Brushing aside the uncertainty posed by a federal criminal investigation, Allstate Insurance Co. painted a rosy picture of the company’s prospects for its shareholders Tuesday.
At the insurer’s annual meeting among the blooms at the Chicago Botanic Garden in north suburban Glencoe, Allstate chief executive Jerry Choate basked in the light of stellar financial results.
In 1997, the Northbrook-based company posted its best performance in its 66-year history, with operating income up 52 percent from the previous year and its stock price soaring 56 percent. “Better than many of the other Wall Street highfliers,” Choate told shareholders at the low-key, uneventful meeting.
As for the investigation, which focuses on claims that Allstate improperly altered engineering reports to reduce its payouts from the 1994 California earthquake, Choate confirmed that the company would cooperate fully.
“We have consistently denied those allegations,” Choate said.
The conduct of Allstate employees in the aftermath of the quake “reflected well” on the company, he added.
“We are committed to . . . conducting our business with the utmost integrity,” he said.
Shareholders appeared content with Choate’s terse explanation. The only questions related to the investigation concerned a separate Allstate claim that it was overbilled by unscrupulous independent adjusters and building contractors repairing post-quake damage. The company has vowed to file civil lawsuitst tagainst those so-far-unnamed adjusters and contractors, perhaps within a few days, a spokesman said.
Since the Northridge quake, which cost the company $1.75 billion in losses, Choate and his management team have taken steps to sharply reduce the company’s exposure to hurricanes in the Northeast and Florida, as well as to California earthquakes.
Choate is counting on more intensive brand-marketing to increase the rate of premium growth, which had slowed as Allstate dropped some prices and shifted business away from California and Florida. “We’re starting to see the line go up,” Choate said.
Also Tuesday, Allstate announced a 2-for-1 stock split, payable July 1 to shareholders of record May 29.
