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Allstate's (ALL) Q3 Earnings Beat Estimates, Increase Y/Y

Allstate Corporation’s ALL 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.

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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, RLI Corp. RLI and The Progressive Corporation PGR beat their respective Zacks Consensus Estimate.

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