Thread regarding Allstate Corp. layoffs

$4 billion National General acquisition

Today, Allstate acquired National General Holdings Co for the price of $4 billion in cash. This wasn't money borrowed against the stock holdings, but capital the company had in reserve. This is slightly less than the entire company net earnings last year ($4.7 billion).

They're letting go of 3,700 employees in the next six weeks and every department is under heavy pressure to cut tens or hundreds of millions of dollars from their budgets, all while jobs are being transferred where-ever possible to India.

Meanwhile, the company has enough capital to both buy-back $3 billion shares in January 2020 and spend an additional $4 billion to dip its toes in a expanding business into an industry it has no experience in.

According to the Star Tribune, National General earned a net $319 million from insurance products last year. It would appear that Allstate is purchasing customers in lieu of being able to earn them.

Assuming this doesn't create a net loss for the company when Allstate's business practices drive insurance costs up for National General customers, at the current rate of profitability this purchase will pay off in about 12.5 years.

It makes you wonder: what is going on? Who's making these decisions? Why do they keep assuring their employees and their customers that they "care" about them, when everything they do insists that this train is off the tracks?

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Post ID: @OP+15SFKCtO

2 replies (most recent on top)

Your hitting the nail on the head with “buying customers they can’t attract.” It’s all accounting sleight of hand to raise market share at all costs

Post ID: @1rwf+15SFKCtO

NatGen is a really scummy company. The owners are the same family that owns AmTrust, which just had their SEC investigation closed out from when the CFO was cooking the books. Guarantee there’s also the same kind of fudging the numbers at NatGen. $10 says Allstate will write down a huge chunk of the spend within a year.

Post ID: @1csb+15SFKCtO

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