Allstate Corp. Chief Executive Officer Tom Wilson, whose company lost car-insurance market share in the last three years, said competitor GEICO could struggle to expand sales as it seeks to sell more policies at storefronts.
Allstate has an agency force selling its namesake brand, while its Esurance unit operates over the Internet. GEICO, the unit of Warren Buffett’s Berkshire Hathaway Inc., won customers by focusing on direct sales and highlighting its low prices, then added agencies under its brand to boost sales.
“We’ve been there, done that,” Wilson said today at an investor conference in New York hosted by Barclays Plc. “It didn’t work for us.”
Wilson, 55, said Allstate’s purchase of Esurance in 2011 helped his business “box in” GEICO by appealing to different groups of drivers with distinct brands and operations. Investors have pushed the CEO to explain how he plans to maintain the company’s share of U.S. auto-insurance premiums as Buffett’s company and Progressive Corp. expand.
Allstate’s share of the U.S. personal auto market slipped to 10 percent last year from 10.5 percent in 2009, according to data compiled by the National Association of Insurance Commissioners. Omaha, Nebraska-based Berkshire’s portion climbed to 9.6 percent from 8.2 percent in the period.
Part of the decline at Allstate has come from changes made at its homeowners business to boost profits, Wilson has said. Allstate-brand auto policies in force rose by about 88,000 in the three months ended June 30 from the prior quarter, the Northbrook, Illinois-based insurer said today in a slide presentation.
Buffett, 83, has praised GEICO as one of the main reasons for improved insurance results at Berkshire.
“GEICO led the way, continuing to gobble up market share without sacrificing underwriting discipline,” Buffett said in his annual letter to investors in March. “When I count my blessings, I count GEICO twice.” The insurer didn’t immediately return a voice mail left at its media line.
Editors: Dan Reichl, Dan Kraut