After five years of international financial crises and natural calamities, Allstate, the number two property and casualty insurer in the USA, seemed to be on the mend. It had been a rough ride for Thomas Wilson who had taken over as CEO on January 1, 2007 and vowed to "reinvent protection and retirement for the consumer." Soon following this statement, the whole business had been driven by blend of intense competition and exogenous shocks into underwriting the losses. Meanwhile, Allstate continued to lose its market share to Progressive and GEICO as it fought to develop its direct sales company in facing resistance from its tied-agent distribution system.
During the May 2011 Annual General Meeting, 31% of investors voted against Wilson's reappointment, the highest "no" vote for virtually any CEO in the Standard & Poor's 500. Many speculated he wouldn't last long. To help improve direct sales, in October 2011, Wilson finished the acquisition of Esurance, a direct online specialist with a 2% share of online sales. In the following six months, Allstate's stock price grew 45%, buoyed by Wilson's assurance that return on equity would reach 13% by 2014. At the May 2012 AGM, Wilson's support from shareholders surged to 97%. By the end of 2012, earnings were up 2% to $33.3 billion while operating profits surged 168% to $3.6 billion.
PUBLICATION DATE: October 21, 2014 PRODUCT #: 715426-HCC-ENG
This is just an excerpt. This case is about STRATEGY & EXECUTION
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