Allstate CEO Touts Huge Response to Esurance Super Bowl Ad Response
February 10, 2014 by Marie Suszynski, Best's News Service correspondent
NORTHBROOK, Ill. – A profitable 2013 for Allstate Corp., with its direct-to-consumer unit Esurance showing significant premium and policy growth, was topped off with a successful Super Bowl television ad and contest that lit up Twitter.
The ad aired following the Super Bowl and featured actor John Krasinski sitting in front of a pallet of cash. He told viewers Esurance saved $1.5 million by waiting until after the Super Bowl to run the ad and told them to take to Twitter to tweet an Esurance hashtag to enter to win the money. The winner of the contest was announced on the Jimmy Kimmel show on Feb. 5.It sent Esurance’s call volume off the charts and brought in a significant quote volume for days after the game, the company’s executives said in an earnings conference call.
It was part of Allstate’s move to substantially increase marketing for its Esurance unit. Although the marketing expense has affected the combined ratio, it is leading to top-line growth, Thomas J. Wilson, chairman, president, and chief executive officer, said during the call. The combined ratio of Esurance was 117.3 for the year.
For the full year 2013, Allstate posted net income of $2.26 billion, slightly lower than the $2.31 billion of net income it reported in 2012, due in part to a $521 million loss from the sale of its life insurance subsidiary Lincoln Benefit Life Co. Consolidated revenues for the year rose 3.6% to $34.5 billion (Best’s News Service, Feb. 6, 2014).
However, 2013 fourth-quarter net income more than doubled to $810 million, compared with $394 million during the fourth quarter of 2012. Consolidated revenues for the quarter rose 2.9% to $8.8 billion (Best’s News Service, Feb. 6, 2014).
Allstate has four consumer segments: The Allstate brand, which serves consumers who prefer local advice from agents; Esurance; Encompass, which offers local advice along with brand choices; and Answer Financial.
The Allstate brand grew net written premiums by 3% in 2013. During the fourth quarter, Allstate grew average premium in automobile and homeowners and auto policy counts. Net written premiums for the Esurance unit grew 27.9% during 2013.
Allstate’s homeowners policies have been declining, but the decline slowed in 2013. During the call, Wilson said it took the company more than four years to get its homeowners business to a point where it can be leveraged as a competitive advantage. Matthew Winter, president of Allstate Personal Lines, said Allstate approaches its homeowners business four ways: by getting rate adequacy, updating and upgrading product availability, reassessing the profit and loss capacity, and diversifying geographically.
Allstate has neared rate adequacy, he said. Meanwhile, there is a lot of work underway to increase geographic diversity and grow in some areas of the country where Allstate has not historically grown, Winter said.
Over the past three to four years, Allstate made several changes to the way it works with its agencies, and overall it has been successful.
“This is my eighth year as CEO,” Wilson said. “This last year was a lot more fun than the first six.” Over the years, Allstate had to shift some focus onto homeowners when it was leaning too heavy on auto, and in the meantime worked on improving relationships with agents, which is driving growth in the company. It took a couple of years to regroup and build the foundation, he said.
Although it was a tough transitional period, Allstate’s agencies today are more valuable. “We’re thriving together,” Winter said. As a result, an agency relationship survey that measured satisfaction was at an all-time high.
Going into 2014, Allstate plans to shift the focus of its priorities from premiums and prices to units and market share growth, Wilson said.
Allstate Insurance Group companies currently have a Best’s Financial Strength Rating of A+ (Superior).
Early afternoon Feb. 6, shares of Allstate Corp. (NYSE: ALL) were trading at $51.62, up 4.18% from the previous close.
(By Marie Suszynski, Best’s News Service correspondent)
