.
Strong segmental contributions are also expected to have driven ALL’s quarterly performance. The Property-Liability segment is likely to have been aided by higher earned premiums, which in turn, are likely to have stemmed from rate increases in the auto and homeowners insurance business. Our estimate for the unit’s premiums earned is $12.3 billion, which indicates an improvement of 9.9% year over year.
The auto insurance business is expected to have been aided by expanding earned premiums, lower expenses and reduced adverse non-catastrophe prior year reserve re-estimates in the third quarter.
Meanwhile, the homeowners insurance business is likely to have received a boost from improved average gross premium per policy in the Allstate and National General brands coupled with a rise in policies in force. However, the continued incidence of catastrophe losses is expected to have acted as a partial offset for both the business’ quarterly performance.
Inevitably, catastrophe losses are likely to have hurt the overall underwriting results of Allstate in the to-be-reported quarter and led to a deterioration in the combined ratio. Management forecasts pre-tax catastrophe losses to be $1.18 billion in the third quarter.
The Protection Services segment is expected to have been aided by the strength in Allstate Protection Plans and Allstate Dealer Services coupled with expanding international operations. We expect the unit’s revenues to rise 24.5% year over year to $780.4 million.
Additionally, improved premiums and contract charges, as well as higher revenues derived from group health products, are likely to have contributed to the performance of the Allstate Health and Benefits segment in the to-be-reported quarter. However, the upside is likely to have been partly offset by a decline in individual health and employer voluntary benefits and, escalating expenses linked with system investments. Our estimate for the unit’s revenues is $586 million, up 3.9% year over year.
Besides, an elevated catastrophe loss level is expected to have increased property and casualty insurance claims and claims expenses in the third quarter, which in turn, are likely to have acted as a drag on ALL’s margins. We expect the abovementioned cost to increase 5.6% year over year to $10.6 billion.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Allstate has an Earnings ESP of -53.74% because the Most Accurate Estimate of 18 cents is pegged lower than the Zacks Consensus Estimate of 39 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: ALL currently carries a Zacks Rank of 3.
Stocks to Consider
While an earnings beat looks uncertain for Allstate, here are some companies from the insurance space, which according to our model, have the right combination of elements to beat on earnings this time around:
American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +4.02% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIG’s third-quarter 2023 earnings is pegged at $1.55 per share, which has more than doubled from the prior-year quarter’s reported figure.
American Equity’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 13.45%.
Aflac Incorporated (AFL - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for AFL’s third-quarter 2023 earnings is pegged at $1.44 per share, suggesting 17.1% growth from the year-ago quarter’s reported figure.
Aflac’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 7.76%.
American Equity Investment Life Holding Company (AEL - Free Report) has an Earnings ESP of +1.44% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for AEL’s third-quarter 2023 earnings is pegged at $1.67 per share, indicating a 68.7% surge from the prior-year quarter’s reported figure.
American Equity’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 6.54%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.