The paragraph outlines the introduction and structure of Allstate's third-quarter 2024 earnings call. Hosted by Alastair Gobin, Head of Investor Relations, the call includes a presentation of earnings results and strategy updates. It emphasizes the availability of related materials on their website and highlights the use of non-GAAP measures and forward-looking statements. The call features Tom Wilson, who provides an overview of results, followed by Mario and Jess discussing operating performance before the Q&A session. Allstate's strategy focuses on increasing market share in personal Property-Liability and expanding customer protection, with over 200 million policies currently in force.

The paragraph outlines Allstate's strong financial performance in the recent quarter, highlighting a 14.7% increase in total revenues to $16.6 billion and net income of $1.2 billion. The company's return on equity reached 26.1%. It mentions the execution of an auto profit improvement plan leading to restored auto margins and emphasizes the need for better customer retention and new business to achieve auto insurance growth. The homeowners business is performing well, and growth initiatives focus on developing a low-cost digital insurer. Proactive investment strategies have increased portfolio yields, and a recent acquisition aims to expand mobile device protection capabilities. Mario Rizzo is set to discuss Property-Liability results further.

In the recent quarter, Allstate simplified its Protection segment disclosures by focusing on product and channel rather than brand, following the successful integration of National General. This strategic shift allows performance assessment by distribution channel and overall protection business rather than separate brands. Key financial highlights include $13.7 billion in Property-Liability premiums, an 11.6% increase driven by higher average premiums. Underwriting income improved by $909 million to $495 million, despite a slight increase in the expense ratio due to increased advertising. The combined ratio was 96.4, with an improved underlying combined ratio of 83.2 compared to the prior year.

The paragraph discusses improvements in auto insurance margins, driven mainly by higher earned premiums and better loss cost management. It notes minimal impact from prior year reserve reestimates and highlights a 7.3-point improvement in the auto insurance combined ratio compared to the previous year. This improvement is due to increased average earned premiums outpacing loss costs, despite higher claims severity in bodily injury coverage. The company continues to manage inflationary impacts through operational actions and regularly updates claim severity expectations. For 2022 and 2023, adjustments are made to reflect these severity updates, and a reduction in the 2024 third quarter severity estimate positively affected the quarter’s results.

The paragraph discusses Allstate's performance and growth opportunities in homeowners insurance. In the third quarter, Allstate achieved an adjusted combined ratio of 95.6 and a 98.2 combined ratio for homeowners insurance, resulting in $60 million in underwriting income, compared to a $131 million loss the previous year. The company experienced a 10.8% increase in written premiums and a 2.5% growth in policies. For the first nine months of 2024, Allstate's homeowners insurance generated a $249 million profit, despite significant catastrophe losses. Homeowners insurance represents about 20% of Allstate's Property-Liability book, with improvement in retention and new applications, making it a key growth area, while auto policies, accounting for two-thirds of the book, saw a 1.5% decrease in policies.

The paragraph discusses a decline in customer retention for Allstate brand auto insurance, which is now at 84.7%. This decrease is attributed primarily to price increases, which cause customers to seek other options, although a 26% increase in new issued applications has partially offset the losses. Over the past decade, retention has fluctuated, notably dropping from 88.2% in 2014 to 86.7% in 2017 following price hikes due to increased accident frequency. Retention rebounded to 88.3% by 2019 with modest price increases. Recent significant rate hikes totaling 36% over ten quarters have again negatively impacted retention, now down by 2.7 points. Factors like new business, bundled policies, regional actions, and customer satisfaction also affect retention, but pricing is the main influence.

The paragraph discusses Allstate's outlook on auto insurance, highlighting expected lower rate increases due to profitability, leading to higher customer retention. The company reports a 26% rise in new business in the third quarter and attributes this growth to investments in a multichannel distribution strategy, advertising, and changes in compensation structure. The Allstate agency channel saw a 16% increase in new business, while the acquisition of National General boosted independent agency new business by 14%. The direct channel regained 2022 levels with fewer restrictions and enhanced advertising, achieving a 56% rise in new business. These efforts are expected to drive future growth.

The paragraph discusses the growth and investment performance of a company's property-liability business. It highlights the potential for increased market share through new products, advertising, lower expenses, and expanded distribution. A 5% increase in issued applications can increase policies by approximately 250,000. The investment strategy focuses on optimizing returns and managing risk, resulting in strong returns this quarter. Fixed income yields have risen due to a shift to higher yielding assets, with a 14% increase in book value since Q4 2021. This growth, along with higher coupon rates, has boosted net investment income to $783 million, $94 million more than the previous year's third quarter.

In this paragraph, the article discusses Allstate's financial performance and strategic moves. The company reported a market-based income of $708 million, which was $141 million higher than the previous year due to better fixed income yields. However, performance-based income was $43 million lower due to weaker real estate investments. The Protection Plans business, part of Allstate's protection services, showed strong growth with $512 million in third-quarter revenues, up 23.1% from the previous year. This growth led to an adjusted net income increase of $19 million. Allstate continues to invest in this segment, evidenced by the acquisition of Kingfisher to boost mobile phone protection capabilities. The paragraph also mentions Allstate's agreement to sell its Employer Voluntary Benefits business to StanCorp Financial for $2 billion.

The transaction to sell Allstate's Employer Voluntary Benefits (EVB) business is expected to close in the first half of 2025, subject to regulatory approvals. This sale is part of Allstate's strategy to realign its business by divesting its employer voluntary benefits, group health, and individual health segments to capture more value. The EVB deal is beneficial financially for shareholders, allowing Allstate to retain the business's economic benefits until it closes. The company has classified $3.2 billion in assets and $2.2 billion in liabilities related to the EVB business as held for sale, projecting a $600 million gain and generating around $1.6 billion in capital. Health and benefits segments showed a 5.2% growth in premiums, with individual and group health premiums rising by 8.1% and 20.2%, respectively, although EVB saw a slight decline. The segment's adjusted net income stood at $37 million, a drop from the previous year, due to increased benefit use. To address this, Allstate is implementing underwriting and rate actions. The company remains focused on operational excellence and transformative growth investments to drive sustainable growth and deliver strong returns.

In this segment of the conference call, Jimmy Bhullar from JPMorgan asks about the confidence and outlook for Policy In Force (PIF) growth in the auto business and the competitive behavior regarding prices and advertising. Tom Wilson responds by stating that the company does not provide growth projections but believes in its strategy to grow market share. He notes that competitors like Progressive continue to advertise aggressively, while GEICO and State Farm are also active but facing challenges. Wilson emphasizes the presence of smaller competitors who may lack the resources or pricing strategies to compete effectively. Mario Rizzo adds that to achieve positive PIF growth, the company needs to focus on retaining existing customers and increasing new business.

The paragraph discusses a company's strategy to improve customer retention and business growth. While recent profit improvement plans have negatively impacted customer retention, the company plans to increase retention by reducing rate hikes and enhancing customer experience. They are working through agents and contact centers to improve affordability and reduce customer shopping for alternatives. The company is open for business in the majority of markets and is seeing positive trends in production across various distribution channels, including through agents and direct business. Investment acceleration and the National General acquisition are also contributing to positive growth, particularly in the non-standard auto market and independent agent space.

The paragraph discusses a company's focus on improving customer retention and building growth momentum, particularly in auto insurance. Tom Wilson emphasizes the company's efforts to enhance profitability in auto insurance, mentioning strategies like using Milewise and telematics to retain customers. The company is now positioned with three effective distribution channels, leading to a notable growth in their direct channel after a strategic pause to improve profitability. Overall, they feel confident about their growth potential and have a stronger balance sheet due to improved profitability.

In the paragraph, Tom Wilson discusses the company's capital allocation strategy following the pending sale of its benefits business. He emphasizes the company's financial strength and commitment to maximizing shareholder value. The primary focus for capital use is organic growth, given the high returns on equity. While the company has a history of significant share repurchases, Wilson suggests that current growth opportunities take precedence over buybacks. He indicates that the company will consider other investments, such as the bond portfolio, if returns justify it and reflects on past decisions like reducing equity allocation when risks outweighed returns.

The paragraph discusses a company's strategic approach to managing equity allocation and acquisition for growth, highlighting successful acquisitions like National General and a protection plans business that have significantly increased in size and profitability since their purchase. The company remains focused on shareholders' interests and future growth potential. During a Q&A, Gregory Peters asks about an impact on retention due to changes in agent compensation and streamlined claims functions. Mario Rizzo responds, explaining that despite changes, retention in the agency channel has improved year-over-year, with price increases being a significant factor affecting retention.

The paragraph discusses a company’s strategy to align agent compensation with strategic goals and customer value, leading to increased new business and customer relationship depth, marked by high levels of bundling. The agency force’s performance is viewed as a key component of future growth. Despite stable retention ratios due to higher average premiums, the company is investing in and expanding its claims organization to enhance claims capabilities, customer satisfaction, and manage severity levels, viewing these efforts as growth and profit levers. Gregory Peters then inquires about the growth of the homeowner’s business, noting its impressive performance and questioning the company's strategy in light of significant rate increases. Tom Wilson is set to respond, with Mario also expected to contribute.

The paragraph discusses the success and growth potential of Allstate's homeowner insurance business. The company has optimized various aspects of its operations over the past decade, which has led to profitability. They attribute some growth to effective bundling by agents, which benefits both customers and the company. Although some in the industry have stopped expanding in homeowners insurance, Allstate sees opportunity, particularly through independent agents and direct sales. The company believes it can become an industry leader in direct sales, noting the ease of purchasing homes online should extend to buying insurance. Allstate is optimistic about their new ASC Affordable Simple Connected Homeowners product, which will offer advanced features and is poised for future market entry.

The paragraph discusses Allstate's strategy to capitalize on opportunities in the homeowners insurance market, particularly due to reduced competition. The company feels confident about its pricing and profit trends, aiming for strong returns by targeting a low combined ratio. Allstate plans to expand its homeowners business across various distribution channels, emphasizing the Custom360 offering, which is available in 24 states. This product, which bundles homeowners and auto insurance, uses Allstate's data to attract business in both the independent agent and direct sales channels, enhancing growth potential.

The paragraph is a discussion during a financial call about the company's growth opportunities and challenges in the independent agent space, particularly regarding nonstandard auto and homeowner insurance. Tom Wilson and Mario Rizzo comment on price sensitivity, noting that homeowners are less sensitive to price increases compared to auto insurance because people value their homes more. Yaron Kinar from Jefferies questions how this affects renewal ratios, especially as the company grows in nonstandard auto and direct sectors, where renewal rates tend to be lower. Tom Wilson acknowledges the question and asks Mario Rizzo to respond, clarifying that the figures in question pertain to the Allstate brand.

The paragraph discusses the impact of new business and rate increases on auto insurance retention rates. It explains that as more new business is written, it may initially lower the overall retention rate due to customers shopping around more, especially in non-standard auto insurance. The Allstate brand is leveraging National General's non-standard auto capabilities, which also affects retention. Increases in policy rates tend to have a lagged effect on renewal ratios, meaning that the impact of rate hikes on renewals is not immediate but becomes evident over time.

The paragraph discusses the implementation of rate increases in the insurance industry, highlighting a six-month delay for full implementation and impact on retention. Rate hikes are necessary to stay aligned with loss trends, and though there's a move towards needing fewer increases due to profitability, some states like New York, New Jersey, and Texas have seen significant recent hikes. Yaron Kinar notes that major rate increases initially occurred in the first quarter, while Mario Rizzo confirms New York and New Jersey experienced such changes in the third quarter. Tom Wilson mentions that consumer response to rate changes is not immediate, as some customers may simply pay their bills without shopping for alternatives.

The paragraph is part of a conversation discussing the auto insurance business, specifically focusing on the company's combined ratio and growth strategy. Bob Huang from Morgan Stanley questions whether the current combined ratio is sufficient for the company to aggressively pursue growth or if further improvements are needed. Tom Wilson responds by indicating that their auto profit improvement plan has been successful, which has led to a significant increase in advertising spending compared to previous years. He acknowledges that while some individual states may still need attention, overall, they are optimistic about growth. Additionally, Bob Huang raises a question about growth opportunities in homeowner insurance, mentioning that certain states with growth potential may also present challenges, implying that growth may be geographically dependent.

The discussion focuses on the attractiveness and challenges of the homeowners insurance market. Tom Wilson highlights the impact of increased severe weather on catastrophe losses, emphasizing the pricing and risk management strategies like reinsurance. He identifies three drivers of increased weather-related losses: more severe storms, increased home values, and building in risky areas, noting the latter two are more predictable. Mario Rizzo adds that Florida and California are particularly challenging markets with industry-wide pullback, implying limited growth opportunities there. Overall, they believe in the potential of the homeowners market despite these challenges.

The paragraph discusses the company's strategy for growth in the homeowners insurance market. They plan to focus on expanding in the middle part of the United States, where there is less exposure to hurricanes and wildfires but more opportunities related to severe weather such as tornadoes and hail. Competitors have pulled back in these areas due to severe weather, but the company feels confident in its ability to manage risk and pricing effectively, allowing them to capitalize on market disruptions and generate attractive returns. They have seen growth trends throughout the year, including a 2.5% increase in two large markets, which represent a significant portion of U.S. homes. Additionally, an unidentified analyst inquires about the company's auto premiums, and Mario Rizzo confirms growth in auto policies quarter-over-quarter in certain states.

The paragraph discusses the factors affecting the retention and performance of an auto insurance business. A 26% increase in new business is observed broadly across states, but there's a decline in retention. This decline is influenced by significant rate increases in California, New York, and New Jersey, which contribute to about 40% of the retention drop. Additionally, the migration of some old business to National General in large states like California accounts for around 60% of the decline. The company is focused on improving its performance across all markets despite these challenges.

The paragraph discusses the challenges in interpreting brand metrics for insurance policies, as customers transitioning to National General policies may skew data. The speaker suggests evaluating the business as a whole rather than by individual brands. Mario Rizzo points out a recent improvement in long-term numbers, noting a 2.7-point decrease, with potential for growth. He attributes these trends to significant price increases discouraging shopping. An unidentified analyst asks about retention ratio improvements, and Tom Wilson responds, indicating efforts to enhance retention are underway. Although they see improvements in certain states, they haven't made firm projections but aim to grow market share and profitability through transformative growth strategies.

The paragraph discusses the company's focus on improving customer retention and expanding new business in the near term, with a goal of driving long-term growth through initiatives like ASC auto and homeowners. Tom Wilson emphasizes the importance of enhancing customer experience, especially after recent price increases. The company aims to refine pricing strategies, such as offering discounts for low-mileage drivers, to retain more customers. Operational excellence and capabilities are being leveraged to address the impact of higher prices and improve customer satisfaction.

In the paragraph, Josh Shanker asks about the possibility of using AI for customer interactions at Allstate, specifically with AI representations of Dennis Haysbert or Dean Winters to help customers save money and optimize their policies. Tom Wilson explains that Allstate is developing a sales sidekick to enhance customer interactions and improve the productivity of off-site agents. He mentions the sophisticated web capabilities of Allstate. Mario Rizzo adds that Allstate's extensive data on homeowners and their properties enables efficient pricing and risk management. Josh then turns the discussion to the increased advertising spend to grow the business.

In the paragraph, Tom Wilson addresses questions about the company's advertising strategy and customer acquisition costs. He explains that, like accelerating a car, the impact of advertising takes time to manifest in measurable returns. While the company hasn't recouped every dollar spent on advertising immediately, they are satisfied with the increase in brand consideration, quotes, and close rates. The company employs sophisticated metrics for both upper (brand image) and lower (lead conversion) funnel strategies and is confident in their approach, though they acknowledge they can improve. Despite spending billions, they feel positive about the investment and are prepared to adjust spending as needed to achieve their goals of increasing profit, liability, and market share.

The paragraph highlights that the company plans to expand its protection products, is financially strong, offers good returns to shareholders, and anticipates the next quarterly meeting. The conference call is then concluded by the operator, thanking participants.

This summary was generated with AI and may contain some inaccuracies.