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Allstate’s (ALL) Q4 Earnings & Revenues Beat, Dividend Up


Allstate Corporation’s ALL fourth-quarter 2017 operating earnings per share of $2.09, surpassed the Zacks Consensus Estimate by 39.3%. The bottom line, however, declined by 3.7% year over year due to high catastrophe loss.

The Tax Cuts and Jobs Act resulted in a $506 million increase in net income, which was up 50.4% year over year to $1.22 billion.

Allstate generated total revenues of $9.72 billion, outpacing the consensus mark by 15.3% and up 4.7% year over year. The upside was driven by premium growth and an increase in net investment income.

In the quarter, total expenses increased 8.3% year over year to $8.69 billion. The company incurred catastrophe loss of $599 million, which was up 98% year over year.

Allstate Corporation (The) Price, Consensus and EPS Surprise

Top-line Growth Across Segments

Property-Liability insurance premiums amounted to $7.97 billion, up 2.8% year over year. Net investment income of $45 million also increased 24.3% year over year. Underwriting income of $715 million declined 10.7% year over year due to high catastrophe loss.

Service Businesses, a new reportable segment, offers a broad range of products and services that expand and enhance customer value propositions. Total revenues from this division were $264 million up 45.9% year over year, led by Square Trade acquisition closed last year.

Allstate Life’s premium and contract charges of $324 million increased 1.9% year over year driven by higher traditional life insurance renewal premiums and lower levels of reinsurance premiums ceded. Net income of $57 million declined 13.6% year over year due to increased contract benefits and operating expenses, partially offset by higher premiums.

Allstate Benefits’ premium and contract charges of $273 million were up 8.3% backed by 7.4% growth in policies in force in 2017. Net income of $20 million was 13% lower than the prior-year quarter figure, primarily due to higher contract benefits and operating expenses, partially offset by higher premiums.

Allstate Annuities’ premium and contract charges of $4 million remained flat year over year. Adjusted net income of $55 million surged 34% owing to higher performance-based investment income.

Capital Position

As of Dec 31, 2017, total shareholders’ equity was $22.6 billion, up 9.6% year over year.

Total assets were $112.4 billion, up 3.5% from the level at 2016-end.

Long-term debt remained flat year over year at $6.35 billion.

For 2017, cash inflow from operating activities totaled $4.3 billion, up 8% year over year.

Stock Repurchase and Dividend Update

Allstate returned $713 million in the quarter under review via share buyback ($579 million) and dividend payments ($134 million).

Driven by its strong operating fundamentals and a reduction in the U.S. federal income tax rate, the company increased the quarterly dividend by 24% to 46 cents per share for the first quarter of 2018.

Zacks Rank

Allstate carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurers that have reported their fourth-quarter earnings so far, American Financial Group Inc. AFG, RLI Corp. RLI and W.R. Berkley Corp. WRB exceeded their respective Zacks Consensus Estimate by 33.3%, 6.25% and 4.11%.

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