One of the more commonly made arguments during the debate surrounding the debt ceiling -and the anticipation of the ensuing havoc had the default on our debts not been narrowly avoided-was that America’s corporate class and business owners were becoming “scared,” “frightened” and as such, unlikely to make jobs.
Allstate- the insurance company you probably know from their ubiquitous ads featuring worst case scenarios rather than a quacking duck or accented lizard- is one company that has elucidated their strategy for the time the debate was raging. During a recent Q2 call with analysts just 13 hours after the compromise had been reached, Allstate CEO Thomas J. Wilson described how the company handled looming financial disaster:
“Our assumptions are that any (financial market) dislocation will be temporary, and that the commercial banking system will continue to function… Given the highly liquid nature of our portfolio, and the long duration of our liabilities, this obviously only has a limited impact on us. Nevertheless, we did a number of things. We sold our long Treasuries, we put some additional hedges in place, we shifted the focus of our short-term portfolio, we underweighted equities, and we continued our shift into corporate credit.”
We also increased liquidity by building up operating cash. And two weeks ago, we issued $400 million in commercial paper, and placed the proceeds in compensating balances to ensure we have cash to take advantage of any short-term investment opportunities.”
Allstate has a $99 billion investment portfolio.