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$19.90 -5.10 (-20.40%)
11/19/2008 4:00 PM

The Allstate Corp (ALL)

CAPS Rating:
****

The Company is engaged, principally in the United States, in the property-liability insurance, life insurance, retirement and investment product business. Its primary business is the sale of private passenger auto and homeowner's insurance.

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Avatar csguernsey (73.22) Submitted: 6/16/07 4:04 PM : Outperform Start Price: $59.15 ALL Score: -19.49

The insurance business has a number af factors that make it a good long term investment. It will not go out of fashion, it's premiums tend to grow with or faster than the undelying liabilities over time, and there is no alternative to buying insurance products for houses and automobilies. As a key player in the business, Allstate has good long term growth prospects.

On the down side, insurance carriers are subject to massive losses when extreme events like Katrina occur. This is part of the reason is trading at a fire-sale P/E of 7.6 right now.

Even with the possibility of such unexpected losses, I expect ALL will provide above-average long term returns. In the mean time, it also pays a decent dividend.

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