ALLSTATE CORP (ALL): what the price assumes

In the published model solve dated 2026-Q2, anchored at $260.58, ALLSTATE CORP (ALL) is priced for 13.5% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ALL

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 8.6% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026).

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by asset-based and earnings-power value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=4)

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• Today's level asks Allstate to sustain a return on equity of about 14.6% while it is currently earning about 35.5%, so the market is underwriting a large reversion rather than an extrapolation.
• The fragile input is weather and reserves, and the cost of insuring against the first is rising: the 10-K reports that "The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during 2025 was $1.23 billion compared to $1.11 billion during 2024."
• Second-quarter results are filed after the close on August 5, 2026, with the call the next morning, and the underlying combined ratio is the line that matters.

Bull Case

Start with the number that does not fit. Allstate is currently earning a return on equity of about 35.5%. The level it trades at asks the company to sustain about 14.6%. Most equities priced on a return assumption are being asked to do better than they have been doing. This one is being asked to do dramatically worse and still clear the bar. A return that falls by well over half from here still leaves the current level standing, which is a rare shape for a large, well-followed insurer.

The reason that gap exists is that personal lines have had two unusually kind years, and markets do not capitalize a kind year at face value. What may be getting less weight is the operating change underneath it. Pricing has normalized enough that the business can grow again rather than shed customers to hold margin: the 2025 underwriting discussion records "rate increases of 3.5% were implemented resulting in a total insurance premium impact of 2.6%", with "PIF increased 2.3% or 568 thousand to 25,504 thousand". Growing the policy count while raising price only modestly is the harder of the two things an auto insurer can do, and it is the one that compounds.

Scale is where the durability comes from. The 10-K puts the core segment at "93.9% of Allstate's 2025 consolidated insurance premiums and contract charges", which is a single national book of auto and homeowners risk with the data history to price it. The smaller piece is contracted differently and worth reading on its own terms: "The Company expects to recognize approximately $2.06 billion, $1.52 billion and $2.03 billion of the December 31, 2025 unearned premium balance for Protection Services in 2026, 2027 and thereafter, respectively." That is revenue already written and sitting on the balance sheet waiting to be earned, on a business whose economics do not depend on hailstorms.

Capital allocation is conservative in an unusual direction. Dividends and buybacks together absorbed only about 22.3% of the latest year's earnings, so the great majority of a very large profit stayed inside the company rebuilding surplus. Even so, the share count has fallen about 1.7% a year over the four years to March 2026. Holders are getting the compounding without the company spending down the cushion that lets it absorb a bad season. For a business whose worst years arrive without warning, that ordering matters more than the size of the dividend.

Bear Case

Every dollar of today's level rests on a single assumption: that the underwriting margins of the last two years are nearer to normal than to exceptional. The level embeds a sustained return on equity near 14.6%. Across seventeen years of its own record the company has averaged closer to eleven percent. So the market is not asking for today's returns to continue. It is asking for a permanent step up from the company's own long-run experience, starting from what is plainly a good patch of weather. That is the dependency, and everything else in the bear case is a way of testing it.

Two of the three things driving the recent result are the two that reverse. The first-quarter 2026 combined-ratio improvement was attributed to lower catastrophe losses, favorable prior-year reserve development and higher average earned premiums. Reserve development is the one investors most often read as skill. The 10-K reads it as variance: the difference between new and recorded reserve estimates "could be material and vary significantly from period to period" and lands directly in claims expense. Releases in good years are the mirror image of strengthening in bad ones, and neither is a franchise.

Catastrophe exposure is the other reversing input, and its price is going the wrong way. The company retains the first slice of any single large event before reinsurance responds at all: the Nationwide program "provides per occurrence coverage to protect against a large single event up to $9.51 billion of loss less a $1.00 billion retention". The cost of buying that protection rose year over year, and the 10-K's own risk language allows for losses above those experienced in prior years, above the level used in pricing, and above current reinsurance limits. A single bad season does not break the company. It does remove the earnings that the value lenses are currently capitalizing.

The growth side offers no offset. Progressive (PGR) grew revenue 13.9% over the trailing year, well ahead of Allstate's low single-digit pace, and it frames its own scoreboard on volume rather than rate, describing policies in force as "our preferred measure of growth since it removes the variability due to rate changes or mix". Chubb (CB) grew 8.2% and Travelers (TRV) 4.1%. In a market where the fastest grower is also the lowest-cost underwriter, rate-driven margin recovery is the easier half of the job, and it is the half that ends when competitors decide to buy back the customers they gave up.

Put it together arithmetically. At about 2.3 times book value, the level being paid needs the elevated return to persist. If the sustained return instead settles back toward the long-run average, the multiple of book that the business supports compresses with it, and a large share of what is being paid today rides on that one difference. Nothing has to go wrong operationally for that to happen. The weather and the reserve cycle only have to behave averagely.

Valuation

An insurer is worth the return it earns on the capital it holds, so the read starts at book value rather than at an operating multiple. At about 2.3 times book, the market assumes Allstate sustains a return on equity near 14.6%. It has recently been earning about 35.5%. That is an unusual direction for a market to lean, and it is the most informative single fact available here.

The lenses all line up on one side, which is itself worth pausing on. Asset-based value, earnings power, and peer-multiple comparison all land above today's level, several of them a long way above. Only one forward-looking model lands below. It gets there by carrying revenue growth of about 4% a year and holding today's sales multiple flat rather than expanding it. Read quickly, nothing that capitalizes current earning power finds the shares expensive. Read slowly, everything that capitalizes current earning power is capitalizing trailing earnings per share of about $45.33 and a return the company reaches only in the best stretch of a cycle. When every backward-looking lens agrees that a cyclical is cheap, the useful question is not whether the lenses are wrong. It is whether the input they all share is durable.

The cohort read points the same way. On book-value multiples the assumed return places Allstate in the upper half of its peer group, which is what you would expect of a company earning well above its own average and being credited for part of that. The growth comparison is less flattering: Progressive (PGR) grew revenue 13.9% over the trailing year, Chubb (CB) 8.2%, Travelers (TRV) 4.1%, against a low single-digit pace at Allstate. Whatever is holding the level up, it is not premium growth.

For an insurer the balance-sheet question is not leverage but whether capital can absorb a bad year and still fund the payout. Dividends and buybacks together took about 22.3% of the most recent year's earnings, leaving the large majority retained inside the company. The share count still fell about 1.7% a year over the four years to March 2026, so holders received the compounding without the surplus being spent to produce it. That surplus is what is actually being tested: the catastrophe program retains the first $1.00 billion of a single large event, and the annual cost of the layers above it moved to $1.23 billion in 2025 from $1.11 billion the year before. Underwriting quality, not growth and not capital return, is what a buyer here is long.

Catalysts

Second-quarter results are filed after the close on August 5, 2026, with the earnings call the following morning. The season matters as much as the calendar: the second and third quarters carry most of the US convective-storm and hurricane exposure, so this print and the next are where the durability question actually gets answered.

The March quarter set a high bar. Net income applicable to common shareholders was $2.4 billion, or $9.25 per diluted share, against $566 million and $2.11 a year earlier; the Property-Liability recorded combined ratio came in at 82.0 versus 97.4, an improvement of 15.4 points, and the underlying combined ratio, which strips out catastrophes and prior-year reserve development, improved to 80.3 from 83.1. Policies in force reached 212 million, up 2.5% year over year, with growth in auto, homeowners and the protection-plans business.

Two things are worth separating on the August print. The recorded combined ratio moves with weather and with reserve development, and neither says much about the franchise. The underlying figure, which excludes both, is the one that shows whether the pricing gains of the last two years are sticking as competitors return to growth. The other item on the near-term calendar is the placement of the 2026 catastrophe reinsurance program, which the 10-K describes as anticipated rather than completed; the terms on which it is placed set the retention and the annual cost the company carries into the heart of the season.

Peer Cohorts (Per Segment, With Filing Citations)

Allstate Protection (reported)

• PGR (PROGRESSIVE CORP/OH/)
• FY2025 10-K: …in the current and prior periods, are generally earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end…
• FY2025 10-K: …current and prior accident years to reflect these adjustments as part of the total prior accident years development. "All other development" represents claims settling for more or less than reserved, emergence of unrecorded claims at rates different than anticipated in our incurred but not recorded (IBNR) reserves,…
• TRV (Travelers Companies, Inc.)
• FY2025 10-K: …country:CA us-gaap:ShortDurationInsuranceContractAccidentYear2022Member trv:PersonalInsuranceMember 2023-12-31 0000086312 us-gaap:PropertyLiabilityAndCasualtyInsuranceSegmentMember country:CA us-gaap:ShortDurationInsuranceContractAccidentYear2022Member trv:PersonalInsuranceMember 2024-12-31 0000086312…
• FY2025 10-K: …injury protection, frequently referred to as no-fault coverage. • Homeowners and Other provides protection against losses to dwellings and contents from a variety of perils (excluding flooding) as well as coverage for personal liability. The Company writes homeowners insurance for dwellings, condominiums and tenants,…
• HIG (The Hartford Insurance Group, Inc.)
• FY2025 10-K: …8-K 001-13958 4.4 09/21/2021 4.14 Description of Securities ** 10.01 Aggregate Excess of Loss Reinsurance Agreement by and between Hartford Fire Insurance Company, First State Insurance Company, New England Insurance Company, New England Reinsurance Corporation, Hartford Accident and Indemnity Company, Hartford…
• FY2025 10-K: …to pursue any transaction that would result in it acquiring interest in and becoming the primary beneficiary of Foundation Re IV, the consolidation of that entity in the Company's Consolidated Financial Statements in future periods is unlikely. Reinsurance for Terrorism- For the risk of terrorism, private sector…
• CB (Chubb Limited)
• FY2025 10-K: AllRelatedPartyMember 2025-12-31 0000896159 srt:ParentCompanyMember 2025-12-31 0000896159 srt:ParentCompanyMember 2024-12-31 0000896159 srt:ParentCompanyMember 2025-01-01 2025-12-31 0000896159 srt:ParentCompanyMember 2024-01-01 2024-12-31 0000896159 srt:ParentCompanyMember 2023-01-01 2023-12-31 0000896159…
• FY2025 10-K: OtherInsuranceProductLineMember 2025-12-31 0000896159 us-gaap:UniversalLifeMember 2023-12-31 0000896159 cb:AnnuitiesMember 2023-12-31 0000896159 us-gaap:OtherInsuranceProductLineMember 2023-12-31 0000896159 us-gaap:UniversalLifeMember 2024-01-01 2024-12-31 0000896159 cb:AnnuitiesMember 2024-01-01 2024-12-31 0000896159…
• CINF (CINCINNATI FINANCIAL CORPORATION)
• FY2025 10-K: …$15 million and $50 million are reinsured at 100%. The 2026 ceded premium estimate was $54 million, compared with $52 million for the 2025 estimate. • Property excess treaty - We purchased a property reinsurance treaty that provides an additional $75 million in protection for certain property losses. This treaty,…
• FY2025 10-K: …payable only if the insured dies during a specific period of time. Policy options include a return of premium provision, a benefit equal to the sum of all paid base premiums that is payable if the insured person survives to the end of the term. The policies are fully underwritten using traditional and accelerated…
• MCY (MERCURY GENERAL CORP)
• FY2025 10-K: …(2) The reinstatement premium and the total combined premium for the treaty period ending June 30, 2026 are projected amounts to be paid based on the latest information available. The reinstatement premium and the total combined premium for the treaty period ended June 30, 2025 are based on actual amounts paid. The…
• FY2025 10-K: This layer covers only California wildfires and fires following an earthquake in California, and is not subject to reinstatement. 9 Coverage on individual catastrophes provided for the 12 months ended June 30, 2025 under the Treaty is presented below in various layers: Catastrophe Losses and LAE In Excess of Up to…
• KMPR (Kemper Corporation)
• FY2025 10-K: …us-gaap:FairValueMeasurementsRecurringMember kmpr:AllIndustriesOtherthanFinanceInsuranceandRealEstateMember us-gaap:FairValueInputsLevel3Member 2025-12-31 0000860748 us-gaap:PreferredStockMember us-gaap:FairValueMeasurementsRecurringMember kmpr:AllIndustriesOtherthanFinanceInsuranceandRealEstateMember…
• FY2025 10-K: …2025-12-31 0000860748 us-gaap:CommonStockMember us-gaap:FairValueMeasurementsRecurringMember kmpr:AllIndustriesOtherthanFinanceInsuranceandRealEstateMember us-gaap:FairValueInputsLevel3Member 2025-12-31 0000860748 us-gaap:CommonStockMember us-gaap:FairValueMeasurementsRecurringMember…

Protection Services (reported)

• HIG (The Hartford Insurance Group, Inc.)
• FY2025 10-K: …hig:PCBusinessInsuranceMember 2022-12-31 0000874766 us-gaap:PropertyInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractAccidentYear2021Member hig:PCBusinessInsuranceMember 2023-12-31 0000874766 us-gaap:PropertyInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractAccidentYear2021Member…
• FY2025 10-K: …2021-12-31 0000874766 us-gaap:ProfessionalLiabilityInsuranceMember us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member 2022-12-31 0000874766 us-gaap:ProfessionalLiabilityInsuranceMember us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member 2023-12-31 0000874766…
• CB (Chubb Limited)
• FY2025 10-K: …premiums earned in 2025. Products and Distribution Chubb PRS offers comprehensive personal insurance products and services to meet the evolving needs of high-net-worth families and individuals. Our seamless customer experience and superior coverage protect not only our clients' most valuable possessions, but also…
• FY2025 10-K: 2-31 0000896159 us-gaap:ShortDurationInsuranceContractAccidentYear2020Member cb:NorthAmericaPersonalPCInsuranceMember 2024-12-31 0000896159 us-gaap:ShortDurationInsuranceContractAccidentYear2020Member cb:NorthAmericaPersonalPCInsuranceMember 2025-12-31 0000896159…
• TRV (Travelers Companies, Inc.)
• FY2025 10-K: InsuranceProductLineMember us-gaap:ShortDurationInsuranceContractAccidentYear2022Member trv:PersonalInsuranceMember 2022-12-31 0000086312 us-gaap:PropertyAndCasualtyPersonalInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractAccidentYear2022Member trv:PersonalInsuranceMember 2023-12-31 0000086312…
• FY2025 10-K: …country:CA us-gaap:ShortDurationInsuranceContractAccidentYear2022Member trv:PersonalInsuranceMember 2023-12-31 0000086312 us-gaap:PropertyLiabilityAndCasualtyInsuranceSegmentMember country:CA us-gaap:ShortDurationInsuranceContractAccidentYear2022Member trv:PersonalInsuranceMember 2024-12-31 0000086312…
• MKL (MARKEL GROUP INC.)
• FY2025 10-K: ProductMember us-gaap:RevenueFromContractWithCustomerMember 2023-01-01 2023-12-31 0001096343 mkl:ServicesMember us-gaap:RevenueFromContractWithCustomerMember mkl:MarkelInsuranceMember 2023-01-01 2023-12-31 0001096343 mkl:ServicesMember us-gaap:RevenueFromContractWithCustomerMember mkl:IndustrialMember 2023-01-01…
• FY2025 10-K: …mkl:MarkelInsuranceMember 2025-01-01 2025-12-31 0001096343 us-gaap:ProfessionalLiabilityInsuranceMember mkl:MarkelInsuranceMember 2024-01-01 2024-12-31 0001096343 us-gaap:ProfessionalLiabilityInsuranceMember mkl:MarkelInsuranceMember 2023-01-01 2023-12-31 0001096343 mkl:MarineAndEnergyMember mkl:MarkelInsuranceMember…
• WRB (W. R. BERKLEY CORP)
• FY2025 10-K: …Product Protection offers a broad product suite, including product liability and product recall and contamination, to assist clients in the manufacturing, wholesale and import space with their risk management and insurance needs. Berkley Professional Liability specializes in professional liability insurance for…
• FY2025 10-K: …2025-12-31 0000011544 wrb:ProfessionalLiabilityInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member 2020-12-31 0000011544 wrb:ProfessionalLiabilityInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member 2021-12-31 0000011544…
• PGR (PROGRESSIVE CORP/OH/)
• FY2025 10-K: …businesses; • we improperly raised insureds' premiums during their current policy term; • we improperly restrict the sale of optional physical damage coverage during weather-related events; • we improperly fail to timely process and pay PIP claims; • we improperly fail to conduct a reasonable investigation of…
• FY2025 10-K: …in the current and prior periods, are generally earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end…
• EG (EVEREST GROUP, LTD.)
• FY2025 10-K: …us-gaap:ShortDurationInsuranceContractsAccidentYear2017Member eg:InsuranceMember 2025-12-31 0001095073 us-gaap:PropertyInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractsAccidentYear2017Member eg:InsuranceMember 2025-01-01 2025-12-31 0001095073 us-gaap:PropertyInsuranceProductLineMember…
• FY2025 10-K: …us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member eg:ReinsuranceMember 2022-12-31 0001095073 us-gaap:PropertyInsuranceProductLineMember us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member eg:ReinsuranceMember 2023-12-31 0001095073 us-gaap:PropertyInsuranceProductLineMember…
• CNA (CNA FINANCIAL CORP)
• FY2025 10-K: …us-gaap:ShortdurationInsuranceContractsAccidentYear2016Member cna:SpecialtySegmentMember 2018-12-31 0000021175 cna:OtherProfessionalLiabilityandManagementLiabilityMember us-gaap:ShortdurationInsuranceContractsAccidentYear2016Member cna:SpecialtySegmentMember 2019-12-31 0000021175…
• FY2025 10-K: …us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member cna:SpecialtySegmentMember 2021-12-31 0000021175 cna:OtherProfessionalLiabilityandManagementLiabilityMember us-gaap:ShortDurationInsuranceContractsAccidentYear2018Member cna:SpecialtySegmentMember 2022-12-31 0000021175…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.