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Allstate (ALL) Unveils Catastrophe Loss Estimates for April

The Allstate Corporation ALL released estimates of catastrophe losses for April 2024. The metric is expected to be $494 million, pre-tax, or at an after-tax figure of $390 million.

Catastrophe losses encompassed 11 incidents, estimated to total $491 million, with around 80% of these losses stemming from four events involving wind, hail or tornadoes.

The incidence of such catastrophe losses dampens an insurer’s underwriting profits and subsequently, the combined ratio. Softer underwriting results may also exert strain on a company’s margins. As the results of a property and casualty (P&C) insurer usually remain susceptible to such losses, the companies have to remain equipped with measures such as rate hikes and favorable reserve development to counter the headwinds arising from such losses.

Notably, catastrophe losses in the first quarter dropped 56.8% year over year to $731 million for Allstate. After a sustained period of incurring such losses for the past few quarters, the metric finally seemed to witness a significant year-over-year decline from the fourth quarter of 2023. As a result, the insurer’s adjusted earnings per share were $5.13 in the first quarter while an adjusted loss of $1.30 per share was incurred in the prior-year quarter.

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Also, frequent catastrophe losses serve as a means for insurers to accelerate the policy renewal rate to make uninterrupted claim payments. Rate hikes are expected to bring higher premiums, which usually account for a massive chunk of an insurer’s top line. P&C insurance premiums earned advanced 10.9% year over year in the first quarter.

Management remains optimistic to pursue additional rate hikes in 2024. On this front, the company had also remained quite active in 2023, wherein it implemented rate hikes of 17.9% for the Allstate brand across 55 locations. This had a favorable impact of 16.4% on total Allstate brand insurance premiums.

Shares of Allstate have rallied 42.2% in the past year compared with the industry’s 24.2% growth. ALL currently sports a Zacks Rank #1 (Strong Buy).

 

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Other Stocks to Consider

Some other top-ranked stocks in the P&C insurance space are Arch Capital Group Ltd. ACGL, RLI Corp. RLI and The Progressive Corporation PGR, each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 28.41%. The Zacks Consensus Estimate for ACGL’s 2024 earnings suggests an improvement of 1.2%, while the consensus mark for revenues suggests growth of 18.8% from the respective 2023 reported figures. The consensus mark for ACGL’s 2024 earnings has moved 1.4% north in the past seven days.

The bottom line of RLI outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 132.39%. The Zacks Consensus Estimate for RLI’s 2024 earnings suggests an improvement of 18.2%, while the same for revenues suggests growth of 15.3% from the corresponding 2023 reported figures. The consensus mark for RLI’s 2024 earnings has moved 5% north in the past 30 days.

Progressive’s earnings surpassed estimates in three of the trailing four quarters and missed the mark once, the average surprise being 4.99%. The Zacks Consensus Estimate for PGR’s 2024 earnings suggests an improvement of 87.6%, while the same for revenues suggests growth of 17.8% from the corresponding 2023 reported figures. The consensus mark for PGR’s 2024 earnings has moved 3.3% north in the past 30 days.

Shares of Arch Capital, RLI and Progressive have gained 33.2%, 14.8% and 52.7%, respectively, in the past year.

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