Allstate to Pay $90M in Shareholder Settlement

Allstate (ALL.N) agreed to pay $90 million to settle a class action lawsuit by shareholders who accused the insurer of defrauding them by concealing that it lowered underwriting standards to boost growth.

A preliminary settlement was filed on Monday in federal court in Chicago, and requires a judge’s approval.

The lawsuit came after Allstate on Aug. 3, 2015, reported unexpectedly high claims payouts from auto accidents, causing a larger-than-expected 38% decline in quarterly operating profit.

Allstate’s share price fell 10.1% the next day, wiping out $2.8 billion of market value.
Shareholders said Allstate had falsely assured earlier in the year that claims had been increasing because of factors beyond its control, such as the economy and weather.