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Allstate Corporation’s (ALL - Free Report) third-quarter 2017 operating earnings per share of $1.60 beat the Zacks Consensus Estimate of 88 cents by 81.8%. Earnings also increased 27% year over year on higher revenues.
Net income applicable to common shareholders was $637 million, up 30% from the prior-year quarter.
Allstate generated total revenues of $9.6 billion in the third quarter. The top line surpassed the Zacks Consensus Estimate by 13.1% and also improved 4.8% year over year. The upside was driven by premium growth and an increase in net investment income.
In the quarter, total expenses increased 2.7% year over year to $8.7 billion.
Segment Update
Property-Liability
Insurance premiums earned amounted to $8.6 billion, up 3.3% year over year. Net income of $604 million increased 25% due to higher premiums earned. The combined ratio of 94.7% improved 80 basis points (bps) from the prior-year quarter due to lower claims and claims expense ratio.
Premiums written by Allstate brand auto rose 3.2% in the quarter. Combined ratio of 94.1% improved 410 bps from the prior-year quarter.
Allstate brand homeowners net written premium increased 2.8%. Combined ratio of 81.3% deteriorated 540 bps from the prior-year quarter.
Allstate brand other personal lines net written premium of $454 million increased 1.6% from the prior-year quarter. Combined ratio of 104.3% deteriorated 1680 basis points, primarily due to higher catastrophe losses.
The Esurance brand recorded net written premium growth of 1.6% from the prior-year quarter due to a lower expense ratio in auto and homeowners insurance. Combined ratio of 104.4% improved 540 bps year over year.
The Encompass brand’s net written premiums declined 9.4% year over year. Combined ratio of 89.2% improved 910 bps from the prior-year quarter driven by improved auto loss costs and lower catastrophes due to limited exposure in areas impacted by the hurricanes.
Allstate Financial
Premium and contract charges of $593 million jumped 4% year over year. Net income of $168 million was 110% higher due to better investment results at Allstate Annuities.
Allstate Life’s premium and contract charges of $316 million increased 2%. Net income of $73 million was 69% higher than the prior-year quarter.
Allstate Benefits’ premium and contract charges of $273 million jumped 6.2%. Net income of $29 million was 16% higher than the prior-year quarter.
Allstate Annuities’ premium and contract charges of $4 million remained flat year over year. Net income of $66 million surged 450%.
Corporate and Others
Revenues generated primarily from net investment income totaled $10 million, down 9% year over year. Net loss of $135 million widened from the prior-year quarter loss of $72 million.
The Allstate Corporation Price, Consensus and EPS Surprise
Among other insurers that have reported their third-quarter earnings so far, Brown & Brown, Inc. (BRO - Free Report) , RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) beat their respective Zacks Consensus Estimate.
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Allstate's (ALL) Q3 Earnings Beat Estimates, Increase Y/Y
Allstate Corporation’s (ALL - Free Report) third-quarter 2017 operating earnings per share of $1.60 beat the Zacks Consensus Estimate of 88 cents by 81.8%. Earnings also increased 27% year over year on higher revenues.
Net income applicable to common shareholders was $637 million, up 30% from the prior-year quarter.
Allstate generated total revenues of $9.6 billion in the third quarter. The top line surpassed the Zacks Consensus Estimate by 13.1% and also improved 4.8% year over year. The upside was driven by premium growth and an increase in net investment income.
In the quarter, total expenses increased 2.7% year over year to $8.7 billion.
Segment Update
Property-Liability
Insurance premiums earned amounted to $8.6 billion, up 3.3% year over year. Net income of $604 million increased 25% due to higher premiums earned. The combined ratio of 94.7% improved 80 basis points (bps) from the prior-year quarter due to lower claims and claims expense ratio.
Premiums written by Allstate brand auto rose 3.2% in the quarter. Combined ratio of 94.1% improved 410 bps from the prior-year quarter.
Allstate brand homeowners net written premium increased 2.8%. Combined ratio of 81.3% deteriorated 540 bps from the prior-year quarter.
Allstate brand other personal lines net written premium of $454 million increased 1.6% from the prior-year quarter. Combined ratio of 104.3% deteriorated 1680 basis points, primarily due to higher catastrophe losses.
The Esurance brand recorded net written premium growth of 1.6% from the prior-year quarter due to a lower expense ratio in auto and homeowners insurance. Combined ratio of 104.4% improved 540 bps year over year.
The Encompass brand’s net written premiums declined 9.4% year over year. Combined ratio of 89.2% improved 910 bps from the prior-year quarter driven by improved auto loss costs and lower catastrophes due to limited exposure in areas impacted by the hurricanes.
Allstate Financial
Premium and contract charges of $593 million jumped 4% year over year. Net income of $168 million was 110% higher due to better investment results at Allstate Annuities.
Allstate Life’s premium and contract charges of $316 million increased 2%. Net income of $73 million was 69% higher than the prior-year quarter.
Allstate Benefits’ premium and contract charges of $273 million jumped 6.2%. Net income of $29 million was 16% higher than the prior-year quarter.
Allstate Annuities’ premium and contract charges of $4 million remained flat year over year. Net income of $66 million surged 450%.
Corporate and Others
Revenues generated primarily from net investment income totaled $10 million, down 9% year over year. Net loss of $135 million widened from the prior-year quarter loss of $72 million.
The Allstate Corporation Price, Consensus and EPS Surprise
Allstate Corporation (The) Price, Consensus and EPS Surprise | Allstate Corporation (The) Quote
Capital Position
As of Sep 30, 2017, total shareholders’ equity was $22.1 billion, up 7.55% from year-end 2016.
Total assets increased to $113.6 billion, up 5% from the end of 2016.
Long-term debt remained flat year over year at $6.3 billion.
For the first nine months of 2017, cash inflow from operating activities totaled $3.2 billion, up 18% year over year.
Stock Repurchase and Dividend Update
Allstate paid $391 million in dividends for the first nine months of 2017.
The board of directors approved a $2 billion worth share repurchase program in August.
Zacks Rank
Allstate currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other insurers that have reported their third-quarter earnings so far, Brown & Brown, Inc. (BRO - Free Report) , RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) beat their respective Zacks Consensus Estimate.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>