Despite PPL market share losses over past decade, current capabilities and some strategic moves may be of interest to key competitors like GEICO. Allstate brings homeowner product portfolio, captive and independent agency distribution, and sold the low margin/high liability LIfe company. These areas round out deficiencies in the current GEICO operating model. Progressive about to pass them for #2 in Auto, and there are limits to their direct-only distribution model. Buffet has talked about building a confidential large position in a yet unnamed company with his cash hoard, and he loves insurance. Bolt on the other protection products (old Squaretrade) and even more attractive. AND, note that the BOD recently amended TW's cash severance payable to the CEO from three times to two times the sum of base salary and target annual bonus, in line with other plan participants. This is to deflect criticism of further self-enrichment should company change hands.
15 replies (most recent on top)
The Wolf likes Allstate agents. He was was an Allstate Agent for 20+ years. He gets many referrals from Agents. The Wolf is respectful and does not cross sell the referral and steel Agent business.In his geographic area there were 500+ agents and the direct channel had less penetration in our books. My heart bleeds for the Allstate Agent. It completely s&x what TW and GS are doing to the Agents. The Wolf thinks Terrance Williams is a phony and a fink also. Those boys are acting reckless and can’t be trusted. Allstate agents are and always will be the backbone of Allstate. The Wolf prays for the Allstate Agent that things get better. He barks at the moon for GS and the TW’s.
I don't know what this Wolf guy is talking about but my Allstate book is about 40% direct. I don't know of an EA whose book has any fewer than 30% direct. 2% is impossible under current rules or rules over the past decade.
Hey wolf...either you are a grey wolf since as you say the book was established in the 70s, which really doesn’t make sense..as most of the customers would be well into their 70s. Or you bought a book and haven’t done squat other than collect renewals if the demographics of your book is as what you state.
Maybe you should change your handle to BoyThatCriedWolf.
Under this current management team Allstate is dead on arrival. The ship left the port years ago.
Now it’s sinking to 5th place.
Dear Mr. Agent Comp-
Im glad to see you are sniffing the same glue that Try Harder is using. I like Home office Smartie Pants such as yourself. The Wolf sold his $5 mil book in mid 2019. Of the $5 mil only $60k was direct bound. It was a tenured book established in the '70's. Most of the books around country resemble what the Wolf's book was like. An agent would be out of business if his book was 50% direct (Remember the E-Surance Fiasco!) High loss ratio, 80% retention, and poorly underwritten policies is no way to go through life!
I have 2 questions for you. Do you own any Allstate property and casualty products? Question #2-Why did Allstate's retention drop 1/2 % in 2020?
I actually have to defend what "try harder" is saying...
I have work related to agency compensation and it is a fact that over half of the average agent's Allstate book is direct bound. The R3001 requires agents to accept the assigning of the direct business based on the zip, renewal and retention rates, and tenure formula factor in the supplement.
Many agents hourly flood us with disputes and appeals regarding direct business not being assigned to them as they see fit. In fact they are on our lines and channels of communication so much regarding this that there is no way that they can possibly be out writing their own business. They swallow what Allstate gives them to swallow....up until now.
Of course we now have the direct channel bound business being placed in the reinstated 34000 corporate book and no longer being assigned to field agents. MANY agents have expressed to us and corporate how this is going to ruin their books of business and severely limit new business going into their books. Hardly the type of response and panic one would expect from the agents in which only "2%" makes up their books.
Dear Try Harder-
What brand of glue are you sniffing? I have to get some of your stuff! Allstate agent books are less than 2% direct channel. Agents do not want the direct business because it does not pay well (2% new and renewal.) Moreover, many of the policies are written incorrectly and the Allstate AGENT DOES NOT want the E&O exposure.
As a test sample look at the combined of E-Surance for the past 10 years. It never got below a 106%. Now Allstate is pricing it’s direct business 7% less than agent business, look out loss ratio here comes Allstate direct! Esurance was a failure and it is being absorbed by the Allstate brand. TW is putting make up on the pig!
This management team does not have the ability to convert to the Progressive model. Moreover, with the present condition of Allstate, I don’t see Buffet open up his purse strings to purchase Allstate.
The Wolf knows more than you! So please pull your head out of your “hoo hoo!”
I’ve got the brains, you’ve got the look, let’s make lots of money! 🎶🎶🎶
Per CNBC: "The conglomerate (Berkshire/GEICO) is still sitting on a huge cash war chest with more than $138 billion at the end of 2020." $34B is chump change even with a 20% premium to current value. They'd take the cash on our balance sheet, lower the expense ratio considerably, and dominate across all channels. That's why they'd be interested. There's a limit to their expansion without property and agency distribution. But they start with a far more competitive market position.
GEICO wouldn’t touch this sinking ship. Warren Buffet is far too smart for that.
EA is old news & technology, this younger generations does not want to chew the fat with an EA, they prefer to self service, no one wants to pay higher premiums with EA when direct sales is more cost effective! But 100% of customers DO NOT want to the claims process or speak with customer service in Puna!!!!! Too bad the Chicago Scumbags (Tom & Glen) done see that and will continue to run this once great company into the ground. More market share will be lost!
75% of Allstate customers DO NOT want the representation of an agent. LMAO. You pulled those numbers straight out if your hoo hoo. The agents like to say they bind more new business than direct but in reality a large percentage of their book of business has been bound by direct and assigned to agents per the R3001.
Try harder Wolfie....
The Wolf wishes Allstate would go direct! 75% of the Allstate customers want the representation of an Agent. It is not easy for customers to navigate the Allstate cesspool on their own. It would be easy for him to pick off more Allstate customers.
The former EA’s will pick off their old Allstate customers. Remember the EA has the relationship with the client...not Allstate! You can count on 20% of Allstate’s book of business disappearing when Allstate goes direct. For those of you that are keeping track at home, 20% equals about $7 billion!
Who is rich enough to buy a company with a $34 Billion market cap?
I think that is safe to inquire about. There is a TON of chatter that Allstate is looking to sell itself out in 3-5 year's once the m8ve to direct is complete. Outsourcing claims and other areas now until then to maximize profit and get the top as much money coming in until this happens. The cost cutting and lower cost process changes are not that of a company that plans to be around in a stand alone fashion in 7-10 years. This is a process and cost cutting to make as much money for the Chicago crowd quick and easy.
But the key is the company must go full direct as potential suitors want no part if the high expenses and bloated overhead that the exclusive agency channel brings.