Ex-Agents Sue Allstate for Lost Pension

Allstate Corp., the No. 2 U.S. auto and home insurer, has been charged in a lawsuit with robbing 6,400 of its agents of $325 million in pension and profit-sharing benefits when it forced them to become independent contractors or sell their agencies.

The suit, which was filed in U.S. District Court in Philadelphia, is the latest fallout from Allstate Chief Executive Edward Liddy’s two-year effort to overhaul the insurer’s agency distribution system to make it less costly and more competitive with rivals such as Progressive Corp. and Geico Corp.

The suit, which is seeking class-action status, as filed by 27 former Allstate agents including Eugene Romero, a former agent from Kansas City, Mo., who was among about 2,400 agents who left Allstate rather than become independent contractors.

“Having failed in a decade-long effort to persuade its employee agents to voluntarily relinquish their benefits, Allstate and its newly appointed CEO, Edward M. Liddy, decided to dictate that result through coercive and unlawful measures,” the suit said. Liddy joined Allstate in 1994 and became CEO in 1999.

The agent restructuring was part of a change Allstate announced in November 1999, which also involved an effort to offer customers access to its products via the Internet and over the phone.

The suit names Allstate, Allstate Insurance Co., various Allstate employee benefit plans and Liddy. Allstate spokesman Michael Trevino said the company had not seen the suit, but refutes its allegations.

“We believe the restructuring of the employee agent work force was lawful and permissible,” Trevino said.

Allstate also is being sued by a group of agents for back pay and overtime in connection with a November 1999 requirement that agent offices stay open six days a week.

Allstate shares gained 29 cents to $35.25 on the New York Stock Exchange.