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Allstate : company profile

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Allstate Insurance is one of America's largest personal lines insurers, offering a wide range of services. It is the second-largest insurer in the homeowner segment behind State Farm, but was pushed into the #3 spot in auto for the first time in 2013 by rival Geico. Allstate also offers life and commercial insurance as well as retirement and investment products and a growing range of banking services. Like all financial services companies it suffered from the impact of the recession but was able to turn around performance during 2009 and 2010. Nevertheless, its status as a shareholder-owned corporation instead of a mutual association has forced it to raise premiums, with an inevitable impact on its market share. It also suffered during 2011 from a higher than usual number of catastrophe payouts. The main Allstate brand is supported by a small sumber of secondary brands, of which the biggest is Esurance.

Advertising

Who handles advertising? Click here for these and other agency account assignments from Adbrands.net. Allstate declared advertising expenses of $785m in 2016.

Competitors

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Brands & Activities

Allstate Protection provides auto and home insurance products to more than 16m households in the US and Canada, and also offers national roadside emergency assistance under the Allstate Auto Club banner. It sells cover under a number of different product offerings, such as Allstate Your Choice Auto, which allows customers to tailor cover to their specific needs and provides accident forgiveness and deductible rewards; Allstate Blue for higher risk drivers or eco-friendly Allstate Green insurance cover. Premiums are calculated on a tiered basis according to a sophisticated calculation of individual risk and other factors. The company claims to offer as many as 384 different pricing levels.

In addition to the Allstate brand, which it offers via a network of around 13,200 local branded agencies, it offers property and casualty cover through independent resellers under the Encompass and Deerbrook brands. In 2011, the group agreed to acquire direct insurer Esurance and its sister company, the Answer Financial brokerage, for around $1bn. A separate division, Allstate Financial, provides life and health insurance as well as a range of mutual funds, college savings programs and other products. It also offers savings and loan products including home mortgages under the Allstate Bank banner.

In 2017, the group acquired consumer appliance protection plan insurer SquareTrade for $4.1bn.

For 2016, according to NAIC figures, Allstate had 9.7% share of the US private passenger insurance market, with premiums written of $20.8bn. That was still behind Geico for the fourth consecutive year. In the home market it retained second place, a considerable distance behind State Farm, with 8.7% share and premiums written of $7.9bn. Total policies in force were 22.5m for private auto and 6.5m for homeowners.

The company is widely recognised for its marketing, fronted for many years by the African-American actor Dennis Haysbert (best-known for playing the Obama-esque US President in two series of 24). In 2010 Allstate introduced a new character, "Mayhem" (played by actor Dean Winters), in a series of humourous ads depicting potential insurance risks. Allstate has also established itself as a leading supporter of sporting events, sponsoring NCAA college basketball and college football, US Major League Soccer and Mexico's national soccer team.

Financials

Group revenues peaked in 2007 at $36.8bn, before suffering a sharp decline in 2008 to $29.4bn as a result of writedowns in investment values. The savagery of that fall was was reflected in a loss of $1.7bn, after a profit the previous year of $4.6bn. There has been a modest recovery since then, but performance remains well below past highs because of reduced investment income and large catastrophe payouts. For 2011, for example, the group's catastrophe payouts soared by 73% to $3.8bn, more even than the $3.6bn it paid out in 2005 over Hurricane Katrina. As a result, Allstate reported an underwriting loss of $849m. For 2014, Allstate reported revenues of $34.24bn, up 2%. Net income jumped 25% to $2.85bn.

For 2015, Allstate reported total revenues of $35.65bn, up marginally on the year before. Net income slumped by 24% to $2.17bn as a result of an 8% increase in property liability claims. The Allstate brand contributed written premiums of $28.0bn, Esurance for $1.6bn and Encompass for $1.3bn. Combined auto premiums were almost $20.7bn, or just over two-thirds the group total.

Background

The company was founded in 1931 as a wholly owned subsidiary of Sears Roebuck, named after one the best-selling automobile tires in the retailer's catalogue. It specialised in private passenger car insurance, and in a significant break with traditional methods, Allstate introduced banded insurance premiums calculated according to the age of applicants as well as the type of car, and annual mileage. All other insurers later followed suit. In 1950, the company adopted the marketing slogan "You're in good hands with Allstate", which it continues to use to this day. Mid-decade, it began offering residential fire insurance as well, and then life insurance, and added lease finance, mortgage banking and mutual fund management in the early 1960s. Commercial property insurance was introduced in the 1970s, initially under the Northbrook name.

By the early 1980s, Allstate was just one unit of a substantial financial services group within Sears, alongside Coldwell Banker real estate and stock broker Dean Witter. Declining performance in the main retail business, as well as series of huge insurance payouts to cover hurricane damage persuaded Sears to spin off the business. The retail giant issued an IPO of equity in Allstate in 1993 in what was then the largest offering to-date in US history. The business was spun off as an entirely independent entity in 1995. It continued to expand its financial services offering with the launch of Allstate Federal Savings Bank in 1998, as well an alliance a year later with Putnam Investments to offer brokerage.

Longserving chairman Ed Liddy stepped down in 2007 (but was called out of retirement in 2008 to oversee struggling giant AIG).

Last full revision 12th July 2016

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