Exclusive-Activist hedge fund Trian targets insurer Allstate-sources
Reuters
Published Oct 16, 2023 05:35PM ET
Updated Oct 17, 2023 11:47AM ET
By Svea Herbst-Bayliss and David French
(Reuters) -Nelson Peltz's activist hedge fund Trian Fund Management has built a stake in Allstate Corp (NYSE:ALL), one of the insurers struggling to cope with the fallout of natural disasters such as the Maui wildfire in Hawaii, people familiar with the matter said.
The move could increase pressure on Chief Executive Tom Wilson, who has led Allstate since 2007, to turn the Northbrook, Illinois-based company around following five quarters of losses. It has blamed natural disasters that are sometimes amplified by climate change for its poor performance.
Allstate has hired investment bankers to advise it on how to handle Trian, the sources said. Trian's exact stake and plans for Allstate could not be learned.
The sources spoke on condition of anonymity because the matter is confidential. Allstate and Trian did not immediately respond to requests for comment.
Allstate shares jumped 6% on the news to $127.46 in Monday trading in New York. Prior to news of Trian's involvement, Allstate's stock price had dropped 9% year-to-date, significantly underperforming a 4% rise in the S&P 500 Property & Casualty Insurance index, due to its exposure to losses in property and auto insurance.
Like many insurers, Allstate has not raised its premiums fast enough to cover losses it incurs by paying out on big natural disasters such as wildfires, while inflation has also made it harder for it to cover replacement costs.
Activist investor Carl Icahn built a position in Allstate two years ago but did not publicly push for board seats or other major changes.
Trian, which recently overhauled its top ranks and promoted two veterans, including Peltz's son, Matthew, to co-chief investment officers, is already busy with another high-profile corporate battle. It reignited its activist campaign against Walt Disney (NYSE:DIS) this month after it dropped a board challenge earlier this year in the wake of CEO Bob Iger's return.
Trian has previously pushed for change at companies such as Procter & Gamble (NYSE:PG), Unilever (LON:ULVR) and Invesco.
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Written By: Reuters
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