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News stories of interest to Allstate Agency Owners published by the National Association of
Professional Allstate Agents, Inc. This Special complimentary issue of Agent Informer is designed to acquaint
you with our email publications. NAPAA members have already received all of this news in their inbox over the last 4
weeks. You could also receive weekly news in the DirectExpress newsletter – exclusively for NAPAA Members.


June 19, 2011




                  Possible Legal Relief for Allstate Agents
NAPAA continues to seek solutions for Allstate agents who have been or will be adversely affected by
the company’s unreasonable and heavy-handed management strategies.

Recently, we had the opportunity to speak with the law firm of Beal & Blitch, LLP, a litigation firm in
Atlanta, Georgia, which is investigating claims regarding the repurchase of agencies (TPP) by Allstate
from those agents who are classified as underperforming. Specifically, the firm is investigating the
right of Allstate to impose performance requirements and other controls on its agents when they are
classified by Allstate as ‘independent contractors’ as opposed to employees. Beal & Blitch is also
investigating a variety of other issues surrounding the buy-back of agencies, including any type of
discriminatory enforcement of performance requirements.

As we understand it, the firm is interested in speaking with any agents who may have information
regarding Allstate’s attempts confiscate their agencies. If your contract has been terminated, or you
have been threatened with the termination of your contract for failing to achieve company-imposed
“business objectives,” you may want to contact the law firm for more information. Their contact
information and website address is listed below.




                                                1100 Peachtree Street
                                                      Suite 640
                                                 Atlanta, GA 30309
                                               (404) 688-2700 ext. 116

                                               Email: abeal@bbllp.com

                                                   www.bbllp.com
Allstate Outlines Its Agent and Direct Distribution Strategies
June 3, 2011, By Mark E. Ruquet, PropertyCasualty360.com

Allstate says it has the bases covered in its insurance distribution channel and is planning to revamp its
business strategy to grow its property and casualty business for the future.

During its Investor Day conference on Wednesday, executives with the Northbrook, Ill.-based insurer outlined
their strategy for growing business by developing a distribution network that covers all the touch points for
consumers. The company is also taking steps it believes will improve the performance of its agency system
through consolidation and incentivizing agents to expand their business.

Tom Wilson, Allstate’s chairman, president and CEO, spoke about how the company “has made good
progress” and is responding to the need to improve the company’s performance for the future.

Part of that strategy involves the acquisition of Esurance, the online carrier, making Allstate “the only company
serving all segments of the customer proposition.”

Joe Lacher, president of Allstate Protection, the company’s property and casualty business, laid out how the
new distribution model will help the company.

On the business side, Allstate has seen the greatest impact to its earnings from rate inadequacy on its
homeowners insurance business. He says the company plans to take rate on homeowners to reflect loss
inflation. Along with taking rate, the company will tighten underwriting standards in an effort to avoid
unwarranted claims.

The aim, says Lacher, is to achieve a combined ratio in the low 60s, excluding catastrophes, by 2013.

On the auto side, the company is concentrating on claims activity to cut down on losses, primarily
concentrating on New York and Florida, which account for 20 percent of the carrier’s business, says Lacher.

On the distribution side, Lacher says Allstate’s exclusive agents will be compensated differently than in the
past in an effort to boost existing customer loyalty and grow revenues. The company’s variable compensation
to agents will be increased from 10 percent to 25 percent commission, based on improvements in the agency’s
business, which will mean more cross-selling and building the scale of the firm. However, compensation on the
sale of policies will be dropped from 10 percent on new and 8 percent on renewal.

Lacher says there will be more emphasis placed on the consolidation of agencies, feeling that bigger agencies
can deliver more services and be there when the customer needs them.

The shift, which Lacher says will involve a two-year transition, will cause some disruption but will strengthen
the company in the future, he says.

Encompass, the independent agency distribution company, has suffered from a five-year decline in business
that was “self-inflicted,” says Lacher. He notes that Allstate recognizes that it tried to treat Encompass as a
direct writer system and ignored the “unique” environment of the independent agency system. He says the
company is repairing that model, but does not provide much in the way of specifics.

While the direct agents and Encompass will provide the services for those looking for an agent, Allstate’s
acquisition of Esurance and independent agency Answer Financial will be there for those seeking to make their
purchases from the Internet.

Lacher says Esurance will be in a position to pull on the expertise and claims-adjusting capabilities of Allstate,
while the online insurer can provide cross-selling and other marketing possibilities.

He says more details about the company’s plans will be released after the deal is complete, adding that both
Allstate and Esurance are “excited” about the possibilities the transaction brings.
Allstate Agents Not Applauding Insurer’s Plans
June 8, 2011, By Mark E. Ruquet, PropertyCasualty360.com

Allstate’s plans to consolidate its direct-writer agencies and alter commissions is receiving a lot of negative
feedback, including criticism from the executive director of the agent’s association.

Jim Fish, executive director of the National Association of Professional Allstate Agents (NAPAA),
says that a lot of Allstate agents “are not happy at all” with the way the company is being run.
“No one at the top of the company understands what it is like to be an agent,” says Fish. “It is sad because
agents have tried to tell them what is not working, but they are not listening.”
Fish was referring to comments made by Allstate executives recently that the company plans to concentrate on
forming larger direct-writer agencies at the expense of lesser performing agencies and to cut upfront
commissions on new and renewal business while increasing variable compensation to reward for reaching
certain business goals.
Fish says he disagrees with the philosophy that larger is better because it impersonalizes the agent-client
relationship.
“It is fine to do, but you lose some of the home-spun advantage” that the small, local agency has developed
with its customers, Fish suggests. It will also mean less agency locations for customers to choose from.
Fish suggests that the plan is part of a move NAPAA criticized last year where it says an internal memo
revealed the company planned to eliminate 3,000 or more agents from its books. He says the current call to
consolidate agencies is an acceleration of that process.
While executives said the move would result in some disruption, Fish says it is only producing fear in the ranks
of the agents who are afraid they will lose their jobs because they are not in markets where they can reach
production goals of $3-$4 million in revenue.
“The smaller agencies are feeling a lot of pressure to get to [the revenues] that [Allstate] wants,” says Fish, but
the result is that experienced agents are either being terminated because they can’t reach the sales goals or
give up and sell their business.
Fish’s comments echo statements posted by readers of the June 3 article who say they are not supportive of
the company’s plans.
“The strategy will cause much more than ‘some disruption,’” says a reader with the username "22 year Allstate
Agent.” “As agents leave, clients will follow. Large agencies cannot deliver better service than many smaller
agencies.”
“This is proof positive that company management doesn’t know what it is doing,” says reader “Agentgurus.”
“No agency, no matter the size, can provide good customer service when it is paid 8 percent renewal
commissions; it can’t be done.”
“What Allstate’s strategy clearly does is force out competent, experienced agents who have a following and
obviously successful agencies, and pay them 8 percent for having a mature, seasoned book,” says reader
“Been Here Too Long.”
Fish, who notes that his association represents about 12 percent of the company’s workforce, says that based
on anecdotal evidence, “a lot of agents are not happy at all” with Allstate, adding that they “are demoralized
like you wouldn’t believe.”

"Allstate is reviewing all components of agency owner compensation to create a model that better rewards
higher performing agencies and aligns more closely with competitive industry practices," the company says in
an emailed statement. "We are committed to our agencies and to helping them enhance the customer
experience, and we will continue to provide them with the support they need to grow and succeed."
http://www.twfgga.com/

New Allstate Distribution Strategy Draws Fire From Agents
June 13, 2011 | By Mark E. Ruquet, PropertyCasualty360.com

Allstate unveiled plans to revamp its distribution channels and its business strategy to grow its property and
casualty business, but the executive director of the company’s agents’ association has criticized the plans.

During its Investor Day conference on June 1, executives with Northbrook, Ill.-based Allstate outlined their
strategy for growing business by developing a distribution network that covers all the touch points for
consumers. The company is also taking steps it believes will improve the performance of its agency system
through consolidation and incentivizing agents to expand their business.

Tom Wilson, Allstate’s chairman, president and CEO, spoke about how the company “has made good
progress” and is responding to the need to improve the company’s performance for the future.

Part of that strategy involves the acquisition of Esurance, the online carrier, making Allstate “the only company
serving all segments of the customer proposition.”

Joe Lacher, president of Allstate Protection, the company’s property and casualty business, laid out how the
new distribution model will help the company.

On the business side, Allstate has seen the greatest negative impact to its earnings from rate inadequacy on
its homeowners insurance business. He says the company plans to increase premiums on homeowners to
reflect loss inflation. Along with taking rate, the company will tighten underwriting standards in an effort to avoid
unwarranted claims.

The aim, says Lacher, is to achieve a combined ratio in the low 60s, excluding catastrophes, by 2013.

On the auto side, the company is concentrating on claims activity to cut down on losses, primarily
concentrating on New York and Florida, which account for 20 percent of the carrier’s business, says Lacher.

On the distribution side, Lacher says Allstate’s exclusive agents will be compensated differently than in the
past in an effort to boost existing customer loyalty and grow revenues. The company’s variable compensation
to agents will be increased from 10 percent to 25 percent commission, based on improvements in the agency’s
business, which will mean more cross-selling and building the scale of the firm. However, compensation will be
dropped from 10 percent to 8 percent on new business and renewals.

Lacher says there will be more emphasis placed on the consolidation of agencies, based on the feeling that
bigger agencies can deliver more services and be there when the customer needs them.

The shift, which Lacher says will involve a two-year transition, will cause some disruption but will strengthen
the company in the future, he says.

Encompass, the independent-agency distribution company, has suffered from a five-year decline in business
that was “self-inflicted,” says Lacher. He notes that Allstate recognizes that it tried to treat Encompass as a
direct-writer system and ignored the “unique” environment of the independent-agency system. He says the
company is repairing that model but did not provide much in the way of specifics.

While the direct agents and Encompass will provide the services for those looking for an agent, Allstate’s
acquisition of Esurance and independent-agency Answer Financial will be there for those seeking to make their
purchases from the Internet.

Lacher says Esurance will be in a position to drew on the expertise and claims-adjusting capabilities of Allstate,
while the online insurer can provide cross-selling and other marketing possibilities.

He says more details about the company’s plans will be released after the deal is complete, adding that both
Allstate and Esurance are “excited” about the possibilities the transaction brings.

However, Jim Fish, executive director of the National Association of Professional Allstate Agents
(NAPAA), says that a lot of Allstate agents “are not happy at all” with the way the company is being
run.

“No one at the top of the company understands what it is like to be an agent,” says Fish. “It is sad because
agents have tried to tell them what is not working, but they are not listening.”

Fish says he disagrees with the philosophy that larger is better because it impersonalizes the agent-client
relationship.

“It is fine to [consolidate agencies], but you lose some of the homespun advantage” that the small, local agency
has developed with its customers,” Fish suggests. It will also mean less agency locations for customers to
choose from.

Fish says the plan is part of a move NAPAA criticized last year when an internal memo revealed the company
planned to eliminate 3,000 or more agents from its books. He says the current call to consolidate agencies is
an acceleration of that process.

While executives acknowledged the move would result in some disruption, Fish says it is only producing fear in
the ranks of the agents who are afraid they will lose their jobs because they are not in markets where they can
reach production goals of $3-$4 million in revenue.

“The smaller agencies are feeling a lot of pressure to get to [the revenues] that [Allstate] wants,” says Fish, but
the result is that experienced agents are either being terminated because they can’t reach the sales goals or
the agents give up and sell their business.


Analyst Has Doubts about Allstate's Growth Plans
June 3, 2011, Associated Press

An analyst lowered his rating on shares of Allstate Corp. to "Hold" from "Buy" on Friday, saying he's skeptical
on management's growth targets.

THE SPARK: Keith F. Walsh said that while he agrees that there is significant value in the company, he
believes the insurer's pace of improvement will take time. Walsh cut his price target on the stock by $1 to $36.

THE ANALYSIS: "While management presented a story of how they stabilized the franchise during the
financial crisis, we came away less convinced as to the timing of improvement to overall returns," the analyst
said in a note to clients.

The analyst said he's not confident that Allstate ( ALL - news - people )'s Homeowners segment can produce
expected returns "given management's inability to improve profitability at that unit for several years."
Management also expects auto policy declines to continue this year. It sees low single-digit growth through
2013.
http://www.capitalresources.com/

Allstate Targets Online Ins. Sales; Buys Esurance, Answer Financial
May 18, 2011, www.InsuranceJournal.com [Excerpt]
In a bid to capture more business from customers who shop online, giant Allstate Corp. has agreed to pay $1 billion
to buy two popular online insurance sellers — Esurance and the associated site, Answer Financial.
Allstate will pay a total price of about $1 billion– $700 million plus the tangible book value of the two firms acquired
at close.
Esurance is the third-largest provider of online auto insurance quotes through its website and a 24/7 call center. It
sells in 30 states. Over the past five years, Esurance has more than doubled policies in force and grown premiums
on average 20 percent per year, according to the company, which advertises heavily. It also sells other personal
lines coverages.
Answer Financial provides auto insurance quote comparisons from 20 brand-name auto insurance companies to
buyers in all 50 states. The carriers it represents include Esurance, Travelers, Progressive, Safeco, Met Life Auto &
Home, Unitrin and The Hartford. In July, it reported having 324,000 policies in force.
Alltstate is buying the firms from White Mountains Insurance Group, Ltd., a Bermuda-domiciled financial services
holding company with interests in property/ casualty insurance and reinsurance, including OneBeacon.
Allstate, which has seen its personal lines business shrink, said the deal lets it expand its service to consumers who
prefer to buy direct online rather than through personal agents. It allows it to compete with Progressive and Geico,
which have strong web insurance shopping sites.
“Consumers today expect to have their specific needs met by their insurance companies. Our strategy is to focus on
individual preferences and utilize different value propositions for distinct consumer segments,” said Thomas J.
Wilson, Allstate’s president, chairman and chief executive officer.
He said Allstate agencies do “an outstanding job of serving customers who want a local personal touch and prefer to
purchase a branded product.” But Esurance will expand the company’s ability to serve customers who are “more
self-directed but still prefer a branded product.”
He said Answer Financial will strengthen Allstate’s offering to individuals who want to be offered a choice between
insurance carriers and are brand-neutral.
The move has Allstate agents concerned. “Many Allstate agents are viewing the proposed acquisition suspiciously.
The company has been hell-bent on growing its direct channel for years, but only recently has it had any success,”
said Jim Fish, executive director of the National Association of Professional Allstate Agents, Inc. “Who
knows, the success of the Esurance business model and technology platform could ultimately improve and
transform Allstate’s direct channel into a powerhouse. Should this come to pass, Allstate agents would feel more
expendable than ever.”
According to Fish, Allstate is shedding seasoned agencies in favor of larger agencies with more staff. “[S]o adding
this acquisition to the agents’ woes, can only create more angst. Without a doubt, the agents want Allstate to be
successful – but not at their expense,” he said.
Allstate said Esurance and Answer Financial will retain their brand names. Esurance has some 1,7000 employees
and 14 regional offices.
Allstate’s Good Hands Scoop Up Esurance, Answer Financial For $1B
May 23/30, 2011, By Chad Hemenway, PropertyCasualty360.com, Eric Gilkey, PropertyCasualty360.com

Allstate Corp. says it has entered into an agreement to buy online auto insurer Esurance and independent
insurance agency Answer Financial from White Mountains Insurance Group Ltd. for about $1 billion.

“This is a significant acquisition for Allstate, not in terms of any immediate market-share growth, but because it
will—in time—enhance Allstate’s ability to support multiple distribution channels and offer an independent auto-
quote service to better compete with Progressive and GEICO,” says Stephen Applebaum, a senior P&C
industry analyst for Aite Group.

Allstate Corp. says the deal will help it expand its ability to “serve customers that are more self-directed but still
prefer a branded product.”

During a conference call Allstate CEO Thomas J. Wilson said Allstate will continue to utilize the Esurance and
Answer Financial brands and they will be run as independent operations.

Esurance will continue to spend advertising dollars since that is how customers are acquired, Wilson adds.

Hamilton, Bermuda-based White Mountains CEO Raymond Barrette calls the deal a “win-win transaction.”

“Allstate has been gradually losing auto-insurance market share over the past few years and now holds about
a 10.5 percent share of the auto-insurance market, with about 12 million policyholders and 18 million vehicles.
Esurance holds under a 0.2 percent share,” says Applebaum.

With this purchase, aimed at the direct market, Allstate agents are “feeling a little apprehensive,” says Jim
Fish, executive director of the National Association of Professional Allstate Agents.

“The agency force who sells and services policies for Allstate basically they are competing with their own
company,” he adds. The insurer has direct-market channels but has had trouble expanding that online
presence until recently, he says.

Wilson says the move was made for customers, not agents.

“The right thing to do for customers is to give them what they want,” he notes. Business decisions are made
based on what the customer wants, “not what people inside the house wants.”

Joseph P. Lacher Jr., president of Allstate Protection, said the transaction would enhance and solidify agents’
business.

Some questions remain and may not be answered, Fish says, until the deal is closed. For instance, it is not
known whether Allstate agents will get a commission for servicing Esurance business, he says. Furthermore,
Fish adds, there is speculation that Allstate will soon introduce variable commissions, which may force some
agents to sell their business or look to merge with another.



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A.M. Best Comments on The Allstate Corporation’s Proposed
Acquisition of Esurance Insurance Company and Its Subsidiaries
May 20, 2011, Business Wire [Excerpt]

A.M. Best Co. has commented that the financial strength rating of A+ (Superior) and issuer credit ratings of
“aa-” of Allstate Insurance Group (Allstate) and its members, led by Allstate Insurance Company (Northbrook,
IL), are unchanged following the announcement that The Allstate Corporation (Allcorp) (NYSE: ALL) has
signed a definitive agreement with White Mountains Insurance Group, Ltd(NYSE: WTM) to acquire Esurance
Insurance Company and its subsidiaries, Esurance Insurance Company of New Jersey and Esurance Property
& Casualty Insurance Company.

Under the terms of the agreement, which also includes the purchase of Answer Financial Inc., Allcorp will pay
$700 million plus the tangible book value of all the entities acquired at the close of the transaction. The total
price is expected to be approximately $1.0 billion. The transaction has been approved by both companies’
boards of directors and is expected to close in the fall of 2011, pending regulatory approvals.

Esurance sells personal automobile insurance directly to customers online and through call centers. Answer
Financial, Inc., as a personal lines insurance agency, allows clients to compare quotes and purchase
insurance through its website and store fronts. These acquisitions are expected to further Allstate’s strategy of
utilizing different value propositions for distinct customer segments. A.M. Best believes the transaction will
improve Allstate’s overall market position by expanding its distribution capacity in the growing direct channel.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life
and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process
and highlights the different rating criteria employed. Additional key criteria utilized include “Rating Members of
Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.


The National Association of Professional Allstate Agents, Inc. is a nonprofit professional trade association
for Allstate agents. NAPAA provides its members with reliable communications on issues that affect agency
owners and their customers every week. NAPAA further serves its members by acting on their behalf and
speaking with a distinct and unfettered voice on a wide range of issues. Our operations, including our
publications, Website and office expenses are funded by member agents who pay membership dues.

Please support NAPAA with your membership today. www.napaaUSA.org
http://www.napaausa.org/Upload/Printable%20app%20Elite%20Gold.pdf
NAPAA is a professional trade association, membership dues may be paid annually, or monthly by EFT
automatic draft from your chekcing account. Dues are tax deductible as an ordinary business expense.



Allstate Cushioning Hit from Tornadoes
June 2, 2011, Birmingham Business Journal

Citing April's tornadoes that ripped through the Southeast, Allstate announced it is raising home insurance
rates to contend with its $1.4 billion cost of catastrophes that month, according to Bloomberg News.

Allstate, the largest publicly traded U.S. home insurer, blamed the increase on "inadequate" returns in the
homeowners' segment in its presentation Wednesday for its Investor Day.

On April 27, several tornadoes tore through Alabama, including one, just 10 mph shy of being an E5, that cut a
mile-wide swath through Tuscaloosa and killed 41 people.
Did Allstate Just Blunder?
May 25, 2011, By Neha Chamaria, MotleyFool.com

If you think "you're in good hands" with Allstate, consider this.

Allstate has agreed to acquire White Mountains Insurance's Esurance and Answer Financial businesses in a deal
that is valued at about $1 billion, or roughly three times tangible book value. The deal is expected to be completed
by late 2011.

The first impression
Given that Allstate is the second largest auto insurer in the country, acquiring Esurance, which provides auto
insurance quotes online, could prove to be a positive move. Esurance is the third-largest provider of such quotes,
and is well-recognized as a consumer-facing brand, while Answer Financial helps customers in choosing insurance
from 20 companies, through comparison of quotes. The combination looks like a valuable proposition for the
company, and should ideally translate into better advertising, customer reach, and sales for Allstate.

The insurer recently added a feather to its cap by receiving the highest recognition in the collision repair industry.
Add to this the current deal, and it shows Allstate's focus on the auto sector. But does this mean the company is all
set to zoom ahead of its peers?

Competition in the industry is already stiff and getting stiffer. Progressive and Berkshire's Geico unit already have a
hold in the online auto insurance business, with Geico having more than 10 million auto policyholders on its own.

For the quarter ended March 31, Esurance had 892,000 policies, and $247 million in gross premiums written. Post
the deal's completion, these new properties will add significantly to Allstate's portfolio. With Answer Financial's
technology, Allstate should be able to tap wider markets. But even if the deal looks impressive at first, it does not
give us the freedom to ignore the associated costs and challenges.

A challenging proposition
How insurance companies perform depends on several external factors, and it's difficult to project costs associated
with catastrophes like earthquakes and tornadoes -- especially this year.

Allstate reported a huge catastrophe loss of $1.4 billion for the month of April, which is bound to have an impact on
its margins. This month may prove worse.

Progressive incurred losses of around $55 million in the same month. Allstate can diversify its portfolio by selling
policies in newer areas and protect itself by purchasing reinsurance, but these are just some of the risks involved in
building scale in the insurance business.

Can Allstate now stand tall? Or will it fall?
The company says "the transaction is anticipated to be non-dilutive to Allstate's earnings in the second full year of
ownership." Foolish investors can read between the lines: Dilution of earnings in the first year after the acquisition is
completed appears likely. Analysts suggest the move was expensive and won't be accretive to earnings until the
second full year of ownership, but that Allstate didn't have much of a choice if it wanted to grow.

Naturally, White Mountains, which expects its adjusted book value to increase by around $80 per share, called the
deal a "win-win." By selling the Esurance segment, it seems to be shifting focus to its global reinsurance and
specialty insurance businesses. Investors reacted positively, sending White Mountains' stock sharply higher on the
day the deal was announced.

The Foolish bottom line
If you're a shareholder of Allstate, you need to think over this deal carefully. The move is a strategic one and is
certainly relevant to current trends. In the short run though, the stock might not be a grab, as there is still time for the
deal to be completed, and we need to see how the company capitalizes on its acquisition. I would prefer to remain
on the sidelines in the near term.
Will Allstate's Strategy Lead to Growth & Marketshare Improvements?
Tuesday, June 07, 2011, GLGGroup.com

Analysis by: GLG Expert Contributor
Analysis of: Allstate Outlines Its Agent And Direct Distribution Strategies | www.propertycasualty360.com
Source: http://www.glgroup.com/News/Will-Allstates-Strategy-Lead-to-Growth--Marketshare-Improvements--
54267.html

Summary:
During its Investor Day Conference Allstate Corporation outlined their strategy for growing business by
developing a distribution network that covers all the touch points for consumers. This is not really a new
strategy. About a decade ago Allstate developed a similar strategy to grow in market share by introducing
internet quoting, and purchasing the personal lines business of CNA. Perhaps under the leadership of Joe
Lacher they can do what they could not do under Chairman and CEO, Tom Wilson.

Analysis:
Most that are familiar with Allstate are skeptical that the strategy will lead to success. most of the skepticism is
driven by the fact that the strategy is not unique. Allstate has made similar attempts to be all things to all
consumers previously. The strategy is actually sensible, but it appears that the players executing the strategies
at Allstate might not be equipped to do so.

Over the past few years Allstate has lost market share and revenue in a very consistent manner. There are
many who believe that the solution to this issue is not to shrink the number of agencies. A strategy that lowers
commissions for new and renewal business will not be attractive to many exclusive or independent agencies.
Most veteran agency owners argue that agencies can not sustain viability with eight per cent commission
levels in today's market. This casts widespread disbelief in Allstate's new strategy.

Many believe that as the agency owners leave, there customers will follow them. This will cause more negative
impact on the renewal ratios, and lead to more reliance on acquiring new clients. This will lead to increases in
the expense ratio of the company, because of costs associated with the new acquisition of consumers.

To achieve the projected combined ratio in the low 60's excluding catastrophes by 2013, will be a difficult
target with agency disruption and consolidations. It appears that the strategy has more agencies questioning
the comittment of Allstate to the exclusive agency distribution system. Joe Lacher admits that the independent
agency distribution company Encompass has suffered from a five year decline in business that was self
inflicted. The question for most investment analysts should be, what has or will change to improve the results
in this market. Growth in this market segment was a key strategy when Tom Wilson was the President of
Allstate Protection.

Allstate was widely known for decades as the "good hands company." The question for many today is whether
the company is in good hands. Will investors be willing to wait another two or three years to see if this strategy
is finally on target to improve shareholder equity?




www.sprint.com/allstateagent
                                             Letters to NAPAA

Following is a paragraph from last week’s DirectExpress. “Encompass, the independent agency distribution
company, has suffered from a five-year decline in business that was ‘self-inflicted,’ says Lacher. He notes that
Allstate recognizes that it tried to treat Encompass as a direct writer system and ignored the ‘unique’
environment of the independent agency system [emphasis added]. He says the company is repairing that model,
but does not provide much in the way of specifics.”

I feel Joe Lacher's explanation of the lack of success and diminishing sales from the Allstate affiliate, whose design
it was to gain market share from the independent agency system, is quite revealing. It is and always has been quite
obvious that Allstate has great difficulty operating in ANY independent contractor business model. Management just
cannot fathom how to work within a framework where they are required to earn the support and loyalty of the agency
force. Instead, they appear to view teamwork through the eyes of the early 20th Century sweat shop bosses. Do the
job the way they want or you will be punished with lower wages, threatened with poorer work conditions or fired, if
you fail to conform.

To them it matters not if an agency is profitable. It is “their way or the highway.” What purpose is served to Allstate's
bottom line if producers who provide low loss ratios, high retention and highly loyal customers are driven from the
business model?

Lacher said that Allstate "ignored the ‘unique’ environment of the independent agency system.” This statement is
quite telling. Allstate understood the environment, but chose to disregard it. The Allstate solution is and has been
unchanged for decades; they rule as tyrants over their shackled minions with iron fists. They will force their agencies
to produce or the agents will suffer great penalties. This solution is a textbook example of failure through equal
doses of ignorance and arrogance.

The independent agents answered by writing business with other carriers. They are not chained to Allstate like
captive Allstate agents are and they won’t tolerate any company that tries to exert control over them. They can do
something about it because the represent other carriers and they own their books of business.

The choices available to Allstate Exclusive agencies are much more limited and court the real possibility of financial
ruin. Sadly, financial ruin is one of the weapons used by Allstate to scare its agencies into ill-founded acts of
desperation. The final insult is the effort Allstate expends to prevent financially exhausted agents from selling their
agencies, either by withholding approval, or flat-out rejecting buyers under the guise of pretending to be concerned
about the future success of the EA Agency.

A related, final question regarding the coming changes to the agency compensation package; "Does Allstate really
want to market its products through an Agency Distribution System? Answer: Of course it does, but only at the
lowest rate of remuneration which the marketplace will tolerate. This does not bode well for EA agency owners.
________________________________

Have there been any discussions about ISO and town class ratings being completely wrong – and what can we do
in each state to get these changed? In our area, we have a SUPER big mess. Any ideas on how we get answers?
Are there any lawsuits popping up on this?

Editor’s response: There has been a lot of grumbling about the ISO issue and town class ratings, but so far there
has been no litigation. This is a Home Office edict, so individual regions have their hands tied. I’m sure the company
saw this as an opportunity to either increase premiums and/or a way to get people to leave without having to cancel
them. The company has made it pretty clear that it only wants certain property risks - and town class 9 and 10
business is not among their favorites. We think the property business about to get worse; we see higher rates and
tighter underwriting ahead. And as much as local management would like to change things, they can’t because
Home Office is adamant about reducing risk and increasing profits. It’s not a pretty picture ahead of us.
__________________________________
Allstate set back in Countrywide toxic debt case
June 14, 2011, By Jonathan Stempel, Reuters
* Judge moves lawsuit to Los Angeles from New York
* Allstate says was misled on risks, suffered losses

NEW YORK, June 14 (Reuters) - Allstate Corp suffered a setback in its lawsuit against Bank of America Corp's
Countrywide unit over toxic mortgage debt, as a Manhattan federal judge moved the dispute to Los Angeles.
U.S. District Judge Alvin Hellerstein said Allstate (ALL.N) appeared to be "judge-shopping" by suing in New York
last Dec. 27 to recover "significant" losses on more than $700 million of mortgage securities it bought between 2005
and 2007.
He said this followed a Los Angeles judge's decision the prior month in a similar case to exclude some securities on
which the largest publicly traded U.S. home and auto insurer was basing its claims.
In that Nov. 4 ruling, U.S. District Judge Mariana Pfaelzer narrowed the potential recovery by various investors in
Countrywide mortgage-backed securities. Bank of America (BAC.N) has said this ruling reduced the amount of
securities at issue to $31 billion from $352 billion. [ID:nN05108525]
Hellerstein said moving Allstate's lawsuit to Los Angeles would promote efficiency and consistent results, and that
the court clerk "should consider" sending the case to Pfaelzer.
"This matter is closely related," Hellerstein said. "It had been filed in the aftermath of Judge Pfaelzer's ruling limiting
the scope of Allstate's claims, and gives the appearance of judge-shopping."
An Allstate spokesman had no immediate comment.
Other defendants in the case include former Countrywide Chief Executive Angelo Mozilo, who Allstate has called
the "architect" of a scheme to boost market share and ignore sound underwriting in a "proverbial race to the
bottom."
A lawyer for Mozilo has argued that the Countrywide founder should be dismissed from the case, having had
"nothing to do" with the sale of debt to Allstate. [ID:nN01186476]
Mozilo in October reached a $67.5 million settlement of a U.S. Securities and Exchange Commission civil fraud
lawsuit accusing him of misleading investors and generating improper gains from insider stock sales. He did not
admit wrongdoing.
Allstate is based in Northbrook, Illinois. It has filed several lawsuits to recover losses on mortgage debt against
lenders including Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE) and JPMorgan Chase & Co (JPM.N).
Shares of Allstate closed Tuesday up 33 cents at $30.22.
The case is Allstate Insurance Co et al v. Countrywide Financial Corp et al, U.S. District Court, Southern District of
New York, No. 10-09591. (Reporting by Jonathan Stempel in New York, editing by Bernard Orr)




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 [Idaho] Allstate Will Soon Begin Hiring For New Facility
May 22, 2011, By Jake Taylor, LocalNews8.com

A new building is going up in Chubbuck, and it will mean hundreds of jobs for the local economy.

Five hundred people will work inside when the building is finished in October, but hiring is taking place well
before then.

"Allstate will start interviewing next month, in June, and we will hire that first crop of employees in July,” Allstate
regional spokeswoman Shauna McBride said.

As the facility is still being built, these first positions filled will be the facility's management and administration.

Allstate said it plans to have the finished site fully staffed by people from the area.

"Allstate's goal is to hire locally. We are looking to find local people that are looking for employment to work in
this call center, absolutely 100 percent,” McBride said.

According to the Idaho Department of Labor, those hires will have a multiplier effect, likely causing even more
local job openings.

"It's very simple; Jobs create jobs,” Idaho Department of Labor regional economist Dan Cravens said.

There are 40,000 in the Bannock County workforce, and 3,600 of those need jobs.

"So, if you knock off 800 people from the unemployment rolls, that is going to drop our unemployment rate
from right around 9 percent to down around 7 percent, give or take. That's pretty staggering,” Cravens said.

Cravens said these Allstate jobs will have a profound effect on the area.

"That number of jobs is going to be a real shot in the arm for our economy,” Cravens said.

Cravens said a stable workforce and business-friendly tax structures, mean a lot of businesses are starting to
look this way.

"I think the most important thing to say is, Allstate is not a one shot deal,” Cravens said.

                                                    Letters to NAPAA
It is NAPAA's editorial policy to publish letters submitted by our readers. Just because we publish a letter, does not mean the NAPAA
Board agrees with, supports or endorses the letter's content or the writer's opinion. Also, NAPAA reserves the right to edit any material
submitted for offensive or inappropriate language, length, tone and civility.

Allstate agents have a rare opportunity. Senator Richard Blumenthal (D CT) has just started a new campaign to
combat misclassified workers. From the news reports it seems he is concentrating on construction workers.

If enough Allstate agents contact him, he may see it as a way to get countrywide exposure that would further his
career. I am sure that the news of this campaign is only being aired in CT. I have no way to contact more than a
handful of Allstate agents but NAPAA can get the word out to all of them. Following is Senator Blumenthal’s contact
information:
State Office                                                   Washington D.C. Office
Senator Richard Blumenthal                                     Senator Richard Blumenthal
30 Lewis St., Ste 101                                          702 Hart Senate Office Bldg.
Hartford, CT 06103                                             Washington DC, 20510
tel: (860) 258-6940                                            tel: (202) 224-2823
fax: (860) 258-6958                                            fax: (202) 224-9673
Insurance agents sue to protect their independent contractor rights
May 23, 2011, By Jaime L. Brockway, IFAwebnews.com

An association of 54 insurance agents is suing a Columbus, Ohio-based insurance company for allegedly forcing
them to submit to changes in the insurer-agent relationship that exert more control over them.

The Nationwide Insurance Independent Contractors Association, representing Nationwide agents from across the
U.S., filed the suit in U.S. District Court in Philadelphia last week, in part because Nationwide is seeking exclusive
control over policyholder information obtained by agents.

Nationwide Mutual Insurance Co. created the 2010 Agent Choice Addendum, which allegedly “impinges” on agents’
contractual right to operate as independent contractors, the association argues in its suit, according to a Courthouse
News Service report.

“There is no legitimate business purpose for Nationwide’s assertion that it should have exclusive ownership and use
of the policyholder information,” the suit suggests. “This is information generated in the ordinary course of business
that originates with, and is developed by, the agent. Nationwide is aware of the information only because the agent
has transmitted the necessary information to Nationwide in the form of an application for an insurance policy and
then transmitted updating information where appropriate.”

Agents who sign the addendum would have better commission rates on certain products and services than agents
who do not sign; would have a lower servicing fee; and other benefits, although they would have to forfeit any further
DCIC (retirement) benefits, according to the report. Agents who refuse to sign can continue to accumulate DCIC
benefits, but would not have access to better rates and other benefits.

The servicing fee would support a centralized policyholder servicing facility to be operated by Nationwide, which
breaks agents’ contracts with the carrier that give agents independent judgment in relation to policyholders, the
agents allege in the suit.

The addendum also would discriminate in favor of larger agents, since agents with smaller sales volumes would
follow requirements not demanded of agents with larger sales volumes, the association said.

Nationwide does not have a contractual relationship with the association and doesn’t recognize it as a
representation of its agency force, according to Elizabeth Giannetti, a Nationwide spokeswoman.

“We’re committed to paying competitive compensation to our agents and recent changes that were made were in
the best interests of our customers and will help keep Nationwide pricing competitive in the market,” Giannetti told
IFA.


We finance Allstate insurance agencies.
Capital Resources           866.523.6641
info@capitalresources.com                         www.CapitalResources.com

Note on letters: The opinions expressed in letters are not necessarily those of NAPAA. Letters should be brief and are subject
to editing. We will publish letters anonymously; however, we will not accept letters sent anonymously.
The views expressed by NAPAA, or any of its positions relative to its activities and those of its members' actions on behalf
of this organization, are expressly those of NAPAA, and do not reflect the views or opinions of Allstate Insurance
Company, or any of its affiliates.
This newsletter may not be redistributed or reproduced in any form, including electronically, without prior written
permission from NAPAA.
Contact Information for Agent Informer Newsletter & NAPAA Headquarters:
National Association of Professional Allstate Agents, Inc. (NAPAA)
P.O. Box 7666, Gulfport, MS 39506-7666
Toll free Phone:       877/627-2248             Toll free Fax:                       866/627-2232
E-mail:      ExecutiveDirector@napaausa.org     Web Site:                           www.napaausa.org

				
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