Nelson Peltz’s activist hedge fund, Trian Fund Management, has acquired a stake in Allstate Corp, according to sources familiar with the matter. Allstate Corp, an insurance company based in Northbrook, Illinois, has been struggling with losses due to natural disasters, including the recent Maui wildfire in Hawaii. The move by Trian Fund Management could increase pressure on Allstate’s CEO, Tom Wilson, to turn the company around after five consecutive quarters of losses.
Allstate has reportedly hired investment bankers for advice on how to handle Trian Fund Management. The exact stake and plans of Trian for Allstate are currently unknown. Both Allstate and Trian have not yet responded to requests for comment.
Following the news of Trian’s involvement, Allstate’s stock price soared by 6% to $127.46 in Monday’s trading. Prior to Trian’s announcement, Allstate’s stock had dropped by 9% year-to-date, significantly underperforming the S&P 500 Property & Casualty Insurance index, which had risen by 4%.
One of the key issues faced by Allstate and many other insurers is the failure to raise premiums fast enough to cover losses caused by major natural disasters. Additionally, inflation has made it even more challenging for the company to cover replacement costs.
It is worth noting that activist investor Carl Icahn had also previously built a position in Allstate two years ago but did not publicly push for major changes. Trian Fund Management, on the other hand, has a history of pushing for change at companies such as Procter & Gamble, Unilever, and Invesco.
Trian Fund Management has recently undergone a leadership overhaul, promoting two veterans to co-chief investment officers. The fund is currently engaged in a high-profile corporate battle with Walt Disney. It reignited its activist campaign against the company this month after dropping a board challenge earlier this year.
Reporting by Svea Herbst-Bayliss and David French in New York, Editing by Greg Roumeliotis and Rod Nickel.