Allstate Corporation’s (ALL - Free Report) fourth-quarter 2016 operating earnings per share of $2.17 beat the Zacks Consensus Estimate of $1.61. Earnings also soared 85% year over year on higher revenues.

However, operating income per diluted share was $4.87 in 2016, down 4.2% year over year. An increase of $853 million in pre-tax catastrophe losses during the year is likely to have contributed to the overall earnings decline.

Allstate generated total revenue of $9.3 billion in the fourth quarter. The top line surpassed the Zacks Consensus Estimate of $8.5 billion and also increased 6.8% year over year. The upside was mainly driven by premium growth as well as a decent increase in net investment income.

In 2016, the company’s total revenue of $36.5 billion grew 2.5% year over year, mainly due to a rise in property-liability insurance premiums.

Quarter in Detail

Property-liability insurance premiums amounted $7.9 billion in the fourth quarter, up 2.8% year over year. Net income of $761 million displayed 54.4% year-over-year growth on the back of a lower loss ratio. The underlying combined ratio of 87.7 grew 30 basis points over the last-year quarter due to increased expense ratio.

The net written premium of Allstate brand – Encompass – declined 10.2% and policies in force were 13.4% lower in the fourth quarter on a year-over-year basis.

The Esurance brandrecorded net written premium growth of 5.6% from the prior-year quarter. The upside was driven by a 5.5% increase in auto average premiums and modest growth in policies in force.

Allstate brand – Auto – reported net written premium growth of 3.9% in the fourth quarter. The improvement can be attributed to a 7.0% increase in average premiums.

Allstate brand – Homeowners – saw its net written premiums increasing slightly in the fourth quarter as average premiums increased by 1.5%. However, policies in force of this brand declined by 1.2%.

Allstate brand – Other Personal Lines – recorded net written premium increase of 4.5% in the fourth quarter. Policies in force declined 0.1%.

Allstate Financial’s operating income of $130 million was 33% higher than the prior-year quarter due to performance-based investment returns in excess of long-term expectations.

Net investment income of $801 million increased 12.8% year over year. This upside reflects strong performance-based results, partially offset by lower interest income on market-based investments.

In the fourth quarter, realized capital gains were $2 million. This compared favorably with losses of $250 million in the prior-year quarter.

In the fourth quarter, operating expenses increased 13.3% year over year to $1.06 billion. In 2016, the same grew 0.6% to $4.1 billion.

In the quarter, the company incurred catastrophe losses of $303. The reported figure is 15% wider than the year-ago quarter. In 2016, the company’s catastrophe losses widened almost 50% year over year to $2.6 billion.

The Allstate CorporationPrice, Consensus and EPS Surprise

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Allstate Corporation (The) Price, Consensus and EPS Surprise | Allstate Corporation (The) Quote

Capital Position

As of Dec 31, 2016, total shareholders’ equity increased to $20.6 billion from $20 billion at year-end 2015. Total assets increased to $108.6 billion from $104.7 billion from the end of 2015. Long-term debt also rose 24% to $6.35 billion from the 2015-end level.

Stock Repurchase and Dividend Update

Allstate returned $369 million of capital to shareholders in the fourth quarter through a combination of $122 million in common stock dividends and repurchase of $247 million of outstanding shares.

In 2016, the company returned a total of $1.8 billion to its shareholders. As of Dec 31, 2016, the company had $691 million remaining under the $1.5 billion authorization.

Zacks Rank & Performance of Other Players

Allstate carries a Zacks Rank #3 (Hold). 

Among the other players from the insurance industry that have reported their fourth-quarter earnings so far, the bottom line at Brown & Brown Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate.