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What's in the Offing for Allstate (ALL) in Q3 Earnings?

Allstate's (ALL) third-quarter earnings are likely to have suffered catastrophe losses, partly offset by better premiums.

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This story originally appeared on Zacks

The Allstate Corp. ALL is scheduled to report third-quarter 2021 earnings on Nov 4, after market close. The company fared well in the second quarter owing to a revenue rise coupled with lower Shelter-in-Place Payback expense, partially offset by higher non-catastrophe losses.

- Zacks

Q3 Earnings Expectation

The Zacks Consensus Estimate for earnings of $1.62 per share implies a 44.9% decrease from the prior-year quarter’s reported number.

Factors to Impact Q3 Results

The company’s third-quarter results are likely to reflect catastrophe losses. Due to a relatively large property insurance business, Allstate is significantly exposed to catastrophic events. Weather-related losses over the years have weighed on the company’s claims and benefits, expenses and cash flow, draining its underwriting profitability. The company estimated a headwind of $876 million or $692 million after tax. Catastrophe losses for July and August totaled $1.1 billion pretax.

The havoc was caused by 11 weather-related occurrences. Hurricane Ida impacted 19 states with the majority of losses occurring in Louisiana, resulting in gross losses of $1.4 billion.

The company might have suffered a blow from its Services businesses (protection services) line. The consensus mark for adjusted net income for this line stands at $1.50, much lower than the year-ago quarter's reported figure of $40.

Nevertheless, revenues of the company might have increased owing to better premiums. The consensus mark for net premiums written from the Property Liability and Services businesses segments indicates an upside of 12.8% and 27.4% from the respective year-ago quarter’s reported levels.

The company also fortified its footprint in lender-placed homeowners insurance, accident and health insurance and the digital marketing area. This new non-standard business along with the already strong standard insurance business might have driven revenues in the to-be reported quarter.

The company successfully expanded the total addressable market into appliances, furniture, cellular carriers and its international markets with revenue recognition from each of these areas.

The combination of attractive unit economics, a scalable technology platform and the power of The Allstate brand is expected to have led to a protection plan business with continued profitable growth.

Earnings Surprise History

The company’s earnings beat estimates in all the trailing four quarters, the average being 51.31%.

Here is what our quantitative model predicts:

Our proven model doesn’t predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is not the case here. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Earnings ESP:  Allstate has an Earnings ESP of 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.62 each.

 

The Allstate Corporation Price and EPS Surprise

The Allstate Corporation Price and EPS Surprise

The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote

Zacks Rank:  Allstate currently has a Zacks Rank #4.

Performance of Other Insurers

Of the insurance industry players, which have reported third-quarter results so far, earnings of W. R. Berkley Corporation WRB, Chubb Limited CB and Selective Insurance Group, Inc. SIGI beat the respective Zacks Consensus Estimate.

 



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Chubb Limited (CB): Free Stock Analysis Report

 

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The Allstate Corporation (ALL): Free Stock Analysis Report

 

Selective Insurance Group, Inc. (SIGI): Free Stock Analysis Report

 

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