In early May, insurance giant Allstate (NYSE:ALL) reported a first-quarter profit that surged 46%, thanks in part to higher average homeowner premiums, as well as the acquisition of online auto insurance retailer Esurance. First-quarter net income rose to $766 million, or $1.53 per share, from $524 million, or 98 cents per share, a year ago. The company said operating income, which excludes gains on investments and other items, was $1.42 per share — well ahead of operating income estimates of $1.12 per share. In February, Allstate increased its dividend 4.8% to 22 cents per share. And since the year began, investors have been pouring into ALL, pushing the share price up 24% YTD.
As the biggest publicly traded U.S. home and auto insurer, Allstate is able to offer best-in-class pricing power to clients. This will be the primary driver of earnings going forward for the carrier, and as we’ve already seen, the company has proven to be an earnings powerhouse.