Trian Fund Management, the activist hedge fund led by Nelson Peltz, has reportedly acquired a stake in Allstate.
The move signals a potential shakeup for the insurance giant, which has reported five consecutive quarters of losses that it largely attributed to natural catastrophes and the impact of climate change.
Sources told Reuters that Allstate has enlisted the services of investment bankers to strategize on how to respond to Trian’s involvement.
Like other insurers, the Northbrook, Illinois-based company has struggled to raise premiums at a pace that matches costs incurred from increased payouts related to severe weather events like wildfires and hurricanes.
For the second quarter of 2023, the company saw an adjusted net loss of $1.2 billion from $207 million in the same period last year.
Commenting on the loss, CEO Tom Wilson said Allstate would be focusing on improving results while “building an enhanced business model.”
News of Trian’s stake in Allstate brought its stock price up 6% to $127.46 in Monday’s trading in New York, according to Reuters. Its stock price was previously down 9% year-to-date, posting a stark contrast to the 4% rise in the S&P 500 Property & Casualty Insurance index.
Two years ago, activist investor Carl Icahn also took a position in Allstate but did not publicly advocate for board seats or any major operational changes.
Trian has managed to instigate change in major corporations such as Procter & Gamble, Unilever, and Invesco. Its involvement in Allstate comes as it restarts its activist campaign against Disney after temporarily withdrawing its board challenge earlier this year.
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