Car Insurance Rates Skyrocketing: 10 Best Stocks to Buy

3. The Allstate Corporation (NYSE:ALL)

Number of Hedge Fund Investors  in Q1 2024: 59

The Allstate Corporation (NYSE:ALL) is one of the most diversified auto insurance companies on our list. Its policies cover a wide variety of vehicles including cars, off road vehicles, recreational vehicles, boats, and snowmobiles. Due to coverage of vehicles such as boats and snowmobiles, The Allstate Corporation (NYSE:ALL) is exposed to climate related risk, and like other auto insurers, it also took a beating in the auto industry in 2022 with a painful combined ratio of 110. This underperformance is also key to The Allstate Corporation (NYSE:ALL)’s auto insurance hypothesis moving forward. Back then, management responded by sharing a four tiered approach of selective underwriting, improved claims practices, premium increases, and expense reduction to bring this division back to profitability. The plan appears to be working since The Allstate Corporation (NYSE:ALL) reported an improved auto insurance combined ratio of 96 during Q1 2024 for a sequential reduction of 8.4 points. Business diversification also means that the firm can bundle its homeowners and auto insurance products.

The Allstate Corporation (NYSE:ALL)’s shared the latest details for its auto insurance improvement during the Q2 2024 earnings call when it revealed:

“Given the successful execution of the Auto Insurance profit improvement plan, investments in growth will made in Allstate that offer attractive return opportunities.

These higher growth investments led to a 17% increase in Personal Auto new business applications in the second quarter, as you can see at the top of the chart on the left. The green bars show the components of that growth in new policy sales. The first two bars reflect the drivers of the 23% increase in new business volume in the Allstate brand. Higher productivity per exclusive agents drove a 9% new business increase compared to prior year and advertising investments and enhancements to direct operations resulted in a 92% increase in the direct channel compared to the prior year. The last two green bars reflect national general growth in both the non-standard auto business and higher sales volume from the Custom360 middle market offering that we continue to roll out.

On the right, you can see that total protection auto policies enforced decreased by 1.6% compared to prior year as the Allstate brand decrease was partially offset by growth at National General. Allstate brand auto policies in force decreased by 4.5% compared to prior year as policies lost from customer defections more than offset the increase in new policy sales.”