The Allstate Corporation (ALL) 2 Aug 182018 Q2 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.
Don Civgin	The Allstate Corp.
Steven E. Shebik	The Allstate Corp.
Sarah E. DeWitt	JPMorgan Securities LLC
Gary Kent Ransom	Dowling & Partners Securities LLC
Marcos Holanda	Raymond James & Associates, Inc.
Jay Gelb	Barclays Capital, Inc.
Michael Zaremski	Credit Suisse
Christopher Campbell	Keefe, Bruyette & Woods, Inc.
Josh D. Shanker	Deutsche Bank Securities, Inc.
Michael W. Phillips	Morgan Stanley & Co. LLC
Robert Glasspiegel	Janney Montgomery Scott LLC
Brian Meredith	UBS Securities LLC

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to The Allstate Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Investor of Head Griek, Relations. John begin. Sir, you may

John Griek

and Well, Allstate's to prepared we question-and-answer morning, conference thank Daniel. And remarks, session. a have you, welcome will second After everyone call. good quarter earnings XXXX

Accounting quarter CEO, Officer. Wilson, and Shapiro, of Officer; of the investor Mary Eric Ferren, Corporate Glenn Allstate the on Service Tom are Chief John of at presentation Life, today Steve close Vice the Controller Retirement, Chief Rizzo, and our President Civgin, press Chair; Don Lines; President Strategy Dugenske, Jane today's following our Benefit Shebik, of allstateinvestors.com. Yesterday, and market, XX-Q businesses; the Personal Businesses; for and release, Fortin, filed CFO; we and website the Mario President supplement, second and Here Investment posted

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

turn it I'll Tom. over to Now

Thomas Joseph Wilson

products our keep achieve Thank XXXX investing morning. on operating operating consumers excellent you and Allstate The laid Well, to good is continued deliver is slide to X our your priorities. up to time for progress to on to Allstate. out we're differentiated working. deliver at results, pace on strategy and

prior comprise our lower Brand of competes segment across self-serve different customer and advise XX% business preferred and revenues businesses, who four growth on in left, and which of adjusted accelerated our We quarter. XX.X% premium its have a Esurance the increased businesses our left and in model. in on product XX% market-facing local create each go-to-market over these businesses with in right analytical, shareholders. operating with for lower the branded proposition Property-Liability the expertise value the starting The and net Allstate year. income, and focuses the branded So leverage second value the customers pricing, and substantial we

Our focus a the also We're Allstate increased auto customers areas is example insurance agency mile. value the of panel. propositions enhancing and connectivity. customer the behavior four connectivity value in reflects right buy the by give give price creation A to individual that through the businesses. use in telematics them use the includes to Esurance We and opportunity good driving on it for this of

who us claims Claim Score. industry implementing So wraps you've advertising needed and enables Insurance in for create QuickFoto in of in the our what's improve believe by connection ferries Jersey, an customers' this Risk versus pay this maintaining is to which subway. driving experience those you insurance days. to in beyond are hours our also New lead And in likely on highlighted technology, We're advertising. our the we auto the to working in seen the we

significant businesses scale large, Allstate these the and of overshadowed We sheer of The also SquareTrade. like business. but by value be and substantial of the in is a Allstate growth create Property-Liability Benefits, through can number size value Life, businesses

proactively also will manage As create Mario discuss, we value. to shareholder capital

and billion excellent X, and premiums Revenues in policies slide force. in the were returns $XX growth average with increases increased in to Turning quarter. Allstate's exceeded

Service quarter XX% in force Businesses in the the from force the second grew policies of green Esurance see of policies X.X% can is grew to far table, you Allstate As due to right and SquareTrade. which in nearly XXXX, protection Allstate growth due on the the in box brands.

adjusted adjusted net in at If income the that was a $X.XX share XXXX, $XXX million net or middle better Property-Liability $XXX of lower to XX.X% primarily equity per the net you outlook was XX% our net see income. auto income or and with of you'll of bottom, million The XXXX was the than was left, by move back underlying XX, on the share. second annual to accident driven combined return XX income $X.XX on the In frequency. first quarter ratio half for

given So the XX improved underlying the positive XX this outlook result, combined for to XXXX. to ratio full-year

priority, generated generated better customers, across returns SquareTrade on we committed We've progress turn on new customer imperative base, achieve Customer capital retention The new $XX from continued the over in Arity good are most is track the quarter. income Total interest its manage operating examples added our XX low contribution in force and underwriting Esurance in XX.X record income increased. now a attractive to go key X, income return a results two and for the XXXX were our increased this driver which as of months. business. partially of $XXX on in accelerating the $XXX in rate long just profitable force to good more by proactivity in was in the customers Property-Liability policies X.X% investments, Esurance second portfolio growth grow the long-term and investment discussed. with improved income through five of Allstate Property-Liability progress our X.X%, was better intertwined priorities, building target ratio to is growth growth. generated The Those three Promoter over and Net recorded for We're and total fixed to long-term SquareTrade are prior-year Returns made made Allstate from growth. priorities. as will but you priority. John Benefits brands first last million Growth of slide grew quarter. billion investment investment detail. combined million growing Allstate in on economic fourth growth higher as lower offset quarter. businesses. platforms. policies million net also valuation. also serving environment. Property-Liability progress businesses, The Life If policies the also of returns. we improved XX.X, and serve both ensure Allstate good Allstate Score the

John Griek

an overview Tom. of of accelerated written higher of XXXX, of The second to costs. premiums prior-year Slide combined was by X.X% for X.X was in Esurance and partially XX.X reserve of re-estimates first for catastrophe driven increased which in by higher the year. reserve ratio lower the favorable X growth insurance in ratio Thanks, an accident recorded excludes Property-Liability results. and technology the the better and XX.X losses, catastrophes underlying brands. premium was Net quarter months non-catastrophe quarter growth second Allstate combined quarter our was agent XX.X shows and points than of due the re-estimates due frequency. XXXX auto This ratio and second expense prior-year offset employee-related The and compensation the increase to earned, lower six

point XX As the account by takes for half This XXXX. the the XX originally in the moderate Tom of seasonal loss the mentioned, growth more into to and performance in nature year, guidance we savings. tax full-year revised frequency deployment are X of to range planned, of second improving the range initiatives, than assumptions investments

of force some by with discussing spend quarter our a results customer few let's quarter, Allstate an for focus benefiting in grew insurance. points X.X minutes the covers XXX,XXX in the chart, and the X Renewal Starting policies ratio stable operating Now each auto experience detail. from brand second X.X% environment. from or in Slide left Brand bottom The of the on XXXX. of prior-year XX.X improvement rate was a

the issued compared quarter XX% applications grew year-over-year to consecutive the second of sixth New for XXXX. quarter, increasing

and higher lower ratio reserve for catastrophe combined frequency. underlying and an quarter recorded XXXX combined the in underwriting were higher The to ratio higher box, driven premium, average of accident and of better improvement hand a $XXX compensation in than increased drivers generated points profitability expense agent prior-year income. X.X was XX.X, the compared primary losses, prior-year right quarter the re-estimates, by points the the The employee-related XX.X, XX.X earned On of the more quarter costs. loss in prior-year decline was favorable broad-based million X.X by second This improvement than an ratio a ratio, underlying included quarter. of offset second of

X.X% Let's the X.X% bottom force at ratio cover to both renewal applications the to of Starting insurance Allstate in the million Encompass. insurance results. to as increased auto increase policies the homeowners average issued grew net homeowners in improved premium XX.X X and over year, with recorded go written insurance, new Allstate slide Esurance prior and underwriting total compared $XXX bottom Brand profitability. highlights and strong recorded homeowners a The on the is provides insurance quarter, Slide this for underlying XX in a Esurance Performance grew evaluated and ratio financial combined quarter. combined last X right prior the second and policies variability. the profitability in chart XX-month premium reflecting growth Esurance and months. income Brand Homeowners provides line force. weather XX.X% compared had for over in detail in seasonality a ratio increased. given was to of better XX.X left, period quarter. generated

X.X underlying last points the from execute insurance quarter, its There ratio X.X and loss recorded I'll the the in growth of improvement better for right, quarter to the the The XX.X% was and than XX.X Mario. turn quarter, into The underlying income was XX.X X quarter the due ratio to auto the policies as a ratio points offset results better improvement a increased in underwriting of in premium shown due quarter quarter, ratios. it below lower increase and than XXXX of the prior-year homeowners second was XX X.X XXXX. in average combined points both X.X% Encompass improvement was as underlying benefited expansion X.X% insurance premium profit combined auto and prior-year plan quarter. decline loss in quarter's continues policies frequency. were the second now in policy more XXX.X generated written ratio than over was combined the points And the prior-year ratio improved. combined expense expense of months prior-year the net in force and the to recorded period Encompass's as homeowners lower auto ratio. upper to This second insurance the insurance. over in in The force in X.X of on than the and both

Mario Rizzo

John. Thanks,

revenue Services. quarter, in quarter, grew the quarter, and $X improved $X Allstate $XXX the our go prior-year a SquareTrade to SquareTrade detail million improvement reached to was million, the Businesses. loss slide net Adjusted at Dealer over policies income Let's which force as and revenues to XX.X the a of in In domestic adoption million X, policies due on million. on provides second Service organic new the prior half acquisition and the experience million the were progress improved, $XXX objectives international of increased, growth standard. increase to force million business accounting with driven revenue and made the loss expanded. in due by supporting the year $XX above three remainder its SquareTrade experience

the and the slide top shown benefit to in a on middle $XX our the premiums, was tax Allstate far on investment products, in to This million, proactively investment investment to rate. than shown relatively net net our exceptional performance-based gray lower million ratio of adjusted of from Market-based highlights corporate returns conditions, yields. Allstate compared by investment was was increased in remained long-term results primarily XXXX. income Life very at of Turning quarter, chart and lower bottom which in Allstate improved lower $XX increase net review split results. X.X% Benefits rate, and quarter in second results, the left portfolio tax due on XXXX. due let's The to to page the shown of the attractive right quarter and higher Benefits the the $X had premium and between was chart. chart than bottom Annuities was generated income We performance-based appetite. Net $XX $XXX portfolios. investment prior-year Allstate $XX to high primary investment effective selected regulatory portfolio rates. in investment performance-based million quarter. strong over quarter, market the adjusted quarter, our Annuities income. primarily net Performance-based due slide prior-year in was blue Slide the our the second income profile, The results. based reflects income Life, driven the prior-year million prior-year the and risk strategic million the income adjusted capital, XX, driver higher on income left risk due capital lower market which with on decrease a quarter, shows effective lower income million in relevant increased low XX manage the investment shown the a increased net

rates a points interest overview left months performance-based share reduction year, the net repurchases, an of Book offset our right. income in income period. by impact strong as of gray. lower from spreads. earnings by income supported favorable and X.X income as market return While the which and to on returns Total to The for the is $XX.XX valuations to since was XX.X% positive the the was dividends, a and very The in was unrealized last higher a XX.X% quarter income X.X% was chart, June the equity, XX, XXXX equity increase return Slide increased shown Adjusted value fixed the XXXX, stable the quarter shown return Total this strength. and was in was yields in quarters, of shown lower annualized of in compared X% outstanding blue, investment second credit of in income, for to reflected than an the a markets. first shares provides the the quarter last on XX gains share comparison in in quarter, shown year. wider yield higher quarter reflecting was lower portfolio last dampened months capital decline losses. prior-year four of decline performance-based due the or to bottom the in in by but of due break-even the XXXX fixed X.X% per on offset billion this XX six ended $X.X value increased contribution portfolio, return is

returned shares bottom as XXX the the And XX%, the or XXXX, end capital position right Since in shareholders by Our to quarter. of second outstanding of in number is excellent. we have $XXX reduced million we common shown million, chart. the

up for questions. the open lines we'll Now

Operator

Thank you.

Sarah question first Our from comes JPMorgan. with DeWitt

Your line now is open.

Sarah E. DeWitt

your Hi. I some thoughts wanted that competitive just quarter. Good We're get to morning the cut to and good hearing starting are congrats on environment. a on competitors price.

your you over in to years? get few And still wanted maintain just accelerate thoughts. so that can margins and environment you I the Do growth next underlying think

Thomas Joseph Wilson

then here a and Glenn is in Sarah. I'll Morning, Tom. want make well. This comment, may as to jump

First, do? or assume about things I talking insurance insurance of auto as opposed to other you're we any just home the

Sarah E. DeWitt

yes. Yes,

Sorry that. about

Thomas Joseph Wilson

no. Okay,

– of go early so slightly people that over were Other to you've on you coming saw back the increasing Then So of start after saw auto that in business to the insurance – time. seen we prices. – earlier people. if that increase a you XXXX XXXX, prices companies we period number perhaps than some

you're or about everyone much. than – that direct the else, matter states. rather look now. competitors X% some some, pretty it doesn't their come think if X% a – State Farm taking you of but who's down see what many basis really a number price price to one that have in particularly But at moderating think higher XX% percentage increases, there absolute recently still is, did price because with on company, But you You than I it are reduce big

feel If And all price – with close you is at we our get. good rates on absolute we it's when number is. relative quotes very absolute to your of what price look where today we our

war positioned think want coming what's you feel don't where price we're any, big there's Glenn, that? the maybe in like, industry something in to good mind. your add and we So about that's to if

Glenn T. Shapiro

thanks, Tom. Yeah,

are system. part rate reductions a the we a – we all insurance. CPI, where of there's Tom was, look the high. And On Just rates still the like, state-by-state at of the there's was on, carrier one if look at taken But monitor our some it's pricing, last Year-to-date, that basis yes, you are competitors. And in their We in A – we basis, about adding first really some activity these as auto around rates feel the the X%. still talked good filing at we What do now. some. we we and competitively. recent, still look the year-over-year a much about change that through as slowdown, we quarter of took were in X% don't burning that on in but coming is most see see it right lot of and we see year. filings

I customers. call, So we're it's that for stable rate still, would a our environment positive and position, we've rates, well fact taken be the those in pricing to good

Sarah E. DeWitt

frequency factored talked lot your you. prices? And is To you Thank secondly, about what great. do Okay, extent a in that And you then that in think declining. persists?

Thomas Joseph Wilson

come realized. Glenn back we been to And we'll to-date will talk that's then what about see forecasting.

Glenn T. Shapiro

Yeah.

always as some facts it. to But unpredictability that can some and level frequency, have, of a we there Tom So are opinions says, components on there's on. both

of external. the book. quality So I'll internal talk we like Internally, and our

some percentage look the about we full risk monitor the we grow. of the new XX% percentage in actually growth at And of nice the the other that coming quality good coming which we're our that's over the improved shift we to you past a the coverage, from getting and and the of retention, because us tenured away improved. book at of quickly risk away tenured the higher look we're years If look some on the back as to than business took tended business business of rates, lower couple walked risk we business from rates is that and growth XX% balanced oppose walked bringing the of quality business and we less nice our coming is about feel business, the more profile, or way, Then way you because like quality to quality those as business, from more bundled.

there's us hypothesis. backed-in book that's impacted favorably of we of a gives quality From mix standpoint, the a that into that good have an frequency. external of more confidence All coming

miles the and got the would car look number trends warning driving driven overall other warning. park frequency are starting external burn are to of trends. improvements spot blind community car that automobile and I You've departure more that into at lane a there's the say we less –

that of But that of all in few those that of last favorable there And moves environment sort over seen the some can have macroeconomic change things a frequency. we've said, things years impact. a is the as level unpredictability

Operator

next you. & question with from our Partners. And Gary Dowling Thank Ransom comes

line Your open. is now

Gary Kent Ransom

versus Yes, good Drivewise. you the Milewise compare I was could morning. wondering contrast if and

is customer wonder The And some differences opinion whether insurance there's And I in level are to and likely interaction, pricing market time. your large of over also if of any of things there. the a obvious. connectivity level the But different. auto attract is share of the pay-by-the-mile I'm insurance interested

Thomas Joseph Wilson

I'll Gary. can start questions, in. and important Both jump Glenn

we're them And, is specific two to to a give with their driving relative One increased two, using first, So purposes connectivity price to driving for customers. individual experience. improve our behavior. their more

which So they not you many can is, drive on in the what just when, first and records and they telematics look is piece at garages specifically vehicle behavior. look where where, doing their day. claim car drive But or based motor can how are somebody actually, people how to you at their used that

pricing That'll options now. particularly So talk sense that might how Milewise Milewise. about lot a three up to payment of you end give Jersey. And states setup. for went Glenn why we gives in we're Milewise. And as a in being can you ubiquitous some New including What

and retention. to drive using working hard The on the customer improve we're loyalty improve is that doing experience, driving second connection to thing

to car. it, you people your said had wrong cost, is, By about here's it connect it'll months to here's fix device on has a John this you about OBD approach, how we with everybody port couple came connection, warning what's whether here's your his information light an the phone time your got So through warning in, or taken desk, ago, what here's it to is maintain he the serious what it's your light to, and his connected give the on can help a but to you car. car. phone not three

you which finally of are You others your can better do also resolve the things driver. really like or significant

low do to talk Glenn, want engagement things So product. trying and there? is, take product a there's to increase of engagement a what see Milewise we're into high to and oftentimes, about you do lot what a you

Glenn T. Shapiro

Yeah.

say, the Milewise, positive. early very read would So, I

paying how market be I'll into there's will you ago, to about favorably very a in has prices those sits doesn't the People I a folks. what public when a they're don't the or it them Jersey if metropolitan auto about share two insurance lot make don't New type of for determined. use a car use tell they been of think because It the the still question it'll freight And very take. intuitively, good transportation, received. time, that area. for months percentage expanding good parked car pay their of few full most feel an much. can works sense to they you experience I anecdote to It's full in tell

too and situations felt the was wanted in their said amount the saying, rate And this else. that less to like that's used specific just by their I car, had save really get for make for first they sense we've able coverage hey, the the I somewhere business was had got even with out to door you. I they So week to agents the business might from and they launched much walk notes because about some we a after customer

very it's seeing – still with an really think time, signs their seen. that important our a uptake. it But – to and niche over growing positive. use percentage are market use niche, we're sources. the don't and other early be so nice It's is a car I within potentially niche, So The primarily people remains

Operator

question next our from And you. Greg comes with Raymond Peters Thank James.

is now Your line open.

Marcos Holanda

are efficiency there? to the of question wave of And context developing challenges the be following the can control in the adoption on operational will like that? It seems you some how Do first carriers side. This Claim has agree with online QuickFoto guys do what of InsurTech. to you perhaps processes and Good claim calling about for quoting for of Greg. is talk the costs in is Hi. with morning. My Marcos next

Thomas Joseph Wilson

and you Claim that's what picture we any call of on the when quite tell something rapidly. that it is of you which a on And of and with now. can take the one ubiquitous build Marcos, look cameras those turn at change combination in more at years and But update I'll recognition ability give communication dramatically numbers a from out it's to you QuickFoto been costs, for give to it's business. the new digital ability that of is enterprise which we've amount an it without we're number Glenn information going on the then the getting would integrated change and a perspective combine and developing business. what for a digital there, digital to the sophisticated because places competitive, Claims into can decision-making, specific of it information use doing. it technology, the computer And clearly where algorithms

parts be we've using many in the other Claim. in so can put And that QuickFoto It business. that used of – we're

beyond just experiences. well goes InsurTech So those

information professionals a we're for collection but buy So which sell of questions the know, than sales a three homeowners don't by – owners in can you digitally. licensed have on you information agency pieces the certainly ability policy maybe verifying example, our and just whole and the data bunch rather business you ask to of be answer we maybe launching of know,

Claim? want do on give in you're that update company. throughout separate, digital our it's Glenn, saying have is called it QuickFoto and an to enterprise do that we you which to So entire correct – – integrated

Glenn T. Shapiro

first QuickFoto happy change for a launch business half people. it's shift like or Yeah, what's of and going do in And adoption really with big. year feels way one It's the at But so it, those And it's into on we it. Claim. just it that of of management big now. a exercises a bigger a so the very customers very right

human get of to through human. I'll a for car That you or getting Historically, write were the car physically. work Our half about segments And of working agents employees in vehicle the think was had units of going that the And work. we the effort. some of The down the just of that's front work, about our was the it. like employees. customer break estimate parts it. the to to like person to way, an In effort that if

the estimate. of work the half writing actually other The was

to that what So was eliminating or the to get that have the the opening, we're The as said hours doing on first half photos through in claims artificial didn't talked to about the human the car days the piece. Tom work QuickFoto that would through Tom work. photographs human on able is We previously. flowed potentially car. right settle and The take of with to, that intelligence essentially in

So very Very positive adoption. positive customer experience.

Marcos Holanda

quarter Thank a several versus uptick you. the revenues on PIF would of you. in My but I appreciate be that follow-up came was improvement. in color. Thank SquareTrade. There nice flat QX following sequential quarters

there? color some just guess I So

Don Civgin

Marcos, it's Yeah. Don.

When the Allstate. three to acquisition, set is off a did really start we great we goals. First, with SquareTrade

our additional retailers, The domestic first well we do increase as retailers with with with was to existing the as business ones. both the business

future as And you the the the last expenses third us loss had improve small, for can see improvement for nicely been for volume to profitability, was the very to partially additional done was risk also growth. build but and we seeing It's the double we're trending Europe double then well. as them, the underwriting taking a still volume. and year. Second quite an result them quarter, the of has the well roughly and quarter, have platform but this this fairly

quarter-to-quarter, you little can it bit have a beyond look a little it's So be – specifically question, your to lumpy. bit because to

their to seasonality some ramp depends they there. when you up got on begin program. in You've retailers It pick when up and additional

the look think I better trend is So to year-over-year. at

of their customers. revenue of doing that is a because exaggerated the with increase additional but we organic. retailers look better retailers, Part just job part roughly little and of numbers picking the Now recognition, of it but half up have is a is

happy very their far. with progress So, thus

Operator

you. Thank

Our comes Gelb from Jay next question of Barclays.

now Your is line open.

Jay Gelb

Thank to you. accelerate strong growth each Brand. My first question in That is on quarter. Allstate the continues

half? that a you Just get would continue on to if perspective expect to back the trend trying in

Thomas Joseph Wilson

Tom. is this Jay,

that we When growth give know keeps if that is that that's in or continue retention. first I but it's quarters, the that the last time look headed A you've guidance growth direction. direction. giving. in three look you been We line. would key been that the top portion don't you up, it significant And were the at of a expecting on it's that – As you gift the to we're driven is to bottom over by note year-over-year – point either a on head

Jay Gelb

Right.

growth strong drivers the you discuss as in there? applications the Brand? also What you Can Okay. new view Allstate the in

Glenn T. Shapiro

take I'd Yeah, drive really whole this Jay. the is to Glenn. and look that, on what's gone I'll growth. the across system

going about of to that the about make how a had it distribution back effective. been talked past the plan grow talked we've more going few we're Matt plans system over and years. So There's the

So presence we've licensed We're you sales if about year-over-year, agencies of professionals. points up, our footprint. X,XXX look increased between and

communities. marketing them customer have We improved and they're because meeting needs higher the quotes now, of locally we engaged in have We've winning market they're percentage because our staff. in more really growth. hunting their said, they're more so They're higher right a within hiring effective those a driving into. retention of full bundling drawing is in. And marketing markets lot those the quoting up, and coverage percentage going those the in more being of and activity is And as a Tom agents

Operator

you. Thank

Zaremski Our next Mike with Credit from question Suisse. comes

Your now open. line is

Michael Zaremski

been terms, basis level or frequency follow-up cause changed think And if there's view was what that to Basically volatile used curious on auto guys of forward on level think and a or you I I But has the surrounding – the Hey, of a there's them. more should there drives of Allstate know you thanks. a consumer factors frequencies. I the whether be hypothesis versus appreciate I unpredictability might it's has on a us do out less it over there's unpredictability volatility time? historically. what go had

Thomas Joseph Wilson

Mike, this I'll you in. at Glenn, if to it end, is Tom. add Maybe and, take want jump the

the frequency. – trend well. as on at first, determine benefit And So I around of able understand this what competitors being I their you with have people is the know to poked

known, unknown that category to performance. or actually it. falls you in That You as the frequency the a make whether relates prediction absolute individual it said, level can sector the access the company can it's into volatility or future

reasons, short and frequency more that's And of a the do know business driving, how drunk drunk a number be a a variety and course per processes on course, it that good what, There's there's of there. the good the more for brakes, laws so which there's driving long-term the term, are – of on ought to now people? of decline drivers of is make is lot – of think on based So we things. cars been whether cultural decision Which we model household. unacceptability unknown antilock really well,

So number of it's a gas of time activity, impacted economic which day. at of particular the course miles prices, weather driven, by

how But if p.m., quarter fourth miles a.m. at starting do to know it's the hard miles in you X the Drivewise at the last XXXX. in have ice of future, over number really of than tell. We you number X have from of years, will ice our the So different driven it's that has if be that couple declined, customers

So of then – you and course. seasonality have

lot the we in than half guidance, in the second do versus of year half, a up second the factor think frequency the higher, first our given the – So talk frequency's want people seasonality, we year. typically higher half that that is first typically first which of to a if half about

I I one like it's think – I to So tend it's analogy. it's point almost a about, but – use it baseball season use baseball if so

pitcher, you a have and You a hitter. have

what in good is that. like to individual know going pitch going good of pitcher's kind what or how you But they know nor know fastball you coach, they're get don't a a at, be. every As something or be day, that you the general do curveball whether

is and bit to We same win, saw continued Others pick Allstate's the pitch hits right? then picked you more react can someone need so frequency a the margin. best just not the It's up. releases person's XXXX slack to and We reaction see the it. is see just we in as and XXXX, lower get hitter, caught up prices. didn't choice. our down it. good hitter, before from early, and In it as So auto it a We as hitter, to XXXX, up plate. who XXXX hand, up made a the early. pitch it In up. the went Frequency our insurance, in to They soon

can picks that's we about the up a think, state, the sense it have by people, process, So invest class, system you best for and by the to that the try a do hit. think and risk really, based do they what we get to frequency, is I way how is technology on

Michael Zaremski

quickly trailing ratio at gears I splitting auto points going – but here, Brand Allstate of Thanks, look I'm up underlying home, sorry, a helpful. years. switch homeowners. I'm That's if couple to month probably XX in Tom. last it's to hairs And the in over the Okay. loss couple

those you current there that's curious, to Just levels of that you're at is if improve levels or and might with are take underlying? the monitoring the more something profitability, action happy –

Thomas Joseph Wilson

our our which hairs. live living is life, you're splitting we life Well,

take Glenn So that I'll let one.

Glenn T. Shapiro

the marks like a line Right. in quarterly have in home. to start years is XXX a of homeowners, combined the of longer profit volatile And to I sort Because quarter remarkable. second six like with term quarter of would view. running under consecutive business, XXth ratio

So we do it. view a on take long

two, say Just is we last years, in at And look But loss our And results. that four over be quarters state-by-state timeframes. like were at we rates. five at underlying, at the driven to upper at couple you XX at looking weather. those if you end ago, by look the three, change. auto, lot a want look similar of last the the low-XXs, we're if the we're of years of and even always we But to low-XXs. in We

but the just mix, about the the between So frequencies than It's you severity. our auto we weather, in drives more peril so catastrophes weather lot non-cat much severities it homeowners see a which by volatility in talk line driven drives and patterns.

we bells the from anything would long-term very rate the splitting there. good are a about. or you standpoint there and feel brought not We're based on hair monitoring I alarm So say view,

Thomas Joseph Wilson

talk what and stuff little you about a the mix in bit don't quarter? second why So you did see in peril

Glenn T. Shapiro

the quarter, mix some moving the driving with fire in Yeah, water so we peril and fire fire; – moving the in lot the of about throughout some whereas definitely the the water, decline – even intra-quarter with continued first quarter, quarter a talked on downward. but wind definitely

Thomas Joseph Wilson

your than is lot is loss gets severity a if door. a when in, Like somebody lot So runs higher more higher. fire, fire fire in garage your

same And in elevated the so fire losses hail. the quarter had second and as wind we and

bumped processes we think severity, a have state we So either increase by watch up. And sure need said, we to because or right? do make to built we price it, that. that we it in That frequency

Operator

Thank you. And Christopher our with from next KBW. question Campbell comes

Your now is line open.

Christopher Campbell

Yes, hi, good morning. .

Thomas Joseph Wilson

you Good question. Maybe repeat morning, can can't We it. the Christopher. hear

Christopher Campbell

now? me hear you Can Yes.

Thomas Joseph Wilson

Yes.

Christopher Campbell

Okay. Great. is I the first just question management. on capital guess

quarter. a strong So this of repurchaser bunch a Allstate's back been bought and shares

is wouldn't then capital Now of the there where that how was deployment expensive? change too strategy shares which economical? hurdle your certain thinking above you're a if repurchases And be got

Thomas Joseph Wilson

I'll I overall let that's would we business a it's think the multiples, current cheap. that with with Mario ROE capital about its plan, talk a but say growing XX%

Mario Rizzo

Mario. Yes, I Chris, would is this agree. Hi,

for capital I a excellent capital the And we source level those – point, when really both and Tom's start we it where is look I when to absolute you to capital we I our combined we When fact well. at position, things us. to. performing say have, of structure at look So and to business flexibility I'd efficiently mean, capital that, as source the our and if our view capacity with need of strength that is continues guess be it

to meaningful We of expect generate amounts forward. capital to going continue

we we're really good and long position. capital our capital about So feel

We'll In board. and still to we'll look have we $XXX talk back we'll stock. call our process make of we buyback alternatives on from left run buy terms to the We'll And and program, point. different same a that million when continue follow the authorization we'll the out, at existing we always have.

Christopher Campbell

Thanks, year-over-year Okay. one then the driving that's of just other And kind question improvement? SquareTrade. helpful. ratio What's on very loss

Don Civgin

actually things. more a they scale, they're mean, of variety It's up build their effective. as getting I first,

things and forth ability lower costs of their and handling, combination claims loss a better so to them. leading customer are all to And so the experience like reduce for their for escalations

Operator

Bank. Thank And Deutsche comes question you. next Josh our Shanker from with

open. is Your now line

Josh D. Shanker

be growing you and question. like thank to my that's what for The that product knowing growth seems in auto in for taking homeowners the assume selling only. going mostly how line is other. each only Yeah, the in interested bundled marketplace sales. I and wanted homeowners homeowners I'm growth hitters with to I looks

Thomas Joseph Wilson

homeowners down, it's Because has annual well. going it, you right? slightly lagged correct, it got it. Josh, everybody remember the smaller you're Well, business in that auto when was not as policy, But an

that talk we we we we see prices, impacted extent that. auto and you customers raising about the the to see can of So were because what losing homeowners bundle, were market. how side Glenn in it other

Glenn T. Shapiro

Yeah, so we it's think bundle. great to opportunity

And home in little going – up of in terms as pulling whether to it's thing coming incentives tends this for around to that, think down. cycle bundling. in we is a It lags auto it said, lag And for And so tandem. seeing more. we've the or customers. be aligned our we're in seems it's right What now you agents as the Tom the said, right moving

pretty at equivalent to So we're real-time. growing close in rates

the of a that bundling competitive We very more now. result are in of product. home right is we So think

from we markets position a strong lot pricing We a where have of competitive standpoint. have a

for part Our the reason product is that. of

do house with home, product a have schedule rating and our favorable and We allows that. to roof us

catastrophe risk I and us management period long think of spread over positioned that. a time for well has good of

So spot home. we're in good grow really a to

Josh D. Shanker

pursuing? And product bundle? of it persistency value selling is long-term a home-only terribly But And I of customer ultimately, a product is home-only and realize auto-home home than less in increases a auto, persistent that high too. having a worth the an

Thomas Joseph Wilson

take let Josh, that. me

talk then or that, about question do lifetime on I'll of your and total. let customer, by And Steve value I'll Esurance. in we a policy come to back homeowners Before either the

Steven E. Shebik

over also know, a we have or you last as in the Esurance, product three years. rolled four we out yeah, So homeowners

We PIF Esurance is overall have increasing homeowners. I it X.X%, XX% in while prior And believe. year it's our quarter-over-quarter in XX from states

a that growing a with the the for them of good really cost now. We're significantly acquisition. – So spend premiums, customer for and see have makes advertising. really We because that's and that sale we acquisition the of where both on as the terms we handful more in still good years a get can Obviously, important auto home, country. And money we feel in you are. we spread cross-selling marketing us geographic we have for so

have So we well, But This think one it'll be there. of is we're we do Esurance have catastrophe good some catastrophe. And we addition to well them. quarters business. where profitable pretty growing doing a

Thomas Joseph Wilson

couple on money for lose (XX:XX) on it – on So and to what it one sure every money sell do We of on make does there. it don't – the we make another. product make key and product want so does themes we – we

underwrite from have you know we price around of things products money we – in said, each the they our you, we longer aware people know and as – make do buy on as product. every That stay and – a that how so standards well we actually you're obviously the group. more So that

more. they Now like you some you more because more from so And you more. of that's buy just they they like stay they

bit with you equal, little into you, careful to being should what That to longer to good they for it's connections all got they stay build opportunities a where you. customers be things there's have and more So read ongoing onto relationships of you said, have the you it.

acquisition You per lower their value proposition. customer improve you your customer, cost

in products and You don't have around bunch the have broad-based shop whole set is particularly why to of of left, a services. such to a we which lower people,

they're can do auto So their life needs. And trying do and home stay. meets it likely measures we personal because to them we more sell and insurance, everything know policies, we insurance, insurance, metrics boat that, we we that, insurance, if best whether that's have to around

dramatically you sell in advantage to the acquisition those versus As gives it your well, that starting a lower of which particularly only as and because helps upfront about, business costs competitive acquisition costs, expand we're high you Esurance thing. Steve who one talked people the

end in a our it's and on us. basis customers. to insurance, but auto up with sometimes about – we only win compete aggressively broad to Sometimes product talking also for big We want a it, need they like we

Operator

next from comes Phillips Stanley. with our you. Morgan question Thank And Michael

Your is now open. line

Michael W. Phillips

to your I Tom, you. ask there, a of kind of a step I a throw and I'm morning, thoughts. just it be let's Thank bit might question, back everybody. Good out but goofy it going hear take think

Has at an exclusive find time? difficult that field three look it average And I shifted all years? agency playing then, out to there you has and to agencies, changed As any? age population five how guess what more it run be recruits over the your say, gotten may to or folks aging the the any replacements the replace is over past,

Thomas Joseph Wilson

the specifically. they're going long-term And they're then problem all agency me out let And as them have platform? little look sales I the I'll staying don't We're some channel. go Well, your metrics, over, – so where licensed that people headed view in getting We the of the what the independent it's, agency forever is question business, be will at agency so, recruiting is who's owners Allstate that but of answer they or be professionals. our you bit, think agency away? take that you're a Mike, older, in and you know, particularly time, to whether all there may the not industry

doing less even who growth, or current us the do maintaining effective field so, future That know I'll for by technology call that position. demographic don't business a said, going have going a, job think in customers And the enable barrier have people and is we to our to collection. those to our much dramatically I our better them a what data is change to

much data much view time at spent a you to integrated that go enterprise was slipped in by what collection, to is collection. make then agency work piece hard how they their that trying smaller We're in much to do. data of systems you and went into driving how So Glenn's if if said of driving spent digital around, around on the instead work and back claims effort you

better make it. our do So maybe don't to even enhance have processes and our even and to technology it's the tremendous by person. used that, data of do then a and a our to technology then amount you experience products verification Change and

And change on pushing hard So it. of going think driven I be lot a there's do in doing we're that channel.

challenge amount we're on transition can be that and still So behalf our effectively at same at we "Oh, hard we're just to saying, efficiently of people?" Our customers. jeez, not the of sort of will And hire that. system work

As Glenn's about, work. the up about, trusted Matt we've and picked talked advisor talked

of another to think we've have that series and We we on work technology product further embarked whole will that related a that. accelerate

Michael W. Phillips

liability severity bodily that assuming you XXXX, numbers development, Great. I answer. injury recent feel year question, and accident I'm detailed that's of million I The maybe very Thank much for could. And $XXX Quick if it's you that liability? noticed then that missed press I for if guess numbers I (XX:XX)? unless confirm I XXXX. that. true Is your out the BI you release just of took could

Thomas Joseph Wilson

an but I'll let Right. changes, you're the it severity, He'll There's to it And then correct, wouldn't can on update there. reserve includes also means talk you transparent you're years net. – recent be talk two the transparency But that about. parts talking with we we because, give something. fully John we've done about time, is talk as you Mario handle injury, what about Mario most want can last But, giving be the bodily everybody. there. information and

stuff. And so bodily severity the changed we

to then start and you John? do with Mario, So, want reserves,

Mario Rizzo

sure. Yeah,

external feel really at that, quarters, processes number our that reserve place we perspective really reserves So, gross reserve on processes reserves, when reassess we I'd that the And like of claim look done recognize statement. as of we business. we both last guess on and that broad roughly both entire change, and mentioned there of in extent to at level. in our we have those terms income we've quarter established across as the are continually a level circumstances good in place releases, solid have over reserves the set of billion and in from we $XX.X Having environment, at appropriate then every the – I past, balance, to the the look the the kind it's said start really balance the the we've

releases to as and something if look that as anything else. forward. function continue It's going we a much I a as as to at redundant, think I are them. we reserves our reserving wouldn't predictor release of that's just certainly conservative reserve But approach use

Thomas Joseph Wilson

– been Yeah, it wouldn't look XXXX back years it on have at bodily you and when the report so XXXX that. before injury, was

be to were the get – you'll numbers look if calendar the when to ratio you you year, we you, So adjust would you do able back information. which combined gave

was You can years them. really see to it prior

John Griek

John. Hey, Mike, it's

severity severity statistic. Really long your specific the financial very evaluate you on a severity aim Just question to to that paid our to using the statistic measure, trying to the factor than performance much P&L. overall you our We're something going clearly each in metrics quarter, tail We're the BI to in best reporting. in financial do gives BI, calendar be disclosures. provide overall signal severity year it's We the transparent business. removing our line like an year. trends we of to a paid a more clear coverage we that operational with sight were BI on guidance of did Last

And like. combined underlying look find our in can this in XX-Q of severity terms ratio guidance. overall you quarter, some included trends it's in our what So color

Operator

Thank Janney. comes with question you. next And Bob Glasspiegel our from

Your line is now open.

Robert Glasspiegel

Good chance throw cold Tom. to water enthusiasm, morning. you on give a my I'll

some and life were the bit both were onward partnerships. into earnings and helping broke one-time black, and for the think, Your service quarter business a there year-over-year Is out? for it items first think upward I up or your units sequentially decent excluding I

Thomas Joseph Wilson

water a Bob, as down idea, to bad it first, But know, of be the equally when idea would bad individual cold right? would be you a components comes P&L. guidance

for simpler, customer our by with tend three want you It is so what family specifics. to really our to base. just which good work earning for down. base. your years, feel which our new term this something people, we It's five pays well insurance you give returns. number you really product some just would scares will some our say years well won't run. It's We life think on I we I So of term. good both about big bringing opposed the costs just We as of launched customer a them, We're month want a monthly business.

and And some Businesses. are strategically. doing so do operationally our better, that because is where same that feel There high that aspirations. different broadening down and we well about business feel some the positioned the good we'd have like and – we get about And characters, Service really portfolio we both though, to it's others are of to

almost Allstate Dealer policies there. So got than it this you'll this to million quarter, used Services It a which quarter. up. turned X more out make profit see the has made Its lot

make more quarter – it more. So losses we'd last like actually to year. But than see I it it its think last made did

– feel our those One business overall, good an on a was businesses. all investments their we because still it's down. the quarter That investments, down annualized down, were So this you said, is though, the results returns even which were performance-based didn't about performance-based are though where basis yield Annuity mention the business, X%.

We're to where because is about good well so put that. the talked good as that about have past. with in have as continues on business we're can so an much less in return But cap it to come We've you the earn capital you by investing it if talk to interest. up Annuity total. can we returns put up we capital raise that trying differently. So feel feeling about John up. about well ways to Overall,

Robert Glasspiegel

That's just serious a question, opening the closing helpful. loop. question, And

– competitors in on observed large of because the frequency, is yesterday of volatility of not frequency the declining down industry One factor competitors that future issue tend the frequency wondering, was lower prospective your to thought I the lowered suspect your Are because your of factoring into just for for negative process range I frequency? actions. actions. you not, pricing guidance pricing frequency. of you in in

Thomas Joseph Wilson

Bob. differently, prices everybody Well,

expenses don't I of is to to combination you frequency do. look includes I are it's costs total that tell would people loss severity. and from costs, What at which So – hard we what a underwriting everything loss of which tell course

severity, look the at wide. it's a gotten frequency call percentage they it's because change If what – of you alligator were would see of graph you that and we'll year-over-year to have chop

not gone of the get an numbers Because assuming level. at going some back up And usually kind And go continued in point, frequency jaws. at has and severity's so, to that whereas the you're severity's looking come depending inflationary down. the going frequency Pricing plus there means sort could X% of at lower is to on away. you're which that caught the and basis frequency

in returns really so to to speak the people their first to – well. can't really, we other question. quarter. as in call do It that? people and see which you returns look we – earns So tried and at listen price one it Yeah, stays call And we're level I high fewer down, does this a increases still we even basis. let we think on at way know what less to and really take now. really our position. well comfortable future, Can competitors Everybody this we their long-term is standpoint, sure, the tend the old and own more earns shareholder with or it from really where it year. other a frequency guidance, that high as It If value down way creation I'd let's take at doesn't

Operator

Thank you.

from comes UBS. question last with Our Meredith Brian

Your line now open. is

Brian Meredith

Yes, thanks.

asked I question looking Bob the So was for.

just Tom, things clarify kind of to here. So,

right Your looking not You're some now what auto for book, line like market that loss to you're pricing you share of is look pricing gains? kind you're at because for purposely providing loss in here insurance looking with decisions going think trend forward? going you're below trend

Thomas Joseph Wilson

to sure – of policies – than from make this, in our growth force our I more retention. our growth underline want two-thirds came and in No, we

stuff business businesses But of how all very get our our at because or and that's comfortable risk didn't point we're that retaining into them profitability with whether which growth loss from, we in, really So class, whether which new kind new we're the our of and stuff. this states and getting we're ratio in we're that growth, state-based why that. be and retaining, where retention on discount come our customers

strategy. We're we're that's been So to comfortable position. – not in that, grow. good attempting not not to our our lower we're profitability That's

Brian Meredith

Right.

Thomas Joseph Wilson

all. you thank So,

the Let first hour. me half. had a We strong I close. it's know past

and So, We're priorities we focused all our balance stakeholders. our stay make can initiatives, more long- up sure on both customers, short-term quarter. going we next look operating to catching shareholders, our create forward so our other with to for for you to the and we value

So, thank you very much.

Operator

does Ladies a have all and may Everyone, gentlemen, program thank you conclude for wonderful participating disconnect. today's This day. you today's in conference. and

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