ALL - Earnings call transcript Q4 2019 | The Allstate Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to The Allstate Fourth Quarter

2019 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation there will be a question-and-answer session [Operator Instructions].

As a reminder, today's program is being recorded.

to host like Mr. today's I'd now introduce for your program, And Nogal, Relations. of Mark Investor Head ahead, go Please sir.

Mark Nogal

After will Jonathan. presentation posted everyone following our quarter at call. news to site you, the on Allstate's remarks, Thank Good market, investor allstateinvestors.com. fourth our XXXX morning close of release earnings Web we session. and a today's question-and-answer have and the welcome prepared Yesterday, we issued conference and supplement

further perspective management our contacts is and to these Our plan. on provide announced on growth team transformative recently results here

from As presentation, investor noted reconciliations non-GAAP which of may statements on these in the first materially operations. and are supplement our measures statements. slide the Allstate's there and contain discussion results about will release forward-looking the news Allstate's for differ

to and So information our documents for XXXX potential XX-K public for on other risks. please refer

now turn And over Tom. it I'll to

Tom Wilson

us Thank morning. for you good Allstate. Well, stay joining current on and

Allstate Slide on strategy. begin X Let's with

know, liability differentiated expertise upper new have you been We as features, with replacement. our the leader to oval, two and components declining as claims such lower pricing, protection process Starting used car other to and creating in digital share strong So are into an a building integrated costs. market sophisticated personal businesses. has property insurance we've strategy deductibles enterprise increase expand

growth bottom drive diversifying also to leverage We oval. the the these which our and Allstate in capabilities We're businesses customer highlighted by offerings, expanding businesses. protection are brand, base our in

insurance, So identity plans services, protection we Allstate car and that includes life, workplace offer a roadside benefits, commercial protection customers circle of protection. warranties,

to at the distribution, includes telcos broad retailers, worksite, and have brokers manufacturers, platforms insurance growth extremely These auto dealers, consumers. directly major

customer profitability shareholder growth, see strategy a create satisfaction, attractive sustainable diversified on have platform. also ensures you that hand, returns and can value right It the capital. unit business On we and this to

for the and quarter net You billion in $X.X XX.X full billion billion nearly the year. X.X and results fourth billion deliver income or the Net quarter. the and billion XXXX. fourth in income move XXXX. share per in Allstate Slide excellent full to was X, X.XX $X.XX Revenues XX.X to diluted in continue quarter was strategy in were fourth year the Adjusted

adjusted year, $X.XX compared rose For billion on share. XX.X% with or per net to and losses. also income XX.X%. excellent That underlying the an prior Returns return year, excellent $XX.XX to full adjusted the lower catastrophe equity of were profitability reflects

If you performance both of turn focus Slide operating on five term to priorities, all near in creation. value long-term Allstate which X, delivered XXXX and

base better better at improved grow were achieve Enterprise in priorities, target customer three long-term profitable capital, Net Promoter are businesses. as they served returns customers, to serve and our most it Customers on first growth. intertwined The just ensure our Score of all

XX.X% liability million, partner retail as growth major Total formerly by for the Property compared year. Allstate respectively. which items which of an force the bigger prior its the in are and reached $XX.X Allstate to increase policies, rapid was year is plans, force policies million amounts, X.X% million. of now course, in reaching increased to addition with $XXX,XXX $XX.X prior of X.X% our brands SquareTrade, protection due which insurance grew continued a $XXX.X to dollar

excellent due ratio to quarter second revised full of Returns XX.X. our guidance underlying excellent, by part outlook to liability our driven of of earnings at end XX.X year, last had results. release improved as The property the this remember range primarily And remain results. finished you’ll strong combined operating favorable annual XX year we XXXX of

going yields, better portfolio in results As to have and The this no income investment equity context you measure. portfolio $XX to Mario underlying additional market term on provide the going since some a Performance base investment performance, by lower longer billion measure is was know, combined provide based but which results longer on been generated $X.X net for Allstate's below based in guidance quarter, return were ratio billion which of expectations offset strong. XXXX, results. performance higher reflects is

portfolio building long-term by digital offering features growing growth car indemnity announced Arity sharing launches return Shareholder operations. a also X.X% in avail is capabilities. new value initiated expand XXXX. been which footprint a was we’ll has platform Total plan, We and to growth continued created discuss protection platforms. and next. of transformative new Allstate

property pricing has transformative strengths growth a You our market Slide build let's competitive as X, plan particularly competitive conditions. reflects number from in distribution of goes Allstate encompasses Allstate move to we the breadth agents Allstate significant increase to product expertise, The have capabilities strength, you sophistication, property and know, share. liability direct agents. plan Esurance's platform the on discuss to that have liability to claim and is broad brand, current we independent a

growing low cost we're but massive share result, and auto spending GEICO advertising and a structures. As growing faster through insurance Progressive are market

due that changing increased analytics. Our are to advanced recognizes also and needs plan customer conductivity

leading the a we changes. two and time, positions embracing insurance hope Allstate purchasing an majority and insurance collision a are with comfortable self service. At same how these telematics customers are Our of digital auto we're agent, policy, of but in agent, estimates Allstate when examples prefer

increasing centralized capabilities we're capabilities. cost integrated mobile service and application So low building

expenses and plan, these the which marketing. value Expand customer access, has accelerating customer and property a in redesigning improving investing with lowering by proposition growth liability technology now three and efforts We're transformative components. products

eight provided little strong sell be has will Allstate it direct acquired products. more Esurance’s years in branded utilizing access than capabilities Esurance by ago. since capabilities, to having doubled size direct a customer over Standard was

we require result, will the the brand for previously capabilities out shifted in brand be reposition XXXX. to a the phased and advertising will branded This brand Allstate then deployed Allstate us late will the consumers. to be the can and policies by selling Allstate directly Esurance brand Esurance As these leverage to further

comprehensive into by make will agent stronger independent us the reductions independent offering Expense improve market lead in also affordability, plan increased to technology a Allstate competitor investments that platform will merging a while share. agent We'll strengthen is This and funding marketing. the and Encompass.

liability Now Mario over investment it the let through and results. property go me turn to to

Mario Rizzo

Tom. Thanks,

X, higher where property fourth our brands premium Let's $X Policy we in the marketing the growth was strong income than of acquisition the the significantly related go by Esurance to ratio write-off in strong the prior of increased continued continued and billion results the and underlying highlight driven of within name. improvement catastrophe the liability had despite profitability. the tangible and segment. all remaining losses and quarter to Slide brand and Underwriting year, lower expense investments

XXXX. for year, progress driven written losses. periods, respective premium XX.X in income full than our in by billion X.X% table, structure, driven Underwriting million the billion homeowners continued net prior in increased of and cost and Allstate fourth increased Total year, and average the the by to and premium $X.X policy the quarter to the brand. Moving for the premium policies X.X% X.X% auto growth enforced Esurance lower year and in on $X fourth brand quarter substantially the higher were average full improving catastrophe and increases insurance

catastrophes impairment of of for of fourth estimates $XX guidance the XX.X decision Allstate for year in utilize The was our the full reserve range results related direct to XXXX the underlying pre-tax brand XX.X. charge combined favorable ratio bottom left, the end to prior to quarter. The million and year was the XX.X, which sales, at shown XX.X excludes the

of lower the our of ratio profitability bottom by with trend as page, combined table recorded total strong a as the offset the impairment, ratio injury bodily average Focusing on line property premium insurance property XXXX. right business, and combined you liability. Esurance on remained XX.X, frequency increased in higher and overtime the earned severity can of see well damage Auto excluding

to into has returns. higher our repair Lower our Bodily excellent severity while insurance leading in significant ratios which XX.X Property injury industry combined but Homeowners increases businesses. factor the -- of continues were of severity total indices, a total, for above increase damage combined severity medical In costs to number impacted we continues be year. catastrophe losses these losses. Allstate property achieving at trends increased pricing a inflation the ratio vehicles, for algorithms. rate to by liability generate

go quarter. the Let's Slide which and X, fourth year investment to performance the for highlights

X.X%. Our valuation fixed contributed a investments, income contribution in XXXX interest on income from stable and investment total from contribution investment income was return our equity total X.X% X.X% lower to a portfolio total return bond with but return Net contributed Higher performance for to portfolio. based XXXX.

Market The million private included benefited quarter from for income million, proactive Performance a chart actions at shown income we've taken, the income $XXX portfolio. liability and pre-tax lower of the investment net shown on million and equity in two than limited of fourth extension investment in based our fourth recent the million shows $XX increased property duration in based to $XXX bottom gray partnerships. valuations XXXX. was lower of quarter than blue lower including trend $XX

on Slide let's review the these income, the investments. purpose, results Given of and turn portfolios impact performance recorded to X based makeup to

that based diversifies performance through strategy returns our capital. equity long-term portfolio liabilities for adjusted strategy market attractive Our our is well strategy. and The and risk based complement delivers long dated idiosyncratic suited returns

of three year invest geography, diversified broadly a and is We equity The of year billion as around investments in private had partners. one and funds, and and real XX%. portfolio through as well estate, return well. and co-invest The direct asset have $X.X September sectors as X.X%, by five returns type, portfolio including

create income you idiosyncratic volatility, While right. returns, the generate do can as investments they on higher see

and portfolio $XXX the million the investment private are on generated in portfolio. the in $XXX income quarters. believe and that portfolio the equity investments We continuously of not XXXX, in investment but million In in quarter valuations fourth all million the the first broader portfolio The generated of three the monitor do occurred of indicative XXXX, of $XXX fourth quarter. income lower two

shown The Allstate highlights left, in income net million annuities. results the for by full third quarter, improved quarter the $XX to life, million lower $X fourth year prior of acquisition was Allstate costs annual compared operating and life, XXXX million driven net interest deferred income for rates. generated reflected the fourth year X actuarial which $XXX of $XXX assumption review, quarter the down the on write by due million The connection XX.X% and the year. below benefits and adjusted of higher Slide income lower with in investment costs. to quarter

year by quarter. underperforming below quarter primarily nonrenewal prior decline Allstate income of the of write-off This the was $XX benefits related account. costs driven to adjusted $XX million of a the million net acquisition fourth the in large was

below full income million was year, $XXX prior year. million net of the For $X adjusted the

bottom the performance in million year, prior the shown full based income lower annuities, year fourth $XX adjusted of net income first investment income. reflecting loss driven quarters. the by Adjusted on Allstate right, the in of below for quarter, was net and $XX million an lower XXXX had performance fourth the based

the was protection. services for Adjusted continued increased businesses the net of the XX.X% fourth and prior customers quarter $X XX% increase growth to force net grow to service to full The the at XX. million $XXX Allstate grew period million to XXXX plans integration by increasing in Slide the protection million due loss Revenues is full year. fourth plans. dealer to offset the and million. to compared in the Adjusted policies Allstate turn in income in Let's reaching $XXX.X billion performance Allstate year $X.X Allstate as for quarter, XXXX. were $XX partially in protected This identity with number continued year in protection investments largely improved and income

a billion last returns common common share outstanding the We million or to XXXX, more to share $X.X stock of book $XX than returned XX XX.X highlights $X.X increased value $XXX by dividends. and our per combination provided XX the billion million shares over and excellent through to in Slide shareholders. cash common in repurchased months of shareholders In repurchases X.X% we $XX.XX.

$X The in yesterday, was authorization share the end repurchase of to completed XXXX. XXXX. repurchase new approved billion October a late-January billion by announced program the completed in be XXXX board share $X And

capital reduce lower We also will preferred million issued at series by reduced of rates, cost new by multiple annually. dividends the XXXX preferred in two series of $XX which and redeeming stock

year, property on combined return equity annual on liability Slide provide we Let's Starting equity. discuss instead discuss longer returns underlying this guidance, XX move goal. but and long-term will to ratio no our

of measure we've As multiple a performance reasons. the over past quarters, for better discussed two this is our

It with to part measure is just price is is stock protection proxy and also in excludes the executive XX% a items, peers. income focuses with significant correlated broader compensation comparison XX%. which capital our long-term a with goal equity our one fosters a income. it management more catastrophes and our factors of than basis, return as on It adjusted investment annual range On income, better one aligns This and net as long-term statement. our discussed on such performance ratio, combined businesses in underlying other businesses of of and

line open we'll Now for up questions. the

Operator

[Operator Fargo. line the Instructions] might Wells Our you have from phone from first Elyse, question on Elyse of comes mute. Greenspan your

Elyse Greenspan

first ROE XX% the your my So is to on target, question XX%.

couple my as you you And going how define details life we services? be, what thought would Just versus can particular in the XX%? XXXX within questions that on kind to within that then are see there, get of a to into last you that liability the if And that question sense charging on returns or to your property of then go a you're related businesses any coming-in XX% long-term? reference

Mario Rizzo

up this we basis question. there first economic go to we at we at couple cats earn three-year and to in of down is we let out to the go how can and over and of First, goes me three-year down, rent by kind with the We be are able a not like a you going really up deal when a capture what's give by for like question market return. which look a in. should XXXX, your first, number operate XX% rolling looking to things level of Which good things XX% we're versus second got period

the industry favorable return. business, we and than a amount economic And in substantially substantial of for the so a you more liability property combined that's as know run ratio

doing shareholders the we this what's We like use that to take, us better think feel to to up ratio, insurance are, the three the total, combined decide that for zoomed appropriate to ways break our the is XXXX not all we’ve a ourselves how also out -- to to basically for we you do. opportunities of XX% forecast. get level that there’s you auto it well to what we return on was We're at XX% and I to to in the component, going was and because by say appropriate with our goal other corporate because from good a goal risks basis. what lot focus look have what's it neglected here forecasts should risks to over are including try do in the don't underlying into year doing

bunch Obviously, includes of the XX% whole components. XX% to a

on about a before, large the as annuities, talked So we’ve are drag that.

between to has course, would Obviously, will to ROE is change you that the say higher So the other over particularly intuit if businesses that put the plans, acquisitions, targets, its our the you are businesses, property And were doing drag liability XXX%-plus that Interest other like drag Property-Liability on rates standpoint it time. go return. Allstate from does other portfolio. purchase is of but most of extremely well business ROE. well of acquisition would is protection a the the but on above way, in obviously, that

kind year of basis. we time on is back think over what rolling what So a we was did do and stand right say, three

Elyse Greenspan

growth second optimization December. my out in guys rolled new efforts then question, your related you And

as to you of bit. want kind commission the growth loss to see envision I structure book? How having pick a little your of guess, of up on that you underlying in sense, Just specifically a change playing and auto drag business kind that both new get terms you any ratio, out a

Tom Wilson

Glenn ask XXXX, to maybe referring. minute specific which me commission talk a go changes you're up and the talking let ones about you're for the Well, think for about I

we you that's in be to later multiyear board the share. as market ways, expenses. more the done if structure So talk and reducing technology customer commission The us want, growth two which help it's improving that property can and and expanding board to but about some redesign the value across for changes access, both talk can about. make he across did and transformative value we expect one And will a is effort marketing, customer improving it investing liability XXXX, really Glenn the expenses projects. grow

Glenn Shapiro

few got we've what a in competitive very is environment a now. stimulate to things growth Elyse, right going

returns. pleased part that the question, second growing. deliver of we're And able your keep So we're to to

also to in folks referring to, We're the we've their business. you change first. because our specific management returns. would for we've to the platform. incentivize agent Do new that into putting the I'll to returns? eye actions, are we've one, we our no, We business expect some pretty part about we're that more we been -- as We But lead So compensation. want from grow I evidenced of move variable answer pay advertising say comp growing and grown, kept we've and deteriorate that, it disciplined managing on renewals compensation the to to growth. as

Operator

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

Greg Peters

will in first you the around be XXXX. generated improvement My that question guys expense ratio

I least that's some comp. outside some said observer think from of your In perspective. an previous incentive was you at surprise, the probably comments, biggest for there benefit

of I of that last So results are And improvement around with boost improvement improvements? about year? how my I or in considering you the out guess dovetail you that to XX comp should factor kind know ratio question every anticipation, rolling expense et that the So basis expectation sustainable is incentive we should some platform, points going what cetera. for strong then the services the integrated up have we year, guys much posted continuing XXXX? modest was is,

Tom Wilson

Greg, about it talk expenses. let me can take incentive. Mario

targets every So we comp said year. incentive

is on have that’s compensation so incentive year management's the year did or we one which and two program based how annual well measures, before. is And -- the is programs. One we X plan, every at

like So a it's couple of you years. get not

which equity. rewards, stock tied is plan, are obviously on also have performance return We a term longer which our to

as the the established If board put P&L, one the into over have making we expect but relates it to because So than we thought. shouldn't then targets to those year we're by that's everybody from more obviously, expenses. you money to presumably another fall it exceed

Mario Rizzo

I couple just would things. add a

to pleased a of improve customer I proposition investments expenses. that with And he as the part the transformative continued progress for alluded we're and talked about And Tom to the growth first, our of capacity we're be value the ways to. think one the core it's So earlier, going further making create on we're strategy. that growth

with One this So expense tenths the impairment keep was area going drive not in a brand on the focusing the to I'll thing our add done. related and expenses ratio. quarter about look on down fourth to Esurance work specifically, worth to charge We're the point is of the expense ratio. six

look you see quarter meaningful So masked in that gets by if you real improvement expense year-over-year, bit a some in ratio charge. little that non-recurring the the

Greg Peters

that is up ratios Mario, quarter. I talking Esurance XX.X% fourth where the the what was expense about? that in you're think, Is

Mario Rizzo

in about six expense it’s an to overall the number, so liability ratio, specifically. of to obviously, worth Yes, tenths impact Esurance the more property

Greg Peters

guess, of this provide I investments. for question, just think second a there Obviously, the a you us we and any the to long about result as think you for guidance observers, strong pivot was for time, past The volatility. year, there's based volatility it's but outlook? outside XXXX XXXX, volatility. can And over And we performance should generated period about that how

Tom Wilson

also the make go a base, more our and when and just those, really and losses me we overall there. invest like what missed and allocation it John track proactively we so We made comment portfolio capital investments, John's year's any managed not of and track on an can created out made helps color projections we to we or don't next investment and recognizing comprehensive used performance give keeps Let to about we can but but team opportunities decide any avoided. the to the investments that decisions framework

and money on our watch of portfolio. we the ports well all So it's

we how John we performance about base that So what can what and talks do, and deploy means. it

John Griek

context that instruments and up billion and think roughly its of that in and The invested go $XX like performance income size, of we helps portfolio, and about portfolio in it is the you whole quality base. is When half of about majority performance put why about is in fixed high it. XX% equity base

liability more within allows more capital to just set expands overall the can private So in suited and We performance like markets with and our investments because base focuses play belief it of us to efficient and create a structure. it well context. kind efficient portfolio size to frontier, opportunity a that on our that's our really we overall

was that We volatility we expect believe there. What income. comes here. we tied we in that the we're and the two look was That agriculture, investments. we and it obviously at this recognize income. past $XX gone from but for to forward. was basis, that a They we’ll to volatility, on to we've expected that difference real out. to expect compensated down million In underlying is pin range of play quarterly that disappointment a we and hard that's back with believe increased timber on it in and estate, And investments if number different XX in It's how particular that of a the especially any to going of in it to equity, private investments going and year-over-year about volatility, at quarter quarter you given look volatility great that precision with

I So continued expect volatility. would

team. in When those three, measures. we look gone that look some of longer at We measures would at confident forward and we this despite this XX do we term was tend and this, our off We have a to are remain to this a believe the through, supplement, in five regular as strong a measuring normally and and performance quarter. be holding of year effort investor really in was those quarter. We this going true. to look type we surveillance -- and one We bit and processes, and also looked holdings of believe not all part of risk of as our a have

what expect long in to while So commitment we given in really the there it bumps road quarter part that do. are of be we important changing may our overall it's any run and an

Operator

Thank you.

Newsome Our from from the next line comes Piper Sandler. of Paul question

Paul Newsome

current us update was give an things see that if year little auto. trend competitive Obviously, the a industry last just of year or you think and pricing to a how competitive wide not, bit if love I in stabilizing your but hear thoughts? pretty you was you of hoping are

Tom Wilson

is let seeing as make philosophy our of market in profitable what me conversations dramatic growth. talk the then been Glenn has know, Tom, about by for, overall profitable you growth This to But can and and couple he's a competitor. long-term

So we so to raise we prices need around plan. behind we, here, show the when to to we in think not increase anybody not reducing like do when way our don't and we on big say We're terms of share should it it. lose we trends get to try like grow price can their I'd and to market that's

careful say thing be other start. The of because percentages, would to always it always where you you is the depends I have

we and have price other carriers who us their prices. they're higher us than they're who prices than and are the So certain are competitors some reducing lower and and risks, raising

insurance macro trends auto talk some to overall So obviously -- specific there percentages. work the to what be have but next I at And not in to as it too can are Glenn for sales. means pricing we quarter careful be about just

Glenn Shapiro

Tom one story. I’ll said, think that tells of as you think I And to the set I lead numbers

year-over-year in up premium was and up average and X.X%. average our loss auto expense X% Our was

some look during to rate you trend something a very So said, overall very, a disciplined as or a return is the based did actually see state-by-state. were we little negative, made and reductions, was said, CPI time a it we’ll follow broad of not as sort progress in we competitive where, Tom is out there. managing positive subscribe why that which to, take competitors we We

little would your is starting rate question there the to yes, I'll into you flow market. about activity a bit recently To qualified it what I seeing more stabilizing, give the we're more is say,

less and seeing some there. reductions see no the you or recent in really increases price You're reductions out price past

more So stable. it I’ll call

Paul Newsome

as the that Second home side you about what of there's line to fairly whether that's I part basically of and the the related on pieces that huge auto world, business? do of parts insurer. or of a obviously, are you’re But modest talk casualty on not your recognize could conversation question, commercial seeing inflation a an trends. casualty you in lot

Tom Wilson

Paul, assuming… injury that we're are bodily costs talking you about

Paul Newsome

more actually of and insurance falls, flips thinking Well, things that I'm and nature? and for lawsuits, business, pure and liability example, home

Glenn Shapiro

much of our on the a of losses. for So that, the and us not severity more between seeing party trend are really our set frequency trend property, home mix on home on the are first meaningful side side

not anything seeing really we're home. So on

Operator

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

Yaron Kinar

First question around written growth. net premiums is

slowed renewal ratios in a I new how transformative auto. the And think of growth little and bit. about slowdown talk that that especially we to bit it's see maybe a down I in a applications, then you guess particular little plan? in Can ties maybe the and

Tom Wilson

position, and which it's throughout the in stories other earlier, higher Allstate growth I to drive growth than said competitive about to the as business. our should First, business Esurance the all us, profit in expense different improve down should ratio enable plan XXXX us for transformative growth branded bring our

growth. still And of But can branded So in the about Steve course under transformative Esurance. business. was on Glenn, talk as of maybe Glenn under Esurance you Allstate can you pop for maybe our Steve, XXXX part now

Glenn Shapiro

force been in call environment. work up the here, major grew hard to X.X%, start you I'll it's we negative tell high good off. feel policies just in fact And And as in CPI, competitive across grow us really level, has market, a a I’d So we competitive pointed about at that do a out all to before were the able premiums on lines.

retention changing the coming of We're point fourth call moved To both third out and that our taking to it short-term we're actions challenging. into towards bit bounds still the down transformative little we comp quarter, putting that the of on upper we're before, new it's grow, I in the shifting sort more a of So high which trend And referenced but growth, long-term off more taking the agency base we're your in in actions short-term business, where as new here. the business. build marketing. upper

Steve Shebik

insurance increase had So premium. for X.X% in about XXXX, return net

feels last we you but year it throughout the as And year, grew was only that quarter the fourth fairly we So rapidly good also. did, X.X%. trend for know, the declined and year

have significant so more And of some penalty in fairly new rates took and states, business we we the in that some year. second the half

and is really with the quarter. to feel that we we had, down good have our going as forward went we about growth So good the but feel where business into the we be Overall, slowed third probable. fourth growth positioned we

Yaron Kinar

the would ROE components that three range? goes contemplate And the second business? of my range end this of lower that drive of possibility does And the or years. ROE end the next range guidance upper the also question then for annuity the just I that largest to the would to range that what be back of guess disposition

Tom Wilson

would that's investment so play number been still to there's your and is, an the buying of happens of building a is here, talked that I components there's what are, but we've which obvious we're you income we've equity today. have equity There's the piece has that know ratio shares also what your at underlying -- underwriting amount so, around. back, catastrophes what's about and what impacted income There's and also impact. combined what’s bounce say as you by your

But up, bottom feel could XX% change substantially. most interest things of the business, a stuff up is the interest future, over time, right falls look that the are our an the right as business and of We to future, down that income to could range. we change, at Elyse change for of line. Property-Liability still period of related it income approach. is kind assume the rates go to rates this XX% go you like investment but we if And through to in long going didn't anything As was model the mentioned is is will lots

reducing improving Now that time. combined the by in up over invest negative. we we've income, be that an positive. To will the extent decided made will that would but to growth business a acquisition, a be and ratio change in underwriting annuities Obviously

kind average good rolling let for we'll total the to of like XX% it changes the as three world So us. year us, then know. in we changes felt people it's But a was XX% goal for a but

Operator

you. Thank

of line Evercore from the from Motemaden comes question David ISI. next Our

David Motemaden

a a see sense we roll get just of start on think those start for terms when competitive growth those transformative we've uptick seen applications, new Just trying and the bit changes better to some of PIF in then product an a in should plan benefits follow-up more deceleration to and through you after the metrics? in growth all to higher and of retention

Tom Wilson

in take David, multiple bigger the first, there's other to have larger of years will parts some game. parts obviously it and do. and will plan. impact But a impact This going us components it's is a later have a early long-term to

us proposition. expect the improving So expense the play a reductions value second our affordability that getting in customers, significant we role improving that part of will in early to and plan for

redesigning forward, more -- will drive expect liability go that differentiation. As we you products would property our technology our

take but more were things the we it's to going place those market deductibles, marketplace. into with first in can to to we and ideas have drive replacement. So decline car market other first time the with value, we There more new to put are think that

in improving terms products the customer later. first expenses So value redesign proposition, those of

part the is new requires products technology which piece. a platform, is third is redesign later The it in

We our layer. and have to technology platforms, new invest particularly platform customer experience more management the our in product

is growth. service. integrated that them to us to out we a taking into freeing and new Glenn Allstate increasing same doing reduce up their offices investing overall while still do. agent the work because or in commissions, our that the value can expense he drive the We value to putting those of more that's but take by it time, enhance we and whether cut process, So what at think believe and low goal. going earlier we're And in But expenses about the invest that's marketing are proposition, will we why will talked in business

The other piece is that's to access, expand happening and speak. as we the

called So in brand those who people our the which open had the Web restricted to it, got to to Allstate up on brand, who some started on site now. rules access Allstate for we've

same you during you get experience working different matter you it have you're that. do called working of a hours, day you hours, for getting shouldn't online, what you if could experience. after and should called if the time Like So example,

which time get and to some Allstate capabilities, all site, us and utilized to to putting good take operations get some in the technology obviously, brand will work One rules. put are same. the direct the together, the do. the to flow on capabilities, do centers those What got you’ve that taking And all Esurance which and be call for same then be the -- Web doing that So the branded order the the direct. is those Glenn also Allstate exceptionally with we're today. the changing He's together will is

Allstate We the to also brand. need reposition

Esurance and is Allstate not it’s the – modern awareness, world people great course, viewed trust of great as brands unaided marks, said, as so the And brand, the extremely of is. high one of well-known, that it's

a modern So for a the Esurance world, cleaner. hit little little built

on agents the them that of brings when those we hard when them so working Allstate both both they serve it want so together customers and want. reposition they we brand with are direct serve we that So our

see front parts a it's end on its others. there's back So plan long-term end can but and some you -- loaded loaded on

David Motemaden

of that is embedded I that Or is that already the something I against to value of increases proposition quarter, you, injury competitive the just CPI, first bodily it this rate? above I your customer the the maybe severity through would and in And pass that has. with bit popped a in some which expense go pricing? other that some the way think these is CPI, able medical guess saves mean, Have more time in

Glenn Shapiro

our have trends set things, through position Glenn. think we on that Yes, come we from in some yes, I'll these others through reserves, strategy. as we seen as bodily It of heard about injury. where take our the that that. This is pricing we our we've is And set reserve you've embedded

couple really where seen on hasn't from of and the damage adapting standpoint you've As pricing physical run we're severity over yet a at because last a market-by-market to on and we've hot quick basis. pretty margins, the years through flowed

we've you it, tell we’re process. would I So got watching good

technology handle the to we they that can into followed they're great whereas looks quickly. claims process the that claims manage get a what goes it, beyond claims both and pricing paying department have We accurately, it claims. And it where

David Motemaden

seems of just ROE few the just terms the fourth potentially about like on there transactions these of last insurance. a I thinking have in lot there's or And of interest high-end some quarter then life a one And interest, run like guide. in of the in if could pretty and vibrant off just guess the been life it side, in, books annuities one a I speak of

out out Illinois, and to reserves legal that wondering entity I that of believe acquirer. of division specific to can allow Illinois rule a there's -- company divest you potential carve Just a in and

So maybe a ROE? just any sort of XXX on that to whether in the like to you there of view wanted book like of, update terms see sustainable that has to digest in and ROE reinsure a high-end of or potentially guide thinking get get terms your an drag your more bp on given opportunities it

Glenn Shapiro

can We we division that we has the do can adjusted it economic statute use we It a a years is a but were been there is than at, we've annuities trying -- the we've unhappy a different will of it I lot to were do would that, way return, good risk guidance. in also for we do people to other The looked take. try -- it’s progress the extent are to we'll I the a there our get if solution If on else question, made do that. we of anybody to whole -- house. upper working if for bunch where ones, in end But above if other this it, I something get to if is reinsured. be don't trying the and third is, better. different is And been let's think shareholders you of answer -- a

Operator

Thank you.

Amit line Buckingham question from next from comes Research. of Our Kumar the

Amit Kumar

questions, agents? guess in is of previous sort also, bonus and from follow-up shift new in the I early integrated first feedback platform, one and and/or quick on plan. the structure is give feedback plan, the to from Can question the services new the two you the response existing businesses? two, on number any Actually Number on the us the what commission shifting the

Tom Wilson

steep the in sure mean leaning low make all heard I I light. were we think towards to it. was curve We it got I a

Glenn talk transformative Maybe the really think integrated commissions. on the comment and about customer. So go can behalf service me growth make of back and to I let

we're about going doing. range there's said, make them opinions team. you're are of them to them the successful. hard That They drive bunch our and of to successful. hard a agents be think So work a to to We at We're of as our in successful. people what want part what leaning making business

risks customer. pay it the one customer stick our But let to way What new with the of is very get create. end come growth philosophies. you We're fair price the the with to is trying we a do back are of do which We philosophies should pricing. with Drivewise. And for our me is we sophisticated you transformative in telematics,

a And things have it as pay they what apply. We should get that auto same insurance customers the to relates philosophy for. also

you extra to should then you be there should agent, of pay service extra be and get you if prepared for. So something -- help from an extra advice the should

different stuff something If yourself that's you all then that's price want to a do proposition. value

can effective it the proposition as over agent as as agent half working base. sure want make to customer be. are we talked we I we as our said, said reflects that So and that we people hard and higher think when is it efficient people an value about it's that Like this,

to So and as help Glenn we want on is why successful as programs working that's they couple be is. he them of can the

Glenn Shapiro

boards. our spend range talked of talking I’ll just give Yes, time I'll all every agency got a the week. And council, lot agents you We've time to add agency of regional reactions. with force. our force to We it. to advisory the national We

and as from might fact the about pull So you there's good on that to in on brand. wildly Like we're marketing the the really the -- pipeline the everybody transformative going Esurance to overall, growth, going focusing out brand, the Allstate popular. we're the more imagine marketing in be facing of feels Allstate as

to the a change, right leads growing folks they grow. fast that they're it you strength. into their liked lot, On were commission got because They that and built

a or higher to or business, business. really need in of growing to either the new say weren't are the business, retooling grow, order retool transition weren't business who making commission. they that to But the built ones wasn't commission really you that I folks that folks about new ready my goes got and earn You excited range have to that their with

different faster goes you tell it Tom are are in people about lots for As said, growing really It the is folks than I as can folks opinions growth. up integrated of freeing what is the aren't. to service, it out And there. that that

So we valuable force. be to the something really think agency for going that's we're creating

Tom Wilson

when on customer of on higher new an So value, me most the it's to sort customers, always add helping the changing out of product does the blends what either and little is the business are review, insurance if agent an where ask you stuff, almost go you back address. purchase very doing

so what working on. Glenn's And that's

Amit Kumar

and frequency either on loss of here? the what’s very you lost your trend, about And when the the Is quickly you foreseeable net-net, it. for is on the expectation cost know that But briefly cost future, trends trends. outlook this look or talked about remains can I how at talk you the sort it severity

Glenn Shapiro

This is Glenn. that. take I'll So

overtime and and go the then to whole those costs bit, are and because I to by if out that frequency your the you door, we look you going split loss that at me a Let severity. you say, premiums think system come there's in up these how changes little and expenses may

of the Over those for year, four out three well going past have been us.

and autos Our average and X.X premium, the up -- home mentioned, X% X%, respective loss as lines up expense on are those premium, premium is I average X.

point up a of full terms we've improving the made point in So over period. a a time actually and half

it say, market on from market-by-market really up predict can years be severity or a two tell you each that more I But managing been quickly year, what can't over will me to for basis. now. a we've hard into it's flattening disciplined is about So I

state we've that types we're of Our changes been to and time deliver. manage to better pricing has better sophistication, our to gotten able management and to returns the real able in and team, react those

I in I prediction you while severities give react feel it perfect ability to really So go, the will to real time. on a good can't where about our

Operator

you. Thank

Research. Tunis from Our next question of the Autonomous comes from Ryan line

Ryan Tunis

Couple for Glenn.

branded in interesting. it thought So Allstate was half that I mentioned over customers Tom of Asia, one

versus on In I like insurance a generation start or the becoming an Internet, that something people brand as Internet Allstate And guess just something percentage of Google customer, the league the that? or that. of like like an guess just lead pathway I the or is agent terms Allstate mechanism, of digital what coach little

Tom Wilson

percentages can and. want give agent. well, we they an are of like, people times It's Glenn people to they out Ryan, Like, of not you the we'll anyway give A conversation. an sell this through some but and/or buy is direct lot or want. through to

ways buy to many You want the we as as sell through many we agent, as as as can to as agent there to want much from people we we online, start can. an call can to. online, Like, buy just we're like

Glenn Shapiro

process there phone of to online it. It's there's challenging The to the agency all is one paths with least path, people go want agent. and through. a to process vast them pops quote you, they our tells somebody that's you of to about up majority they multiple example, stops off, and online, that call then some local out nearest that at people of take people and said, where their research the in That business a and majority a start get drop the the written data to understanding vast by for talk lot start the and that's I'll get decide question, and a quote because make tell there's

So and that. me specifics that more of give you imperfect a any on for got data to mix we've

Ryan Tunis

XX% down potential And sensitivity something give to think understand that? just trying like bit I captive on like, a particular, I'm understand you of I'm how a mean, agent. I I you applications? for your new new issued do obviously, new much peak these or if price some then was us a in guess, could trying hoping that of product you to initiatives. is pricing thinking whatever. Are driver of business or the

Tom Wilson

it. we the We're rephrase question. sure --maybe could not am you not I understood

Ryan Tunis

way. I'm you is might like or captive. this years they independent could of travelers think in well for it what just see impact, agency level ask big three channel that that by ago, if announced driver a agent cutting how a captive missing or in player, versus be prices new you price an elasticity could how I'll a more like could I So and wondering growth. who's if see it business is agent, they that’s you see obviously I there distribution as that XX%. similar an have am something were of that an Like two --

Tom Wilson

wants and Let the work last and me maybe with piece my in. else jump start way up, to anybody

multiple general, you there of people more how much would companies points could that of to that within So elasticity said would always tell you In first, think a be an price four than view. around hard elasticity and and can quotes it's for the That had course multiple in is agent. agency an their share call captive price three those or people agency. get

particular insurance auto So in price is sensitive.

profitable Although, trying trying growth, we've do. have to guess talked at us to what length we're I

we all products are we think of auto, variety the products things home, a less there complicated. different redesign is make our and The to of where do products, them of can on

customers doing other complexity, That state proper. renter's in down it, circle, XX%. products size the year, to a took protection less the to. its also helping And have so to get in rewrote and we this trying for But understand example, the variety we're we we're so of policy one by gets

agents. So protection Allstate through sell identity today don't our we

Allstate that systems their like transformative to we're longer something get and everything to and work? compensation do we platform customers technology part it, we factored we do agents, the Make into that? have of on else? probably do do How would basis. how we that a the sense growth it’s get that’s come How It’s protected. get do to How identity working

already sell of of we channels So sell we don't of have the of places what do sell. because many through all transformative, products we how all we in we that sell more channels. but of that's it’s products more sell we through many And our our part

Ryan Tunis

Thanks.

Tom Wilson

more time question. about We one one more question. probably How have for

Operator

for then today line from from Zaremski Michael Our final question comes Credit the Suisse.

Michael Zaremski

as continue measurably of if kind end question of elongating. comfortable years curious the liabilities? duration last fairly of P&C plus Are kind see duration up range at First increased just you're years the -- over few and investment of the to that has you five the with you kind now to high of portfolio, versus the your

John Griek

Mike, what exactly the it's holds. John. future you Look, know never

we've to seen we're back I in norm. XX recent and the a lot in that respond to going duration economic of of So last that risk terms our a and always extension of was and conditions, the would overall months taken time of in environment of to structure the say firm way. reaction more strategic that's place portfolio what

-- bit when there's a to with had better that with the go the better that it was to that We recapture It a look and opportunity. As to the rising time they’re been that a in, and cycle if you that economic interest different. to policymakers cycle. fed that the to yields engage, rates thought we are software it tightening months prior back was prudent the in a stay higher that little little couple clear so bit, wasn't was situation in XX in at U.S. XX short going were world was

wanted back portfolio it also to off, the in or little bit If duration. the of we to when economy put help a have and We falls inflation it thought you balance more protector engage, needed to your that recession tends they protection portfolio, out more.

with processes, internally extend highly our risk actively did duration. we coordinated So all the

corporate that extension basis are you based did is to benefits are with. And if did in where roughly our rates It a balance pleased XXX look where are were perfect that at today, about at positive. were market when back income increase include --this a our than It also assets. and if price a lower number we time. in where had look income, portfolio, a points roughly but been more which relative treasuries it's of where when balanced yields you securities. you fixed of did we're It great isn't build at increase risk math, most Rates they

So continue it process going forward, What with investments. our capital you we'll earlier talked processes, monitor. can be Tom highly I inside. allocation is our that to numerous coordinated about will assure

we to group are to to our enterprise well a these We believe also moves way understood. sure investment risk that is -- proactive with add enterprise. all work that management value are very closely our And make the portfolio

Michael Zaremski

Okay, yes, it's great a that's And been helpful. definitely call.

years? maybe structure policy of questions towards agencies? I commission lot didn't seems curious, know could the like that'd that change too, about be --is commission clearly, did growth Lastly it a as it add and of smaller a Maybe fall ago Is worked has years you more percentage changed over of color structure. more great. it okay, number sales any new disproportionately the and out apart. Maybe a weighted

Tom Wilson

productive. to what have mean, strategy them be all our I of agents and growing of our is all

not you As out, all every them of year. point there get

local local we that's what or the in conditions. market market a do Sometimes what

do or they what that's of do. don't Some they

it's are time, I objectives like all that around their now and address not commission it with -- problem. an this it And is to happens all -- businesses a in wasn't is So sure objectives. -- to we It don't to goal commission seize aligned our our frequently, change move do we the are the think make commissions was opportunity. people

in saying XXXX. just let a talk by quarter. to had me Thank for you. growth close all We focused we'll good you. We're you -- And next transformers XXXX. Thank you thank on

Operator

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

You day. Good may disconnect. now

The Allstate Corporation (ALL) 5 Feb 202019 Q4 Earnings call transcript