Allstate Advances Transformative Growth Plan
The Allstate Corporation (NYSE: ALL) detailed the impacts of its Transformative Growth Plan and low interest rates on third quarter earnings. The plan aims to increase market share by enhancing customer access and value through a merger with Esurance. A restructuring plan affecting 3,800 employees will incur pre-tax charges of $290 million, impacting net income. Additionally, low interest rates will lead to a total reduction in net income of $450 million to $550 million. Further details will be available in the third quarter Form 10-Q.
- Transformative Growth Plan aims to increase market share.
- Expansion of customer access by merging with Esurance.
- Restructuring plan to impact 3,800 employees, incurring charges of $290 million.
- Projected net income reduction of $450 million to $550 million due to low interest rates.
NORTHBROOK, Ill.--(BUSINESS WIRE)--The Allstate Corporation (NYSE: ALL) today provided detail on the impacts of its multi-year Transformative Growth Plan and record low interest rates on third quarter earnings.
The goal of the Transformative Growth Plan is to increase personal property-liability market share by expanding customer access, improving customer value and investing in marketing and technology. Customer access has been expanded by merging the Esurance and Allstate brand direct operations. Improving customer value includes improving the competitive price position of auto insurance, which requires cost reductions to maintain margins.
To lower costs, a restructuring plan is being implemented which will impact approximately 3,800 employees primarily in claims, sales, service and support functions. “Implementing this plan is difficult as we still deal with the impact of the pandemic but necessary to provide customers the best value. We have expanded transition support for impacted employees including prioritized internal hiring, extended medical coverage, expanded retraining support and help in employment searches,” said Tom Wilson, Chair, President and CEO of Allstate.
As a result of these actions, Allstate expects to incur a restructuring charge totaling approximately
The expectation that interest rates will remain low will also impact third quarter earnings. A premium deficiency reserve for immediate annuities with life contingencies will be recognized given updated investment and actuarial assumptions, which will reduce net income, but not adjusted net income. The annual review of assumptions for life insurance, other annuities and Discontinued Lines and Coverages will reduce both net income and adjusted net income. In total, these items will reduce net income by approximately
Additional details on these items will be provided in Allstate’s third quarter Form 10-Q.
Financial information, including material announcements about The Allstate Corporation, is routinely posted on www.allstateinvestors.com.
Forward-Looking Statements
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