Analysis Group Client in Securities Fraud Litigation Reaches Settlement

November 13, 2023

Analysis Group was retained by The Allstate Corporation, defendant in a securities fraud class action alleging that it misled investors about the frequency of its auto insurance claims. The plaintiffs alleged that an uptick in auto insurance claim frequency that Allstate experienced during the third quarter of 2014 was due to Allstate loosening its underwriting standards in order to grow its insurance business.

According to the plaintiffs, Allstate allegedly misled investors by failing to disclose the uptick in claim frequency and by attributing the increase to external factors, such as severe weather and the number of miles driven. The plaintiffs alleged that Allstate’s push for new business was a factor in its higher claim frequency contributing to the company’s stock price falling by more than 10 percent.

An Analysis Group team, led by Vice President Mike Nguyen and Manager Joel Wiles, supported Managing Principal Bruce Deal, who filed expert reports and testified at deposition. Mr. Deal evaluated whether Allstate’s at-issue statements about claim frequency were consistent with data available during and after the relevant period and if they were reasonably based on the information Allstate had available at the time. Mr. Deal also opined on whether available data supported the plaintiffs’ contention that Allstate’s claim frequency increase was caused by its growth strategy and a resulting loosening of underwriting standards, and he rebutted the statistical analyses of the plaintiffs’ liability expert.  

The case settled on terms favorable to Allstate.