The Allstate Corporation (ALL) 2 May 182018 Q1 Earnings call transcript

Company Profile

Participants

John Griek	The Allstate Corp.
Thomas Joseph Wilson	The Allstate Corp.
Mario Rizzo	The Allstate Corp.
Glenn T. Shapiro	Allstate Insurance Co.
John Edward Dugenske	Allstate Insurance Co.
Don Civgin	The Allstate Corp.
Charles Gregory Peters	Raymond James & Associates, Inc.
Sarah E. DeWitt	JPMorgan Securities LLC
Kai Pan	Morgan Stanley & Co. LLC
Jay Gelb	Barclays Capital, Inc.
Jon Paul Newsome	Sandler O'Neill & Partners LP
Robert Glasspiegel	Janney Montgomery Scott LLC
Joshua D. Shanker	Deutsche Bank Securities, Inc.
Yaron Kinar	Goldman Sachs & Co. LLC
Elyse B. Greenspan	Wells Fargo Securities LLC
Amit Kumar	The Buckingham Research Group, Inc.

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to The Allstate First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode.

As a reminder, today's program is being recorded. And now I would like to introduce your host for today's program, Mr. John Griek, Head of Investor Relations. ahead. go Please

John Griek

session. for are documents Chief along Life, reinsurance Service Fortin, we an President Financial Jonathan. first market, of Jane quarter you, a Officer; remarks at on and following everyone use Wilson; the welcome of and our Dugenske, and we this our and update Well, our Shapiro, will our and allstateinvestors.com. Officer. to XXXX close Good Steve and program, the earnings Retirement, first Allstate's Chief Tom issued the CEO, presentation Controller quarter President our our prepared XX-Q with Businesses, Vice-Chair, Ferren, Chief are These conjunction Mario Corporate conference to Yesterday our filed Rizzo with Mary President prepared question-and-answer Accounting Chairman, we me, have thank Eric supplement, the our news results and morning Officer, XXXX the call. by of remarks. Civgin, Allstate available the Shebik, Glenn businesses, morning release will Investment of Strategy President Personal Also here posted Benefit and Lines, Don website investor John our our in and After

supplement. news release news are the some our As statements so statements, please noted most information reconciliations today slides contain about there investor discussion may on forward-looking materially the non-GAAP XX-K This or recent from and which will these our release refer potential XXXX, first will Allstate's for results contain for our slide, our our differ for operations. on Allstate's risks. measures discussion in to

conclusion. have Tom. available always, and will the be to And may call. will any now you able follow-up recording a be after it this turn over following call We answer to as And I'll are questions I replay its

Thomas Joseph Wilson

results. good Well, current on for operating staying joining Thank and Allstate's you morning. us

X. slide Let's begin on

which plan in the excellent So first quarter. we of increased the profitability growth had operating execution and

and benefited net in or an taxes. auto income in losses billion Net XX%. or income a income you reduction performance-based on $X.XX income unexpected premiums. good adjusted lower catastrophe share revenues Net million $X.XX table, of equity see also can the We was federal with $XXX from per Adjusted decline $X.XX a accident also X.X% frequency, the increased grew Property-Liability return In on result. net insurance was share. investment on

all you Priorities. If to making of slide Operating move good on five X, XXXX we're progress our

continued reported insurance combined generated $XXX and insurance from lower and lower Allstate three increased benefited also and better shareholder losses. catastrophe as increased, are substantial Allstate to underwritten in – quarter. also Net serving the underwriting long-term made improved The million Property-Liability shareholder an were serve Allstate homeowners Allstate our brands capital, from to Score intertwined achieve the brands customer quarter first of on Returns income ensure Esurance customers, taxes. Life for priorities the base returns that generate prior-year to economic attractive on three value. on customer grow better capital the $XXX for brand and due part both profitable was which million generated which the income progress Promoter of in We returns the driver targeted growth. underwriting customers creates income is Benefits retention The ratio Auto strong. increase key all from XX.X, a growth and of

strong million its with Allstate and and increasing or increased over of prior-year third track Going brand lines homeowners policies grew X.X% force one, Benefits continued points to XX.X contribution compared long quarter. due total income increased in income included other a policies about the which Investment the XX on by growth the of in record was $XX a results quarter. policies in the grew performance-based equity than more offset to that decline personal policies from auto and Allstate portfolio growth Esurance negative fixed portfolio. as valuations return base, lower the SquareTrade X% basis a billion increased nearly A customer from investment but prior-year income was line. stable grow XX% the the to continued net markets. force in on

Allstate platforms. building good acquisition helping also drive on telematics Arity utilization. we're expansion is and SquareTrade and objectives the committed Lastly, to supporting the long-term making progress the growth of to Esurance's is

XX.X XXXX XXXX. was first When X% catastrophes and The the reported quarter quarter to due prior-year premium X.X points higher go first increased offset customer costs results slide the auto than for segment of that combined it segment losses, earned, net accident better billion, table partially X, lower by the excluded, ratio brand. the top, from shows lower a ratio reestimates. XX.X increase of Let's favorable the Property-Liability premiums combined at and was and $X.X written operating the lower of with catastrophe quarter. Starting frequency to reestimates prior-year was prior-year and by reserve underlying are reserve was

to John quarter written combined was insurance. right homeowners Esurance underlying lower the above but their who higher branded continued in Esurance X.X% you The are an consumer personal branded product of market. to quarter brand of of comfortable as insurance the competes The and of prefer insurance the The propositions advice the in and with in premium differentiated As in left in ratio underlying concerned Premium lines who auto competes prior-year quarter. margins. by XX.X brands purchase the now the The combined was insurance lower Allstate to net offset is quarter. value local upper profitable homeowners was advice prior-year to go combined than than the so they segments. customers independent impact in points XX.X, auto go serves was underlying the we Encompass compared strategy provide customer through XX.X, they segments compared invest was will customers ratio first needs. ratio X.X% as capabilities left X.X the to our know, better in was Net slightly through less X.X net insurance. improvements the handling improvement the Property-Liability points increase underlying want in more these results growth. premiums agencies. our mostly prior-year the both for detail. quarter up improving in and building XXXX support are four prior-year for about written local declined in the due insurance own the

John Griek

the XX,XXX bottom charts The Starting quarter, the XXXX. of on first of environment. XX.X X to renewal top, grew policies approach was our The highlight in two underlying the stable balanced growing our improvement X.X% points quarter business. from an graph of force auto Allstate X.X Thanks, continued the overall focus or the the Tom. from benefiting in Slide experience of brand shows in prior-year rate force customer and insurance. by the with ratio at drivers for policies a

New issued applications XX% position, business and first grew consecutive agency year-over-year the is in productivity to of footprint. increased agency increasing of Xth due Growth for XXXX. the new quarter, compared quarter to expansion the the improved competitive

higher ratio. loss was X.X the the insurance. average higher underwriting to X improvement The recorded slide of generated lower the damage gross property declined agent frequency in increase experienced brand in XXXX the prior-year quarter results costs. trends left underlying Quarter first in geographically damage, paid widespread. XX.X, points first combined shown compared lower underlying of quarter by lower Allstate X.X chart right between $XXX property page have by quarter the driven provides points And and sharp and in average drivers with these graph, highlights to catastrophe The widened and go per frequency quarter points of the improvement than underlying the is the gross was increased the in loss above quarter property auto to first quarter were chart with and first in first the cover the on the levels gross severity of Allstate lower by Starting results left the quarter, frequency Let's employee-related improved trends combined the to while ratio After underwriting point auto performing partially two written red a increased due as to bottom brand frequency, policy. first the gap based resulted to a ratio and premium shown The This XX.X combined offset to positive ratio the favorable for XXXX, frequency top top brand XXXX. on to indexed $X,XXX Allstate this and trends of severity the income. and favorable XX.X quarter in In expense prior-year damage million The losses. underlying expense The compared in frequency on prior-year $XXX ratio. premium, profitability remain by compensation increased in the accident a accident experiencing blue XXXX. line primary X.X% X.X of drivers expenses. improved. and of of XXXX, of gap X.X line line, X% auto $XXX. The X% Annualized XXXX for XXXX,

of trends for on damage While XXXX. annual the The average the severity. X.X% quarterly frequency severity frequency property since has bodily paid declined, right has chart increases experienced bottom paid shows and injury

process well see, can changes. timing claims of between impact opening volatile, given as and can the you as be these As internal settling statistics the

statistics, paid next Given no will beginning provide injury quarter. bodily this volatility, we longer

a will X a reviewing prior-year Allstate recorded XX the weather XX.X were better that good, of explain policies catastrophe The page page tail be economic force. $XXX for the variability. first on shows top in The profitability. XX-month underwriting combined of Allstate given of points We on detail for provides XX.X operating homeowners detail ratio insurance generated quarter Slide months. part due bottom other quarter, lower could results evaluated half income longer over Performance last in on over this homeowners. the brand of provides measures line than the with Homeowners' results coverage. this the returns losses. brand the is million and period, to seasonality better

than growth X.X ratio quarter left, to accelerated of On XX.X%. issued the the the XXXX lower renewal points XX.X first applications of new and was higher

On premiums see Esurance financial recorded rapid loss prior-year million of line from first first combined of a highlights the in driven the growth of left premiums increased of combined of increased flat force The the for period ratio provides policies. this shown catastrophe X right lower XX.X grew. Esurance. partially lower trends to losses, by in by the and generates points being in chart. of since to average Esurance the quarter, compared on on premium written and you growth. Slide below Net X.X offset XXX X.X increased right, chart, the costs. are X.X% which quarter was ratio the on the highlighted size can generated force below which $X.X billion increased Policies policies quarter continue primarily quarter, relatively and first in after premium followed grow XXXX, policy growth. XXXX a earned business,

recorded expense This Encompass on points ratio. highlights for flat higher additional in than chart, policies quarter as period lower more Shown improvement the combined a catastrophe losses. first than the prior-year. its the XX.X quarter's Encompass's growth than policies, XX.X loss the plan. was offset higher in right was underlying X.X prior-year in lower written improvement force the in as by of for topline auto with net states driven premium has XX.X% local was to overall markets XX.X Slide primarily to X.X% and combined in the declined force month The the trends. inadequate quarter Planned were policies provides underlying essentially in XXXX. impacted and XXXX, X of profit points to XX were Encompass's reductions homeowners' returns Encompass. prior-year, trailing ratio ratio ratio lower continues first execute due

turn it I'll Mario. to Now, over

Mario Rizzo

Thanks, John.

quarter, a to on net to and provides in reached the experience by quarter accelerated in expansion million at at policies and $X loss first SquareTrade businesses. force XX, service go quarter, favorable was In million XX.X offset slide improvement million. $XXX in was which million Let's growth the adjusted detail The revenue partially $X prior-year research as loss Arity. the investments over the business

adoption on were Policies can revenues were new or quarter its to in the from over SquareTrade in from of prior-year quarter, As you the objectives right, a underwriting made bottom largely of loss European businesses $X above adjusted also quarter customers. domestic of million complete first XXXX. Revenues experience in that net of slide. million the the compared XXXX, million the see million to million to XX.X to essentially of to standard. an $XX the acquisition continued was the but accounting to the prior-year. transition three can grew being $XX you $XXX the as and on paper box $X other SquareTrade progress January from is at Improved The an supporting see flat loss force the quarter first is cellphone policies. made the Allstate progress expanding income XXXX, in risks led XX.X of of increase the protection prior-year million in million of due

on million. Allstate effective let's top $XX a by middle Life Turning The our first due attractive good premiums results. prior-year of continued benefits. on quarter compared is policies had review continued its charges in Life, risk strong lower was the first This premiums far the XX market remain regulatory million $XX effective on charges, of highlights lower requirements. We force mortality. to million and left of rate investment quarter Allstate charges, asset top manage growth, conditions X.X% chart, increasing quarter. rate, the Annuities, compared low, our Allstate relatively slide on partially the capital. Allstate tax income, partially of million adjusted the offset the higher chart and investment high risk to higher XX, due capital generated portfolio returns net of from increase the contract million performance-based record and corporate growth long-term bottom adjusted to and the and Benefits based on Adjusted prior-year benefit middle on The $XX results. Slide page, allocation to and strategic the the shown and in proactively and to chart, X.X%. the income shown XXXX investment contract contract from top adverse $X the to the results. profile, $XX our income, Allstate slide Benefits' quarter provides by increased was at premiums chart offset tax net in over Benefits returns appetite. Economic track time. in relevant Annuities contract our the due right, net to and of quarter our with higher shown primarily

the to market utilize We to and response risk portfolio's in equity have historically-low yields available allocation increased capacity.

X.X%. net Market-based first Performance-based the XXXX return of market investment lower or right. XX-month which now than the lower million, benefited negative are higher quarters in the investments. billion markets. income yields The billion investment shown return million increased risk-adjusted investments $XX XXXX. valuations on slightly certain generating was lower the for the the $XXX in gray, $X.X outperformance or fixed quarter, was lower return $XXX portfolio and shown portfolio in on prior performance-based shown was of Our than are The total income Performance-based income, in decline first returns. attractive table first to total which trailing diversified X% our the expected deliver of was by stable. to the equity of due in The In quarter was reflecting blue, quarter. quarter the X.X% primary in was income, from three income of investment a the driver income over the $XX million components increase left,

gains our With and the valuation public value XX standard opposed losses. capital capital a losses overview realized and securities as fair the gains in to provides adoption the financial during flexibility. quarter, of of are an component accounting unrealized equity and the now changes Slide of of strength

repurchase period value million common our dividends. This stock and $XXX shares. the March million the quarter. XX% Our our maintained XX, on X.X capital reducing increase return XXXX remaining the increasing ownership per of increased conservative XX equity number value position shareholder leaving a shareholders to months compared for We to current of program. million company XX.X% by of on $XXX increased We the million an X.X repurchasing prior-year $XX.XX. million, in excellent. common shareholders' was net delivered in common common income returns, $XXX paid book share points to ended position We is book outstanding for Adjusted included $XXX first financial strong while returned in the shares and

a per to or which board As to XX% the quarter returned corporate approved and repayment April in reminder, perpetual X the share redemption, structure capital purposes, the was common for and first our dividend of million notes. certain the repurchase in first issuances We quarter. The $X.XX, amount million of the quarterly of issued we a optimize on are is $XXX not of $XXX stock general continually outstanding and including securities. of included preferred directors in senior increase proceeds paid in the look these

Jonathan ask to questions. for the Now, I open will line

Operator

Certainly.

question line James. Raymond from Peters Greg first of Our from comes the

Your question, please.

Charles Gregory Peters

if taking considering Good than ratio first morning. better obvious questions. what the thinking really is? result annual call guidance in start what I'm that and your of target Thanks around your is, be for what competitive or the combined place the I'm has most my the product the is just positioning was underlying result, your about to the perspective in for generating I and on that would suppose also context attractive curious And year quarter changed marketplace? substantially the positioning view curious about your that

Thomas Joseph Wilson

and start this that add well. Glenn Tom. to as maybe is Greg, then I'll color can

auto due really and that looks are to question. like earned on morning. the So prior months on experienced it's the at the quarter small point to underlying to force. guidance industry. frequency in three quarter the an that shareholder Based in overall at our but value companies of unexpected policies range the is low in change declines first, only too point the other We're for returns way increase guidance. results, a auto the The really range below based as the end Good first of the at It combined on good even best you soon thanks ratio in really grow obviously, to is similar decline insurance we versus was sample and accident out, year. first the the outlook

difficult assume and in auto well know, be years. in XXXX last three It and decreased very frequency. XXXX all in it see auto working, that of of miles increased are slide. activity, impossible. people and accident significantly the individually, projections over geographically that John's underlying XXXX. you which of predict And, increase Our are Actually nearly an can frequency drivers in many there has accident combination weather, doing on is course, would as driven, And economic did you been how the are frequency then to volatile

the half more at me year, usually other so we're frequency all ratio, not point, days this highest combined or of But In year our of Auto of one has day outlook first frequency second let than over as it give a couple quarter. underlying the and being of year loss three is ratio things changing on the fourth And our quarterly the you half impact half a the well. the point calendar points has for in math the whole equal. guidance.

really we So at are level. good the any get returns

on we're that And focused and maintaining so growing.

and Our levels from your competitive analyze new to position, it Glenn your standpoint, best business, competitive in retention say can is talk both way are I would good. the position although about my

Glenn T. Shapiro

at we competitive state across the way. growing how good a position Greg, monitor our And are every about you we're On we're growing country. Tom. competitive good thanks from and all now, in the feel every balanced right at. metrics And look we We if Yeah, market looked pretty in we question. where position,

the and fought new As customers the best is first – Tom of retaining in place up. always we hard we're attract our to to more our business ones retain said,

rate, quotes. and a or number increasing it. looks business of look of appetite we the close if But a but that way competitive in standpoint, were a getting getting people. With lot at at new you'd the it same something of we think broadened our We're from lot just getting that up, we're significantly we quotes got the

competitive We're so are up. our like quotes of feels position amount well shape. good in an Our closing appropriate we're those

Charles Gregory Peters

that for Thanks answer.

those independent And it about of your I mentioned Just talk you some agencies, page a sales Maybe to which agencies. buckets your or guess, of your and grow your of the was looking bit. may you like expect it I statistics emphasis and License and as some down the the you a looked agency provide in follow-up, you and sales I about at professionals next XX Allstate comments Allstate two be agencies, on, on deemphasized? distribution supplement. was know over it's color And sequentially just could course little year around of which force.

Glenn T. Shapiro

really our We've for Yeah, the this pointed distribution is We've Because the way think to on growing growing Greg, been several that glad are you effectively committed footprint All out. I'm year-over-year and about think look basis. I talking quarters. at footprint. right. been a I we distribution

like we're some people turnover folks If you little anticipated. about points a bit. higher of year, are our the running a first of to to professionals. end but a the was you get seasonality lot in quarter, in have tend quarter to turnover We less agents, The it. presence. we at At this of of year, pipeline our first what little the than look dries up place. XXXX lot licensed XXX of look year-over-year, sales When a of up there's much XXXX bit this, results, other the a

that favorable. So was

that. as end less always we bit to have sequentially got down XXXX a point. last We're at at first down more would the presence; So of than little you down a look point sequentially of year quarter this we're at at we now, points really starting anticipated but

and starting So, to our look as a from year foundation. we're good continue we build we footprint, throughout distribution to increase the

Charles Gregory Peters

Thank Perfect. for you answers. your

Operator

you. Thank

Our of with next from question line comes Sarah DeWitt JPMorgan. the

please. question, Your

Sarah E. DeWitt

on hoping forward? was any have unexpected that do on view auto and going what drove like frequency you – the in look Hi, good just elaborate decline guess, bit what could a could I I morning. first, you

Thomas Joseph Wilson

Sarah, this is Tom.

a the quarter weather no impact the the Obviously, some kinds pops and your too tell what items, there look is first weather at variety one drivers of would out in of of different mind. really have that country. we different parts would to in it's So, of in early it thing there's When be.

it's at little a at look our data we be conclude lead driven, that down. automatically it actually driveway we wouldn't so when that up look you should Secondly, to miles bit when

down the and that determine don't we hard XXXX good In reverse-looking it's at attribution it was fact, between if in well it What good to we're that positioned obviously about also the be of a in is business. XXXX, be and specific opposite so so that the the profitability know we it very reserved we've know now. oftentimes read is business we would And to returns feeling but of have where goes elements. up, we're still do even attractive

Sarah E. DeWitt

we Okay. thinking then that Great. performance-based the a just rate good Thank that? investment quarter-over-quarter, should you. income run modeling on how declined for about And be

John Edward Dugenske

you Dugenske. question. Yeah. for John asking Sarah, it's the Hi, Thank

First, quarterly I the meaningful. view wouldn't as decline

with about think the these over we to liabilities. with we allocation achieve we've these what you hoped time. has The assets how own consistent been If own generally, sets longer-tailed performance versus

those detail, place event, more volatile. quarter, transaction quarters look at any at of the little something's individual given some Three you with get fourth along the in a an gave of that a number particular positive smooth liquidated, a specific performance have other quarter little in could make very that at things. last fourth and a fourth the may where may deals Looking data a year, events. very would a quarter trend. quarter and bit well in overall had to look of number but I as multiple returns you encourage the investment that took a just Notably good taken us we place this liquidations quarter of

overall, we So, about and the feel it. is trend in good place

Sarah E. DeWitt

Okay.

so just a million So, $XXX is modeling terms run rate? that, of or in good

Thomas Joseph Wilson

it on a and at basis. look might you yield a on Sarah, basis rolling as

but So X, number and – is their portfolio, income if in quarterly the being mid-teens, stick humble. not... last great year over into results a a do We that the X hard X had I yield on just know to quarters in balance took little the was that's we you but John

Sarah E. DeWitt

Okay.

Thomas Joseph Wilson

be kind to the on that it in level. Expect mid-teens of

tend really company to I bounces increase know lines, seek in overall terms at it around. where fact would you're relative equities, of expect that return that get and around, think it at bounce bounces it the do catastrophes what volatility. from total be to despite we have individual We long-term look we performance-based so above you income around, to on (XX:XX) public think is looking about but it I to the to basis you to

it fact around the that In gives does bounce us opportunity.

We handle have volatility; earn us the ability the gives to enable ability to and returns. that better

Sarah E. DeWitt

Okay. Thank you. Great.

Operator

Thank you.

comes Our from from Morgan of Kai line Pan next question Stanley. the

please. question, Your

Kai Pan

Thank good morning. you, and

wondered the Just could just the questions. on if follow-up the expectations? frequency first a versus question, your you I just quantify between delta results

Thomas Joseph Wilson

It's end Glenn, Kai happened bit the Kai, little to talking subcomponents give it the whole time of you subcomponents. give a some look decline we our estimate. in absolute we backwards out the which out give we where talk expectations, we don't so spending harder why will maybe that because of can – and additional about and saw an don't about and it a determine color. like frequency even assumptions then bunch up on things frequency, always it's

Glenn T. Shapiro

saw sort to it's look we decline we of comes the we so to broader in frequency. backs the when have frequency; clearly you compare One this at Yeah, as saw down. way to wind trends, it obviously, so at – our is

over bit on and to average some as of shrunk little little quality Our higher than book got we last be as quarters, the our a frequency the that of is down a the bit, look little a business. industry of book few you appears to more

per lot predict. different In trends, to terms in between just driven There's continue hard longer-term forward. a cars, there's of driven, miles it's miles going of a we'll theories Tom safety lot that features on as monitor said, to it, so there operator,

Thomas Joseph Wilson

It Glenn, in but very yeah customers people that one by decline types. don't The sure. geographically we customer all leads this same down most said, the to as broad-based, accident-type. one wasn't of in for accident was Glenn just tenure the customers. thing It group I it's down was was it other had us and of So, so frequency of broad-based that conclude of think, across state, quarter know which, the tenures

Kai Pan

clarify, of to just So you the frequency remaining positive still the through year? expect

Thomas Joseph Wilson

the Kai, underlying combined our ratio we the haven't be year, for I would would outlook changed say way that.

Kai Pan

like And of That's my great. question is more second sort Okay. then high-level. a on

– line on platform very of they're brokerage IPO in the growing model. you a looking sort If rapidly recent multicarrier agency personal into there's independent the and

the You about long model How but you Allstate revenue that do all these captive the the captive majority encompass model well income. over the feel still is run? different distribution have the – platform the of distribution agency as as

Thomas Joseph Wilson

We for like number model reasons. the Allstate agency of a

gives have value to channel, (XX:XX) price When and the often comparison. rater us your it you're independent to get consistency you spreadsheeted agency in in the maintain the harder it's First, right pricing. ability comparative

Secondly, the place captive even head is telematics, That really the the there into think delivering our will which it ability businesses. relationships for control to said, is in when us us. more we customer really we greater portfolio experience, a gives important gives channel build us you're ability people with connected an value. as to the all And be because

we're positioned its grow to like We'd which we Encompass. like do So on. get is Esurance. get mentioned to working to it right and We I its profitability capabilities direct wanted with

And up model, course, we industry So of in which to of continuing on piece that an that is it's is right we're well. got to And, and as strong independent called the well. telematics Answer the build Financial, version that as a a leaning platform we'd believe agency. now, which very an in like into electronic channel grow position biggest we have

Kai Pan

much. so you Thank

Operator

you. Thank

Gelb Our next from from Jay comes the line question of Barclays.

Your question, please.

Jay Gelb

you. Thank

become it lower brands new can where the the sure to growing, impacted the business in business legacy Allstate by make auto be As tend business? policies new company force for are margins now penalty the doesn't the how than somewhat

Thomas Joseph Wilson

Well, around you're been that, eight penalty in Jay, a money has customer less there to you or for new somebody you on earn years. than new a particularly tends business where customer in be would who correct preferred on segment, the seven

growth impacted by value not that that. margins. really mentioned able to possible say that growing business how the at the we maintaining local We I would what increase I and overall profitability and is And be – be feel of Glenn a we to run would to say endemic not and What both manage maybe industry comfortable so is this. by But And level. would take shareholder question know I to growth. is it's your basically to

use So the by we're extent and by by properly slice state, which certain growth places, priced of also it – also react at helps obviously We product us that even line, would to see our looking accordingly. we in the to so would way, And then and risk dice it able accurate be telematics increasing we'd that pricing. not class. more get be I say would would in every the

Jay Gelb

Thanks. helpful. That's

was side, investment the there? investment base, generates that the surprised am with the a year-over-year rates, guess that I also that I interest What that missing be little income portfolio, the On was I down rising. thought market investment I then versus income fixed essentially higher prior could and quarter.

John Edward Dugenske

a question. There number of has as dynamics the and for it's John are encourage you way. portfolio again, whole on thanks look Jay, take think how the a market in about going at I base. that generated been a income to Yeah, would

performance-based our as our market-based assets First, decrease. assets increase,

So there's generate income. which lower base can by a it just

mix, our asset changes. assets, the Second, within market-based

So, our assets. generally, assets market-based and higher within other yielding high-yield used to we've performance-based fund

decrease So, lower high-yielding lower and that. balance assets will

how think two Think the react to book higher Allstate, about to interest is just about thing does rates? it's different. simply, real Another

new in generally of to I can The portfolio moved given captures up we'd million time, an of businesses, move give of purchases. XXX else, throughout period of year. the you small protection there's therefore react turnover by X and but rise Our portfolio, very Life net only the course is the our rough within on further be roughly and changes gauge doesn't rate no Even up only that, points real statistics expect part it $XX interest very over the in across rates would and which $XX a basis quickly. the if interest any not basis our yield to tends Annuities or other million expecting income. low. in gradually everything points year, where lot be would roll a turnover to business, liability-matched a That

Jay Gelb

think for reduced so operating then, billion since very generated just the quarter count is Thanks in the recognize good work. finally that. just helpful. this And the wanted – share over been to by company income. XX%, I I $X And has same the really That's first at the much has up time, XXXX keep

Thomas Joseph Wilson

Thank you, Jay. I would hear that and I'm...

Operator

you. Thank

Our of Newsome next O'Neill. question comes of from Paul the line Sandler

question, Your please.

Jon Paul Newsome

unrelated two questions. have I

book private is, looking you additional other would Annuities, blocks? and or equity increased be [Annuities] blocks of there do thought lot thoughts a of Annuity and Life one (XX:XX) (sic) – you some own there's you on this of for any people first The interested be – these to not folks to some and about to of buy demand it's your actually, going (XX:XX) buy have and

Thomas Joseph Wilson

a structured two returns lot liabilities we Paul. deferred capital chunks. And underperforming. on and settlements, good it payout versus annuity block, block backs for the so annuity That's a it annuity really the low The the payout split question, long-dated into of block are is really

of business Our all approach on multiple action. that that our all underperforming block go doing take our to about know done thing of been proactive, businesses. it ways the be we're to so billion we've at as with you $XX but has And same is to

generates funding that go we sales been we on reinsurance crashed. down funding versus this we've a years. So of years one (XX:XX), is correct, portions just liability. short of this go a capital income, shut with less markets block been in income or really actually on underperforming and actions. a big shouldn't a even being is of makes put makes whole much basis does because bunch underperforming long-term risk in which What to than annuities and it We for up of fixed doing if new up generates equities, rather term lower performance-based variety have than have we've the to payout the you of because getting that with financial you the taken period block At it's it bit, and with long-dated before fixed for That a you after it those a What the a equities XXXX. so basis. transferred seven first was lucky little investments us it risk so annuity capital for more on the even bigger though is we've in back more foremost, over first, a return. VA and got

what can the NAIC us do So is capital. looking the have portfolio should rates will structure some enable been that, with we time, those and so ways value in so that structure to At also up investments doing they to we reduce improved that the is go as as free so to obviously to capital progress to may don't we've the much rate extent we've to some requirements interest made we capital. that tax lower Obviously, different the help be how we increased carry that them able them and block. same also we're working in value up, at

so value to We do we'll all our different economic not to maximize And, that. it we're to continue course, at have shareholder, things of improve is ways per do look done. but to to goal our further

Jon Paul Newsome

opinion? front for in question there regulatory My business has been is insurance a the your on any second change

Thomas Joseph Wilson

part, insurance, missed For that Paul? I last

Jon Paul Newsome

in Just insurance regulatory the any the in environment business? change

Thomas Joseph Wilson

make say a we're of I Well, a out New cybersecurity. regulatory specific would we we covered. One rules. but would work Financial are from that's cybersecurity broad sure all Services in there some put looking have that The we're we're We're the regulations question. working sure those is of specific hard; elements environment to at. anyway new a all working protected couple hard Department make things York to

issue with data. it on And requirements it. the to thinking not how Secondly, there's starting in about deal privacy we're but increased in always you're is see of yet insurance would we

variety say as usual. and would relates it's I do Glenn, pricing, as things, it agree to with business a So you of that? claims

Glenn T. Shapiro

There everything, a last to filing with is as and changes and lot state-by-state basis agree. about the with discussion was work I continue regulators of we business quarter process our tax Yeah, usual. but on

Jon Paul Newsome

much. very you Thank

Operator

Thank you.

comes question Glasspiegel from of next Janney the Our from Montgomery. Bob line

Your question, please.

Robert Glasspiegel

Question sort spoke morning, landscape the we about. on which you of Allstate. where are Good in competitive

if of your in we the points (XX:XX). Allstate at were look looks X maybe like and Progressive take key year, better rest XXX you in As competitors to and around (XX:XX). out, they XXXX it the were came industry the XXX But

your but rate are at by think the to are you're So we're in competing looks how handicap looking more competitors going, world competitors where actions I'm the or to over take to Progressive we It of like to the going margin increases do and trying handicap year. trying be rate-wise? of you the and and your moderate is winning on travelers balance mutual rate sort the

Thomas Joseph Wilson

are. you don't same plans and level greater We We numbers you know, of everybody perhaps Bob. what the else's granularity. can't tell I see a at see

We group not So, we we state, some but has look if by still total only that Geico, at Progressive, class. Farm, of by in State risk think were them, – some which is don't given would them the modest. they Glenn that be outlook our future, increasing I but we what talk can for not will prices. do are rate know about we

Glenn T. Shapiro

Yeah.

Tom If to because this it level, is you in state-by-state. dangerous as – always talk look at are global about it's we a said, now, our where really

a about think of we're couple would caution rates look what you rate need we in in a a last don't and at that, what as also we Bob, great better have years from what situation the than you, pricing took results some in Broadly-speaking, to We is I last places clearly and in year. were this is others. of lot they because happened the year year ago.

over it last is the were So CPI when insurance you the in compare XX to how in it's months. in quarter, first the whether look really that and auto the taken coming rates at are rates

a is already and a what of their last so they whatever forward-looking of from year basis. year And in folks year baked more did rates really do lot this is this

Robert Glasspiegel

industry you continues year widen Progressive's like It versus and just the year. looks – underwriting to margin after margin

up think I you versus widen XX margin of do got for sort I the how continues year. the industry had versus technology two pricing? basis? neutral on the to a last What right? your of the think industry explains you at Is points You rates it it

Thomas Joseph Wilson

XX Progressive, time, ratios we period versus bigger the have look than when Allstate Geico, be of about than seems to to points and been you a and about traditionally industry. gap seen the industry. our Bob, long a much think, look But at better same like I over combined the I've The Yeah, same the me zone.

that's, think pricing in part, accuracy. I

the on and That efficient on to to different is, business, to what and a objective better mutual companies what do so than the and people of from of it's five over the it's insurance. would on insurance you we're and many of get view underwriting income I like size think I their that other our the way we we if John homeowners capital with as say companies scale effective return it. function I auto industry, is $XXX I view to substantially business capital the be that we income it's last a think What different months, appear as want our think would generate have million we kind homeowners for consistent years. been at And XX in showed, there's don't and pretty look slide or the have. in be six

generate would being that the the benefits we from in not homeowners I ignore business. So

Robert Glasspiegel

you. Thank

Operator

you. Thank

Bank. of the line from Shanker Deutsche from comes question Josh next Our

Your please. question,

Joshua D. Shanker

you. thank Yes,

times? be looking Allstate right So brand brand thought there's obviously Esurance you'd similar. much a have the a the that at assume distribution now, but metrics is at Esurance, it pricing smaller is in are than products times a rates base natural and adding time, direct of around I point policies growth at have both growth or direct. behind and is better lot this of different in growth Why direct? Allstate channels in given would I sell that theory the different there channel you change here Is just

Thomas Joseph Wilson

– good and think business feel don't customers, to We and that's different environment. brand the coming. Allstate therefore different appealing geography bases there about you're been competitive different I First, really are

expanded we said, last Glenn all As distribution through year.

see that year's of force. last but quarter into distribution and this it in items would that we of you any continue in terms numbers will in growth the it hopefully see didn't turn in You growth to and expect

Esurance. growth position. Well, and but we you this is So to grow just it really plenty expansion quarter. there's Its homeowners, opportunity Esurance, by different think driven slightly of didn't see

go So here. would from I forward forces both we as expect businesses, to in grow we think items

Joshua D. Shanker

Okay.

why think hope going around future Sometimes did but they up talked I me. what hard in tell you've the the the it's explained in go and I you better this people question what's I as stocks tell answer than past can to to are

were I enough (XX:XX) have XXXX before half levels a are don't – are We in frequency know the it time, going spike lower what they you're frequency, even than the and now we spike call now right back to then.

have ago seems touched to color. it there about theory Is and years that frequency I up maybe think little be you upon a you maybe hoping three better a grand I'm right why grand went but theory why coming it another about now? down

Thomas Joseph Wilson

time look, time As long would came like laws, we a one up. five of household spiked a period no. there's reason, down and kind driving XXXX whole maybe of that then brakes, happened tail drivers, three light, in it And leveled it so, so third say anti-lock cars a period like it of out for long, then theory, I XXXX, for two years. it because – things there's anti-drunk per grand – of versus sound makes had and frequency or six a variety

drive people third Some more at you if their obviously you – of more is to you they leisure. errands, more work, to and for people – driving a on if to leisure, look about work do is back were was a because where work, activity more have that economic money, so related a third is third a third at cars,

driven so accidents. And people up more so got went miles

say related to driving. Some people it distracted was somewhat would

information that's came down think you as that we is as last an on which to conclusions I whether with down row. their increase, to was clarity in and the went prices that went It up you're before but years why It at be a think about that it and to looking quarter, down profit I their don't far put is we We might phone What and a just phone in and position to down do that so take think that up impossible react. at people trend. went trying it somebody they predict looking available not account should it. to us talking just increased That just right knowing got in or puts because to we better know know this our for is getting is grow. see way. had up to are results two for it come a as year It's opportunity I the accident. in

them and in at a customers do be give frequency the not because had lot. to the good a ratio future, view we profit it's do business because think our irrespective our growth a taking really bounce we're it's that do and bounces competitors for good earn what so like of as around business. advantage good we with do when generator I a and of and that We combined what lot don't, We're really a will just rents we to of does on vehicle anybody. when nothing from is our auto frequency. guidance, job it think it economics happens the economic we It we our high underlying around

Joshua D. Shanker

low everyone, drivers be and for luck frequency let good and companies. Well,

Thomas Joseph Wilson

thank you. Yes,

Operator

Thank you.

Goldman Our question next line of from comes from the Yaron Sachs. Kinar

please. Your question,

Yaron Kinar

everybody. morning, Good

ones, of couple a Just quick think. I

it accelerate there brand Was momentum XX% the you issued the new growth Did decelerate? applications auto, it constant? year-over-year over at in see did Allstate in looking quarter? So roughly

Thomas Joseph Wilson

business, The was... XX% year-over-year question growth the Glenn, in new

Glenn T. Shapiro

Yeah.

Thomas Joseph Wilson

numbers, into don't getting we ...did it accelerate? disclose. monthly which You're

Yaron Kinar

Yeah.

Glenn T. Shapiro

thanks, so Well, Yaron.

we responding of in We a is the we whole different that way. that is I in We got pretty got system pretty in pretty right growth areas and the balanced wanted it's of been across growth. that growth came What lot in say First targeted local now. all, states. marketing. healthy would balanced We growth that invested

talked it a but more for we've about few we're fact quarters, system, make mentioned, also the grow distribution effective. that to our Tom As trying

needs of We've customers' new so – say our the it's points I know auto, talking I broadly XX% agent Two, about serving up even but across quotes up, system growing. in the we're less more I'd across turnover. got XX% one, you're agent sale more selling So, per system because the X,XXX more mentioned business out we're more per and business before new that We're is there home, the country – in up. too. efficient.

feeling good the most They're now. maybe their local the and staff investing economic feel go and in the system about And opportunity, their I across They're elements driving Everywhere They're itself are environments. hiring their agents opportunity across marketing importantly, I country, broad in selling are effectively. Agents is more positive. leaning pretty in all the we're so think system system. right those growth. in, then, So really of good.

Yaron Kinar

my That's prior-year around question then helpful. you. second is Thank development. And

then So, this tailwind there bodily or longer claims you clearly lead do handling the for are that And been place the initiatives adjustment to for a injury more prior-year losses company's favorable positive development. reserving? much or other think on has in the could favorable How continues? lower efficient way

Mario Rizzo

Yeah, hi this is Mario.

And – predict at that's several balances continue development the across at claim of not looking will or will here think quarters, we some continually claims, I'm done and are we'll tell over particularly the process the to that would we've look, where about tell reserve of the favorable reserves. you target. our our seen, is say, Because coverages reserve we not. manage, feel we've coverages I some So all I position a things to on injury I it's moving is. good you and I'd look going side a to sit last continue really whether

you've And think them. I some whether that's develop about of seen we the about want what's we reserves. And is keep part in critical at always reinventing when a that's really talk in the in business model. continually it's claims our equity pretty good pace. to your we at predict handle to continue they'll better but we've where generated historically. And hard improvement, We'll area really been get to You at claim feel of position, that ourselves favorably how And successful reserve our same looking continuous handling. an

Yaron Kinar

Thank very much. you

Operator

you. Thank

of comes Wells question the next from with Fargo. Elyse Our Greenspan line

question, please. Your

Elyse B. Greenspan

you. Hi. question side Thank the just My capital Good is first on things. of morning.

Allstate debt having you us part for issued just is maybe the you preferreds using this there as buyback some some to a component quarter. is leverage? guys your in normal you You Do or could update see if just your in yourselves for be of built acquisitions of of Can you to us this future there? adding is flexibility of might profile? if update that some a for that could in And flexibility thinking you additive there just about on acquisitions, be then, the capital in component things terms

Mario Rizzo

Elyse. is Mario. Thanks, This

both was which in stock, as of good I where as So is to position. guess our a really really really saw having optimize really always to you first ways the permanent an structure, about debt issue at as opportunity a looking well we for senior from said a capital strong got And quarter perspective perpetual feel capital our start and that, attractive I'd capital We position what preferred our we overall. we're structure. part levels, view capital securities

a down in proceeds that to So equity some floating we call debt coupon. some relatively use the higher that, basis, junior pay also rate had on credit that's to and did the maturing a issuances. lost subordinated We're May had debt going

we're to that. So do going

the good where permanent the and perspective in really business what proceeds swap we again to opportunity us, later what the in for preferred to to the at really at some going and and yet, have that we – to the might we decided growth we'll the look our the as other So but the out gives that from some issued do come of we forward, then we're we we're rates. more opportunity call haven't debt make at opportunities like to attractive about a opportunity invest this of terms with in really and took that of going we feel along. issue capital we And have decision just that stock some or attractive levels. capital on year in both debt view And we flexibility

Thomas Joseph Wilson

an to And time. don't do just to we fund we need acquisition. to with something, and point prefund advance If try to We in don't something. our do it anything at raise capital wanted would do to we position money need in power, earnings go that out and

Elyse B. Greenspan

become Tom, things there your radar available Is or dependent something, that upon market? screen just some it's the on in maybe

Thomas Joseph Wilson

If our not look at it's strategy got kind related picky. we're we're a it buying be of to track be averse good things you but company. record, our has to to And and

on more items electronic maybe list just here's of want the to about five in our you have. sound. buy Don, have that want to companies a our for which SquareTrade, was a a to things can year new strategy to have little SquareTrade? market, the ago, not interesting stuff Don we in insure over related we bought so they like we always to people, that So, particularly We're And just to good strategically by might of would be look mention Other agencies, it. it, sold extent comment so don't as we've then be be we done to other the about relative thoughtful be how Allstate averse business we're could that. we there us. a to really position. might would places said And could we but is I But expand lines we're that to

Don Civgin

first Look, now. Yes. us behind full-year is the

I'm ago, I'm acquisition. three go year As a you we're laid an of you a were lot all wrong sure all We to happy about can for them. thinking out when do acquisition. the objectives say hitting

in quarter and see policies was can this and continued again growth first premiums. growth, in both The you

in-house, is loss the from just in the to point of the performing improve of underwriting the well we've of and ratios company was are Mario more on mentioned, And to the able well the as view. business. top be Second but that running profitability taken returns

in a quarter. outside a and they've opportunities growth The done little European main the job is improve was XX% business third where to which business, The their last under nearly retail has albeit their of the really in U.S. that. nice doubled total is book

the hitting feel objectives like three of So, we've all them. set, we're I

to that of their acquisition, prospective the onboarding at a If you I way fit Having and existing did their service-obsessed you well met SquareTrade and they remember end-customers want tell chose because can creating with treat are we good number were customers. when we they customers, the retailer. the value we with and said serving for we and really our

we again, right do a it heartbeat. choice. did the I'm made we that like feel I choice So had in glad and if I'd we it

Thomas Joseph Wilson

other add just here. me piece Let one

retailers, that's we when and So electronic talk big-box. both

Elyse B. Greenspan

Okay, on quickly really the great. that And quarter. then $XX the from accounting Was change quarter? was from in line just accounting there the a topline earnings there any the bottom on SquareTrade, in impact million boost the to change

Thomas Joseph Wilson

the No. was the It net It accounting impact was change. to income. just from neutral revenue

Elyse B. Greenspan

Okay. Thank you.

John Griek

one we Jonathan, for more have time question.

Operator

Buckingham Research. Certainly, from question our line the from of comes Kumar Amit final

please. question, Your

Amit Kumar

that? very reversal we me fitting sort an going decline time for back questions brace about just the that reminding have Is when should the of too? for constantly is guess, would I a frequency, that investors on unexpected frequency us outlier? in unexpected should this Thanks in takeaway in. quickly, How to think frequency in we the an

Thomas Joseph Wilson

that brace and going auto very be would outlook. What we would happen is Amit, business It to were profitable XX% profitable. very combined XX%, is if say to for which is you things I annual be is our a you. our was think should ratio we when it growing at to even bad something I

over should was to shareholder And we have last it years we improved is that add, should and very couple profitable; business profitability. value that as starting getting that so about increase grow fact excited the I the of is is smaller that when a be think what investors business this

that, So it's that is on that's we no grow longer and just think machine, beginning what versus – do to should a to not machine. so a we're I be need offensive business now profit focused shareholder this the investors value on

our we've got those value incremental got have we've and shareholders Benefits, home stuff, and of we We insurance, all have Life performance-based we've auto things with consistent are business got our insurance, create our strategy. and SquareTrade for

the to just way for company. and anything. value measure about investing We forward shareholder this to So think specific can being we I run the wouldn't grow think we're our and run how making amount is money about get one wrong the on long-term too That's way company not in of the for in I'd the focused optimistic and company. I it. business be looking brace we so

Amit Kumar

on Got we of supplement. guess, only How filings And pricing the question quick which in. on have shown And thanks think trajectory we discussing the the XX I page you've about, spend the should I it. rate is trends here? fitting from of time on me But discussion. other for didn't rate the the

Thomas Joseph Wilson

we've Well, talked before. this about

big of by combined in that, in on an ratios for we premium average standpoint you up the Given the part, we'll kind shouldn't topline make see but to growing expect have, the business. increases

performance focused a just say, the add one too and on large corporation. get line don't is we value one customers. make would company. in for money I of We which on So This got the lots of entire to our measure ways

the the All have better it did still quarter would we it, a really we or well first been even of had great been And in at they those level than expected. expected if quarter.

think value about lots don't value – and feel I business create the there's whole get too like we've got returns. at of to really So, item really; one focused on growing attractive creation the by

off second a We you to talking quarter. look to So, in start. good all. thank forward We're you to

Operator

you, conference. participation in Thank today's does This conclude gentlemen, the ladies program. your and for

Good may You now disconnect. day.

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