Allstate Insurance company’s recent ad campaign calls them the company that protects you from mayhem, and since 1931 they have been doing just that. As a provider of home, car and life coverage, the company has grown in to the second largest corporation based on incoming insurance premiums. Allstate Financial has expanded the organization’s scope by giving clients financial planning tools, like annuities, that give customers the advantage of keeping their assets consolidated. But, with any business, there are problems, and lately Allstate has had their fair share.
Banking giant, JP Morgan Chase, sold Allstate Insurance a group of mortgage-backed securities between 2005 and 2008, reported to be worth $750 million dollars. Now Chase is finding themselves the target of a number of lawsuits. Allstate is claiming that JP Morgan Chase was aware that the mortgages were high risk properties, and likely to fall through. During the financial crises that saw millions of homeowners and businesses losing money, Allstate saw their holdings almost wiped out, due to, according to them, misrepresentation and omission of information.
On a more humanitarian front, Allstate Insurance sponsored a “Charity Shoot” event, in conjunction with a minor league Indiana hockey team. A hockey fan, picked at random, would have one shot at making a goal, from a distance of one hundred seventy five feet, for a $50,000 donation to charity. Well, fan Richard Marsh made the shot, but was denied payment because of a rules violation. Although a second party insurance company is responsible for the payout, Allstate has withstood an online lashing from fans who are calling the insurance giant heartless. Rink owner Paul and Cindy Skjodt plan to make a donation to St. Vincent Heart Center, in an effort to calm the situation.
Insurance analysts are pointing the finger at Allstate executives for poor fourth quarter profits. Experts are blaming irresponsible spending on a massive advertising campaign, coupled with natural disasters like severe hailstorms in Arizona, which have caused an increase in claims. Although share prices have risen nine percent, Allstate is taking steps to increase prices, and ironically, the new ad campaign seems to be bringing in business.
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