ALLSTATE CORP Q2 FY2025 earnings call

Transformative Growth - 5 phases in progress, now in Phase 4. New Allstate branded auto insurance products available in 40 states, homeowners in 16 states. Independent agent channel in 34 states. Underwriting expenses reduced for competitive pricing. Enhanced pricing, marketing, claims processes, and deployed new tech systems. New business almost doubled to 10.8 million policies over 12 months. ### Protection Services - Comprised of 5 businesses: Protection Plans, Auto Dealer protection, Roadside assistance, Arity, Identity Protection. Revenues of $867 million in Q2, $60 million income. Protection Plans sell protection for consumer electronics, etc., with 16.6% Y/Y revenue growth. ### Investment Portfolio - Diversified portfolio of fixed income and growth assets, private equity and real estate investments, delivering higher returns aligned with enterprise risk and return objectives.

Property-Liability: Revenues were $16.6 billion in the second quarter, a 5.8% increase compared to Q2 2024. Total policies in force increased by 208 million (4.2% Y/Y), led by Allstate Protection Plans. Net income was $2.1 billion and adjusted net income was $1.6 billion or $5.94 per diluted share. Adjusted net income return on equity was 28.6% over the trailing 12 months. Protection Services: While smaller, it's a significant business with 170 million policies in force, $3.2 billion of revenue and $0.25 billion of income over the last 12 months. Revenues were $867 million in Q2, generating $60 million of income, mostly from Protection Plans. Investment Portfolio: Proactively managing a $77 billion portfolio, with investment income of $754 million in Q2, total return of 1.4% Q2 and 5.4% TTM. Fixed income and growth assets, along with private equity and real estate investments, deliver higher returns despite variability.

- Expect continued growth in Personal Property-Liability market share. ### - Continue expanding protection services. ### - Proactively manage $77 billion portfolio aligned with risk and return objectives. ### - Anticipate impact of tariffs on loss cost trends but confident in managing through it profitably.

• Potential impact of regulatory changes, especially in California homeowners market. - Competition in personal auto insurance leading to potential price wars and margin impact. - Attrition of policies in inactive brands (Esurance, Encompass) and its impact on growth rates. - Uncertainty around full impact of tariffs on loss costs and regulatory scrutiny on rate hikes.

Q: Jimmy Miller from JPMorgan on PIF growth tailwinds and headwinds.

A: Thomas Joseph Wilson and Mario Rizzo discuss inactive brands, transformative growth components, and New York/New Jersey market.

Q: Charles Gregory Peters on reinsurance program.

A: Jesse Edward Merten explains reinsurance as capital source, new program with more limit and 10% risk-adjusted cost decrease.

Q: Jack Kendall on exclusive agency growth.

A: Mario Rizzo talks about transformative growth strategy with agents, productivity, and support.

Q: David Motemaden on monthly Auto PIF growth.

A: Thomas Joseph Wilson and Mario Rizzo discuss transformative growth components and inactive brands' attrition.

Q: Jian Huang on competitive environment.

A: Thomas Joseph Wilson and Mario Rizzo talk about distribution, marketing, and pricing strategies.

Q: Taylor Alexander Scott on retention.

A: Mario Rizzo discusses retention status, SAVE program, and proactive efforts.

Q: Joshua David Shanker on roadside assistance bundling.

A: Thomas Joseph Wilson and unidentified representative talk about bundling success and future opportunities.

Q: Hristian Getsov on NY/NJ drag and tariffs.

A: Thomas Joseph Wilson discusses managing through tariffs and NY/NJ market impact.

Q: Jing Li on SAFE program and Affordable, Simple and Connected Auto products.

A: Thomas Joseph Wilson talks about SAFE program progress and positive impact of new auto products.