The surge in Allstate’s share price was accompanied by a dramatic fall in the “pure loss ratio,” the measure of claims payouts divided by premium income, before factoring in operating costs. In 1987, Allstate paid out 70.9 cents in claims for every dollar it took in. By 1997, two full years into the McKinsey makeover, the ratio had fallen to 58.2. By 2006, after spiking a year earlier amid huge claims resulting from Hurricane Katrina, it was 47.6.
