SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 9, 1999
The Allstate Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 1-11840 36-3871531
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
2775 Sanders Road, Northbrook, Illinois 60062
(Address of Principal Executive Offices) ( Zip Code)
Registrant's telephone number, including area code (847) 402-5000
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Exhibit Index at page 4
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Item 5. Other Events
On June 9, 1999, the Registrant issued the press release attached hereto as
Exhibit 99.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description
99 Registrant's press release dated
June 9, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE ALLSTATE CORPORATION
By s\ EMMA M. KALAIDJIAN
Name: Emma M. Kalaidjian
Title: Assistant Secretary
July 14, 1999
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INDEX TO EXHIBITS
SEQUENTIAL
PAGE
NUMBER DESCRIPTION NUMBER
99 Registrant's press release dated 5
June 9, 1999
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Exhibit No. 99
The Allstate Corporation
NEWS
FOR MORE INFORMATION:
April Hattori
Allstate Media Relations
(847) 402-8373
For Immediate Release
ALLSTATE ACCELERATES INDEPENDENT AGENCY STRATEGY, ANNOUNCES ACQUISITION OF
CNA PERSONAL LINES BUSINESS IN DEAL VALUED AT $1.2 BILLION
BRUCE MARLOW, FORMER COO OF PROGRESSIVE, TO HEAD NEW DRIVE
(Northbrook, IL) - June 9, 1999 - The Allstate Corporation (NYSE: ALL)
today announced a series of moves - starting with the acquisition of the
personal lines business of Chicago-based insurer CNA - designed to help it reach
its goal of becoming the leading provider of auto and homeowners insurance in
the $45 billion independent agent market. CNA is the insurance unit of CNA
Financial Corporation (NYSE:CNA).
Allstate said that it had agreed with CNA to acquire its personal lines
auto and homeowners business in a transaction valued at $1.2 billion, a move
that will increase Allstate's total annual premium revenue from the independent
agent channel to approximately $3 billion.
Specifically, Allstate will make a $140 million cash payment to CNA for the
business and for company shells to support the rating structure. In addition,
Allstate will utilize about $950 million of its capital to support the premium
and will pay a marketing royalty to CNA Insurance for the use of their brand
name for the next six years.
Allstate also announced that it has appointed Bruce W. Marlow, 50, formerly
Chief Operating Officer of The Progressive Corporation, to head its new
independent agency initiative. While at Progressive, Marlow's leadership helped
the company become the largest personal lines insurance company in the
independent agent channel in the United States. Marlow will report to Allstate
Chairman Edward M. Liddy and has been named to a seat on Allstate's senior
management team.
"The total personal lines insurance market is over $130 billion, and we
already have $20 billion in annual premium revenue. In today's market place we
have to listen to the customer, and provide our product where and how the
customer wants it. We are going to grow the number of channels we use to meet
the needs of our customers, and we intend to be the market leader in every
channel in which we compete," Edward M. Liddy, Allstate's Chairman, President
and Chief Executive Officer said today in commenting on the announcements.
"We have outlined a clear strategy for the future which sees The Allstate
Corporation as being multi-channel, multi-brand, multi-product, and
multi-national. This transaction is an important and complementary step in
Allstate's goal of becoming the major force in the independent agent personal
lines market."
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CNA's personal lines operation currently has annual premium revenue of $1.7
billion and distributes its auto and homeowners insurance products through a
network of 3,800 independent agents in 43 states. The transaction has been
approved by the boards of directors of both companies, and is subject to various
regulatory approvals and other customary conditions. The transaction is expected
to be completed no later than the fourth quarter of this year, and will have a
minimally dilutive effect for the first two fiscal years following closing.
Allstate will establish a new business, CNA Personal Insurance, that will
sell CNA personal lines insurance under its current brand name. The formation of
the new unit is a major component of a new Allstate initiative aimed at enabling
the company to become the leading provider of personal lines insurance in the
independent agent market. The approximately 2,000 employees of the existing CNA
personal lines operation will transfer to the new business.
Allstate is already a significant participant in the $45 billion
independent agent personal insurance market with its Deerbrook brand, and
distributes Allstate products through independent agents in rural areas. Over
the past 25 years, through organic growth and acquisitions, Allstate has become
the ninth largest company marketing insurance through the independent agent
channel. The acquisition of the CNA business will make Allstate the nation's
third largest provider of personal lines insurance through independent agents,
with a total revenue of approximately $3 billion through this distribution
channel.
"By combining Allstate's leadership and expertise with CNA's highly
developed personal lines operation, we are laying the foundation for significant
growth in this area. In particular, we will be able to utilize Allstate's
capital and our personal lines expertise and build on CNA's strong agency
relationships in this channel," Liddy said.
Liddy added that the deal also fits well with Allstate's overall plan to
expand the scope of the company and increase shareholder value.
"While the Allstate agent remains the core strength of the Allstate brand,
expanding our presence under different names in the independent agent channel
bolsters our goal to become multi-channel and multi-brand," Liddy said. "We know
from our research that there is a significant segment of the insurance market as
much as 20 percent - that will only buy through the independent agent market.
These are customers Allstate is currently not able to access through our direct
agent channel. The initiatives that we have announced today give us the platform
for accelerated growth in this market. Importantly, they give us the ability to
leverage the things we are very good at across a wider customer base, and
generate significant benefit from the synergies between the two organizations.
"I am delighted that Bruce Marlow has agreed to help us realize the
potential of this opportunity. His track record at Progressive is second to none
in auto insurance, and he was the architect for the impressive growth of that
company. His experience in growing a vibrant, national independent agency
network will be invaluable as we build this new part of the Allstate business."
In a press release issued today by CNA, CNA Insurance Chairman and
Chief Executive Officer Bernard L. Hengesbaugh said: "For our agents and their
customers, CNA Personal Insurance will be able to provide an expanded product
line with more competitive price and service features than would be possible by
CNA alone. And for our employees, this new business offers an opportunity to be
associated with a personal lines market leader.
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"CNA is committed to working closely with the management of CNA Personal
Insurance to assure a smooth transition."
Allstate and CNA personal lines will immediately begin planning the
integration of the two companies' operations. "A smooth integration of CNA
Personal Insurance with Allstate is our immediate priority," Liddy said.
The management team will remain largely in place. Ernie Lausier, currently
President of CNA's personal lines business, will continue in a leadership role,
along with Doug Reynolds, currently an Assistant Vice President of Deerbrook
Insurance. Bill Monie, a Vice President of Deerbrook, will continue to manage
that company. Both CNA Personal Insurance and Deerbrook will report to Marlow.
The transaction adds significant breadth and strength to Allstate's product
offerings in the independent agent channel. Allstate currently sells
non-standard auto insurance through its Deerbrook insurance product in 36 states
through 13,000 independent agents. CNA's personal insurance business offers auto
and home insurance through 3,800 independent agents.
The Allstate Corporation is the nation's largest publicly held personal
lines insurance company, insuring one of every eight homes and automobiles in
the country. The company provides insurance for more than 20 million customers
and has approximately 15,500 direct agents in the U.S. and Canada. Allstate is
also a major life insurer.
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