NORTHBROOK, Ill., Jan. 16 /PRNewswire-FirstCall/ -- The Allstate
Corporation (NYSE: ALL) today announced that it recorded restructuring
expenses in its fourth quarter 2001 results of approximately $107 million on a
pre-tax basis and $70 million on an after-tax basis, or approximately $0.10
per diluted share. These expenses primarily relate to an initiative started
in 2001 to realign the company's claim offices to fewer, larger office
locations and the re-design of its Customer Information Centers and other
back-office operations. Also reflected is a non-cash charge resulting from
pension benefit payments made to agents in connection with the re-organization
of employee agents to a single exclusive agency independent contractor program
announced in 1999. The company estimates that the annual expense savings
related to these programs, once complete, is expected to total approximately
$140 million on a pre-tax basis.
Allstate also announced it has received preliminary approval of a
settlement between Allstate Insurance Company and Allstate Indemnity Company
and the plaintiffs in a Georgia class action, Earl, et. al. v. Allstate. The
suit involves a claim that certain current and former Allstate customers in
Georgia over the last six years were entitled to payment for inherent
diminished value of their vehicles associated with a covered loss. Inherent
diminished value is the alleged difference between a vehicle's pre-loss value
and its post-loss value after complete and proper repair.
It should be noted that this settlement was recently reached in light of
the November 28, 2001 Georgia Supreme Court decision, in a State Farm class
action, interpreting diminished value coverage under Georgia law. The Georgia
decision is contrary to recent rulings by a number of other state courts in
favor of the insurance industry and Allstate involving diminished value.
Additionally, since 1998 Allstate has been implementing policy language in a
majority of states reaffirming that its collision and comprehensive coverages
do not include diminished value claims. Allstate continues to litigate
several diminished value class actions in other states, including one Illinois
case in which a multi-state class has been certified. Allstate is vigorously
defending these diminished value class actions in which it contends that its
policies do not provide coverage for diminished value claims.
Allstate recorded a reserve related to this settlement in its fourth
quarter 2001 results totaling $59 million on a pre-tax basis and $38 million
on an after-tax basis, or approximately $0.05 per diluted share.
The company will release its complete financial results for the fourth
quarter of 2001 on February 6, 2002.
The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held
personal lines insurer. Widely known through the "You're In Good Hands With
Allstate(R)" slogan, Allstate provides insurance products to more than
14 million households and has approximately 13,000 exclusive agents in the
U.S. and Canada. Customers can access Allstate products and services through
Allstate agents, or in select states at allstate.com and 1-800-Allstate.
Encompass(SM) and Deerbrook(SM) Insurance brand property and casualty products
are sold exclusively through independent agents. Allstate Financial Group
includes the businesses that provide life insurance, retirement and investment
products, through Allstate agents, workplace marketing, independent agents,
banks and securities firms.
This press release contains forward-looking statements about expense
savings and ongoing litigation related to the issue of diminished value
insurance coverage. These statements are subject to the Private Securities
Litigation Reform Act of 1995 and are based on management's estimates,
assumptions and projections. The amount and timing of expense savings are
dependent on the adequacy and timing of the actions taken to eliminate certain
employee positions and consolidate Allstate's operations and facilities. The
outcome of this litigation is unpredictable and is dependent on a variety of
factors including the trial courts' and appellate courts' determination of the
propriety of the class certification as well as the law of diminished value in
each of the states in the class.
SOURCE The Allstate Corporation
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Related links:
http://www.allstate.com
Company News On-Call:
http://www.prnewswire.com/comp/109885.html
CONTACT:
Michael Trevino of The Allstate Corporation,
+1-847-402-5600
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