The Zacks Analyst Blog Highlights: Allstate, Aon Corp., PartnerRe, Aflac and MetLife

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May 16, 2011, 09:37 ET

CHICAGO, May 16, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Allstate Corp. (NYSE: ALL), Aon Corp. (NYSE: AON), PartnerRe Ltd. (NYSE: PRE), Aflac Inc. (NYSE: AFL) and MetLife Inc. (NYSE: MET).

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Here are highlights from Friday's Analyst Blog:

Allstate CAT Loss Soars for April

Yesterday, home and auto insurer Allstate Corp. (NYSE: ALL) projected about $1.4 billion in catastrophe (CAT) losses for April 2011. Of this, $1.37 billion has been estimated for the Allstate brand while $30 million of loss is expected from the Encompass brand. This projection is almost close to the CAT loss recorded for whole of 2010.

Allstate's CAT losses in April include 13 natural disasters in the US and Canada. Particularly, tornadoes harshly hit the Midwest and Southern areas such as Alabama, Arkansas, Georgia and Virginia, thereby increasing the claims payments in these areas.

According to leading insurer Aon Corp. (NYSE: AON), insurance industry CAT losses were impacted by over $5 billion, last month, from the storms in Alabama and wildfires in Texas.

Allstate has more than 10,000 claims cases to deal with till date, for which the company has positioned over 3,000 professionals in these areas.

Furthermore, given the extreme loss nature of catastrophes, Allstate has decided to regularly the release of its CAT losses if they exceed $150 million on a monthly basis. However, CAT losses for Allstate have exceeded this benchmark for only 30% of the months over the past decade.

Even during the first quarter of 2011, Allstate's CAT losses stood at $333 million, substantially lower than $648 million in the year-ago period. This also helped the net income in Property-Liability segment to surge to $468 million from $164 million in the prior-year quarter.

Reduced expenses and losses also aided in improving the first quarter operating earnings of 93 cents per share, which came in substantially ahead of the Zacks Consensus Estimate of 68 cents and 69 cents per share recorded in the year-ago quarter.

However, we believe that despite the increase in rates, Allstate would report earnings of 79 cents in the second quarter, down 2.3% year over year, according to the Zacks Consensus Estimate, on the back of mounting CAT losses.

Severe weather-related adverse events have become a growing concern for insurers and reinsurers in recent years. The weather-pattern changes have been leading to regular occurrence of floods, earthquakes, hurricanes, hailstorms, tsunami etc.

During the first quarter, almost all the insurance giants posted lower-than-expected earnings owing to higher CAT losses. While PartnerRe Ltd. (NYSE: PRE) plummeted on charging $1.02 billion driven by the huge loss from the recent catastrophes in Japan, New Zealand and Australia. Aflac Inc. (NYSE: AFL) incurred increased expenses due to the Japan catastrophe.

Operating earnings for MetLife Inc.'s (NYSE: MET) auto and home segment significantly plummeted 21% year over year based on higher-than-expected CAT losses while insurance products also witnessed a decline.

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