The Allstate Corporation, 2019

John R. Wells; Benjamin  Weinstock

Case | HBS Case Collection | August 2019

The Allstate Corporation, 2019

by John R. Wells and Benjamin Weinstock

Abstract

In July 2019, Allstate, the United States’ number-three property and casualty (P/C) insurer, released its second-quarter earnings, which reported first-half revenues of $22.1 billion, up 11.4% year-over-year. Shareholders cheered the top-line growth, but, P/C premiums had only grown 6.2%, considerably lower than Allstate’s top competitors, GEICO and Progressive. Indeed, since the beginning of the global financial crisis, Allstate had grown net premiums earned by just 2.1% per year, compared to 7.6% at Progressive and 9.9% at GEICO. As a result, Allstate had fallen from the number-two writer of private passenger auto insurance to number four, losing market share each year. There was, however, some sign that Allstate was returning to faster growth, with net premiums earned up 5.3% in 2018.
During this period, CEO Thomas Wilson had taken steps to reignite growth, concerned primarily with building Allstate’s direct-sales business, expanding its range of usage-based products and telematics solutions, and focusing more on insuring smaller consumer devices. Still, growth remained laggard, despite high-profile acquisitions of the direct online specialist Esurance in October 2011 and SquareTrade, a provider of extended warranty contracts for consumer devices, in November 2016. Nothing seemed to ward off challenges from GEICO and Progressive.
Meanwhile, rapid advances in ridesharing and autonomous vehicle technology promised to disrupt the entire auto insurance industry. Allstate was early to recognize this shift and had begun investing heavily in new technologies and partnering with researchers and ridesharing operators to prepare for the coming disruptions. Wilson had also set up a new business unit called Arity that would oversee Allstate’s efforts at usage-based telematics and to collect and process data on drivers to improve underwriting models.
Allstate was positioning itself for a future in which the insurance industry would look fundamentally different. Still, Wilson needed to convince shareholders that Allstate’s return to growth would continue. The growth of Esurance and SquareTrade had been somewhat promising. Should he focus on building the direct online segment, competing with GEICO and Progressive? Or, should he continue to grow SquareTrade and the services segment, accepting that Allstate auto insurance was a declining business? The future of Allstate was hanging in the balance.

Keywords: insurance companies; Strategic Analysis; strategic change; strategic planning; Insurance; Strategy; Strategic Planning; Organizational Change and Adaptation; Competitive Strategy; Insurance Industry; North America;

Language: English

Format: Print

29 pages

Educators

Citation:

Wells, John R., and Benjamin Weinstock. "The Allstate Corporation, 2019." Harvard Business School Case 720-366, August 2019.

In October 2019, Dan Macklin, the newly-appointed chief executive of Salary Finance Inc., was weighing his options for the future of the business. The company’s value proposition was quite simple: partner with employers to offer employees affordable loans that were repaid through automatic payroll deductions. Taking repayments directly from salary, and collecting those repayments in one transaction from the employer, dramatically reduced costs, saving employees large amounts of interest when compared to market alternatives like credit cards or payday lenders.
Salary Finance Inc. was a subsidiary of Salary Finance Limited which was launched in the UK in 2015. By September 2018, Salary Finance Limited had partnered with over 100 UK employers and offered loans to around one million employees. It was at this point that the company decided to try and replicate this success in the United States, and opened an office in Boston, Massachusetts. By October 2019, the US business had partnered with 15 employers, offering loans to around 50,000 employees.
In October 2019, Macklin was contemplating the best way to accelerate the growth of Salary Finance Inc. to hit his 10 million employee target. He was also wrestling with whether he should stick with the core product or add new products to drive sales. This had worked well in the UK where pay advances and savings accounts had proven popular in addition to their core loan product. Salary Finance Inc. was off to a good start, but it remained uncertain how quickly Macklin could grow the business and help more Americans get out of debt.

Case | HBS Case Collection | January 2020

Celata Bioinnovations

John R. Wells, Benjamin Weinstock, John R. Wells and Benjamin Weinstock

In December 2019, Jon Hu (Harvard Business School MBA, 2019) and Dr. Samantha Dale Strasser, co-founders of Celata Bioinnovations, were raising $1 million to launch their company. They had founded Celata less than six months earlier with the aim of redefining the drug discovery process. Celata’s platform used novel data types and a unique data integration process to generate hypotheses about proteins that were involved in the formation and progression of disease. They believed the platform was better and faster at identifying actionable biological targets, increasing the speed of discovery and reducing the chances of failure, promising to lower costs and bring drugs to market more quickly. Their platform had achieved proof of concept during Strasser’s PhD research at Massachusetts Institute of Technology (MIT), when it helped identify and validate a target related to Inflammatory Bowel Disease (IBD) in mouse models. However, full validation wouldn’t come until their platform was used to develop a drug that successfully treated a disease in humans, a process that could take several years.
In the first instance, Celata’s platform was best suited to identify targets for cancers, inflammatory diseases, and neurodegenerative diseases, which collectively presented a global market opportunity of over $200 billion. However, Hu and Strasser were debating which opportunities to pursue. Should they try to improve the efficacy of current drugs, or go for brand new opportunities, indications for which there were no solutions on the market? And if they focused on the latter, should they just look for large market opportunities, or include “orphan” diseases, for which there was a relatively small market? Should they look for small molecule drug candidates, or include large molecule biologics in their search? And where should they operate in the drug development pipeline? At one extreme, they could sell potential drug candidates to established pharmaceutical companies; at the other, they could “go full pharma” and build a new pharmaceutical company themselves.

Keywords: drug development; drug discovery; Drug Trials; Pharmaceutical Companies; Pharmaceutical Company; Pharmaceuticals; therapeutics; Biologics; biotech; biotechnology; biopharmacy company; biochemistry; technology commercialization; technology companies; Drug Testing; Startup; start-up; Startups; start-ups; Startup financing; strategic decision making; strategic decisions; strategic evolution; FDA; Food and Drug Administration; clinical trials; disease management; market attractiveness; Market entry; market opportunities; Health Disorders; Technological Innovation; Technology; Commercialization; Business Startups; Finance; Decision Making; Strategy; Market Entry and Exit; Opportunities; Pharmaceutical Industry; Biotechnology Industry;

Citation:

Wells, John R., and Benjamin Weinstock. "Celata Bioinnovations." Harvard Business School Case 720-427, January 2020. View Details

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The Allstate Corporation, 2019

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