Allstate Corp., the second-largest U.S. home and auto insurer, fell the most since February in New York trading after Chief Executive Officer Thomas Wilson announced the departure of Joseph Lacher, president of the company’s main businesses.
Allstate dropped $1.45, or 4.9 percent, to $28.02 at 10:02 a.m. in New York Stock Exchange composite trading. Lacher, who oversaw residential and car coverage businesses, is leaving the company, effective immediately, the Northbrook, Illinois-based insurer said in a statement today.
“This comes as a complete shock, and it’s a very significant disappointment,” Meyer Shields, an analyst with Stifel Nicolaus & Co., said in an interview. “They’re losing somebody who has been held in reasonably high regard by investors,” said Shields, who cut his rating on Allstate to “hold” from “buy.”
Wilson last month cited inadequate returns at the homeowners business, where Allstate competes with No. 1 State Farm Mutual Automobile Insurance Co. At the car insurance operation, Allstate is seeking to defend market share from Progressive Corp. and Berkshire Hathaway Inc.’s Geico unit, which have been adding customers through Internet sales. Presidents at Lacher’s former operation will report to Wilson.
“Investors will interpret this as a problem at Allstate,” said Paul Newsome, an analyst with Sandler O’Neill & Partners LP. “Joe was one of the more visible, well liked people at Allstate by investors. So him leaving, for whatever reason, I believe will be viewed negatively.”
Seeking a Fix
Allstate declined 7.6 percent this year through July 15, compared with the 6.1 percent drop of the 24-company KBW Insurance index. The company doesn’t comment on personnel matters, said Maryellen Thielen, a spokeswoman for Allstate.
“Overall returns have been inadequate” in the segment protecting houses, Wilson said June 1 in a presentation for the company’s Investor Day. “We believe we can fix the homeowners profitability with basic blocking and tackling around rate adequacy, underwriting focus and core coverage capability.”
Wilson hired Don Civgin, formerly of OfficeMax Inc., as chief financial officer in 2008 as the company booked investment losses at its life unit. The same year, Judith Greffin was promoted to chief investment officer. Former American International Group Inc. Vice Chairman Matthew Winter was named head of the Allstate’s life insurance unit in 2009.
“Wilson is under a lot of pressure,” said Mark Dwelle, an analyst with RBC Capital Markets. “Investors haven’t been pleased.”
Lacher joined Allstate in 2009 from Travelers Cos., where he oversaw units that accounted for about 45 percent of the company’s premiums.
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