About Allstate Insurance Company
Ya gotta hand it to Allstate: The "good hands" company has managed to work its way towards the top of the property/casualty insurance pile. Serving more than 145 million policies in force, the company is one of the top overall property/casualty insurers. Its Allstate Protection segment sells auto, homeowners, and other property/casualty insurance products in Canada and the US. Other divisions provide life insurance, voluntary benefits such as short-term disability and critical illness policies, and consumer protection plans.
Allstate operates through seven segments: Allstate Protection, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, Discontinued Lines and Coverages, and Corporate and Other. The company has more than 145 million policies in force, including around 35 million Property-Liability policies.
Allstate's property and liability operations — consisting of the Allstate Protection and Discontinued Lines and Coverages segments — account for more than 85% of Allstate's total revenue.
Most of the Allstate Protection's sales come from traditional personal auto and homeowners policies. It also sells specialty products including coverage for motorcycle and boat owners, renters and landlords, and mobile home dwellers. The segment includes subsidiaries Esurance (auto insurance), Encompass (package policies), and Answer Financial (agency sales). Commercial products are geared towards small business owners.
The Discontinued Lines and Coverages segment includes results from property/casualty policies written prior to the 1980s that are in runoff.
The Allstate Life segment, accounting for about 5% of sales, offers term, whole, and variable life insurance products through subsidiaries including Allstate Life Insurance and American Heritage Life. The unit also sells retirement products offered by third parties.
The Service Businesses segment (another 5%) includes consumer protection plan provider Allstate Protection Plans, Allstate Dealer Services, telematics unit Arity, Allstate Roadside Services, Arity, and Allstate Identity Protection. InfoArmor offers identity protection via employers.
Allstate Benefits provides voluntary benefits policies such as life, accident, short-term disability, and critical illness policies for employer groups. Allstate Annuities comprises the run-off annuity business. About 5% combined generates from both of this segment.
Allstate's largest property/casualty markets are California, Florida, New York, and Texas. The Service Businesses operate in the US, Puerto Rico, Europe, and Canada. Allstate has some 450 administrative, claims, data, and other facilities in North America. It also has offices in Ireland, India, and London. The company is headquartered in Northbrook, Illinois.
Sales and Marketing
The Allstate Protection segment maintains a network of approximately 10,800 exclusive agencies which sell its insurance products through approximately 27,100 licensed sales professionals and 1,000 financial specialists. It also offers these products, and Encompass-branded products, through some 3,400 independent agencies that are primarily located in rural areas of the US. Esurance and Answer Financial products are distributed online and via contact centers.
The Allstate Life offerings are sold through exclusive agents, while Allstate Benefits offerings are sold through exclusive and independent agents.
The Services Businesses segment distributes through retail stores, auto dealerships, affinity groups, wholesale partners, and exclusive agencies.
Allstate spent $7 million, $8.7 million, and $8.3 million on advertising for FY 2019, 2018, and 2017, respectively.
Allstate's revenue has grown steadily over the past five years, with the company reporting a 22% rise in sales between 2015 and 2019 driven by organic and acquisitive growth. Net income has fluctuated in the $1.7 billion to $3.4 billion range, however, with profits only rising significantly in the last year.
Revenue rose 12% in 2019 to some $44.7 billion. Insurance premiums — the largest contributor to revenue — increased 6%, but growth was offset by lower investment income.
Net income also increased significantly by 133% to some $4.7 billion in 2019 primarily due to net realized capital gains in 2019 compared to losses in 2018 from increased valuations on equity investments and higher underwriting income in Allstate Protection.
The company ended 2019 with $338 million in cash, down $161 million from 2018. Operating activities contributed $5.1 billion, while investing activities used $2.8 billion (on securities, partnership, and mortgage loan investments), and financing activities used $2.5 billion via treasury stock purchases, contractholder fund withdrawals, and dividends.
Allstate is focused on increasing market share in its core auto and homeowners markets as well as in other business lines. It creates shareholder value through customer satisfaction, unit growth, attractive returns on capital, sustainable profitability and a diversified business platform.
Allstate has implemented a multi-year Transformative Growth Plan that leverages the Allstate brand, people, and technology. The Transformative Growth Plan enables it to better serve customers in a changing world with its three components: expand customer access; improve customer value; and increase investments in marketing and technology.
Allstate also regularly introduces new product offerings to meet shifting customer needs. For example, Allstate Benefits launched an enhanced critical illness insurance offering in Canada in 2019, and has also acquired iCracked in the same year to offer consumer protection plans and tech support. Allstate has also agreed to acquire National General Holdings Corporation in 2020 with the closing expected in early 2021, which increases Allstate's market share in personal property-liability and significantly expands its independent agent distribution.
At the same time, Allstate is working to reduce its operational costs through modernization efforts, such as the adoption of data analytics capabilities to improve pricing and underwriting processes. It continues to invest in auto telematics (wireless devices that track drivers' habits), which allow for more accurate policy pricing. It has also made claims settlement processes more efficient by adding digital imaging capabilities.
Catastrophe management is also a key part of the company's stability. To limit its exposure to catastrophic claims in the face of increasing severe weather events in recent years, Allstate limits its activities in geographies that are vulnerable to hurricanes, fires, and earthquakes, such as California and Florida.
Mergers and Acquisitions
In 2019, the company acquired iCracked Inc. for $1.4 billion, which offers on-site, on-demand repair services for smartphones and tablets in North America, supporting Allstate Protection Plans' (formerly known as SquareTrade) operations. iCracked is a privately held San Francisco-based company.
The Allstate Corporation was founded in 1992 to hold the assets of Allstate Insurance Company, which dates back to 1931. Allstate Insurance was originally formed by retail firm Sears to sell car insurance. It added homeowners and other property/casualty lines, as well as life insurance, in the 1950s. Sears divested a 20% stake in 1993 when Allstate went public and sold off the rest of its shares in Allstate in 1995. The company formed the Allstate Federal Savings Bank subsidiary to expand its financial services in 1998.
Acquisitions have included CNA Personal Insurance (now Encompass, 1999), American Heritage Life Investment (workplace offerings, 1999), Sterling Collision (2001), and SquareTrade (consumer protection, 2017).
2775 Sanders Rd
Northbrook, IL 60062-6127
Phone: 1 (847) 402-5000
Employer Type: Privately Owned
Controller and Chief Accounting Officer: Eric Ferren
Pres: Robert D Flagel
Vice Chairman of the Company and AIC: Steve Shebik
Employees (This Location): 4,000
Employees (All Locations): 25,000
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