| Type | Public (NYSE: ALL) S&P 500 Component |
|---|---|
| Industry | Insurance Financial services |
| Founded | April 17, 1931[1] |
| Headquarters | Northfield Township, Illinois, U.S. |
| Key people | Thomas J. Wilson (Chairman, President and CEO) |
| Products | Auto, Home, Life, and Business Insurance. Retirement and Investment products, and Banking services. |
| Revenue | US$ 31.400 billion (2010)[2] |
| Operating income | US$ 1.493 billion (2010)[2] |
| Net income | US$ 928 million (2010)[2] |
| Total assets | US$ 130.874 billion (2010)[2] |
| Total equity | US$ 10.044 billion (2010)[2] |
| Employees | 35,000 (December 2010)[2] |
| Website | Allstate.com |
The Allstate Corporation (NYSE: ALL) is the second-largest personal lines insurer in the United States (behind State Farm) and the largest that is publicly held. The company also has personal lines insurance operations in Canada. Allstate was founded in 1931 as part of Sears, Roebuck and Co., and was spun off in 1993.[3] The company has its headquarters in Northfield Township, Illinois, near Northbrook.[4][5] Its current advertising campaign, in use since 2004, asks, "Are you in good hands?" The corporate spokesperson is Dennis Haysbert.
Allstate sponsors many sporting events, including the Allstate Sugar Bowl, the Allstate 400 at the Brickyard NASCAR race, and the United States Olympic Committee. In 2009, Allstate's total revenue was $32 billion, of which $26.2 billion came from Property Liability.[6]
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In 1925, Sears, Roebuck & Co. held a national contest to decide the name of a new brand of car tires. After over two million name submissions, "Allstate" was chosen as the winner; the trademark was adopted the very next year. The tires success in both the catalog and retail stores, prompted Sears Chairman General Robert E. Wood to praise the Allstate tire's contribution to Sears' retail store success.[1]
The idea for Allstate Insurance Company came during a bridge game on a commuter train in 1930, when insurance broker Carl L. Odell proposed to Wood, his neighbor, the idea of selling auto insurance by direct mail. The idea appealed to Wood, and he passed the proposal to the Sears board of directors, which approved it. Allstate Insurance Company, named after Sears’ tire brand, went into business on April 17, 1931, offering auto insurance by direct mail and through the Sears catalog.[7]
Lessing J. Rosenwald was Allstate's first board chairman, and Odell was named vice president and secretary.[8]
In 1933, at the Century of Progress World’s Fair in Chicago, Allstate’s Richard E. Roskam sold insurance at a booth in the Sears pavilion. In 1934, Allstate opened its first permanent sales office in a Chicago Sears store.[9]
In 1941, only about a quarter of U.S. drivers had auto liability insurance. This led to the state of New York state passing a law which established the financial responsibility of drivers for damage or injuries resulting from auto mishaps. That law inspired legislation in other states, and by the mid-1950s nearly every state had some sort of financial responsibility law on its books.[7]
The company’s "You're in Good Hands with Allstate®" slogan was created in 1950 by Allstate’s general sales manager Davis W. Ellis. At the end of the decade, it was used in the company's first network television advertising campaign, which featured actor Ed Reimers.[8]
Allstate added products throughout the 1950s, including fire insurance in 1954 and homeowners and life insurance in 1957. Allstate began selling insurance to Canadians in 1953. Allstate Insurance Company of Canada was incorporated in 1964.[7]
In 1967, the company's home office was moved from Skokie to Northbrook, Illinois. Allstate continued to sell additional types of insurance to customers throughout the decade, including worker's compensation insurance in 1964, surety bonds in 1966, ocean marine coverage in 1967 and a business package policy in 1969.[8]
The brand itself expanded in the 1950s and 1960s and could be found on a variety of products like fire extinguishers and motor scooters. In 1952, an Allstate car was produced, but it was a flop; it was pulled from stores by 1953. The Allstate brand was eventually limited to insurance, tires, and car batteries by the late 1960s before becoming insurance-only in the mid-1970s.[1] In 1991, the company went public[3] before becoming completely independent in 1995.[1]
In 1985, Allstate began to move agents out of Sears stores and locate agents in neighborhood offices. In June 1993, 20 percent of Allstate became public through a stock offering. Allstate became completely independent in June 1995, when Sears spun off the remaining 80 percent stake in the company, distributing 350.5 million shares of Allstate stock to its stockholders.[7]
In 1999, Allstate unveiled a new business model that created a single contract for exclusive, independent agents selling Allstate insurance. It also created a network of call centers.
In 1999, Allstate purchased the personal lines division of CNA Financial and subsequently renamed it to Encompass Insurance Company which is written by independent insurance agents, as opposed to the direct writing that constitutes the core part of its business.
In 2003, actor Dennis Haysbert became Allstate’s spokesman, using the tagline “That’s Allstate’s stand.”[10]
Since going public in 1993:
Allstate Corporation owns and operates 16 companies around the United States and Canada.[11]
Based in Northbrook, Illinois
Based in Bridgewater, New Jersey
Based in Hauppauge, New York
Based in St. Petersburg, Florida
Based in Irving, Texas
Based in Jacksonville, Florida
Based in Lincoln, Nebraska
Based in Markham, Ontario
Allstate raises branded goal post nets at over 67 colleges and universities around the country. Each field goal and extra point kicked into those nets have has helped to raise over $2.4 million in donations for collegiate general scholarship funds. Allstate also raises branded nets during field goals and extra points at over 20 college bowl games, including the Allstate Sugar Bowl and the BCS National Championship Game.
Additionally, Allstate is a partner of the Southeastern Conference and their 20 sports, including football.[12]
Since 2007, Allstate has been the title sponsor of the Sugar Bowl, one of the four games that make up the Bowl Championship Series. The game is played at the Louisiana Superdome, which is also the home of the New Orleans Saints. Allstate is also a sponsor of the New Orleans Saints.
The 2012 Allstate BCS National Championship Game will be played on January 9, 2012 and broadcast on ESPN.
The Northwestern Wildcats and the Illinois Fighting Illini played a collegiate football game at Wrigley Field on November 20, 2010. It was the first football game at Wrigley Field since 1970 and the first collegiate football game at Wrigley Field since 1938 when DePaul University played its regular games at Wrigley.[9] Allstate title sponsored this game.[13]
Allstate, along with the American Football Coaches Association, has recognized twenty-two college football players embodying the true spirit of “teamwork” and “giving back” through selfless contributions and commendable acts of kindness by naming them to the Allstate AFCA Good Works Team.
In 2010, the captain, who was elected by fan vote, was Siddiq Haynes from the University of Delaware.[14]
In 2004, Allstate became the presenting sponsor of the U.S. Olympic Hall of Fame Induction Ceremony. Allstate revitalized the ceremony, which had gone dormant in the 1980s, by bringing it back to Chicago and giving it a national platform. This was the first athletic Hall of Fame in the US to give fans the opportunity to vote on the final selection of the inductees. Olympic greats such as Bonnie Blair, Kristi Yamaguchi, Shannon Miller, Picabo Street, and the 1992 U.S. Men's Olympic Basketball "Dream Team" have been inducted into the Hall of Fame the sponsorship began.
Allstate has been a USOC partner since 2002.[15]
In 2007, Allstate became a sponsor of the Mexican National Team, and in 2011 partnered with Major League Soccer and the United States Soccer Federation.[16]
Allstate was a sponsor of the Allstate 400 at the Brickyard from 2005-2009 – the annual NASCAR Sprint Cup Series race held at Indianapolis Motor Speedway in late summer.[17] Driver Kasey Kahne was featured in advertisements.
Allstate Insurance has been acknowledged for its accomplishments in the corporate environment.[18]
Allstate is the largest publicly traded property casualty insurance company in the US.[19] Products include:
Asset Protection: Auto Insurance, Homeowners Insurance, Condominium, Renters, Scheduled Personal Property, Business Umbrella, Commercial Auto, Commercial Inland Marine, Small Business Owner, Customizer and Business Package Policy, Landlord Package, Manufactured Home, Mobile Home, Motor Home, Motorcycle, Boat, Personal Umbrella, Comprehensive Personal Liability, Recreational Vehicle, Off-Road Vehicle, Motor Club, Loan Protection and Flood
Estate Planning Products, Business Succession Planning Products, Fixed Survivorship Life, and Variable Survivorship Life Family Protection Insurance, Term Life, Universal Life, Variable Universal Life, Long-Term Care and Supplemental Health
Asset Management and Accumulation, Life insurance and Retirement
In July 2008, the American Association for Justice ranked Allstate No. 1 among nation's worst insurers. This ranking was given because: “While Allstate publicly touts its ‘good hands’ approach, it has instead privately instructed its agents to employ a ‘boxing gloves’ strategy against its policyholders,” said American Association for Justice CEO Jon Haber. “Allstate ducks, bobs and weaves to avoid paying claims to increase its profits.”[20] Allstate criticized the report, with a spokesman noting that "The personal injury lawyers behind this report provide no support for their statements other than decade old recycled allegations that have been shown to be without merit in courts of law." [21] In 2009 Allstate successfully fought to obtain Federal government TARP fund eligibility only to decline it once they obtained eligibility.[22]
An investigative report in February 2007 by CNN found that major car insurance companies, like Allstate, are increasingly fighting auto insurance claims from those who incurred injuries by their insured members.[23] Allstate currently commands 18% of the auto insurance market in the United States.[24]
The PBS television program Now,[25] in conjunction with Bloomberg Markets magazine, did an exposé regarding Allstate's home owners insurance policy change. The idea was to increase profit by not living up to the customers' policy expectations.
On May 11, 2007, Allstate announced it would no longer offer a homeowners insurance product in California, however, Pacific Specialty Insurance Company homeowners insurance is available in every Californian Allstate agency.
Allstate has stated intentions of reducing its exposure in hurricane-prone Florida. In November 2006, Allstate did not renew 120,000 policies that were expiring at that time. Governor Charlie Crist and the Florida Cabinet passed a 90-day emergency order to temporarily prevent insurance companies from nonrenewing policies.[26] On February 20, 2007, Florida Insurance Commissioner Kevin McCarty clarified the order, stating that insurance companies can nonrenew policies if they satisfy certain conditions, including filing new, lower rates with the state and give customers 100 days’ notice.[27]
This is the title of a book written by David Berardinelli, JD, Michael Freeman, Ph.D., D.C., MPH, Aaron DeShaw, D.C., J.D. with a foreword by Eugene R. Anderson, Esq.[28]
The book relates profit-boosting strategies that consulting firm McKinsey & Company presented to Allstate to maximize profits and diminish the amount of money sent to clients who put in a claim. McKinsey specializes in redesigning product delivery systems for Fortune 100 companies (including controversial clients such as Enron) to maximize profits. McKinsey’s recommendation to Allstate, according to Berardinelli, was to low-ball claims so that desperate customers in dire straits would be more likely to accept a settlement offer while Allstate continued to make a profit and collect interest on the insurance payment. Allstate would offer its "good hands" in the way of a low-ball claim and, if the customer did not accept, to get out "boxing gloves." [29]
The book was reviewed by Business Week magazine.[30] According to that article, Allstate responded to Bertinelli's allegations by claiming that Berardinelli's allegations were "unfounded and unproven." Rather than trying to cheat customers, the company stated that its major goal was to benefit policyholders by identifying "exaggerated and fraudulent claims" and that its "processes are absolutely sound . . . to investigate, evaluate, and promptly resolve each claim fairly, based on the merits."[30]
Court decisions on the issues debated by Berardinelli and Allstate have gone both ways. According to the Business Week article, as of 2006, "Courts and regulators in a number of states, including New York, Pennsylvania, and Washington, have forced Allstate to halt or change its practice of handing out a controversial 'Do I Need an Attorney?' form to people involved in accidents." On the other hand, the article also states that "Although plaintiffs have had piecemeal success in bad-faith cases against Allstate, the insurer points to seven court rulings that have rejected attacks on CCPR. Last December a Montana state court noted that while CCPR practices may be illegal 'if misapplied in a particular case, they nevertheless are neutral with no manifestly illegal purpose.'" While many of the cost-reduction strategies McKinsey recommended at Allstate remain in place, some have been reined in following legal and regulatory challenges in several states.[30]
Many criticisms leveled against Allstate (and other insurers), including Barardinelli's book, involved the use of a software program called "Colossus" to process claims. In 2010, Allstate paid a $10 million fine to settle a lawsuit brought by 41 states concerning inconsistencies in the manner in which Colossus was used. It also agreed to standardize its use of the software. However, “it is important to note that we found no systemic underpayment of bodily injury claims,” New York Insurance Superintendent James J. Wrynn said in a press release.[31]
Allstate's advertising activities include traditional media such as print and television, as well as non-traditional media such as internet social media.
In NASCAR commercials only Dennis Haysbert's voice is heard. More recently however his commercials have combined the two with "That's Allstate's stand. Are you in good hands?" which is the company's slogan in the form of a question. Other advertisements feature and NASCAR Sprint Cup Series driver Kasey Kahne and three female fans who follow him and have romantic fantasies of meeting Kahne and having as a love interest. Also they embarrass themselves and hit Kahne's car by accident. In the latest installment, it features Kasey Kahne's car customized with hearts and blue paint scheme and Kahne dancing in his driving suit. In 2009 Allstate used the Neil Sedaka song "Breaking Up Is Hard to Do" in television commercials to promote Allstate's car insurance. Breaking up is hard to do, the ads averred, unless one has an Allstate agent to undertake the deed for the customer, switching from another insurer to Allstate. The viewer learned that "Breaking up is easy to do" as reassured on the screen by Haysbert.
In the summer of 2010, Allstate started a new campaign that features Dean Winters as a character called "Mayhem". In the commercials, Mayhem is seen causing various situations that may or may not be covered by auto insurance, that Allstate assures would be covered under their own insurance. Haysbert's voiceovers typically end the commercials, and Allstate has stated that Haysbert will continue to appear for Allstate in addition to Winters.[32]
In January 2011, Allstate released The Lines,[33] a multi-episode tv drama web series starring actors Teresa Cesario, Kyle Sandgate-Blix, Jackson Schultz, Bridgette Pechman, Chase Maser, and Corey Doyle cast as High-School seniors. The series, filmed in the style of a television drama, depicts the cast in common situations facing teens with respect to driving (Texting while driving in particular). The series appears aimed at promoting interest and support in favor of responsible teen driving and road-safety in general. The Lines spans a total of 8 episodes, each 6–8 minutes in length. Allstate and other large corporations are attracted to the rapid growth of social media for use in their advertising campaigns.
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