Allstate recently reported significant catastrophe losses for the months of July and August, totaling $814 million before taxes. After taxes, the amount comes down to $643 million. In August alone, the losses were estimated at $272 million or $215 million after taxes. The year-to-date catastrophe losses for August reached $3.67 billion. In the first half of 2024, the company’s catastrophe losses decreased by 35% year over year to $2.85 billion. The losses in August were a result of 15 events amounting to $306 million, following July’s losses of $587 million from 20 events. July’s losses included the initial estimate from Hurricane Beryl, which was $226 million.
Despite these losses, investors have shown confidence in Allstate, leading to the stock hitting a 52-week high of $193.19. The stock closed at $191 on Friday. Allstate’s performance has been boosted by strategic rate increases, higher market-based investment income, and growing insurance premiums. Additionally, the company’s Property-Liability underwriting has improved due to its profit improvement plan and lower expenses.
While the stock has reached a high point, it is still a good time to hold onto Allstate. The company is benefitting from increasing premiums, better underwriting performance, and efficiency initiatives. Allstate is also focusing on selling non-core assets to concentrate on more profitable areas. For example, it recently sold its Employer Voluntary Benefits business for $2 billion in cash. Analysts have confidence in Allstate’s future performance, with the Zacks Consensus Estimate for 2024 earnings at $15.20 per share, a significant increase from the previous year.
For investors looking at the broader Finance sector, there are other better-ranked options such as MGIC Investment Corporation, Jackson Financial Inc., and Arch Capital Group Ltd. MGIC Investment holds a Zacks Rank #1 (Strong Buy), while Jackson Financial and Arch Capital carry a Zacks Rank #2 (Buy). These companies have positive growth estimates and strong potential moving forward.
In conclusion, despite the recent catastrophe losses, Allstate’s performance and market potential are promising. Investors may consider holding onto the stock for potential growth. Additionally, exploring other well-ranked companies in the Finance sector could provide further investment opportunities.