Car Insurance Baltimore

Allstate misses the turn as rivals reinvent auto insurance

His dream of a broader financial services empire in ruins, Thomas Wilson is running out of time to revive Allstate's once-dominant insurance business.

Since Mr. Wilson became CEO of the country's second-largest auto and home insurer nearly five years ago, Allstate has stuck to its old ways while rivals using new direct-sales techniques grabbed most of the growth in the $164-billion U.S. auto insurance market. Customers are defecting, premium revenue is falling and Northbrook-based Allstate's stock price is down by half since Mr. Wilson took the helm.

Shareholders seem fed up. Nearly 1 in 3 voted against his re-election as board chairman at last month's annual meeting, the highest percentage of "no" votes for any CEO of a Standard & Poor's 500 company this year.

"I think (he has) probably a year, maybe two at the most," says Meyer Shields, an analyst at Stifel Nicolaus & Co. in Baltimore.

More than Mr. Wilson's job is at stake. Allstate's long slump casts doubt on the future of an 80-year-old company with deep roots in Chicago and 8,400 local employees. Allstate faces the same fate that befell other stalwarts of corporate Chicago — Motorola Inc. and Tribune Co., to name two — that foundered after missing fundamental shifts in their industries.

If Mr. Wilson, 53, can't turn around the auto insurance unit, Allstate faces a long, painful shrinking process that could add many more layoffs to the roughly 1,000 local jobs it has cut since the financial crisis. With its stock trading well below book value, the company also could be vulnerable to a takeover.

"It is going to have to grow," Mr. Shields says. "It's taking forever to turn around."

A BEHEMOTH IS BORN

The eighth-largest Chicago-area company, Allstate was born during the Great Depression as the in-store insurance arm of Sears Roebuck & Co. It became independent in 1995, when Sears spun it off in a $9-billion deal.

Allstate moved beyond the Sears store insurance counters, building a network of exclusive agents around the country to sell auto and homeowners coverage to middle-class Americans in the postwar era. It remains a behemoth. About $1 of every $10 spent by U.S. households on car insurance goes to Allstate; it serves nearly 16 million households.

During the 2000s, Allstate moved to reduce its reliance on insurance by expanding into banking and retirement products. It expanded in life insurance, too, selling annuities through banks and other outside firms, as well as though its agents.

Ways to get Affordable Auto insurance In Baltimore | General ...

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