Allstate

Methodology

Allstate's auto and homeowners insurance earnings fluctuate with claims frequency, catastrophe losses, and competitive pricing in personal lines. Large weather exposure and auto claims trends create volatility around underlying earnings power. Using normalized combined ratios that smooth catastrophe losses provides more reliable estimates than unusually good or bad loss years.

Methodology

Allstate's PEG misleads since growth rates vary dramatically with underwriting cycles and reserve adjustments. During hard markets growth appears strong; during soft markets it stalls. For Allstate, evaluating price-to-book relative to underwriting proficiency and ROE provides better insight than earnings-based multiples fluctuating with insurance cycles.

Methodology

Allstate's dividend provides meaningful total return, particularly during soft markets when earnings growth is limited. The capital return program includes dividends and aggressive buybacks when stock trades below book. PEGY is more relevant for investors seeking total returns from an insurer compounding book value through disciplined underwriting and capital allocation.