Allstate Competition
Now Viewing Allstate's competition in: Insurance Carriers (primary)
Recent Developments
Gains in Berkshire Insurance Business - Revenue from premiums at Berkshire Hathaway's insurance subsidiaries rose by a third in first quarter 2009 compared to the previous year, indicating that they have been aggressively writing policies, according to The Wall Street Journal. Despite the strong performance, Berkshire CEO Warren Buffett has stated that earnings power in insurance, which represents about half of Berkshire's operations, will not be good in 2009.
Providers Drop Property Insurance Customers - Florida insurers are exiting their property coverage lines, due to the difficult market for property insurance policies. State Farm has announced it will drop property insurance customers in Florida over the two years, and Encompass Insurance has announced it would do the same, according to the Orlando Sentinel. Low prices for property and casualty insurance over the past several years have weakened insurance carriers, exposing them to losses that may outweigh revenues from premiums.
Life Insurers to Receive TARP Injections - The Treasury Department allotted $22 billion in TARP funds in May 2009 to qualified companies within the US life insurance industry, which has been negatively affected by falling equity and fixed income markets. Life insurers, who invest their premiums into capital markets, are important sources of capital in the economy. By injecting funds into firms that were previously ineligible for aid, the US government hopes they will continue to invest in capital markets, thereby increasing liquidity and lending throughout the financial system.
Competitive Landscape
Demand is driven by demographics and commercial transactions. Demand is also driven by legal or financial requirements. Consumers are usually required by states to buy auto insurance and by lenders to buy homeowners insurance, for example. The profitability of individual companies depends on effective marketing and on the ability to accurately estimate future payments. Large companies have big economies of scale in administration and in access to capital, as well as advertising and marketing. Small companies can compete successfully by specializing in particular products or industries. Average annual revenue per worker is around $400,000, so the industry is not labor-intensive.
Insurance Carriers Industry Forecast
from Hoover's/D&B subsidiary First Research
The output of US insurance, which is an indicator for insurance carriers, is forecast to grow at an annual compounded rate of 1 percent between 2008 and 2013. Data Sourced: December 2008
Insurance Growth Drops Then Evens
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Industry Growth Rating
The First Research Industry Growth Rating reflects the expected industry growth relative to other industries, based on INFORUM's forecasted average annual growth for the combined years of 2009 and 2010.
- Demand: Limited by demographics
- Need good risk assessment
- Risk: Slow economy limits prices
Industries Where Allstate Competes
- Insurance
- Property & Casualty Insurance (primary)
- Life Insurance
- Banking
- Financial Services
- Asset Management