Allstate CEO Says Tax Overhaul Frees Up Half-Billion in ProfitBy
Wilson to reinvest in business growth, spend on employees
Tax law leads to gain, pushing annual profit up by 75%
Allstate Corp. Chief Executive Officer Tom Wilson said the insurer’s $506 million windfall from the U.S. tax overhaul will be used to invest in growth.
“First we’re going to put more money into marketing, second we’re going to expand distribution in the Allstate agencies and some of our other businesses,” Wilson said Wednesday in an interview discussing fourth-quarter results.
The Northbrook, Illinois-based insurer said Tuesday that fourth-quarter net income climbed 50 percent to $1.22 billion. Full-year profit surged 75 percent to $3.07 billion, pushed by a $506 million gain on revalued tax assets and liabilities. The tax overhaul became law in December, driving the corporate rate down to 21 percent from 35 percent.
Wilson said he also plans to use the cash for employee bonuses or contributions to retirement accounts, and to train staff for digital capabilities. Some funds are being used to boost the dividend by 24 percent to 46 cents a share. In 2017, extra capital also allowed the insurer to contribute an extra $34 million to the Allstate Foundation.
The company said its 2018 tax rate is expected to be 19 percent to 20 percent, down from more than 30 percent in 2015 and 2016. That’d equate to savings of about $500 million under the new tax law, based on the company’s pretax earnings last year.
“Tax reform is a good thing for us because we were almost a full-rate U.S. taxpayer because we don’t have a lot of international operations,” he said.