Drowning in Millions: State Farm, Allstate CEO Pay

Mississippi’s Insurance Commissioner George Dale said Katrina was "the worst natural disaster in U.S. history . . . and put an undue burden on insurance companies.” Oh yeah? Is that how Dale characterizes the obscene tens of millions dollars that State Farm and Allstate paid their CEOs in 2005 and 2006?

As Dale well knows, the company’s financials prove otherwise.

The Insurance Industry Institute pegged the industry's profits at $108 billion for 2005 and 2006. These profits are after companies paid taxes and Katrina claims they didn't pay. These profits are after companies paid out normal expenses such as employee income and benefits. These profits are after companies paid out extraordinary expenses such as their CEOs obscene compensation packages.

These execs denied legitimate policyholder claims stemming from Hurricane Katrina's wind damage. Company memos directed its employees to deny wind claims where ever so much as a drop of water was involved in the damage. [See Wind? Water? More like a Bunch of Hot Air! Also view these insurance documents on the website of Congressman Gene Taylor (D-MS). ]

Collectively the insurance companies sent our government's federal flood insurance program a $23 billion bill, the percent of which is fraudulent is yet unknown. For deliberately hurting Katrina survivors, these CEOs have been handsomely paid. In fact, I'd say that their pay has them drowning in millions. This year, State Farm increased the salary of its CEO by 82%.

"Chairman and Chief Executive Officer Ed Rust Jr. got a $5.26 million raise. He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million, the statement said. Rust made $6.4 million in 2005 and $5.5 million in 2004." -- Insurance Journal

Photo on State Farm Website

Ed Liddy has been "[c]hairman of The Allstate Corporation since January 1999. Mr. Liddy previously served as Chief Executive Officer from January 1999 until December 2006 . . . .” Allstate’s SEC Records Photo by Business Week.

Forbes Magazine reported Liddy’s total compensation for 2006 to be $18 million, and his 5-year compensation total to be $70 million. In 2005, Liddy’s compensation total was $27 million.

When it comes to bloated salaries, these gentlemen are in good hands with their respective companies. All that money didn't buy them ethics, decency, or integrity though. Instead, they acted as really bad neighbors toward their Katrina area policyholders. As for George Dale, he is acting in accordance with his reputation as a bought and paid for political hack of the industry.

M. Dale, if you will kindly look in a mirror, you’ll find the undue burden staring you right in the eye.
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