Allstate CEO Thomas J. Wilson says the insurer has boxedin auto insurance competitor Geico by using two brands to offerproducts using direct and agency channels.

Wilson (pictured) says Allstate's buy of Esurance gave theNorthbrook, Ill.-based insurer a leg up on Geico, which has latelyturned to agencies to bolster sales.

“We've been there, done that—tried to do it under the samebrand,” says Wilson during a Barclay's investor conference in NewYork on Sept. 9. “It didn't work for us. Maybe it will work forthem (Geico).”

Wilson says the insurer used to compete with Geico in the directbusiness market under the Allstate brand but it wasn't gainingmarket share. With Esurance, Wilson says Allstate now has twoavenues to reach customers and the “natural limit of growth in[Geico's] segment is coming out.”

“So we kind of box them in,” he continues.

Wilson says Esurance saw a 36 percent increase in policies to1.2 policies-in-force during the first half of the year, and itsnet written premium increased 31 percent after eclipsing $1 billionin NWP in 2012.

The unit's combined ratio remains elevated due to investments ingrowth, such as ad spending.

Wilson gave some insight into Allstate's other business. Hethought about getting out of the homeowners insurance businessfollowing the destructive 2005 hurricane season but chose not tobecause customers prefer to bundle coverage. Therefore, getting outof homeowners would negatively affect Allstate's auto business.

Allstate instead looked to use reinsurance more effectively,raise rates, improve underwriting and exit some high-riskmarkets.

“The net result of what we did has been to reduce the size ofthe business, lower our risk and substantially improve results,”Wilson tells investors.

Allstate over the last two years took controversial steps withits agency force—encouraging larger agencies and changingperformance standards and compensation.

Wilson says agencies are “bigger and more profitable” and theyare “investing in their business and growing again.”

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