10-QPeriod: Q2 FY2011

ALLSTATE CORP Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 1, 2011For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

The Allstate Corporation reported a net loss of $620 million ($1.19 per diluted share) for the second quarter of 2011, a significant downturn from a net income of $145 million ($0.27 per diluted share) in the same period of 2010. This loss was primarily driven by a substantial increase in catastrophe losses, particularly impacting the Property-Liability segment, which reported an underwriting loss of $1.50 billion. Despite the overall loss, Allstate Financial demonstrated resilience with net income of $166 million, an improvement from a net loss of $107 million in the prior year's second quarter. Total revenues for the quarter showed a modest increase, driven by higher premiums in certain lines and improved investment income, though net investment income for the six-month period declined year-over-year. Investors should monitor the ongoing recovery in the homeowners insurance line and the performance of the Allstate Financial segment as key indicators for future profitability.

Financial Highlights

35 data points
Beta

Revenue

$8.08B

Net Income

-$624.00M

-7.7% Net Margin

EPS (Diluted)

$-1.19

Total Assets

$129.02B

Cash & Equivalents

$693.00M

Free Cash Flow

$476.00M

Financial Statements
Beta
Revenue$8.08B
Interest Expense$91.00M
Net Income-$624.00M
EPS (Basic)$-1.19
EPS (Diluted)$-1.19
Shares Outstanding (Basic)523.10M
Shares Outstanding (Diluted)523.10M

Key Highlights

  • 1Consolidated net loss of $620 million for Q2 2011, compared to net income of $145 million in Q2 2010.
  • 2Property-Liability segment reported a significant underwriting loss of $1.50 billion in Q2 2011, largely due to a substantial increase in catastrophe losses.
  • 3The Property-Liability combined ratio deteriorated to 123.3% in Q2 2011 from 96.8% in Q2 2010.
  • 4Allstate Financial segment reported a net income of $166 million in Q2 2011, an improvement from a net loss of $107 million in Q2 2010.
  • 5Total revenues increased to $8.08 billion in Q2 2011 from $7.66 billion in Q2 2010.
  • 6Homeowners premiums written increased by 2.5% for the Allstate brand in Q2 2011, while standard auto premiums written saw a slight decrease.
  • 7Shareholders' equity stood at $18.76 billion as of June 30, 2011, reflecting a slight decrease from December 31, 2010, impacted by share repurchases and dividends.

Frequently Asked Questions

The primary reason for the net loss of $620 million in the second quarter of 2011 was a substantial increase in catastrophe losses, particularly impacting the Property-Liability segment. These losses significantly outweighed the gains from other segments and improved investment income.

Allstate Financial performed significantly better than the Property-Liability segment. Allstate Financial reported a net income of $166 million for the second quarter of 2011, a notable improvement from a net loss in the same period of the previous year. In contrast, the Property-Liability segment experienced a large underwriting loss due to high catastrophe claims.

The company's investment portfolio saw a slight decrease in total value but an improvement in unrealized net capital gains. While net investment income decreased slightly year-over-year due to lower average balances, the company is actively managing its portfolio to optimize yields and manage market risks. The performance of the investment portfolio remains crucial for supporting overall profitability, especially in offsetting the impact of underwriting results.

Yes, Allstate entered into an agreement to purchase Esurance and Answer Financial for approximately $1 billion, a transaction expected to close in the fall of 2011. This acquisition signals a strategic move to expand its market presence and offerings.