Allstate (ALL) PT Lowered to $135 at Citi, 'we remain bullish...despite a declining risk-based capital “RBC” ratio'

Citi analyst Michael Ward lowered the price target on Allstate (NYSE: ALL) to $135.00 (from $138.00) while maintaining a Buy rating.

The analyst comments "We reiterate confidence in ALL's capital position despite unfavorable 2Q catastrophe losses. Recall ALL’s capital position deteriorated due to ~$2.4b of losses for LTM ended 1Q23. We see capital issues at AIC (ALL’s largest operating company) as unlikely for four reasons. 1) Capital at parent + other subsidiaries >$7b pre-2Q. 2) Improving auto ins. margin dynamic: Despite an uptick in used vehicle values earlier this year, the Manheim index has declined while auto ins. pricing accelerated. 3) While a higher frequency of small/medium CATs has plagued ALL YTD, reinsurance reduces its risks for larger storms, contributing to avg 2H CR of ~94% in Home for 2020-22. 4) Inv. portfolio actions over LTM reduce risk+position ALL to benefit from rising yields. ALL hasn't consistently traded <7x FY+3 (2025) EPS since 2012, and we see a favorable risk/reward."

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