Allstate (ALL) Q2 Earnings Beat Estimates, Revenues Rise

The Allstate Corporation (NYSE:ALL) reported second-quarter 2016 operating earnings per share of 62 cents, comfortably beating the Zacks Consensus Estimate of 53 cents. Reported earnings were, however, down 1.6% on a year-over-year basis.

The earnings outperformance came from higher premium in its property and liability segment plus higher contract charge and fees in the Allstate Financial segment. This was partly offset by high catastrophe loss incurred during the quarter.

Allstate’s total revenue increased 3% year over year to $9.1 billion. This was primarily due to growth in insurance premium and realized capital gains, which were to some extent offset by a decline in net investment income. The top line also exceeded the Zacks Consensus Estimate of $8.1 billion.

Property-liability (P&C) insurance claims and claim expenses rose 5.6% year over year to $5.9 billion, while operating expenses decreased 2% to $1.04 billion.

Net investment income of $762 million declined 3.5% year over year primarily due to lower interest income partially offset by higher dividends on equity securities and performance-based investment results.

During the quarter, the company incurred catastrophe losses of $961 million compared with $797 million in the year-ago quarter.

Quarter in Detail

Property-Liability’s net premiums were $7.8 billion, up 3.5% from the prior-year quarter. The segment’s operating income of $186 million in the second quarter of 2016 was 6.5% lower year over year. The segment sustained an underwriting loss of $66 million in the reported quarter, worse than $56 million reported in the prior-year quarter due to an increase in catastrophe losses and higher auto loss costs, partially offset by higher earned premium.

On the other hand, operating income for Allstate Financial decreased 3.7% to $120 million, due primarily to lower investment income resulting from portfolio repositioning in 2015 to deliver better long-term, risk-adjusted returns.

Capital Position

Total equity increased to $20.6 billion from $20 billion at 2015 end, while total assets increased to $107.3 billion from $104.7 billion from the same time period. Long-term debt was down a meager 0.3% to $5.1 billion from the 2015-end level.

Book value of $50.05 per share increased 4.4% year over year.

Stock Repurchase and Dividend Update

Overall, Allstate returned $1.07 billion worth of capital through share buybacks and dividend for the first half of 2016.

ALLSTATE CORP Price, Consensus and EPS Surprise

ALLSTATE CORP Price, Consensus and EPS Surprise | ALLSTATE CORP Quote

Zacks Rank & Performance of Other Players

Allstate carries a Zacks Rank #3 (Hold). The bottom line at The Travelers Companies, Inc. (NYSE:TRV) outperformed the Zacks Consensus Estimates while Chubb Limited (NYSE:CB) and RLI Corp. (NYSE:RLI) missed the same in the second quarter.