Allstate plan for ‘transformative growth’ not unlike Progressive’s

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CEO Tom Wilson’s strategy was launched late in 2019, but growth won’t arrive until the second phase.

CEO Tom Wilson released the Allstate plan for “transformative growth” late last year. Though there has been a large number of changes throughout 2020, the promised growth has yet to be revealed.

That said, the CEO says that the growth component will arrive with the second part of the strategy.

Though Wilson has not set any dates as to when the second part will arrive – and the growth along with it – he remains confident in the Allstate plan and sticking to it. Wilson has adhered to this strategy throughout this year, even as the pandemic sent a crisis through the world. The car insurance business was particularly impacted by the appearance of COVID-19. As such, the insurer has started being compared with Progressive to an increasing degree.

In fact, Progressive has been using this time to take hold of territory formerly belonging to Allstate. Its CEO, Tricia Griffith, has been moving Progressive to aggressively grab hold of market share traditionally belonging to its rival over the last several years.

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To take that market share back, it appears that Wilson’s repositioning is meant to somewhat emulate its competition. However, there is a substantial risk in executing that type of plan, particularly in the midst of an ongoing global health and economic crisis.

Despite the Allstate plan for growth, the insurance company has been experiencing a slow shrinking.

This insurance company is recognized for its industry-leading profit margins in addition to its aggressive strategies for repurchasing shares. These have traditionally poured oomph into its per-share prices. However, whenever there is even the subtlest indication that those margins are decreasing, the insurer’s share prices tumble.

As a result, despite the Allstate plan for transformative growth that has directed it along a road that have had many comparing it to Progressive, the outcomes of the same moves have not produced mirrored results. While Griffith and Progressive experience a larger amount of wiggle room from shareholders and with a greater stock multiple than its rival, Allstate plan - graph - growthWilson cannot seek growth by sacrificing margins. This represents a considerable challenge for the CEO and helps to illustrate why Wall Street expectations aren’t high.

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