Allstate CorporationALL

Morningstar Rating

Stock Research and Analysis

by Drew Woodbury

A vast distribution network and focus on risk selection give Allstate a long-term competitive advantage and a narrow economic moat, in our opinion. The firm faces significant near-term head winds, as investment losses from its life insurance business Read more

Bulls Say

Allstate's network of captive agents helps keep policies in-house. Customers who insure their home, cars and leisure craft aren't likely to switch to a competitor to save a couple of bucks on one policy.

The company's size gives it significant scale and cost advantages. It is able to spread its fixed costs over a larger base, which helps allow it to price policies lower than its competitors.

The recent market rally has helped turn some unrealized losses in the company's investment portfolio into gains.

Allstate is restructuring its Allstate Financial segment to focus on margins and returns. While profitability is currently depressed, the business still holds some potential. Read more

Bears Say

The firm's Allstate Financial segment dragged the company to a loss in 2008. Future losses in this segment are possible as the firm restructures this business.

Through its investment portfolio, Allstate has significant exposure to the commercial real estate market. Deterioration in this market may cause future write-downs or losses.

Despite reducing its exposure to some coastal areas, Allstate may experience large loss years caused by Midwestern catastrophes.

Allstate's direct-to-consumer channel is not as developed as some competitors'. Progressive PGR and Geico have proven experience in this increasingly popular distribution method. Read more

Strategy

Allstate strives to acquire customers who will stick with the company throughout their lifetime. The firm aggregates the potential lifetime value of a customer rather than simply assessing their current Read more

Management

We believe corporate stewardship at Allstate to be good on the whole; however, after reviewing the firm's most recently released proxy statement, we have lowered our Stewardship Grade to B. The firm is led by chairman and CEO Tom Wilson. We would prefer Read more

Profile

On the basis of premium sales, Allstate is the second-largest U.S. personal lines property-casualty insurer. Personal auto represents an increasing percentage of sales, Read more

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