Updated: November 19, 2018
Status: Ongoing Case
On January 20, 2017, Labaton Sucharow was appointed lead counsel for lead plaintiffs in a securities class action against The Allstate Corporation (Allstate). The lead plaintiffs allege that Allstate misled investors about the frequency or number of claims filed against Allstate brand auto insurance, the company’s most popular and profitable line of insurance.
The action alleges that during the third quarter of 2014, Allstate experienced a pronounced uptick in the number of claims filed against its Allstate brand auto insurance (claims frequency), which was the result of Allstate loosening its underwriting standards in an effort to grow the size of its insurance business. Allstate misled investor by first failing to disclose the uptick in claims frequency. Then, later in the class period, after Allstate acknowledged the increase in claims frequency, it misled investors by attributing the increase not to its loosened underwriting standards, but to external factors, such as severe weather and the number of miles driven. After four consecutive quarters of increased claims frequency and in announcing its second quarter 2015 results, on August 3, 2015, Allstate finally admitted that its push for new business was a factor in the increase in claims frequency. On this news, the company’s stock price fell more than 10 percent, wiping out billions of dollars in the stock’s value.
On March 30, 2017, lead plaintiffs filed a Consolidated Class Action Complaint. On February 27, 2018, the Honorable Robert Gettleman dismissed Allstate’s motion to dismiss the class action, noting that “plaintiffs provide numerous allegedly misleading factual statements." The plaintiffs filed a Second Consolidated Class Action Complaint on September 12, 2018, that named the City of Providence as an additional class representative. Plaintiffs' motion for class certification is fully briefed and we are waiting for the Court's decision. Discovery is ongoing.
The case is In re The Allstate Corporation Securities Litigation, No. 16-cv-10510 (N.D. Ill.). Labaton Sucharow represents Carpenters Pension Trust Fund for Northern California, and Carpenters Annuity Trust Fund for Northern California. In addition to Allstate, the defendants include CEO Thomas J. Wilson, and President Matthew E. Winter.