Allstate Corp., the largest publicly traded U.S. home and auto insurer, said it’s cutting some retirement benefits for employees in a move that will increase book value by a range of $1.70 to $2 a share.
The adjustments include a new formula for calculating pensions and discontinuing retiree life insurance benefits for current employees, Northbrook, Illinois-based Allstate said today in a regulatory filing. A revaluation of book value, a measure of assets minus liabilities, is expected to be completed this quarter.
“These changes will provide more consistent benefits across employees” and reduce Allstate’s cost structure, according to the filing.
Chief Executive Officer Thomas Wilson, 55, has been seeking to pare costs as near-record low interest rates pressure income from the company’s bond portfolio and claims costs from natural disasters crimp profit. The insurer said this month that it was planning to close a call center in Woodbridge, Illinois, after more inquiries were being handled by agencies.
Allstate reversed earlier losses of almost 1 percent, climbing 14 cents to $51.25 a share at 12:17 p.m. in New York. The insurer has gained 28 percent this year, compared with a 30 percent advance for the 22-company Standard & Poor’s 500 Insurance Index. The insurer’s book value was $43.46 per diluted share at the end of March.
Allstate “continues to provide employees with a strong and competitive benefit package,” Laura Strykowski, a spokeswoman, said in an e-mail. The insurer provides employees with “both a pension and 401(k) plan. Today, just 30 percent of Fortune 100 companies offer both.”
Editors: Dan Kraut, Peter Eichenbaum
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