Allstate (ALL) on Track to Sell Property to Reduce Expenses
The Allstate Corporation ALL recently entered into an agreement to divest the property that constitutes the majority of its Northbrook, IL for around $232 million. This deal is expected to close next year.
The insurance giant took this step as part of its changing work patterns and cost-reducing measures.
Dermody Properties, a Nevada-based industrial developer, has agreed to buy the property.
Rationale Behind the Deal
Ever since the pandemic has hit the nation, companies are witnessing alterations in working patterns. Many employees are still choosing to work from home because of the flexibility. This divestiture will help Allstate lower its real-estate costs and boost its multi-year Transformative Growth measure. This deal is expected to expand ALL’s personal property-liability market share.
Allstate continues to make several cost-cutting efforts and the latest move is a part of the same strategy. These measures are likely to drive ALL’s margins in the days ahead.
The insurer moved to the Northbrook site in 1967. The campus right now consists of a 2-million square feet office space on Sanders Road in Northbrook. Allstate looks forward to transforming it into a low-cost insurer with broad distribution with the closure of the deal.
Nevertheless, ALL intends to maintain a significant presence in the Chicago area. However, the portion of the property to be excluded through the deal remains undisclosed.
Allstate completed the sale of Allstate Life Insurance Company of New York last month. The move was in line with the insurer's long-term growth strategy to deploy capital out of lower-growth and return businesses and instead, focus on growing its market share in personal property-liability and expand protection solutions for customers.
Price Performance
Shares of Allstate have gained 8.5% in the past year, outperforming its industry’s growth of 8.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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ALL currently holds a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the insurance space are Aflac Incorporated AFL, RLI Corp. RLI and ProAssurance Corporation PRA, each stock currently carrying a Zacks Rank #2 (Buy).
Aflac is a general business holding company and oversees the operations of its subsidiaries by providing management services and making capital available. AFL managed to deliver a trailing four-quarter surprise of 18.32%. The stock has rallied 24.6% in the past year.
RLI Corp. is a specialty property-casualty (P&C) underwriter that caters primarily to the niche markets through its main operating subsidiary RLI Insurance Company. Shares of RLI have gained 6.4% in the past year. RLI’s earnings managed to surpass estimates in all the trailing four quarters, the average being 39.84%.
ProAssurance operates as a holding company for many property and casualty insurance companies. PRA came up with a trailing four-quarter average of 233.34%. The stock has surged 43.5% in a year’s time.
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