ALLSTATE CORP Q3 FY2025 earnings call

• Allstate's strategy has 2 components: increase personal Property-Liability market share and expand protection. Revenues up, policies in force up, strong net income. - Transformative Growth initiative in Phase 4, focusing on cost reduction (expense ratio reduced 6.7 points), distribution expansion, new affordable products, and improved customer service. - Utilizing generative AI for efficiency in operations and developing ALLIE for reimagining customer value across the business model. - Proactive investment portfolio management to deliver shareholder value, with portfolio book value up 39% since Q1 2021.

Property-Liability: Revenues increased to $17.3 billion, policies in force at $209.5 million, strong net income. Protection Services: Comprised of 5 businesses with 171 million policies in force, generating $3.3 billion in revenue and $211 million of income over the last 12 months. Policy growth 4.4% y-o-y, led by protection plans which saw 15% revenue increase y-o-y (10% domestic, 32% international).

• Focus on growing Property-Liability business as a primary way to create shareholder value. - Consideration of investment portfolio actions to generate extra returns. - Potential for M&A to leverage skills and capabilities. - Continued share repurchases and dividends, prioritizing returns for shareholders.

• Competition could squeeze margins if they lower prices quickly. - Retention challenges, especially with nonstandard auto insurance customers. - Potential adverse development in commercial lines reserves. - Inflation impact on various aspects of the business including claims, operating expenses, and investment portfolio.

Q: Talk about capital holding company liquidity and uses of capital A: Thomas Wilson mentioned they prefer flexibility with capital in the holding company, options include growing the business, investments, M&A, dividends/share repurchases. Key focus is growing the business for good returns.

Q: On pricing excluding NY and NJ and 2026 outlook A: Mario Rizzo said book is broadly rate adequate, loss trends look good, will respond to loss cost trends to maintain mid-90s combined ratio Q: AI lifecycle and impact on retention A: Thomas Wilson talked about generative AI helping efficiency now, Jess Merten mentioned SAVE program and technology aiding retention by personalizing experiences and identifying savings opportunities Q: Exclusive agent channel progress A: Thomas Wilson and Mario Rizzo discussed that Allstate agent network is stronger, productivity up, key part of strategy, agents adapting with AI/tools to deepen relationships Q: Market dynamics and growth trade-off A: Thomas Wilson discussed competitive landscape, Allstate's ability to compete in customer acquisition, growth in nonstandard auto, and various growth avenues like homeowners, protection plans Q: Auto retention trends A: Thomas Wilson and Jesse Merten talked about active vs inactive brands, moving customers to new products, rolling out affordable products to improve retention Q: Inflation outlook A: Thomas Wilson and John Dugenske discussed inflation impact on various parts of the business, investment portfolio adjustments to buffer inflation, and tort reform's potential impact on bodily injury inflation Q: Advertising spend efficiency and NY/NJ product filing A: Thomas Wilson discussed upper and lower funnel advertising efficiency, positive economic returns; Mario Rizzo talked about making money in NY/NJ, writing some new business, hoping for regulator approval of new products