http://www.insurancejournal.com/news/na ... 222666.htmS&P Lowers Outlook on Allstate and Subs to Negative; Affirms Ratings
November 3, 2011
Standard & Poor’s Ratings Services has revised its outlook on Allstate Corp., Allstate Insurance Co. (AIC), and its core property-liability insurance companies (collectively, Allstate Protection), as well as the life insurance companies, deemed strategically important to the group (collectively, Allstate Financial) to negative from stable.
S&P has also affirmed its 'A-' couterparty credit, 'A-2' commercial paper, and 'BBB' junior subordinated debt ratings on Allstate, as well as its 'AA-' counterparty credit and financial strength ratings on Allstate Protection; and its 'A+' counterparty credit and insurance financial strength ratings on Allstate Financial.
The negative outlook “reflects a deterioration in enterprise capital adequacy resulting from a combination of sizable catastrophe losses, the acquisition of Esurance (not rated) and Answer Financial (not rated), and a continued aggressive share-repurchase and dividend strategy,” S&P explained.
Credit analyst Timothy C. Connor added: “We believe capital adequacy is deficient at the rating level and, in our view, is a rating weakness. S&P said the outlook revision also stems from its “uncertainty in how continued catastrophe-risk reduction efforts in Allstate’s homeowners business will affect its personal auto business and overall competitive position.”
S&P added that “although it is likely that Allstate’s strong underlying earnings power from the group could contribute to rebuilding the capital base by year-end 2012, we believe several factors will pressure the company to organically restore capital and return capital adequacy to levels consistent with the rating. These include a combination of the potential decline in top-line growth, uncertainty of catastrophe losses, lower investment income, and competitive pressure at Allstate Financial.”
S&P indicated that the present ratings on Allstate “reflect its very strong and diversified national market presence in the U.S. as the second-largest domestic personal lines insurance company and 17th-largest life insurance company.
“Furthermore, the rating incorporates our expectation that Allstate will continue to sustain its competitive position while pursuing its catastrophe management reduction efforts. We believe that these efforts have not only hampered growth and reduced cross-selling opportunities but could also predispose Allstate to reputation risk.”
The rating agency noted, however, that it “could lower the ratings by one notch if Allstate does not meet our expectations, or there are developments that further dampen operating results, capital adequacy, or its competitive position. We would likely not lower the ratings if Allstate demonstrates in the next 12-18 months that it is able to improve and sustain its operating performance better than peers and with lower volatility than experienced in the last two years, organically replenish capital, and maintain its competitive position in its chosen businesses.”
Source: Standard & Poor’sComments:
To much Mayhem……..
November 3, 2011 at 1:45 pm John says:
They’re killing the agents one at a time. Making insurance agents become financial planners is like having a mechanic due brain surgery.
November 4, 2011 at 4:16 pm hinderance says:
Way to try to sound smart and then use “due” incorrectly.
November 7, 2011 at 6:10 pm GoIndependent says:
No need to be snarky.
November 3, 2011 at 1:46 pm Agent says:
As a former agent….the only way to fix this company is to get rid of managment. The have no clue that it is the agency force that has built this company….NOT THEM!. The managers are certainly not smarter than a 5th Grader.
November 3, 2011 at 2:30 pm Al Davis says:
Don’t count on Allstate to make any smart moves. Everything the current management has introduced in the last 8 years has been a failure. They have made one mistake after another. Need new CEO with some vision.
With all they have going on, particularly with the anti agent movement and subsequent formation of a union to deal with the agents, they may be downgraded on the financial rating in the near future. The Good Hands people may not be so good after all. My guess is the Independents will have easier pickings on their book as their customers flee from rising prices on renewals and lack of decent service.
November 3, 2011 at 3:04 pm Current Agent says:
What rating agencies and financial analysts cannot gauge is the profound depth of agent discontent and the hundreds of active agents that are being terminated or that are voluntarily quitting because of Allstate’s lack of vision and total absence of sales and agency experience of the leadership team. If these details come out, Allstate would sink further.
November 3, 2011 at 3:49 pm Current Agent says:
What S&P, other rating firms and financial analysts do NOT know and are not privy to, is the profound, widespread agent discontent and teh 100's of profitable agencies that are being terminated and the 100's of other current agents that are quitting voluntarily in disgust and how this is starting to damage Allstate’s ability to grow the business and to keep what they have.
If these facts are made public, Allstate will sink even lower.
November 3, 2011 at 10:08 pm Craig Bingham says:
Current Agent says The morale of Agents is as low as it can get.
What is the job of the board of directors, i know
they get paid but thier not doing anything visable.
the current leadership mis-represents the truth.
November 4, 2011 at 3:56 pm Action says:
The current management is clueless. The Agent morale is terrible along with most of the employees I speak with, I am a current 15 year Agent. Tom Wilson and his management team have been a total failure, and currently the company is losing about 33,000 policies per month. How much longer will the BOD sit on their hands and do nothing?
November 4, 2011 at 4:53 pm Allstate Agent says:
S&P has only just begun what will turn out to be a continuous series of downgrades. The current Allstate management team has implemented policies and programs that have created an exceptional level of discord in their agency force and employees. Morale is at an all time low. These ill conceived policies at Allstate are forcing literally thousands of long-term, profitable agents to leave the company. At last count, some 3,700 agents countrywide have been forced to sell their agencies back to Allstate or an “approved” buyer. Under the current management team both morale and market share will continue to deteriorate for the forseeable future.
November 4, 2011 at 6:29 pm stan dwight says:
The majority of the Agents are unhappy. Most of their staff is unhappy. Most of the customers (ones with rate increases every six months without end) are unhappy. The claims reps are very unhappy, even more so than the Agents and their staff.
So why is Tom Wilson still with this company?
November 4, 2011 at 7:45 pm Jon Bonjovi says:
***Only Shareholders Can Save Allstate’s P&C Business***
I too am very close to an agency owner and have learned of the many changes occurring to tenured and once loyal Allstate agents through him. Simply put,
Allstate is in the process of shooting 30-40% of its own sales force. Likely 1/3 or more of the smaller to mid-sized agencies targeted for dislocation have
already been displaced-the remaining 2/3rds will be forced out in 2012. Internal channel, (i.e. 1-800 Allstate) are reporting customer defection and alarming rates because their local agent has “disappeared”. These are agents/agency owners who make money for the company, most of whom are the represented Allstate faces in their communities and have been for years. Most of whom have years and even generations of customer relationships that will simply not be rebuilt or maintained through this “rightsizing” effort to get agents to larger scale. And its shocking that the rightsizing is occurring at break-neck speed.
Its fairly apparent that this is a cost-cutting and margin-squeezing exercise; they can’t improve profitability internally, so they aim to squeeze it from the agency force. However, has any company ever succeeded by reducing and treating its sale channel this way? Even the chosen winners, the larger agencies that will be thrown the remaining pieces of the destroyed smaller agencies, are sickened I’m told by the these ruthless tactics that are ruining many of their fellow agent’s, friends, and associate’s financial lives.
Note to Influential Shareholders: If you believe this is the way to run a company, maintain your bet on Tom Wilson and this strategy to be successful. If not, you better act fast or, per the agents I talk, there will be so much damage, the P&C agency force will be decimated.
November 4, 2011 at 7:51 pm Jon Bonjovi says:
***Only the Shareholder’s Can Save Allstate’s P&C Business***
This is the only message that TW and the BoD will heed. They are shooting 30 to 40% of their sales force over the next 12 months, and expect to come out this ahead of the game? Even the remaining larger agents who will be thrown the left over scraps of those forced out are disgusted that their leadership could be so bold and shortsighted. As said in earlier comments…morale is at an
all time low.
Institutional Shareholders: Act fast or prepare for the fallout.
November 7, 2011 at 9:38 am John the Laid Off says:
When I left Allstate, morale was low. They had an internal “focus on the cusomter” campaign, but none of us believed they really cared about the customer. We took it only as an order from Tom Wilson, CEO: Make Me More Money. He laid off 1000 of us, then took a $7 million Bonus for himself. I think that tells you everything you need to know about the man’s priorities, how he thinks, and what directions are possible for the company.
November 7, 2011 at 9:48 am Former Employee says:
Tom Wilson’s approach is pretty typical of the mature yuppie: Gut the place, leverage everything to the extreme, then take all you can for yourself.
November 7, 2011 at 11:09 am Sarah says:
Allstate is like long lost twin of Nationwide. Allstate needs to enact some of the same marketing efforts of Nationwide. Nationwide has entered the small commercial market with its purchase of Allied and since moved toward the larger commercial accounts with its purchase of Harleysville (which it needs to revamp) Allstate needs to either stay in the cookie cutter personal lines market and compete with the likes of Farmers, State Farm, Geico, Progressive or try to diferentiate itself and move towards a broader scope and toward the true independent agent sales force. Unlike its prior attempts which handcuffed their captive agents but yet treated them like strangers and then slapped all agents in the face with their purchase of Essurance, what a telling sign of where they were headed with that move. Allstate is in dire need to get its future business plan in place and clear to all concerned or face more downgrades and poor morale in their workforce and agency plant.
November 8, 2011 at 11:04 am Long Gone from TC says:
The current sr. management has no clue how to run a P&C company. Slash and burn doesn’t work, as they have found out
November 8, 2011 at 1:57 pm Fla agent says:
Will someone tell me the loss ratio of Allstate on policies written thru the web site, and compare this to the loss ratio of buiness written thru the local agents. Why is Esurance not a rated company and what is the loss ratio for this company? I’ll bet the agent written business is the most profitable and that’s the business that is being sent down the road. I’ve seen this before
and it never ends well.
November 9, 2011 at 8:58 am jtownagent says:
To my knmowledge esurance is not an insurance company, but a marketing firm (online portal) where clients can obtain quotes online. One of the problems with onlines shoppers is that they are shopping for low price. One of the ways to obtain low price is to purchase low (minimum)coverage. A problem in pricing for low coverage polciies is that most losses are partial in nature and do not exceed the limits of the policy. In general when people discuss their needs with professional agents they have a discussion, and learn that low limits are not appropriate. They then purchase increased limits of coverage at a greater premium. Since the number of partial losses “stays the same” the loss ratios tend to be better for those policies that are issued with more coverage, or increased limits.
November 9, 2011 at 9:36 am rst286 says:
There is a lot being said about Allstate’s agencies in this form, what is not said or known is that what Allstate is considering its saving grace the Call Centers are just as bad. As a former call center employee and somone still very close to agents in the call center, the moral is just as low there as with the agency force. There is no clear plan of growth and upper management has no clue how to sale or position insurance products. Beyond that the same disconnect between local agents and upper managament exist between upper managament and the call center. Point is if you are closing your local agents for unjust causes and then driving the business to a call center where morale is just as low and you running just as poorly, then how as a company can you expect to remain profitable?
November 10, 2011 at 12:20 pm DeathofaSalesMan says:
“…Allstate will continue to sustain its competitive position while pursuing its catastrophe management reduction efforts. We believe that these efforts have not only hampered growth and reduced cross-selling opportunities but could also predispose Allstate to reputation risk.” – This spells the end of the Allstate Insurance Company on the East Coast. It is VERY true. Look at Long Island, Florida and the mid-atlantic states of SC, NC, VA and MD. Allstate has damaged NOT only its agents ability to grow but also the company’s reputation. To say nothing of the clients its has broken its promise to.