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The Allstate Corporation : Allstate : Rivals Now Joining Us In Raising Home Insurance Rates

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05/03/2012 | 05:16pm CET
   By Erik Holm 

Allstate Corp. (ALL) executives said rivals are beginning to raise U.S. home-insurance rates, joining Allstate in an effort to offset rising claims costs.

Allstate has been boosting the price of coverage for years as severe weather pushed the company to repeated underwriting losses in its home-insurance operation.

But several analysts on Thursday highlighted the company's first-quarter profit margins, saying the company appeared to be closing in on its goal of achieving appropriate returns from the segment.

The underlying profit margin in the home-insurance business, a measure that excludes some effects out of the company's control, was 33 cents on the dollar in the quarter.

Competitors "are now raising their homeowners rates a little later than I think we did," said Matthew Winter, the head of Allstate's home and auto operations. "My expectation is that we will no longer be alone in the marketplace taking rate."

Allstate shares rose 4.1% to $34.26 in morning trading after the company released first quarter results late Wednesday. The stock jump came after the improved home-insurance results helped push first-quarter profit up 46% to $766 million. Operating income of $1.42 a share beat the consensus estimate of analysts surveyed by Thomson Reuters by 30 cents.

Allstate's efforts to raise home-insurance rates continue, which has had a "chilling effect" on the company's auto-insurance division, Winter said. The company is "accepting, but not liking" the knock-on effect, he said.

"Growth in the absence of profitability is the wrong strategy," he said.

Some of the recent price hikes have reflected the rising costs of repairing roofs, which increased dramatically in 2011, Winter said.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

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Financials ($)
Sales 2016 31 615 M
EBIT 2016 1 897 M
Net income 2016 1 500 M
Debt 2016 -
Yield 2016 1,76%
P/E ratio 2016 18,66
P/E ratio 2017 12,26
Capi. / Sales 2016 0,87x
Capi. / Sales 2017 0,84x
Capitalization 27 449 M
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Allstate Corp Technical Analysis Chart | ALL | US0200021014 | 4-Traders
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 80,1 $
Spread / Average Target 7,5%
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Thomas Joseph Wilson Chairman & Chief Executive Officer
Matthew E. Winter President
Steven E. Shebik Chief Financial Officer & Executive Vice President
Mary Alice Taylor Independent Director
Judith A. Sprieser Lead Independent Director
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