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Allstate (ALL) Beats Earnings on Higher Revenues in Q2

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Allstate Corporation’s (ALL - Free Report) second-quarter 2017 operating earnings per share of $1.38 beat the Zacks Consensus Estimate of 90 cents. Earnings also soared 122.6% year over year on higher revenues.

Allstate generated total revenue of $9.6 billion in the second quarter. The top line surpassed the Zacks Consensus Estimate by 13.9% and also improved 4.6% year over year. The upside was driven by premium growth as well as an increase in net investment income. The customer base rose to 75 million policies in force in the quarter.

The company aims to achieve profitability for shareholders, customers, employees, financial specialists and agency owners in the long term.

In the second quarter, operating expenses increased 4% year over year to $1 billion.

The quarter recorded sturdy underwriting income of $227 million despite catastrophe losses of $993 million.

 

Allstate Corporation (The) Price, Consensus and EPS Surprise

Allstate Corporation (The) Price, Consensus and EPS Surprise | Allstate Corporation (The) Quote

Behind the Headlines

Property-liability

Insurance premiums earned amounted to $8.0 billion in the second quarter, up 2.6% year over year. Net income of $484 million surged 144% year over year due to higher premiums earned. The combined ratio of 97.2% improved 360 basis points (bps) from the prior-year quarter due to lower expenses ratio. The segment incurred losses of $993 million, up 3.33% year over year.

Premiums written by Allstate brand rose 2.7% in the quarter. Combined ratio of 96.0% improved 410 bps from the prior-year quarter.

The Esurance brand recorded net written premium growth of 3% from the prior-year quarter due to an increase in auto and homeowners premiums. Combined ratio of 106.1% improved 280 bps year over year on the back of lower expense ratio.

The Encompass brand’s net written premiums declined 10% year over year.

Combined ratio of 104.4% improved 50 bps from the prior-year quarter.

Allstate Financial

Premium and contract charges of $591 million grew 4.7% year over year. Operating income of $153 million was 28% higher than the prior-year quarter due to better investment results at Allstate Annuities.

Corporate and Others

Revenues generated primarily from net investment income totaled $10 million, down 9% year over year. Operating loss of $80 million widened from the prior-year quarter figure of $71 million.

Capital Position

As of Jun 30, 2017, total shareholders’ equity was $21.5 billion, up 5% from year-end 2016. Total assets increased to $110.8 billion, up 2% from the end of 2016. Long-term debt remained flat year over year at $6.34 billion

Cash in-flow from operating activities totaled $491 million, down 24% year over year.

Stock Repurchase and Dividend Update

Allstate paid $257 million in dividends and spent $646 million in share buybacks in the first half of 2017.

The board of directors approved a $2 billion worth share repurchase program.

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

Among other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at Brown & Brown, Inc. (BRO - Free Report) and Fidelity National Financial, Inc. (FNF - Free Report) have topped their respective Zacks Consensus Estimates, while The Progressive Corporation (PGR - Free Report) lagged the same.

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