) --

Allstate Corp.

(ALL) - Get Report

has been a rare bright spot during an otherwise difficult period for financial stocks, suggesting the company may be a decent place to ride out some of the storms that have hit the financial services sector.

Financial Select Sector SPDR

(XLF) - Get Report

, an exchange traded fund that tracks financial stocks, has lost 8.42% since April 23, while Allstate shares have gained 1.68%.

JPMorgan Chase

(JPM) - Get Report



(C) - Get Report


Morgan Stanley

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have each lost more than 20% over that period. Allstate has also performed well year to date, with shares up 21.12% in 2012.

Allstate has been one of a small number of financial stocks to post gains over the past month.

Property and casualty insurers such as Allstate are far less leveraged than banks and securities dealers, making them relatively safer investments when investors are concerned about widespread investment losses throughout the financial sector, according to Paul Newsome, analyst at Sandler O'Neill.

Allstate's financial leverage ratio of 6.64 compares to 13.80 at JPMorgan, 12.62 at Morgan Stanley and 10.64 at Citigroup, according to


data. Even

Wells Fargo

(WFC) - Get Report

considered the most conservative of giant U.S. banks, has a leverage ratio of 10.10.

Allstate is also far less exposed to shocks outside the U.S., according to Newsome. So to the extent that

fears over European sovereign defaults may be rattling investors in U.S. banks

, Allstate would seem a decent place to hide out.

Allstate has also been lucky, Newsome says, as mild weather this year has led to fewer claims from policyholders.

Still, Newsome, who picked Allstate as his top stock at the start of the year, believes there are factors unique to Allstate that have contributed to the shares' strong performance.

A big part of Allstate's success in 2012 has been investors' perception that management has shifted its focus after a poor showing in 2011.

Last year, for example, Allstate's purchase of a pair of insurers for $1 billion drew criticism from some investors who believed it overpaid for the assets.

"There's sort of a laundry list of things that fundamentally investors were not terribly happy with," Newsome says.

This year, however, "the company appears to be focusing much more on core profitability and its core agency business," according to the analyst.

That has boosted profits, which were $1.53 in the first quarter of 2012, up 9% from the fourth quarter and 56% from the first quarter of 2011.

While Newsome still has a "buy" on Allstate, he says he has lately been more enthusiastic about

The Travellers Companies

(TRV) - Get Report

, as it has cheapened on concerns over increased expenses from workers compensation claims. Newsome believes those concerns are overdone.

Travellers has some similar attributes to Allstate in that it is relatively immune to macro concerns. Shares are flat since April 23 and up 6% year to date.

While Newsome still likes Allstate, he says its strong performance year-to-date has made it more expensive on a valuation basis.

"The thesis I had at the beginning was it was cheap and the company was doing a much better job of coming back to what it should be doing and that happened so I feel like we're kind of in the middle of the thesis as opposed to at the beginning of the thesis," he says.


Written by Dan Freed in New York


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