Bloomberg News

Allstate Advances on Surprise Profit After Sandy Costs

February 07, 2013

Allstate Corp. (ALL:US), the largest publicly traded U.S. auto and home insurer, climbed in New York trading after posting a surprise profit for the quarter in which superstorm Sandy struck the U.S. East Coast.

Allstate advanced (ALL:US) 1.9 percent to $45.17 at 10:06 a.m. Operating income, which excludes some investment results, was 59 cents a share in the fourth quarter, the Northbrook, Illinois- based insurer said yesterday in a statement. The insurer was expected to have a loss of 3 cents a share, according to the average estimate of 24 analysts surveyed by Bloomberg.

Allstate Chief Executive Officer Thomas Wilson, 55, is seeking to boost returns to shareholders through buybacks and a higher dividend (ALL:US), while raising prices to increase underwriting profit. Excluding catastrophes, margins in the main property- liability business improved by 4 cents per dollar in the fourth quarter from a year earlier.

The insurer “is an unusual franchise with pricing power, which still trades at an unchallenging valuation relative to peers,” Josh Stirling, an analyst with Sanford C. Bernstein & Co., said in a note to clients today. Allstate has a “disciplined management” that will drive the stock higher, he said, raising his price target to $50 per share.

Fourth-quarter net income fell to $394 million from $712 million a year earlier as the company paid claims tied to Sandy.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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Companies Mentioned

  • ALL
    (Allstate Corp/The)
    • $67.52 USD
    • -0.06
    • -0.09%
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