ALL
Allstate
Insurance / BV
★ Quality 68/100Price today
$259.57
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What this business is made of
The business
Sells peace of mind, gets paid today, and covers the scare years later.
Allstate insures cars and homes in the United States: it collects premiums upfront and promises to pay claims that come later. It makes money two ways: underwriting with discipline (premiums beating claims plus expenses) and investing the float —the cash from premiums not yet paid out— while it waits. With a loss ratio (claims over premiums) near 67%, there's room to cover expenses and still turn a profit.
Decades of claims data and a well-known brand let it price risk better than a newcomer. Replicating that information base and the agent network costs time and scars, not just money.
Revenue history
From $50.6B to $67.7B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $67.7B · FY2025
Of every $100 in sales, $85 goes to costs and operations; $15 is left as net profit (15% margin).
Catalysts and risks
34% ROE: every dollar on the books works hard, well above the typical cost of capital.
Revenue grew from $50.6B (2021) to $67.7B (2025), a sign that rate hikes are already biting.
Higher interest rates fatten the invested float's yield with no extra effort.
Natural catastrophes (hurricanes, hail, fires) can wipe out a year of underwriting in a single quarter.
The rate cycle: if regulators slow hikes, claims rise faster than premiums.
Mispriced reserves: if future claims cost more than expected, today's profit was an illusion.
Charlie's note
“Paying 1.2x book value for a machine that returns 34% on that capital isn't crazy; it's paying a modest multiple for a not-so-modest return. The hard part is that the 34% lasts.”
Analysis · June 2026
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