Allstate Corporation (NYSE:ALL) reported third-quarter 2016 operating earnings per share of $1.26, beating the Zacks Consensus Estimate of $1.24.
Reported earnings were, however, down 17.1% on a year-over-year basis, due to high catastrophe losses incurred in the quarter.
Allstate’s total revenue increased 2.1% year over year to $9.22 billion. This was primarily due to 29% growth in property-liability insurance premium and 6.1% increase in Allstate Financial premiums and contract charges, partly offset by a 7.3% decline in net investment income. The top line also exceeded the Zacks Consensus Estimate of $8.2 billion.
Property-liability (P&C) combined ratio deteriorated 190 basis points year over year to 95.5%.
Operating expenses increased 2.9% year over year to $1.02 billion.
Net investment income of $748 million declined 7.3% year over year primarily due to lower interest income on market-based investments following the Allstate Financial annuity portfolio repositioning.
ALLSTATE CORP Price, Consensus and EPS Surprise
ALLSTATE CORP Price, Consensus and EPS Surprise | ALLSTATE CORP Quote
During the quarter, the company incurred catastrophe losses of $481 million compared with $270 million in the year-ago quarter.
Quarter in Detail
Property-Liability’s premiums written were $8.3 billion, up 2.1% from the prior-year quarter. Underwriting income of $355 million was down 38% year over year due to an increase in catastrophe losses and unfavorable prior-year reserve reestimates in the company’s Discontinued Lines and Coverages segment, partially offset by a higher earned premium.
On the other hand, operating income for Allstate Financial decreased 32% to $94 million, primarily due to lower limited partnership income and interest income from portfolio repositioning in its annuity business.
Capital Position
Total equity increased to $20.9 billion from $20 billion at 2015 end, while total assets increased to $108.5 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 $51.48 per share increased 8.3% year over year. Operating return on equity declined 270 basis points year over year to 9.4%.
Stock Repurchase and Dividend Update
Overall, Allstate returned $389 million worth of capital through share buybacks and dividend in the reported quarter.
Zacks Rank & Performance of Other Players
Allstate carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The bottom line at Lincoln National Corp. (NYSE:LNC) , CNO Financial Group (NYSE:CNO) , and MetLife, Inc. (NYSE:MET) all surpassed the Zacks Consensus Estimate in the third quarter.
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LINCOLN NATL-IN (LNC): Free Stock Analysis Report
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