Going ahead with its proactive investment approach, Allstate Corp.’s (ALL) Allstate Insurance Co. is in the process of employing about 83 licensed insurance agency owners across Michigan, Ohio and Indiana in the U.S. by the end of 2012.
While Allstate has planned the appointments of 28 new agency owners in Michigan this year, it also expects to create 35 positions in Ohio and another 20 locations in Indiana. The Allstate agencies in Michigan and Ohio intend to hire over 200 sales professionals in each of the states through 2012. The primary areas of appointment include Ann Arbor, Metro Detroit, Flint-Saginaw, Grand Rapids, Kalamazoo and Lansing in Michigan; Cincinnati, Cleveland, Columbus, Dayton, Toledo and Youngstown in Ohio.
Additionally, Allstate plans to hire more than 100 sales representatives in Indiana by the end of 2012, primarily in Indianapolis, Fort Wayne, South Bend, Evansville, Lafayette and Northwest Indiana. Alongside, the company is also looking to appoint about 80 agents in New Mexico, Nevada, Oklahoma and Utah.
Hiring Plans In Line with Growth Strategy
The recent surge in sales professionals along with the expansion of agency owners reflect the company’s capital efficiency and its aim to generate an operating return on equity (:ROE) of 13% by 2014 through business growth. This also complements Allstate’s long-term growth strategy to reposition products and distribution platforms to meet the changing needs of consumers.
Meanwhile, Allstate continues to work relentlessly to maintain its standard auto margins and improve returns in homeowners and Allstate Financial along with managing capital aggressively. The company is also taking strategic actions to reduce losses for Allstate business from catastrophes through enhanced property catastrophe reinsurance program, non-renewals, stricter underwriting guidelines, increased deductibles and discontinuance of selected lines of coverage, including earthquake.
Overall, we believe Allstate will continually benefit due to its diversification, superior financial strength rating and proactive approach to investment. These factors have helped Allstate gain the second-largest personal lines writer position in the US, which also reflects its competitive strength against arch rivals such as Berkshire Hathaway-A (BRK.A) and The Travelers Companies (TRV).
However, Allstate’s exposure to catastrophe risks, capital losses and volatility in pricing, interest and loss costs will continue to impact the premiums and investment portfolio in the upcoming quarters. Hence, we maintain a Neutral rating on Allstate in the long run, with a Zacks Rank #3, which translates in to a short-term Hold recommendation.
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