Allstate: an all-weather stock: Allstate Corp., the number two U.S. personal lines insurer, offers value at current levels

Allstate Corp. (NYSE; ALL; Recent price: U.S.$35.125) is the second-largest U.S. personal lines insurer. Its auto lines account for 75% of sales; the company also sells other property/casualty (homeowners and specialty lines) and life insurance in North America and Asia.

Competition from the direct-to-the-consumer auto insurers resulted in a price war. Allstate has suffered because of it. Its share price has fallen from its 52-week high of $48.37.

The new CEO of Allstate, Edward Liddy, is looking for ways to expand the business. The company has 15,000 exclusive agents. In the U.S. almost one-third of all personal insurance (U.S.$45 billion in premiums) is sold through independent agents. Recently, Allstate bought CNA's property and casualty unit, which generates $1.7 billion in premiums and includes a network of 3,800 independent agents. These agents sell other lines, but retain close ties with CNA. This establishes a second distribution channel for Allstate, making it the third biggest independent broker. It is now in a position to increase its market share. The acquisition will also result in economies of scale. This might reduce operational cost resulting in competitive premiums.

Allstate is trading close to its 52-week low. Its price-to-earnings ratio is just about nine. Its earnings are $3.20 per share and and the stock has a dividend yield of 1.7%.

At current levels, Allstate offers excellent value, especially for longterm value investors.