Allstate Advances After Posting Largest Profit Since 2007

Allstate Corp. (ALL), the biggest publicly traded U.S. home and auto insurer, gained the most since October after posting its largest profit since 2007.

Allstate jumped 5.8 percent to $34.82 at 9:36 a.m. in New York, leading the 24-company KBW Insurance Index. The insurer’s shares climbed 20 percent this year through yesterday.

Net income rose to $766 million, or $1.53 a share, from $524 million, or 98 cents, a year earlier, as catastrophe costs declined and policy sales increased, the Northbrook, Illinois- based firm said yesterday in a statement. Allstate booked $259 million in disaster costs, compared with $333 million a year earlier. Sales rose after Allstate purchased online car- insurance seller Esurance and raised premiums for some coverage.

“We see the firm’s unique, best-in-class pricing power as the primary driver that will drive earnings and sentiment for this now more fairly valued, but still unloved, stock,” analysts at Sanford C. Bernstein led by Josh Stirling wrote in a research note today. The analysts rate the shares “outperform” and raised their price target to $38 from $34.

Premium revenue in Allstate’s property and liability business rose to $6.63 billion from $6.45 billion a year earlier as the company added Esurance customers. The insurer made 7.9 cents for every premium dollar in its property and liability coverage compared with 5.1 cents a year earlier.

Allstate booked lower catastrophe costs in the quarter, in part, because it determined it had set aside more money than necessary for claims in prior quarters, according to an April 19 statement.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net