Today’s Headlines 7/18/2011
- Allstate exec leaves company; stock takes a hit
- NorthShore’s latest big hire: chief of medicine
- Tribune’s Tony Hunter promoted, executives cut
- Losing bidder for O’Hare contract boosts terms in last-minute move
- Abbott Labs’ Q2 results will follow bad news for cholesterol drugs
- Dow slides on overseas debt worries
View All of Today’s News Headlines
— Allstate Corp.’s stock was down more than 5% in late afternoon trading on news that the head of its biggest business unit had left the company suddenly.
The abrupt departure Monday of Allstate Protection President Joseph Lacher, who ran the Northbrook-based company’s core auto and homeowners insurance unit, was a surprise to investors, who’ve been unhappy with Allstate’s sliding marketshare.
In a terse statement, Allstate offered no explanation for Mr. Lacher’s exit, which was effective immediately.
Mr. Lacher, who joined Allstate from Travelers Cos. in late 2009, recently hired several high-priced executives in newly created positions reporting directly to him. He also was showcased in Allstate’s first “analyst day” in over a decade last month. The company didn’t even have an interim replacement for Mr. Lacher lined up, and the presidents of the business units under Mr. Lacher were told to report to Allstate CEO Thomas Wilson for now.
An investor, who declined to be identified, said the word the company was putting out was that lack of growth in policies and premiums explained part of his departure.
But Mr. Lacher’s sudden exit was tied, too, to recent critical remarks he’d made in a semi-public setting about Mr. Wilson, people familiar with the matter said. In particular, Mr. Lacher was said to have disparaged Mr. Wilson to a group of top-performing agents at the company’s annual Leaders Forum for agents in Orlando, Fla., in May, these sources said.
An Allstate spokeswoman said the company wouldn’t comment on Mr. Lacher beyond the minimal language in its announcement. A call placed to Mr. Lacher’s home wasn’t immediately returned.
Before today, investors looked to Mr. Lacher as the key figure in a turnaround story that has yet to be seen in Allstate’s financials. He had played a role in the $1-billion acquisition of online insurer Esurance Cos., announced in May, and was working to rationalize Allstate’s agent force, numbering roughly 11,000. Allstate is getting tougher with agents who don’t meet sales goals and is attempting to force agents to join forces or sell in a bid to create larger, better-capitalized agencies.
“The lack of comment on why he left is largely being interpreted to mean he didn’t leave on the best of terms,” said Paul Newsome, analyst with Sandler O’Neill & Partners in Chicago. “He was perceived as the guy who was there to fix a lot of the problems. . . . There’s just a lot of questions and no answers at this point.”
The news caused at least two analysts who had recommended investors buy Allstate’s beaten-down stock to downgrade their ratings to “hold.”
In the final hour of trading, Allstate’s stock was down $1.54, or 5.2%, to $27.93. That’s just 76% of Allstate’s book value as of March 31.
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