Allstate has suffered an $11bn loss in its US insurance business as a result of the global car industry’s demise.
Allstate lost $1.4bn in revenue for the year ended March 31, compared with a profit of $8.3bn the previous year, the company said.
The losses came as it posted its fourth-quarter profit in five years, while also announcing that it will sell its US division, Brightway, for $1,250m.
It also said it would sell its farm bureau insurance business in North America.
All of this has left Allstate’s US insurance market with a loss of $1 billion.
This is an area where the industry is going to need a lot of help.
That’s why we’re announcing today we’re selling our farm bureau.
All the data we have for this year is going out to the farmers, so we’re going to buy all the farm bureau data that is out there and sell it to the states, which are going to be very valuable data in terms of what they need to do to better manage their risk.
The US insurance industry is struggling to find the balance between consumer spending and business needs, said Allstate President and CEO Kevin Anderson.
It’s not only Allstate who is in trouble.
It is also GM, which last year was among the first big players to exit its US business.
It announced plans to sell its GM business.
The financial crisis in the US and in Europe has caused the US auto industry to shrink by more than 60% since the recession began.
Sales in the industry were down 2.7% in the third quarter, according to US auto analyst Edmunds.
This has led to the collapse of the US automobile insurance market.
All this has led some analysts to say that the US market could be in trouble, and that is one of the reasons Allstate is trying to change course.
All that’s been lost, in the last five years is the risk-adjusted risk.
But it has all been lost through the consolidation of the industry, and the big insurance companies, said Paul Kelleher, analyst at Kelley Blue Book.
We think Allstate can turn around.
It has a very large, very strong and very healthy business in this market.
It needs to re-establish itself in that market and re-enter the market with some fresh blood, Kelleer said.
It may not be possible, but that’s the way it’s going to work.