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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (6803)4/16/1999 11:15:00 PM
From: Shane M  Read Replies (2) of 78567
 
Paul,

I saw your post mentioning interest in ALL.

This is entirely my personal opinion, but I'd hold off for a while on purchasing ALL. I wouldn't have said this a month ago, but outlook has gotten tougher IMO.

I get the feeling that the first quarter top line growth is going to dissappoint, and we're seeing competition intensifying from all sides. There's no room for price increases, and several players seem willing to run higher combined ratios right now. State Farm seems to be phasing in an all out effort to defend marketshare, and Progressive is making inroads in most of the state's I am familiar with. AIG is taking an aggressive posture also. Insurance departments in general are becoming more combative from what I can tell following several years of strong profits by insurers.

I hope Allstate announces a direct operation before it's too late, and I think the new CEO (Ed Liddy) understands this must be done if growth is to be achieved. The old distribution channel aint what it used to be and ALL isn't positioned well in the areas that are rapidly growing (like direct writers).

FWIW, I'm aware of several of the new projects the company is implementing and I get a sense of increasing frustration from home office. All the old tricks don't seem to be generating growth like they used too, and I don't think they've yet come to terms with that.

I am long ALL, but am cautious.

Shane
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