Tom Reese/Paul Rubillo, Dividend.com
The Allstate Corporation (ALL) just reported a big loss loss in the third quarter, as the company was deeply affected by hurricane-related losses and the global financial crisis.
The insurance giant's net investment income declined 15.5 percent to $1.36 billion. Net realized capital losses for the period totaled $1.3 billion, and primarily consisted of impairment write-downs of $666 million.
Allstate's combined ratio for the quarter jumped to 112.7 percent from 91 percent in the same period last year. A ratio above 100 means the insurer pays out more in claims and expenses than it takes in from writing new premiums.
The company also had direct exposure to troubled financial companies Fannie Mae, Freddie Mac, American International Group Inc., and failed investment bank Lehman Brothers Holdings Inc. Allstate's total exposure to these companies amounted to about $1.7 billion, or 1.6 percent of the company's $105 billion investment portfolio.
The Bottom Line
We had removed shares of ALL from our ''Recommmended'' list back on Sept.9, when shares were trading at $46.48. Although the company has an attractive dividend yield of 5.81%, based on last night's closing stock price of $28.23, we would exercise caution here. There are other areas of the market that offer better opportunities at the moment. We will be watching the shares closely if we feel a turnaround has some legs to it.
The Allstate Corporation (ALL) is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.
Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.
