Tags: Allstate | losses | profitability | ALL

Allstate Losses Overshadow Profitability

By    |   Monday, 19 Dec 2011 08:53 AM

Insurance company Allstate (ALL) suffered through two quarters of catastrophic insurance losses during the second and third quarters of 2011. These losses overshadow the basic profitability of the company and have resulted in share price declines, which may make the stock attractive to investors now.

The Allstate Corporation is the largest publicly traded property and casualty insurance company in the United States. The main insurance lines are personal auto and homeowner's insurance. The Allstate Financial division sells life, health and annuity insurance products plus retirement planning products.

The company generates approximately 80 percent of total revenues from property and casualty insurance premiums. The balance is split between life and annuity premiums and investment income.

For the first nine months of 2011, Allstate reported consolidated revenues of $24.4 billion, up from $23.3 billion. For the first three quarters the company reported an operating loss of 14 cents per share, compared to operating income of $2.33 per share in the same period of 2010.

For the full year, the 2011 earnings estimate is 77 cents per share compared to $2.84 in 2010. The earnings estimate for 2012 is $3.68 per share.

Catastrophic losses

Allstate reported catastrophic losses totaling $3.42 billion in the second and third quarter of 2011. This compares to reported catastrophic loss of $2.22 billion for the full year 2010.

Total catastrophic losses for 2011 will be well above what the company typically experiences over a full calendar year, resulting in the much lower operating income for the year.

During the year, the company has reported strong results in both Allstate Financial earnings and investment results.

In the first quarter of 2009, the quarterly dividend was reduced to 20 cents quarterly from the previous 41 cents. For the first quarter of 2011, Allstate increased the dividend to 21 cents, a possible signal of future dividend increases. The stock yields just over 3 percent.

Recently the analysts at Deutsche Bank upgraded Allstate to a buy rating from a hold rating. Credit Suisse analysts have initiated coverage with an outperform rating.

The company reports next on Feb. 8.

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Insurance company Allstate (ALL) suffered through two quarters of catastrophic insurance losses during the second and third quarters of 2011. These losses overshadow the basic profitability of the company and have resulted in share price declines, which may make the stock...
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Monday, 19 Dec 2011 08:53 AM
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