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How Are Rate Hikes Aiding Allstate (ALL) to Fight Inflation?
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The Allstate Corporation (ALL - Free Report) recently announced rate hikes of auto insurance in December, along with homeowners' insurance rate adjustments. This strategy aligns well with current macroeconomic trends, reinforcing the company's commitment to navigating challenging market conditions.
Inflationary pressure has forced insurers to increase rates to maintain a decent level of profitability. The company’s estimated catastrophe losses for December were below the $150 million reporting threshold, highlighting effective risk management. Its fourth-quarter catastrophe loss was $68 million, pre-tax. The company also reported unfavorable prior-year reserve reestimates of $199 million for the fourth quarter, excluding catastrophes.
Last month, Allstate hiked auto rates by 16.5% in 15 locations, which provided a total premium impact of 5%. The auto rate hikes for the year 2023 had a premium impact of 16.4%, which is likely to boost annualized written premiums by around $4.27 billion. The homeowners insurance rate hikes for the year 2023 had a premium impact of 11.3%, which is likely to improve annualized written premiums by around $1.16 billion. Last month, it increased homeowners’ rates by 12% in 10 locations, which offered a total premium impact of 1.2%.
Apart from implementing higher rates, ALL is likely to improve profitability through cost-curbing measures with the help of digitization, improving efficiency, leveraging scale with strategic partnerships and stricter underwriting requirements. Reducing distribution expenses will also support its margins.
Allstate's limited catastrophe losses in December provide relief, especially in light of the substantial $5.6 billion incurred in the first nine months of 2023, marking a significant 138.7% year-over-year increase. Comparatively, 2021 and 2022 saw catastrophe losses of $3.3 billion and $3.1 billion, respectively, showcasing a challenging trend in 2023.
Allstate remains firm on lowering losses through its catastrophe management strategies and reinsurance programs and restricting exposure to riskier geographic markets by expanding premiums. Nevertheless, this is likely to affect the growth rate of policies in force for Allstate Protection Homeowners. Moreover, the first three quarters witnessed a 2.9% decline in policies in force for Allstate Protection Auto, reflecting some challenges.
Price Performances
Allstate shares have gained 36.6% in the past six months compared with the industry’s 5% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
ALL currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the property and casualty insurance industry are CNA Financial Corporation (CNA - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Skyward Specialty Insurance Group, Inc. (SKWD - Free Report) . While CNA Financial sports a Zacks Rank #1 (Strong Buy), Cincinnati Financial and Skyward Specialty Insurance carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CNA Financial has a solid track record of beating earnings estimates in three of the last four quarters, missing once, the average being 9.2%.
The Zacks Consensus Estimate for CNA’s 2023 and 2024 earnings has moved 0.5% and 6.9% north, respectively, in the past seven days, reflecting analysts’ optimism.
Cincinnati Financial beat estimates in three of the last four quarters and missed in one, the average being 38.3%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share (EPS) indicates a year-over-year increase of 32.1% and 8.2%, respectively.
Skyward Specialty Insurance surpassed earnings in each of the last four quarters, the average being 49.8%.
The Zacks Consensus Estimate for SKWD’s 2023 and 2024 EPS indicates a year-over-year increase of 15.1% and 17.8%, respectively.
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How Are Rate Hikes Aiding Allstate (ALL) to Fight Inflation?
The Allstate Corporation (ALL - Free Report) recently announced rate hikes of auto insurance in December, along with homeowners' insurance rate adjustments. This strategy aligns well with current macroeconomic trends, reinforcing the company's commitment to navigating challenging market conditions.
Inflationary pressure has forced insurers to increase rates to maintain a decent level of profitability. The company’s estimated catastrophe losses for December were below the $150 million reporting threshold, highlighting effective risk management. Its fourth-quarter catastrophe loss was $68 million, pre-tax. The company also reported unfavorable prior-year reserve reestimates of $199 million for the fourth quarter, excluding catastrophes.
Last month, Allstate hiked auto rates by 16.5% in 15 locations, which provided a total premium impact of 5%. The auto rate hikes for the year 2023 had a premium impact of 16.4%, which is likely to boost annualized written premiums by around $4.27 billion. The homeowners insurance rate hikes for the year 2023 had a premium impact of 11.3%, which is likely to improve annualized written premiums by around $1.16 billion. Last month, it increased homeowners’ rates by 12% in 10 locations, which offered a total premium impact of 1.2%.
Apart from implementing higher rates, ALL is likely to improve profitability through cost-curbing measures with the help of digitization, improving efficiency, leveraging scale with strategic partnerships and stricter underwriting requirements. Reducing distribution expenses will also support its margins.
Allstate's limited catastrophe losses in December provide relief, especially in light of the substantial $5.6 billion incurred in the first nine months of 2023, marking a significant 138.7% year-over-year increase. Comparatively, 2021 and 2022 saw catastrophe losses of $3.3 billion and $3.1 billion, respectively, showcasing a challenging trend in 2023.
Allstate remains firm on lowering losses through its catastrophe management strategies and reinsurance programs and restricting exposure to riskier geographic markets by expanding premiums. Nevertheless, this is likely to affect the growth rate of policies in force for Allstate Protection Homeowners. Moreover, the first three quarters witnessed a 2.9% decline in policies in force for Allstate Protection Auto, reflecting some challenges.
Price Performances
Allstate shares have gained 36.6% in the past six months compared with the industry’s 5% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
ALL currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the property and casualty insurance industry are CNA Financial Corporation (CNA - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Skyward Specialty Insurance Group, Inc. (SKWD - Free Report) . While CNA Financial sports a Zacks Rank #1 (Strong Buy), Cincinnati Financial and Skyward Specialty Insurance carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CNA Financial has a solid track record of beating earnings estimates in three of the last four quarters, missing once, the average being 9.2%.
The Zacks Consensus Estimate for CNA’s 2023 and 2024 earnings has moved 0.5% and 6.9% north, respectively, in the past seven days, reflecting analysts’ optimism.
Cincinnati Financial beat estimates in three of the last four quarters and missed in one, the average being 38.3%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share (EPS) indicates a year-over-year increase of 32.1% and 8.2%, respectively.
Skyward Specialty Insurance surpassed earnings in each of the last four quarters, the average being 49.8%.
The Zacks Consensus Estimate for SKWD’s 2023 and 2024 EPS indicates a year-over-year increase of 15.1% and 17.8%, respectively.