Allstate on Hiring Spree - Analyst Blog

Going ahead with its proactive investment approach, The Allstate Corp.'s (ALL) Allstate Insurance Co. is in the process of employing about 155 licensed sales producers across Texas in the U.S. by the end of 2010, according to Business Journal. The company has collaborated with a staffing and consulting company, Kelly Services Inc. (KELYA), for the hiring process. About 20 positions have been booked to date.

While Allstate expects to create about 40 new positions in Houston and at least 25 in San Antonio, the company also requires more licensed sales producers to carry out its personal lines insurance operations in  Amarillo, Austin, Dallas-Fort Worth, Lubbock, Midland, Odessa and Rio Grande Valley.

The recent surge in recruitment of sales staff comes from the view that after opening about 122 new agencies in 2009, Allstate now projects at least 130 new locations for 2010. For this, the company will require more staff to enhance its sales and has thereby increased the staff recruitment in Texas to about 155 people for 2010 from the previous guidance of about 45 recruitments announced in April this year.

Earnings Recap

Allstate's third quarter operating earnings of 83 cents per share came in way behind the Zacks Consensus Estimate of 97 cents and 99 cents recorded in the year-ago quarter.

Results for the quarter deteriorated primarily due to lower-than-expected premiums coupled with higher expenses in the Property-Liability Insurance segment, along with relatively higher tax expenses. However, lower catastrophic losses, prudent capital management and strong liquidity had an impressive impact as reflected by the growth in book value per share.

Hence, in order to gear up its top line, amid the weak insurance cycle, Allstate appears to have taken the stand of expanding its operations, thereby widely reaching out to new and existing customers while also raising its premium income.

Further, on November 9, Allstate had also announced its intention to repurchase its common stock worth $1 billion by the end of March 2012. With a managed investment portfolio of over $100 billion, as on September 30, 2010, Allstate recorded an estimated $15.1 billion of statutory capital surplus with the insurance companies and $3.5 billion of investments at the holding company, reflecting a well-capitalized position for future growth.

Overall, we believe the recent events reflect Allstate's long-term growth strategies. However, ongoing volatile markets along with interest rate and catastrophe risks will continue to impact the premiums and investment portfolio in the upcoming quarters. Moreover, hiring of staff in this proportion would also weigh on the operating results. Hence, we maintain our cautious outlook on Allstate over the near term.

 
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