Allstate Corp (NYSE: ALL) in the fourth quarter of FY 17 has reported 50 percent growth in the net income to $1.22 billion. The full-year profit also grew 75 percent to $3.07 billion, due to a $506 million gain on revalued tax assets and liabilities. This amount will be used by the company for growth. The company firstly are going to put more money into marketing and secondly, they are going to expand distribution in the Allstate agencies and some of the other businesses. The tax overhaul became law in December, led the corporate rate to fall to 21 percent from 35 percent. However, the adjusted net income in the fourth quarter fell to $762 million from $807 million in last year’s fourth quarter. Therefore the company in the fourth quarter of FY 17 has reported the adjusted earnings per share of $2.09. As a result, the stock lost over 2.3% on Feb 8th, 2018 (As of 10:53AM EST; Source: Google finance)
Moreover, in the fourth quarter of FY 17, ALL has reported 6.1 percent growth in the revenue to $9.8 billion as compared to the prior-year quarter. Further, in the fourth quarter, the property and casualty insurance premiums grew by 3.8%, life premiums and contract charges rose by 4.7%, net investment income grew 14.0% and the realized capital gains were $127 million compared to $2 million in the prior-year quarter.
Additionally, ALL has also planned to use the cash from the gain on tax for employee bonuses or contributions to retirement accounts and to train the staff for digital capabilities. Furthermore, in 2017, extra capital also allowed the insurer to contribute an extra $34 million to the Allstate Foundation.
For 2018, ALL expect the underlying combined ratio for the Property-Liability business to be between 86 and 88 for 2018, which includes the additional growth investments as a result of the recent tax cuts. The company has accelerated investments in marketing, distribution, telematics, new products and technology. In addition, Allstate Benefits, SquareTrade and Esurance are also expected to contribute to growth in 2018. Due to a reduction in the U.S. federal income tax rate, the quarterly dividend has been increased 24% to 46 cents per share for the first quarter of 2018.