Allstate Corporation’s (NYSE:ALL) first-quarter 2018 operating earnings per share of $2.96 surpassed the Zacks Consensus Estimate by 15.2%. Moreover, the bottom line soared 80.5% year over year, fueled by a decreased auto accident frequency, lower catastrophe loss and lowered tax incidence.
Price, Consensus and EPS Surprise
Allstate generated total revenues of $9.9 billion, outpacing the consensus mark by 19.4%. The top line also improved 6.5% year over year. This upside was driven by premium growth and an increase in net investment income.
In the quarter under review, total expenses dipped 1% year over year to $8.5 billion on lower property and casualty insurance claims and claims expense.
Solid Segmental Performance
Property-Liability insurance premiums written amounted to $7.8 billion, up 2.5% year over year. Net investment income of $45 million also increased 9.4% year over year. Underwriting income of $959 million surged 75% year over year, fueled by lower catastrophe loss, increased premiums earned and a lower auto accident frequency. Combined ratio improved 490 basis points year over year to 88%.
Service Businesses’ total revenues were $313 million, up 26.7% year over year. This upside was led by Square (NYSE:SQ) Trade acquisition, which was closed last year. Policies in force increased 11.7 million to 46.5 million.
Allstate Life’s premium and contract charges of $327 million inched up 1.9% year over year, driven by growth in traditional life insurance and lower levels of reinsurance premiums ceded. Adjusted net income of $69 million improved 16.9% year over year owing to higher premiums and contract charges plus lower taxes.
Allstate Benefits’ premium and contract charges of $286 million were up 6.3%, backed by 7.4% growth in policies in force. Adjusted net income of $28 million was 27.3% higher than the prior-year quarter figure on the back of higher premiums and contract charges plus a lower tax rate.
Allstate Annuities’ premium and contract charges of $3 million remained flat year over year. Adjusted net income of $35 million grew 20.7%, attributable to higher performance-based investment income.
Capital Position
As of Mar 31, 2018, total shareholders’ equity was $23.3 billion, up 3.2% year over year.
Total assets were $113.3 billion, up 0.8% from the level at 2017-end.
Long-term debt of $6.8 billion increased 7.8% from 2017-end level.
Book value of $58.64 per share improved nearly 12% year over year.
Return on equity of 15% expanded 310 basis points year over year.
Cash inflow from operating activities totaled $626 billion, down nearly 27 8% year over year.
Capital Deployment
Allstate returned $465 million in the first quarter via share buyback ($333 million) and dividend payments ($132 million).
As of Mar 31, 2018, Allstate had $935 million remaining under its $2-billion share repurchase authorization.
Zacks Rank and Performance of Other Insurers
Allstate carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other insurers that have reported first-quarter earnings so far, the bottom line of AXIS Capital Holdings Limited (NYSE:AXS) , The Progressive Corporation (NYSE:PGR) and RLI Corp. (NYSE:RLI) surpassed the respective Zacks Consensus Estimate.
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RLI Corp. (RLI): Free Stock Analysis Report
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