I haven't read the book yet but plan to get it soon. This is an excerpt from the Barnes and Noble site from the Publisher about the book:
"And then, when it could least afford to, Sears lost its way. It gradually forgot about its customers. It no longer understood (or cared) who its competitors were. It shifted its focus inward, to the interests and needs of its huge bureaucracy, all at the expense of the customers who found themselves in declining, dismal stores. The greatest retailer in world history had become a company with a great past, a disappointing present, and a dismal future.
The Hard Road to the Softer Side: Lessons from the Transformation of Sears is the story of how Sears recovered from this downfall, told by the visionary who built the team that forged the company�s rebirth. When Arthur Martinez took charge at Sears in 1992, he found a once-great company facing a loss of $4 billion, with a Soviet-style bureaucracy, little idea of its target customer, and an army of 300,000 disheartened employees. Many experts thought Sears was too far gone to save."
I could be wrong, but this sure reminds me of another company close to many here that I recognize. Anybody else recognize it? Sound familiar? I just can't put my finger on who the CEO is now who once was the CFO of Sears. Or the prior CEO of Sears who's now on the BOD at Allstate.
Sounds like an interesting book --- anybody read it yet?
i am still a little hazy on what you are saying about reinsurance. my understanding is that Allstate carries little or no reinsurance....perhaps Texas is an exception but I don't think so.
as far as the stock price goes, I do think it's undervalued. i don't think people's feelings about management are driving the stock price though. I think the bigger factors are:
1. competition keeping rates low, and in the case of homeowners in most states...unprofitable. Apparently there are premium increases coming so that should help.
2. lack of predictibility and consistency in the earnings. Perhaps diversification into Financial products will help down the road.
3. a very difficult and expensive legal and regulatory environment. as the Texas mold issue shows, it's not necessarily about what Allstate believes is a covered peril, but about what regulators and the court lotto system will make the companies pay.
Anyway, Wall Street likes consistency and predictibility of earnings and Allstate is not showing that. Note that AIG sports multiples about twice Allstates.....it's earnings are very consistent (however they are probably playing games with reserves to accomplish it).
The thing that I think is unfortunate for the agents is that the environment seems to be forcing Allstate to focus on management of the legal and regulatory system as the core competency. To the extent that resources need to be focused on navigating the legal and regulatory system, it takes resources away from the marketing engine. This may sound like a strange argument, but resources are limited and to me it looks like the best way for insurance companies to increase returns is to master the absurdities of the legal system.
As long as the legal system remains unpredictible and absurd in it's costs, including ridiculous jury awards, Allstate is going to have to spend excess energy managing that part of the business.
Perhaps management is as ineffective and evil as you and other agents seem so sure, but it looks to me like the legal and reg issues are much more important problems.
A P/E ratio of 15.98 current and 16.10 year to date with a D/E of .19 should be an attractive buy to the general market; as such would drive this stock price back up due to street demand, rather than company repurchase. Assets as of 6 30 were $32,779B with reserve liabilities of $16,632B. You tell me what you think the price of this stock should be with effective management and sustained growth????
Stock split at 52 prior to the 11 1999 announcement about multiple channels and is definitely under value at this time. Repurchase was also a defensive move to ward off hostile takeover when stock price slipped to 17. We have not retired this stock as it is held in assets and can be resold on the market.
Don't need to make things up and was responding to your condecending remarks about All Agents and questions you posed. If you don't like the answers then please disregard.
I'm one of the more positive folks you will ever meet; but I am a realist with a 36 year history with TC.
A. TC told you that they took a loss in P & C on the sale of the German and Italian operations. This event will not reoccur but the Financial Operation will continue to need to improve portfolio or capital losses will continue to occur.
B. The Texas HO states Allstate LLOYDS, which indicated that a reinsurer is involved. LLOYDS is a large reinsurer.
C. You choose your way to wish to express yourself and I will continue to express "negative growth" as a mismanagement phenomenon at ALL. Growth is not always positive, especially if in high loss ratio areas. In my region, TC is in the process of buying back books of business from unprofitable agents in order to close their store fronts. That is negative growth.
D. Where do you get negative bias. I make a positive statement about fact that TC should be proactive in accepting payments from long term customers. It cost TC much more to acquire a new customer so we should make sure we are keeping the good ones at all cost.
E. Mold is an issue due to policy construction; but Deerbrook, AI, Parts and Labor, German and Italian operations, CIC and internet are mgt decisions that do not require a crystal ball to evaluate outcomes.
F. Johnny, TC determines the market direction, while the agents go out and make it happen. If the product isn't profitable who is to blame??? We all know agents who will exceed authority levels and bend rules to their short term benefit; but those folks don't last long.
Jim Jones was a response to your disparaging remark about the Allstate Agent and drinking water. Most of us are smart enough to recognize good leadership and respond positively to effective direction. We have neither at this time; so allow us the opportunity to vent, but more importantly start analyzing the effectiveness of those leading this company. As a shareholder that is the responsibility you owe to yourself.
>D. Agree that good customers should be given the benefit of doubt, and am highly skeptical that Allstate is not accounting for unreasonable delays in it's processing. My guess is that your negative bias is clouding your judgement here<
You are right on the other points but you missed this one MAH.
Thanks for the link Parkay.
I just hope the agents understand how these ridiculous jury verdicts are contaminating their business. If Allstate has to protect itself against the absurdities and unpredictibilities in the legal and regulatory system, it's no wonder they are reluctant to write new business.......
What is most hilarious about the $35 million award:
$9 million in legal fees
$5 million in emotional distress
$12 million in punitive
you just gotta love the part about the investment banker husband who supposedly suffered memory loss from mold and lost his job as an investment banker......
but that's not all folks....they fled their 22 room mansion with only the clothes on their back ! i guess the mold ate the Big screen TV, the fine china, and the automobile collection......that's pretty fierce mold !
And if that's not enough, you just gotta love Hollywood meets the courts as Erin Brockovich's house was overtaken by mold also.....no doubt the investment banker and his wife will be selling their harrowing tale of fleeing toxic mold to the highest bidder.......
Truth is stranger than fiction,
>>When the company buys back shares, it reduces the shares outstanding at the cost of also reducing cash or other assets in the business. There is no magic in a stock buyback, the shares must be paid for.<<
Some people, me among them, see the stock buyback as just another cost of acquisition. Allstate spewed out shares by the million to acquire two companies and assume these companies' debts two years ago.
>>Over time this can be beneficial to the shareholders if the buybacks are made at a time when the shares are undervalued and there are no higher return uses for the cash within the business.<<
One thing that would produce immediate high returns is updating their computer systems for taking payments and paying claims. There really isn't much excuse for the delay now because "the computer made me do it" is no longer an acceptable excuse. Not after years of complaints for problems that are never fixed.
value of the home. The insd. demanded a policy limit settlement which was $6,500,000 Farmers evidenty offered $2,500,000. I expect there was some time delay involved here because of the disbelief that damages could be this high. Farmers along with a number of other carriers is out of the HO business in Texas. Others include State Farm, PGR & SAFC. It isn't just mold but the dreaded Black Mold that appears to be the problem.
are here. The decision came down October 30:
The "event" that triggered the bad faith law suit was the insurer dragging its heels. With new housing construction that simply can't be done.
Every solution brings its own set of problems.
Auto makers that envied German automakers reputation for building safe cars adopted German construction methods. While that process saved lives and reduced injuries, it also made cares and repairs more expensive.
Fire protection offered by asbestos saved lives, too. Now, instead of an immediate death by fire, people can look forward to a slow agnozing death if they were exposed to the deadly fibers.
Tightly sealed, energy efficient homes saved on fuel costs; but made the home vulnerable to another set of problems. Besides buildup of mold, there�s also increased exposure to carbon monoxide.
There are no easy solutions and there will always be tradeoffs. Insurers will either adjust to new realities or go out of business. They can�t just say the rules have changed and I won�t play. The fact is they�ve been the cause of many of these new rules by trying to cut their own costs to the detriment of everyone else.
Texas is also enforcing it�s prompt pay law for health insurers very aggressively. Aetna just recently got gonged and will just have to put out the money to clean up their act.
I have noticed that in states where prompt pay law are enacted, legislators also comply with insurers� requests to drop the grace period for policyholders. It started with health insurers and will touch all other types of insurance, eventually if not now.
It�s only fair that everybody does their job to keep the money flowing; but I think companies like Allstate could save themselves a lot of grief, not to mention bad publicity, by sending a mailing to policiyholders and agents spelling out the change and the reason for it. If they�re running a little ahead of the law or trying to play both ends against the middle, then they have no one to blame but themselves. It's their own antiquated systems, short staffing, and game playing that brought this down on them and no one else.