Allstate says controversial steps it made in an effortto improve agency performance are working.

The Northbrook, Ill.-insurer over the last several years haschanged its compensation and bonus structure while adjustingperformance standards. Additionally the company offered financingfor agency acquisitions, resulting in a drop in the total number ofagencies.

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During a conference call on the insurer's earnings, CEO ThomasJ. Wilson quashed a statement from an analyst who implied thereason for the decline in agencies was due to the new compensationplan.

Instead, Wilson says agents chose to close shop based on theirown fate based on their “ability to succeed”—personal choicesrelated to “their own skills, capabilities and what theywanted to do.”

Matthew Winter (pictured), president of Allstate Auto, Home andAgencies, adds the reduction in agency count “was not allunintended.”

“We had some expected attrition during that period as we wereshifting and trying to get to a more productive agency force,”Winters says.

However, the strategy has worked and the agency count hasstabilized, Wilson and Winter insist.

Winter says there is an initiative to grow the number ofagencies and sales professionals through a concerted effort toimprove recruiting, selection and training.

Agents who remain after the changes are “more representative” ofAllstate's strategy to push household bundling and improve customerexperience.

“It appears to be doing what we wanted it to do,” Winters says.“It's driving the behaviors we want.”

He credited agents with doing a “phenomenal job” adjustingbusiness plans, and many enjoyed a “good payout”—with a “highpercentage making the variable compensation.”

“We've seen agencies prove that they can be very effective withour new structure, with our new compensation structure, with ournew support model and with our new customer value proposition,”Winters says.