ALLSTATE CORP Q4 FY2025 earnings call

• The Allstate Corporation's strategy has two components: increase personal property liability market share and expand protection provided to customers. - Improved auto and homeowners insurance affordability for millions of customers in 2025, with results from transformative growth initiatives. - Shareholders received $2.2 billion of cash returns, dividend increased, and a $4 billion share repurchase program initiated. - Customer value improved via renewal processes and programs like SAVE, which reduced 7.8 million customers' premiums by 17% on average. - Transformative Growth Initiative reduced adjusted expense ratio by 6.6 points since 2018, increased distribution, and expanded product portfolio. - Protection services segment grew policies in force and revenue. - Investment portfolio performed well with net investment income rising to $3.4 billion in 2025.

The Allstate Corporation's total revenues for the fourth quarter were $17.3 billion and $67.7 billion for the year. Net income applicable to common shareholders was $3.8 billion for the quarter and $10.2 billion for the year. Adjusted net income was $3.8 billion or $14.31 per common share for the fourth quarter and $9.3 billion for 2025, $34.83 per share. The Property Liability segment: Auto insurance premiums earned increased 4.4%, with an auto combined ratio improving by 10 points. Homeowners insurance premiums earned increased 15%, with a recorded combined ratio of 84.4. The Protection Services segment: Revenue increased 11.7% to $3.3 billion for the year, policies in force grew 3.3% to 172 million. Domestic revenue for protection plans increased 8.1% over the prior year quarter, while international revenue increased 39.7%.

• Quarterly stock dividend increased by 8% to $1.08 per share payable in cash on 04/01/2026. - A $4 billion share repurchase program authorized, execution begins upon completion of existing $1.5 billion program. - Focus on organic growth in property liability and protection services to create shareholder value.

• Regulatory and legislative changes affecting insurance affordability, such as tort reform and control of bodily injury litigation. - Competitive landscape in auto, home, and protection services segments. - Potential impact of autonomous driving on claims frequency and severity, with uncertainty around pace of technological change and its effect on insurance costs. - Legislative uncertainties and potential changes that could affect the industry's ability to maintain affordability and profitability.

Q: Focus on regulatory and legislative changes, specifically rate relief in states.

A: Thomas Joseph Wilson discussed that affordability is an issue everywhere, with Florida, Louisiana, and Georgia making progress on tort reform, and hope for other states to follow.

Q: Competitive landscape in auto and home insurance.

A: Thomas Joseph Wilson and Mario Rizzo talked about competition from Progressive, GEICO, State Farm in auto, and mutuals in home, with The Allstate Corporation leveraging transformative growth to gain market share.

Q: On auto PIF and drag from nonactive brands.

A: Jesse Edward Merten said Slide 11 includes enact brands, and focus is on state-level growth and rolling out new products like Custom 360.

Q: New business penalty and margins.

A: Thomas Joseph Wilson and Jesse Edward Merten discussed sophisticated pricing reducing new business penalty, focusing on mix of business and state-level profitability.

Q: Autonomous driving impact on personal auto.

A: Thomas Joseph Wilson talked about telematics data and monitoring of frequency and severity changes due to autonomous driving.

Q: Capital priorities and share repurchase.

A: Thomas Joseph Wilson said priority is organic growth, then considering share repurchase as a way to return capital to shareholders.

Q: Auto premiums written per policy inflection.

A: Thomas Joseph Wilson discussed complexity of analysis including rates, mix, and state levels, but focus on maintaining target margins while giving customers affordable prices.

Q: Retention and shopping behaviors.

A: Thomas Joseph Wilson and Joshua Shanker talked about shopping up but new business up more, and focus on building ongoing connections to improve retention.

Q: Auto claims process improvements.

A: Jesse Edward Merten said The Allstate Corporation is in the middle innings of improving claims processes, with proprietary efforts and focus on operational excellence.

Q: Legislative changes in states and impact.

A: Thomas Joseph Wilson and Jesse Edward Merten discussed tort reform as a key legislative change that could impact affordability, with states like Florida, Louisiana, and Georgia making progress.

Q: New York and New Jersey underwriting.

A: Jesse Edward Merten said they are making profit in those states, with focus on getting new product approvals (ASC) to return to growth, with progress in New Jersey and waiting in New York.