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Allstate (ALL) Q4 Earnings Beat on Solid Underwriting Results
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The Allstate Corporation (ALL - Free Report) reported a fourth-quarter 2023 adjusted net income of $5.82 per share, which surpassed the Zacks Consensus Estimate by 50.4%. The company reported a loss of $1.33 per share in the year-ago quarter.
Operating revenues of $14.9 billion rose 10% year over year in the quarter under review. The year-over-year growth was due to a 10.7% increase in Property-Liability insurance premiums earned. Yet, the top line fell short of the consensus mark by a whisker.
The quarterly results benefited on the back of prudent rate increases, a rise in investment income, strong underwriting results, favorable weather conditions and a decline in expenses. However, the upside was partly offset by lower performance-based investment income.
The Allstate Corporation Price, Consensus and EPS Surprise
Net investment income improved 8.4% year over year to $604 million in the fourth quarter but missed the Zacks Consensus Estimate of $643 million. The metric benefited on the back of improved yields from the fixed-income portfolio, resulting in 30.2% year-over-year growth in market-based investment income. However, performance-based investment income plunged 59.2% year over year due to a decline in valuation increases and reduced income from the underlying investments’ sale.
Total costs and expenses of $13 billion decreased 7.5% year over year and also came in lower than our estimate of $13.7 billion. The year-over-year decline was due to lower property and casualty insurance claims and claims expenses.
Allstate generated a pretax income of $1.8 billion in the quarter under review against the year-ago quarter’s pretax loss of $410 million.
Total policies in force were 192.8 million as of Dec 31, 2023, up 2% year over year.
Catastrophe losses dropped 91.3% year over year to $68 million in the fourth quarter.
Segmental Performances
The Property-Liability segment recorded premiums earned of $12.6 billion, which advanced 10.7% year over year on the back of increased average premiums resulting from rate hikes. The metric almost touched the Zacks Consensus Estimate but missed our estimate of $12.7 billion. The Allstate brand gained from improved auto and homeowners average premiums, while average premium growth and an increase in the number of policies contributed to the results of National General.
Underwriting income in the unit amounted to $1.3 billion in the fourth quarter against the prior-year quarter’s underwriting loss of $1 billion. The metric was aided by a rise in earned premiums, reduced catastrophe losses and favorable underlying loss experience. The combined ratio of 89.5% improved 1,960 basis points (bps) year over year in the quarter under review and came lower than our estimate of 96.6%.
The Protection Services segment’s revenues grew 11.8% year over year to $719 million in the fourth quarter, thanks to strength in Allstate Protection Plans. However, the figure fell short of the consensus mark of $731 million. Adjusted net income of $4 million declined nearly 10-fold year over year due to a rise in state income taxes and deferred tax liabilities.
The Allstate Health and Benefits segment reported premium and contract charges of $467 million, which improved 7.1% year over year in the quarter under review, and beat the Zacks Consensus Estimate of $447 million and our estimate of $435.1 million. The unit’s performance was driven by sound individual health and group health results. Adjusted net income advanced 3.4% year over year to $60 million, which matched the consensus mark but outpaced our estimate of $56.5 million.
Financial Update (as of Dec 31, 2023)
Allstate exited the fourth quarter with a cash balance of $722 million, which declined 1.9% from the figure at 2022 end. Total assets of $103.4 billion increased 5.5% from the 2022-end level.
Debt amounted to $7.9 billion, which dipped 0.3% from the figure as of Dec 31, 2022.
Total shareholders’ equity of $17.8 billion increased 1.6% from the 2022-end figure.
Book value per common share was $59.39 as of Dec 31, 2023, which grew 2.2% from the 2022 figure.
The adjusted net income return on ALL’s common shareholders’ equity in the trailing 12-month period was 1.5%. The metric was recorded at a negative figure of 1.2% in the prior-year comparable period.
Full-Year Update
Allstate reported an adjusted net income of 95 cents per share in 2023. A loss of 88 cents per share was reported in 2022.
Consolidated revenues rose 11.1% year over year to $57.1 billion. Property-Liability insurance premiums earned of $48.4 billion rose 10.3% year over year. Net investment income increased 3.1% year over year to $2.5 billion.
It incurred an underwriting loss of $2.2 billion, narrower than the prior year’s loss of $2.9 billion. The combined ratio improved 210 bps year over year to 104.5%.
Of the insurance industry players that have reported fourth-quarter 2023 results so far, the bottom-line results of Cincinnati Financial Corporation (CINF - Free Report) , The Hartford Financial Services Group, Inc. (HIG - Free Report) and American Financial Group, Inc. (AFG - Free Report) beat the respective Zacks Consensus Estimate.
Cincinnati Financial reported fourth-quarter 2023 operating income of $2.28 per share, which surpassed the Zacks Consensus Estimate by 18.1%. The bottom line surged 79.5% year over year. Total operating revenues in the quarter under review were $2.3 billion, which improved 10.8% year over year. Also, the top line beat the consensus mark by 1%. Earned premiums climbed 10% year over year to $2.1 billion.
Investment income, net of expenses, increased 15% year over year to $239 million. In its property & casualty insurance business, CINF witnessed an underwriting income of $252 million compared with an underwriting income of $93 million in the year-ago period. The combined ratio — a measure of underwriting profitability — improved 740 bps year over year to 87.5%. Total revenues in the Commercial Lines Insurance segment increased 4% year over year to $1.1 billion.
Hartford Financial’s fourth-quarter 2023 adjusted operating earnings of $3.06 per share surpassed the Zacks Consensus Estimate by 28%. The bottom line climbed 32% year over year. Operating revenues of HIG amounted to $4.3 billion, which improved 7.6% year over year in the quarter under review. The top line beat the consensus mark by a whisker. Earned premiums rose 8.2% year over year to $5.43 billion in the fourth quarter.
Pre-tax net investment income of $653 million grew 2% year over year. Pretax income of $950 million advanced 29.3% year over year in the fourth quarter. Revenues in the Commercial Lines segment amounted to $3.4 billion in the fourth quarter, which advanced 7.8% year over year. The Personal Lines segment recorded revenues of $876 million, which improved 6.6% year over year.
RenaissanceRe reported fourth-quarter 2023 operating income of $11.77 per share, which beat the Zacks Consensus Estimate by 44.8%. The bottom line increased 60.6% year over year. Total operating revenues increased 42.5% year over year to $2.6 billion in the fourth quarter. The top line outpaced the consensus mark by 19.6%. Gross premiums written of $1.8 billion increased 13.7% year over year in the fourth quarter.
Net premiums earned improved 38.5% year over year to $2.2 billion. RNR’s net investment income amounted to $377 million, which increased 11.6% year over year in the quarter under review. It reported an underwriting income of $541 million, which surged 71% year over year. The combined ratio improved 450 bps year over year to 76% in the fourth quarter.
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Allstate (ALL) Q4 Earnings Beat on Solid Underwriting Results
The Allstate Corporation (ALL - Free Report) reported a fourth-quarter 2023 adjusted net income of $5.82 per share, which surpassed the Zacks Consensus Estimate by 50.4%. The company reported a loss of $1.33 per share in the year-ago quarter.
Operating revenues of $14.9 billion rose 10% year over year in the quarter under review. The year-over-year growth was due to a 10.7% increase in Property-Liability insurance premiums earned. Yet, the top line fell short of the consensus mark by a whisker.
The quarterly results benefited on the back of prudent rate increases, a rise in investment income, strong underwriting results, favorable weather conditions and a decline in expenses. However, the upside was partly offset by lower performance-based investment income.
The Allstate Corporation Price, Consensus and EPS Surprise
The Allstate Corporation price-consensus-eps-surprise-chart | The Allstate Corporation Quote
Q4 Operations
Net investment income improved 8.4% year over year to $604 million in the fourth quarter but missed the Zacks Consensus Estimate of $643 million. The metric benefited on the back of improved yields from the fixed-income portfolio, resulting in 30.2% year-over-year growth in market-based investment income. However, performance-based investment income plunged 59.2% year over year due to a decline in valuation increases and reduced income from the underlying investments’ sale.
Total costs and expenses of $13 billion decreased 7.5% year over year and also came in lower than our estimate of $13.7 billion. The year-over-year decline was due to lower property and casualty insurance claims and claims expenses.
Allstate generated a pretax income of $1.8 billion in the quarter under review against the year-ago quarter’s pretax loss of $410 million.
Total policies in force were 192.8 million as of Dec 31, 2023, up 2% year over year.
Catastrophe losses dropped 91.3% year over year to $68 million in the fourth quarter.
Segmental Performances
The Property-Liability segment recorded premiums earned of $12.6 billion, which advanced 10.7% year over year on the back of increased average premiums resulting from rate hikes. The metric almost touched the Zacks Consensus Estimate but missed our estimate of $12.7 billion. The Allstate brand gained from improved auto and homeowners average premiums, while average premium growth and an increase in the number of policies contributed to the results of National General.
Underwriting income in the unit amounted to $1.3 billion in the fourth quarter against the prior-year quarter’s underwriting loss of $1 billion. The metric was aided by a rise in earned premiums, reduced catastrophe losses and favorable underlying loss experience. The combined ratio of 89.5% improved 1,960 basis points (bps) year over year in the quarter under review and came lower than our estimate of 96.6%.
The Protection Services segment’s revenues grew 11.8% year over year to $719 million in the fourth quarter, thanks to strength in Allstate Protection Plans. However, the figure fell short of the consensus mark of $731 million. Adjusted net income of $4 million declined nearly 10-fold year over year due to a rise in state income taxes and deferred tax liabilities.
The Allstate Health and Benefits segment reported premium and contract charges of $467 million, which improved 7.1% year over year in the quarter under review, and beat the Zacks Consensus Estimate of $447 million and our estimate of $435.1 million. The unit’s performance was driven by sound individual health and group health results. Adjusted net income advanced 3.4% year over year to $60 million, which matched the consensus mark but outpaced our estimate of $56.5 million.
Financial Update (as of Dec 31, 2023)
Allstate exited the fourth quarter with a cash balance of $722 million, which declined 1.9% from the figure at 2022 end. Total assets of $103.4 billion increased 5.5% from the 2022-end level.
Debt amounted to $7.9 billion, which dipped 0.3% from the figure as of Dec 31, 2022.
Total shareholders’ equity of $17.8 billion increased 1.6% from the 2022-end figure.
Book value per common share was $59.39 as of Dec 31, 2023, which grew 2.2% from the 2022 figure.
The adjusted net income return on ALL’s common shareholders’ equity in the trailing 12-month period was 1.5%. The metric was recorded at a negative figure of 1.2% in the prior-year comparable period.
Full-Year Update
Allstate reported an adjusted net income of 95 cents per share in 2023. A loss of 88 cents per share was reported in 2022.
Consolidated revenues rose 11.1% year over year to $57.1 billion. Property-Liability insurance premiums earned of $48.4 billion rose 10.3% year over year. Net investment income increased 3.1% year over year to $2.5 billion.
It incurred an underwriting loss of $2.2 billion, narrower than the prior year’s loss of $2.9 billion. The combined ratio improved 210 bps year over year to 104.5%.
Zacks Rank
Allstate currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported fourth-quarter 2023 results so far, the bottom-line results of Cincinnati Financial Corporation (CINF - Free Report) , The Hartford Financial Services Group, Inc. (HIG - Free Report) and American Financial Group, Inc. (AFG - Free Report) beat the respective Zacks Consensus Estimate.
Cincinnati Financial reported fourth-quarter 2023 operating income of $2.28 per share, which surpassed the Zacks Consensus Estimate by 18.1%. The bottom line surged 79.5% year over year. Total operating revenues in the quarter under review were $2.3 billion, which improved 10.8% year over year. Also, the top line beat the consensus mark by 1%. Earned premiums climbed 10% year over year to $2.1 billion.
Investment income, net of expenses, increased 15% year over year to $239 million. In its property & casualty insurance business, CINF witnessed an underwriting income of $252 million compared with an underwriting income of $93 million in the year-ago period. The combined ratio — a measure of underwriting profitability — improved 740 bps year over year to 87.5%. Total revenues in the Commercial Lines Insurance segment increased 4% year over year to $1.1 billion.
Hartford Financial’s fourth-quarter 2023 adjusted operating earnings of $3.06 per share surpassed the Zacks Consensus Estimate by 28%. The bottom line climbed 32% year over year. Operating revenues of HIG amounted to $4.3 billion, which improved 7.6% year over year in the quarter under review. The top line beat the consensus mark by a whisker. Earned premiums rose 8.2% year over year to $5.43 billion in the fourth quarter.
Pre-tax net investment income of $653 million grew 2% year over year. Pretax income of $950 million advanced 29.3% year over year in the fourth quarter. Revenues in the Commercial Lines segment amounted to $3.4 billion in the fourth quarter, which advanced 7.8% year over year. The Personal Lines segment recorded revenues of $876 million, which improved 6.6% year over year.
RenaissanceRe reported fourth-quarter 2023 operating income of $11.77 per share, which beat the Zacks Consensus Estimate by 44.8%. The bottom line increased 60.6% year over year. Total operating revenues increased 42.5% year over year to $2.6 billion in the fourth quarter. The top line outpaced the consensus mark by 19.6%. Gross premiums written of $1.8 billion increased 13.7% year over year in the fourth quarter.
Net premiums earned improved 38.5% year over year to $2.2 billion. RNR’s net investment income amounted to $377 million, which increased 11.6% year over year in the quarter under review. It reported an underwriting income of $541 million, which surged 71% year over year. The combined ratio improved 450 bps year over year to 76% in the fourth quarter.