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) November 3, 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 November 3 and November 10, 1999, the Registrant issued the press
releases attached hereto as Exhibit 99.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
EXHIBIT NO. DESCRIPTION
99 Registrant's press releases dated
November 3 and November 10, 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
November 12, 1999
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INDEX TO EXHIBITS
SEQUENTIAL
PAGE
NUMBER DESCRIPTION NUMBER
99 Registrant's press releases dated 5
November 3 and November 10, 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 ELECTS DUANE ACKERMAN TO BOARD OF DIRECTORS
Northbrook, IL - November 3, 1999 - The Allstate Corporation has
elected Duane Ackerman to its board of directors, bringing its total membership
to 12. Ackerman, 57, is chairman and chief executive officer of BellSouth
Corporation.
Ackerman was appointed chairman and chief executive officer of BellSouth
Corporation on January 1, 1998. He has served in various capacities with the
Atlanta-based telecommunications company, including president, chief operating
officer and vice chairman. He began his tenure at BellSouth in 1991 as the vice
chairman and group president of BellSouth Telecommunications, BellSouth's local
telephone service unit and largest subsidiary.
"Duane's strategic and operational experience at BellSouth will provide
invaluable perspective to the board as we continue our multi-channel,
multi-product and multi-brand strategy," said Edward M. Liddy, Allstate's
chairman, president and chief executive officer.
The Allstate Corporation is the nation's largest publicly held personal
lines insurance company. Its main business units include Allstate Personal
Property and Casualty, which provides insurance for more than 14 million
households and has approximately 15,500 agents in the U.S. and Canada, and
Allstate Life and Savings, which markets a number of life insurance and savings
products under a variety of brands through a number of channels and is currently
the nation's 17th largest life insurance business.
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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 ANNOUNCES NEW BUSINESS APPROACH INCLUDING DIRECT AND INTERNET SALES;
NEW AGENCY SUPPORT INITIATIVES; EXPENSE REDUCTIONS AND EXPANSION OF SHARE
BUYBACK
SWEEPING CHANGES MARK LATEST MOVE IN COMPANY'S GROWTH STRATEGY
NORTHBROOK, Ill., November 10, 1999 - The Allstate Corporation today
announced a series of strategic initiatives to aggressively expand its selling
and service capabilities. The company said it would leverage the local presence
of its more than 15,200-strong captive agency sales force by seamlessly
integrating it with the growth potential provided by offering Allstate-branded
products via direct response call centers and the Internet. As part of this
initiative, the company said it will reduce current expenses by $600 million
annually to fund the investment in direct access and Internet channels, as well
as invest in competitive pricing, new agent and claim technology and enhanced
marketing and advertising. In addition, Allstate will reorganize its existing
captive agency program to a single exclusive agency independent contractor
program and expand its share repurchase program by an additional $2 billion.
"Allstate is a company that has always delivered products and service to
our customers when and where they wanted, from our earliest days through direct
catalog, then through retail stores, and more recently through offices
conveniently located in neighborhoods," said Edward M. Liddy, Allstate chairman,
president and CEO.
"Now, many of our customers and potential customers are telling us they
want our products to be easier to buy, easier to service and more competitively
priced," said Liddy. "We will combine the power of our agency distribution
system with the growth potential of direct selling and electronic commerce, and
at the same time take advantage of the enhanced sales and service potential of
the Internet. This unique combination is without parallel in the industry and
will make Allstate the most customer-focused company in the marketplace. These
changes have been driven by the need to provide a broad array of insurance
products when, where and how the customer wants to buy them, and will be a
significant step in our drive to become the dominant insurance provider in the
country."
The company's latest initiative continues the strategic expansion of the
company outlined by Liddy earlier this year that will see
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Allstate become multi-channel, multi-brand, multi-product and multi-national.
Earlier initiatives fitting into that overall strategy included the strategic
partnership with Putnam Investments to market variable insurance products; the
acquisition of CNA Personal Lines in a move to make Allstate a leader in the
independent agency channel, and the acquisition of American Heritage Life
Investment Corporation to market workplace insurance products. CNA Personal
Insurance continues as a separate business unit offering non-Allstate branded
products through independent agents.
"We are now adding a multi-access dimension to this strategy," Liddy said.
"These moves will allow us to change fundamentally the way we market and price
our products and interact with our Allstate agents and customers. By
streamlining our processes and changing our approach to sales and service, we
will enhance our ability to grow and improve the way we take care of customers."
The most far-reaching part of Liddy's plan will be the company's expanded
move into direct access and electronic commerce. The company believes the power
of the Allstate brand will enable it to achieve substantial market penetration
of these rapidly growing sales channels. Unlike its competitors using these
means, however, the company will be selling Allstate-branded products with a
uniform pricing and service model across all channels. Customers who come to
Allstate initially via an agent will have access to the service capabilities
provided through the Internet, just as customers who enter via the direct or
Internet channels will have access to a local agent for sales or service if the
customer wants to use one. Allstate's goal is to begin the rollout of the new
model in May and penetrate approximately 16 states, covering more than 40
percent of the U.S. population by the end of 2000 with the balance of the U.S.,
where allowed by law, by the end of 2001.
"This business model meets the needs of a very large and profitable segment
of insurance consumers who want more responsive service and who want their
insurance company to be easier to do business with," said Liddy. "The value is
in the convenience of conducting business anytime, anywhere, anyway and in the
reassurance of having the local presence of a professional insurance agent
available as needed."
Part of Allstate's new business model also calls for the transition of
approximately 6,500 of its captive agents from a number of different contracts
and programs to one independent contractor exclusive agency program. The
Exclusive Agency Program is the arrangement under which the majority of the
company's more than 15,200 agents in the United States currently operate. This
action will enable the company to service agents and customers more nimbly and
cost-effectively.
Rick Cohen, president of Allstate Property and Casualty, said the "intent
is to have larger, more efficient and more entrepreneurial agencies. Our agents
must be in a position to capitalize on the lead generation and cross-sell
opportunities that will arise from our expanded distribution capabilities.
Moving to one program across the country will enable us to simplify our support
systems so that we can do a better job for our agents and respond to the
changing needs of the
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marketplace faster. Our investment in new technology for our agency force is a
key to this move, and we intend to have new systems on every agent desktop by
the end of 2000."
The company also announced that it is implementing a program to reduce
current annual expenses by some $600 million. The reduction is designed to allow
investment in competitive pricing, establishment of new sales capabilities,
agent and claim technology and marketing and advertising. The reduction will
result in the elimination of 4,000 current non-agent positions by the end of
2000, or approximately 10 percent of the company's non-agent work force, and
will come from reductions in force, attrition, the closing of a field support
center, and the previously announced closing of four regional offices. The
reduction includes the elimination of approximately 460 jobs in the company's
home office in Northbrook, Ill.
To implement the cost reductions, Allstate expects to incur restructuring
and related expenses of about $100 million in the fourth quarter and about $100
million throughout 2000. The costs will be incurred as agents transition to one
program, operations and facilities are consolidated, and positions eliminated.
To implement the new strategy, the company estimates that it will invest about
$300 million in capital expenditures over the next two years. In addition, the
company will spend about $700 million in systems development and implementation
costs, rollout costs, and advertising for the new strategy over the same
timeframe.
During a national broadcast to agents and employees, Liddy and his senior
staff described the challenges Allstate faces and plans to address them.
"We are determined to profitably grow our business by offering our
customers superior value, access and service," Liddy said. "We have a clear
strategy, and are highly confident that this new approach represents a model
that is second to none. Through our actions, we will provide superior service,
with access to the company at the customer's convenience through agents, the
Internet and call centers. We are going to fund this by making our organization
more cost efficient, less bureaucratic, and at the same time become faster to
market. We are convinced that this will generate more value for our customers,
agents, shareholders and employees."
Allstate also announced that it would accelerate and expand its share
repurchase program. "We have completed just over half of a $2 billion share
buyback first announced in August 1998 and originally scheduled to be completed
by the end of 2000," said John Carl, Allstate's chief financial officer. "We are
confident the major operational moves we are making will add strong growth over
time. We also see a unique opportunity to enhance both our earnings per share
growth and our return on equity through aggressive share repurchases. We plan
completion of our current buyback program as well as an additional $2 billion by
year end 2000."
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Following today's announcement The Allstate Corporation will be strongly
positioned with powerful brands available to customers through a variety of
distribution channels: Allstate-branded property and casualty and life products
will be available through captive agents, independent agents, call centers and
the Internet; CNA Personal Insurance brand will be available through independent
agents; life insurance products can be accessed via brokers, banks and
independent agents with a variety of brands and affiliations, including the
Allstate/Putnam alliance; and affinity/worksite marketing with a variety of
brands, such as American Heritage Life.
The Allstate Corporation is the nation's largest publicly held personal
lines insurance company. Its main business units include Allstate Personal
Property and Casualty, which provides insurance for more than 14 million
households and has more than 15,600 agents in the U.S. and Canada, and Allstate
Life and Savings, which markets a number of life insurance and savings products
under a variety of brands through a number of channels and is currently the
nation's 17th largest life insurance business.
This release contains forward-looking statements about Allstate's expenses
and restructuring charges. Such statements are made pursuant to safe harbor
provisions of The Private Securities Litigation Reform Act of 1995. They are
based on management's estimates, assumptions and projections and involve risks
and uncertainties that may cause actual results to differ materially from those
set forth in these statements. Among other things, the amount and timing of the
restructuring charges are dependent on the number of agents transitioning to the
Exclusive Agent Program. In addition, the expense reductions are dependent on
the successful consolidation of operations.
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