Allstate Insurance Co. on Thursday made a $45 million commitment to help revitalize inner-city neighborhoods as part of an aggressive strategy to sharply increase its number of policyholders nationwide.
“Urban markets generate a $25 billion business opportunity every year,” said Jerry Choate, chairman and chief executive of the Northbrook-based company. “We intend to have a big share of it, twice as much as our average 12 percent market share nationwide.” Andre Howell, an Allstate official overseeing urban programs, said the company had a 20 percent share of the urban market in 1996.
Allstate’s goal is to increase its total number of policyholders by 8 to 10 percent a year, according to Rhonda Woodard, vice president in charge of underwriting. The goal is ambitious, given that the overall insurance market grows by 2 to 4 percent a year on average.
“We want to dominate the market and be No. 1 in terms of policyholders,” Woodard said. With 20 million policyholders nationwide, however, Allstate is far behind Bloomington-based State Farm Insurance Co., the industry leader with 66 million home and auto policies in force.
“Its commitment to urban revitalization makes sense,” Ronald Frank, financial analyst at Smith Barney, said of Allstate. “It is consistent with its long-lived and successful efforts to help minority communities. But I do not see them getting bigger than State Farm in the near future.”
Allstate’s so-called Ultimate Urban Program aims to improve housing in inner-city neighborhoods, thereby improving home safety and, as a result, reducing the number of insurance claims. The long-term goal is to enhance the economic viability of urban neighborhoods, thus creating better conditions for business and the sale of home and car insurance policies.
Chicago, mainly the South Chicago neighborhood, will receive $7.3 million, the biggest share of the $45 million to be spent over five years.
The lion’s share of the local money, $5 million, will go for low-interest home improvement and rehabilitation loans. Allstate will buy certificates of deposit to be held by Chicago-based Seaway National Bank, the largest minority-owned bank in the U.S.
Allstate will also give $1 million to the Neighborhood Housing Services of America for low-interest loans, and a $1.25 million grant to the Claretian Associates, a church-based non-profit development organization, to finance neighborhood revitalization projects, insurance education, crime prevention, a safety program and youth initiatives.
Six other cities–Cleveland, Dallas/Ft. Worth, Los Angeles, New York, Philadelphia and Washington, D.C.–share the rest of the $45 million commitment. Allstate said it may add four or five more cities to the list in the future.
“Our roots are in urban areas. We started working in the ’30s in Chicago, and we are pursuing that tradition,” Choate said. He said that Allstate is the No. 1 insurer of the Hispanic community and No. 2 among African-Americans.
The new commitment is the largest made by an Illinois insurer to inner-city neighborhoods. It follows last June’s pledge by State Farm of $25 million to expand mortgage funding for lower-income home buyers.
