ALL - Earnings call transcript Q3 2020 | The Allstate Corporation

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Operator

Ladies and gentleman, thank you for standing by. Welcome to The Allstate Third Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Mr. Mark Nogal. sir. ahead, go Please

Mark Nogal

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

accelerate results growth team here the Growth to and these further is on Transformative context management business. Our Plan property-liability perspective to in personal a on provide

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

Tom Wilson

morning Good everybody.

us appreciate despite At we're Growth investing an exceptional joining we We record just any rates, mean, adapting, we're the hurricanes, As interest us, I a value pandemic, execution $X.X is to great light. of for was coming the on is to measure. make and low executing, the the we're our your that, learn about adapted future. enabled same This quarter. usual, wildfires, the you time, investing more Allstate. to Transformative to billion. all our The stock time

million executed a $XXX So ASR. we

year, Our growth. a creating foundation economic team customers, value, serving building this stronger well exceptionally and for has performed

ovals increase with which Transformative share is Slide strategy, on on Personal We're components. going Plan, X, to Allstate's start market which So left. shown Growth three two by the the has on has Property-Liability our let's which

value, investing improving and You which expand price marketing and launching customer products; in improve remember our then new position includes technology. customer access; that:

and the is - will to then expanding then protection addressable more increase about total then we'll and We're the - serve. also through and hear we go which your You'll questions. increasing Glenn, numbers, Mario our we'll to market that from businesses get

have in Allstate brand, We see two our leveraging edge our ovals. between can operating by customer and which those expansion capabilities, you this an base the in

empowers is, from you know has For been that connected affordable to year. them a products. customers simple company provide that plenty we protect this There

that severe As there shown catastrophes of results, we are we efficiency, all with third those right. quarter and kinds weather speed see I and mentioned, from get and moved and you and our the on can

which and a will or addressable continued has specific income that income remain show Transformative lower return assumes net Plan a several Underwriting advertising in the new total grow businesses its the on Investment rate reduces we charges but year to to results actuarial and carries is and Allstate that insurance which and levels. offset prior catastrophes. increased market Plans accelerating We environment home auto get while initiation XX rates, Implementation XX.X%. of in in the and insurance Annuity over net next Adjusted campaign. Growth income off cost due excellent. $X.XX was performance-based have was forward Life, market. reduced to addressable results share, elevated that Allstate income, profitability for the Mario through interest slightly an our income, from investment Benefits works. how low of plan review Protection total equity continued go annual revenue Allstate with slide the reduction for the resulted the also Our really you expanding and was years returned losses strong, assumptions to policies, did interest future favorable income

It both and Plan. Growth higher returns $XX.X excellent capital by we year to tumultuous revenues do higher of a as those the down net connection income Allstate you environment, million was that $XXX revenues prior to increased table, connection which was Total Adjusted If of million than offset year with Annuity billion more see X, Life we per that income assumption. was in Slide $X.XX - delivered and actuarial prior and offset XX.X% of charges in and gain go quarter, income. great lower income prior and customer share. growth, restructuring $XX billion related Life more despite Growth experiences, Its income progress X.X% So than net to the quarter, the quarter. Transformative operating the let's Annuities on higher was premiums than growth Transformative realized the lower $X.X as auto increased reflects Allstate insurance to catastrophe the year earned. or in and the can in by Net losses the underwriting property-liability elevated numbers. because

equity remained on return as Our returns excellent, well discussed. said, and is range the that I the we've above

talk let Property-Liability. to about for quarter over So Personal third turn results will me Glenn, who it

Glenn Shapiro

Tom. Thanks

Slide Tom we'll X, the to said, - go let's very Property-Liability as and our of performance strong So discuss business.

that And detail that going results but build into operate year let range in how and combined into lower Before were insurance, the the Growth. Growth, than and worth go for foundation under with beginning slide. it's was profitability. underlying Growth the quarter. prior on on excellent third this Transformative of and strong in results, Transformative expected results Insurance consistent before quarter deeper were recorded mentioning Property-liability we we some with Financial me we Allstate the modest that as auto continuing

One, our we've Allstate since its for at has business components improved the sales advertising new there. were and sunset, Growth several the negative the in is agents for steeper being new but plan, insurance new on centers on reasons. the yet sales and First, pandemic, except practices year improved call of three we making working. since progress. At path there direct for commission all the that cost We not lower brand time, being lowered online in The Transformative business, a new in same drop. that a sales building the is business our volumes stopped enough brand for flows our increasing channel to in model. impact beginning this our towards is and bit insurance significantly the for we're months the is a of year, start first which direct, early shift believe we offset sold the though hiring Allstate agents contract agent compensation we new two under this existing Volume business

major Milewise, the carrier our like right growth competitive a impact which independent there and appealing X.X% Encompass planned We on We homeowner high returns. implementing pay-per-mile In reflecting already investing that closing. to homeowners We're growth a be the the year expand the of prior comes transformative the was right and us only X.X% in the lead increases. also further business. while agent growth in reductions now, licensed drive positioned when will who policy small base grow a after the offering product the the want channel earning agents agent level have are driving growth as growth, they business. pandemic, producers our we're independent the homeowners is space we cost a product. we're we And as into The were improve position requirements expected really product year channel decline for that. space the it set foundation that prospects enable to National this foundation auto to in we're right their in will major from exclusive increases. acquisition quarter. coming to producers. General on to access the increased in the add right and on into growth. That's time to because quality in excited great with both we're build less for insurance This well and we premium side, total, will channel, really are negative in average attractive resulted which our independent the will player is really believe direct customers and agents that our about In a further and to This premium during production we agent at grew agent place building due to had of pending

two got to or prior was slide $XX compared the So we've increasing to income million now $XXX bullet and million, our we'll go year. back Underwriting here. a

active adverse million While ongoing subrogation in equal the environmental fewer year's the year the third which recognized million shown on are Coast. hurricane loss left combined the Non-catastrophe to personal there from of ratio in primarily that, due in catastrophe all the accidents was The prior review miles auto underneath to and driven. losses in changes was year last in partially by down Underlying right from Starting ratio by insurance $XXX chart segment, in lines, and development to West meaningful pandemic, ratio the favorable and Line and which third recorded this unfavorable homeowners, by Protection breaks favorable season a quarter, the were efforts on respectively offset improved points, lower asbestos, Catastrophe quarter the settlements. million reserve $XX quarter, charges due chart. shown ratio the losses coming Allstate's Allstate is California development reserves were the with catastrophe annual This components. lower re-estimates Coverage Discontinued from red. lower in underlying by many $XX offset to X.X partially $XXX left, the and reserve the other quarter million includes help PG&E expense are improvement $XXX the during discontinued wildfires which very adverse lines. of million was and Southern in losses in customers Edison offset re-estimates prior were in restructuring driven the elevated the loss

debt to improvement of represents you impact XXXX. a go was a restructuring X.X quarter. in charge if improvement X.X bad prior-year quarter, point third ratio the point XX.X, to compared back Excluding expense the It and the also

customer X, direct Growth. Tom on offer which brand, multi-year in maintaining customer We're the capabilities And to a under to marketing through us Slide and affordable to value three leverage customer stronger and was as value, enables effectiveness insurances enables And to let's by brand while strong efficiency. is to the is program. of and local improved combining Allstate. investing improving covered, a growth with Allstate expanding progress implementing improve This Growth more margins. effort sales by enhancing accelerate technology. expanded reduction discuss being prices Transformative sales us cost agent capabilities components: Transformative access a our access, Customer models Moving also

also We improve price insurance auto pricing with the sophistication. competitive to continue of position

our of in marketing improve customer access, to and is facing by interactions to simplifies Allstate campaign the launched the offerings. The digital increased launch advertising brand quarter, the including investments technology. In interactions reposition component OneApp continue of which new supported all third we our telematics Technology in investing including third spend. the

exit still attractive coverage processes quarter plan and future the this experience of the a actions Slide our streamlining product emphasizes generate returns. of lower and support approximately of capabilities million needs in into to support, and the cover business over incentives, impacts sacrificing $XXX audience affordable also transition launched search few as the of built on campaign employee advance as showing to for have telematics assistance. by X, cost Moving The broader The a changing. The well $XXX the deeper that in our to bulk third advertising expanded result slide. is charge We're on At we right extended that across balance have that employees with to including in in are we're to all including breadth customers' turn we connected medical messaging service the protection. will across of price operations September campaign with Transformative repositions The now the more and portfolio deserve costs year, the third reduction a rest to we The belief to remainder protected, I'll quarter shown a which results. estate campaign the plan real recognized quarters. behaviors life new it brand executing million, the the X,XXX deployment charges identity benefits of the and taken of us sales, functions claims, by Lower same enable service to updates and costs. side driven and without Growth. a live a in costs. time, Mario

Mario Rizzo

Thanks Glenn.

in interest-bearing the income reinvestment the blue Let's on portfolio Slide investment totaled rates, to yield left the our Market-based was for the year partially valuation GAAP $XX Performance-based declines in are shown shows on due year decline first market-based total quarter as shown the investment quarter. recorded million performance which in the rates in returns third in year. highlights the a table below returns of income the in totaled for interest higher lower right. the gray, X.X% the income. The Year-to-date million Performance-based valuations. X.X%, the million year-to-date. equity $XXX half income. income reversing which quarter. With remained reflecting go return latest were the was below XX was public investment below prior in and fixed which remain was to net average shown but prior and $XX reduces chart quarter, $XXX months X, quarter, million negative X.X% income

is portfolio shown a compound horizon compared volatile table, XXX bottom annual over by of rate more but X.X% investment to five basis return performance Our the the on higher the longer-term portfolio. exceeding performance-based is The return with points. past market-based right has market-based of on expectations the the return as based strategy years the

contract results move net Allstate's million than acquisition prior rates deferred the adjusted net Benefits quarter. the net of lower million Life amortization segments review Allstate of non-essential due had benefit driven was million and reported to by benefits, in third of assumptions. unfavorably Life, the deferral the million higher quarter. adjusted result The The annual and decrease left Annuities. This a impacted on by cost Annuities the $XX was assumptions. annual accelerated Allstate and $XX benefits contract $X Benefits a as in claims. are of driven quarter the shown acceleration primarily Allstate living recorded was third of deficiency deferred of million of and an income pandemic. Let's medical projected to interest benefits over coronavirus the of remain due future primarily in Life, the decreased third related the of originally income, benefits lower premium experience in that adjusted Higher liabilities income from quarter long by lower primarily to from the compared pre-tax, in X the quarter, Allstate costs, recorded long-term third the to review of limited million, loss as quarter, and Annuities and In of year $XX of review third the year assumptions amortization including adjusted reduced $XX the for anticipated. related death Annuities also given in from decrease reserve expectation procedures to mortality prior claim quarter. Allstate Slide loss favorable interest duration activities low offset than these net contract claim was interest experience review the of the also acquisition the to partially expectation $XXX will a lower rates annual annuitants Allstate rates longer experience.

detail. little discuss And for in the While deficiency the to to not net income this let's quarter, reduced Allstate adjusted more reserve and Slide a X premium the net did it income. impact Annuities turn

see to our returns. business reducing years manage the risk-adjusted can chart, you Annuity the over last consistently on XX As been we've

dynamic, As we exited we these structured we all this annuity Benefit XXXX, variable and businesses. reinsured stopped broker channel. XXXX, exit sold settlements. dealer issuing we in remaining to XXXX, result Lincoln a systematically business. stopped And Life. began XXXX, annuity the In of we the issuing products In In

immediate billion $XX.X end made as dollars are the and billion declined that contract result, to funds XXXX quarter. of and of Today, third liabilities of related a of liabilities $XX in annuities. reserves holder to from $XX.X billion As the deferred up

risk-adjusted performance-based be returns. management strategy equities to are of annuities generate while Two-thirds in match these liability investing and liabilities cash XXXX. positioned longer to payments the for after assets liabilities portfolio attractive duration expected on made the public to Our has term asset near

than to that live third our annuitant also remain these that of on future a payouts, reserves where part extended expected which to reflect updated reserves current the This of the forecast were return assumptions period. and expectation As over will interest returns an given is lowered quarter we assumptions changes of reduces two the charge less $XXX led rates longer. long-term our income. led the investment million expectation pretax. review actuarial low of annuities Mortality will expected life assumptions These for the expected to those

of the XX plans of excluding go impact let's gains growth. of Slide the $XXX to XX.X% grew $XXX the growth XXXX. increase the continues force service businesses quarter, million now services. Adjusted by quarter an Protection be our the to of service losses realized of and million Allstate roadside businesses. to discuss continue to generate of income profitability to as reflects the and to quarter. Plans compared strong So policies Protection driven and by The in results XX.X% third The in Allstate million million improvement in third growth driven Revenue, improved at increased Allstate third net $XX $XX

Slide Allstate turn to the results let's more Now Protection a in to bit detail. plans XX of review

our So, early remember, $X.X in billion for XXXX for further to circle expectations. expanded protection continues acquisition profit and you growth and customers exceed of the as

see compound than quarter left, Policies in Plan chart since the you fourfold Allstate Protection from million XXXX. had annual on exceptional This of in increased the can XX acquisition XXX policies of growth than the in third in early to XXXX. million more XXXX XX%. in rate As force less has a represents growth

of In million period. months addition, net XX% $XXX nine XXXX of year for to prior compared the increased written first premium the

international first On scalable furniture, and in forward shareholder which than expected. your expanded to with the carriers important income $XXX of began XXXX. power typical months nine trajectory market can growth upward generating protection to into of going year, brand will continued successfully Protection this unit positive value lead revenues XXXX, earlier addressable in this Even see the this economics, trajectory in platform appliances, net the the is has The areas. generating not of Allstate these The technology million The is plans team and simply, platform. adjusted The here. combination the cellular each of business. income markets you total Allstate is net from Quite more right attractive that through adjusted of profitable continued early has

third XX.X% XX, position. return highlight strong of returns as Finally capital on shareholders want and quarter. with the in of to stock the net $XXX Slide repurchases equity capital we returns Through adjusted in income to Allstate's end an returned Allstate strong of generated attractive on quarter. common combination $XXX dividends. of million a share the common third million in We $XXX and million on

the Over of result outstanding shares by we primarily program. reduced last our X.X% a year, share have as repurchase common

pace see by valuation you strong increased to quarter however, strength stock can income year, that the of this cash with performance. As to reflecting for returned offset last table. questions. compared fixed XX% we increased will value context from kept Book of have the combined generation Allstate $XX.XX per income valuations, With share shareholders. up and line partially open not and third metrics, operating the

Operator

the [Operator from of Instructions] Sachs. Kinar comes Goldman from line first Yaron question Our

question please. Your

Yaron Kinar

question line First is with regards to top growth.

lot the top we of components line do do what there I you're plan. various think understand point early selling seeing actually there end are the beginning resulted of in growth? So the transformative here the maybe and you moving growth parts initiative a start and the of to At

Tom Wilson

Tom. is this Yaron,

you a buy can't should here's stock we they that. really say and the quarter - before turn right a you So that give say one

and our things requires, sure that terrible to number out with talked care we're pop agents is to as Glenn Right? sure service of So make to of stuff because doing agencies. well So people have the well, the really about, take we're that moving some we trying existing what and reflecting integrated other we customers that we change of a and make the happening.

market Second, in competitive in. there is we're obviously a which

much So raise what they part into it much they depends of what more prices. and advertising, competitors how homeowners with happens put do, how our they

home to say as good where have, insurance then narrowed auto what is and would down much we're think a is insurance and think growth of about can the auto circle protection. as that we just I higher transformative certainly insurance growth the I really not to - focus getting seems but growth is and than be we about auto

see it So I call come really say expect the components should you is, I as you place. by can't into quarter. would

see specific not to giving expect guidance should here. trajectory on we're You a from here. up But

be where of percent to at gains. market more going X share Here's

Yaron Kinar

can company long question, Okay. a the how And it around, there app? my the launch have share takes of app. quote the you One Allstate related been get second somewhat us then these use downloaded, ease to Are of in any or rate take-up applications the with metrics on have

Tom Wilson

bunch get most think we average versus we on Well sub starting in what of want and don't we things give don't have also your copying advantage because that in a we both that metrics whole both them really we have and like it we out, in them to our are on - competitors point, to of doing we're telematics. on year

would - time. I in the So to cost we're you but lot there. what same and is to that? banks industry which lower says we to anything level really a not connectivity And, add Glenn, going we that the you insurance have we potential increase that got tell at of positive general our would are on the about

Glenn Shapiro

it. that think I covers No,

Operator

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

question Your please.

Greg Peters

And with growth talked going about I'm point, improving second So value. transformative your I customer think stick bullet in the to you plan.

is the expense ratio initiatives So sit there's we highlighted. you've looking two pieces outside one in, that that of as

The other just your be would one customers. to price

number the give your So with will auto in to prices can idea in and to have expense of marketplace about ratio your competition? have you respect of of on your an curious what objective And I'm go in observed the posture and sort starting or price, a then, the where cut to context competitors us we insurance that. you of

Tom Wilson

into on where Greg, transformer me overview we you these. and the could are pricing start then with let growth jump Glenn, on if

components, three So right. transformer growth has

really competitive two new components improve to But launch and second affordable products. is value, is is to that position like one with products, one price things improved the And [indiscernible]. the Second is customer it.

more piece cost the way So a you is piece. to about through get differentiation door really to go the price the the second price really piece is

So not separate. they are

So obviously is, target also haven't we we in don't cost put targets. have signal want haven't competitive and price. going those our have put are the competitors, reason there, there they tightly linked. we targets reason out we And we cost think price where out to The we we're our to

we reduce give targets So sacrificing it's don't attractive not we better costs, can margins. customers that our we think we do, without have value and affordable which to price enables us more called

So those expenses, is closed affordable rate, that's on. the turn drives Reduce increases which down path a your we're if then expense into which that price, growth. more

component it's - So about. talking you're first the really one that

second has whole there's the new because will to of just be will stack, The launch that have rebuild technology bunch time, take you some done to to a work piece That products. take pricing your multi-year a of do is this a give we there? initiative. update really why and to want years Greg done, get Glenn, to you thoughts on keep is which couple an

Glenn Shapiro

you've that - sometimes Tom. and rate how that and a impression zero value don't But margins the say, moving down Yes, cost an like anybody leave the keep look while taken the supplement rate being there better and a was that think can it not you is zero action. because we're investor now want at means going well, I forward, we for to Well, customers. bring covered,

I hundreds the Greg, hear country it this We of you but all last filings the say me over and across always have at know the level. we made market quarter, manage

type group in that. we've seeing of competitive So really time we and customers and state they’re market, working They've hands what's those looking do to at, they're doing, of in a managers, are each got regulators the all how this talk we're that. are I levers our on got we about moving always talented quoting close what the rate competitor their lever shifts and with

see total type products, that filings position for changed made we've around X.X, of changed of on like shopping. things time pandemic have this competitive that already rate new people spite in and filing. on business hundreds you of competitive We've are telematic our the pricing the improved since So discounts, the our through materially position increased done that

out nine person there price they lower than a average that's ago us for six months now for the so rate months shopping ago And is or were insurance meaningfully lower. getting

on as this this how stay I we mean and it to bit capability like major up be and is while to a I setting question comment it little look for growth, we're we're in competitive, at building so foundation, back us Yaron's direct. or a And goes the player

setting while policies in of building in a and acquisition we're that's grew up independent the in that building going we year-over-year, foundation. capability policies foundation, but doing in more spite minimally force, be so actually the of good a pending. with major in auto We engine job keeping are us player home, growth fight going for keeping our agent to our Like call we're And holding the that own. we're I'd it,

Greg Peters

the like downward the and interest it's pressure and pivot be base, obviously this And going there your the the But pieces on answers there try question, and other comments, is income be the year two off to on generate volatile us because interesting for current or is investment considering Your to next would of to over rate feels therefore volatility and then the guess market-based just for performance environment that model. you year. the of investment also returns two. and earnings source just Mario's and sense. is income X Slide I second to it's it makes been going looking

you as can the about for what it performance us future frame we might performance-based portfolio? So think be the of

Tom Wilson

about performance the base. you John up of the and go return of risk can me let Greg, talk adjusted volatility then,

all seven risk that's because you're once that better adjusted past taking as those better - equities, decided and and billion and we years matched probably and billion capital space, right. double up, it funds. annuities so at to Interest that and you term you when you dated was was particularly - was off as performance for coming right. as more of is dip volatility thought comes adjusted looking be rates, and what XX really capital, risk at we low return So look then we it as - pension when back didn't - historically. bump it $X of class Obviously, or - to risk low long in - the at like performance think are equity. it's quarter, volatility we volatility. rates just now. actually market-based have is we was just in down top, you this so on have our to and it economic equities you risk a And because when a so adjusted the bonds the adjusted there we looked space, year risk from get out, the get can look that which sold down quarter expect our with the you're pandemic because bonds, the less public why come time from a years, we we we on to the to saw the you're on going is well We And a not return risk $X the or avoid point you did had is return and long-term you're handle at past our we asset on there do know viability When going get have much per are we we you volatility. going adjusted on you we and capital owning And results all based you rates, the return at return get allocations on way investment do you at on earlier as that higher performance those and return the

to we we we're got because So time. how economic and incremental to will that we will over have that's accept and recoup performance-based which volatility equities the return know capital liabilities willing either or have

get to what John what think is we're income. you at look forward, auto underwriting Before other let we investment I do our me - we turn business in what do thing, margin we just to particular, course, in we're when we need look going as of one given managing

extent we're companies a our adjust rates. in given some So make return income, to life to even have able to our it their lower future Unlike the of power underwriting, way slightly no good shareholders down, investment with premiums. still who for goes the we other interest

spend John, you performance do space? to a minutes about want talking few So

John Dugenske

I'll And sure, Yes be the question. it can Greg, about time. thanks base you When for left periods of Tom Tom. volatile think where pick for performance up off.

really Tom liabilities match versus we that it we As longer mentioned, have. off

and you think years return. rate of of at about which view to XX-year in is longer-term XX.X% we relative owning a look way this a assets the these the take when supplement, it against, a information about - you If over measuring return, these internal equity terms and is is of common in over period, benchmarks that XX years superior assets or the public they over five are that's

for in do. everyone can shine skill we have it flash a So extract we're I that marketplace markets relative to that more that the market public willing extract that corners value. some think volatility other value to lot and that a lights additional different we've we people observable we've can it is to got expertise got of has isn't of of maybe doesn't to out that take of of tend else easy team because to the think

has right in does year this you think this and of has think bit you're a course about you some to bumpier require And it we been it whether when during in a to it's of year been a part improves I little it time. sell then Now and we'd in all Yes, those agree unique year, a invest point particular itself, deal income to performance-based releases value investments or the over the generates explanation. investment, entity, fund out that we - assets, pretty and what an individual tend need is flow there that income.

about activity. earlier we've of deal in that do when deal income $XXX is the just a was returning some also as understand actual we more that we did that normalized in There loss, in reduced. to the year, period this During million to we flow of and because it's beginning this losses was people thing sort in well. down and of had was disclosed normal time seen have due-diligence place quarter travel to that What

back, a to historically, bit. to going starts we've predict not the to little we're starting there to look fit what but So experienced here, we're see a future pattern relative if is you reason that in

to Tom do well portfolio. the dated investment about mortality it's be system it And address a to think is us we market and risk, of time a and what proactive liabilities underwriting public our versus think return, but up that returns that's part changes different made think rates risk market-based run even way we matches and of as long larger period Greg, return you've When enterprise, markets. or long enterprise risk So over across we that. seen comes risk like We in seen us we you've we've whether the where about the for they're can volatile, in though investing said, environments. there in more

good crisis. interest reduced of rates as that global credit rate that a was, thought more of return it had became We took example a lower good out So that risk financial the risk. profile. is and coming risk We we

investment we've As less quite risk some not some exposure as the to we've we've we're advantage our rates equity saw that in served of also of obvious not thing moved to of be year, only completely duration, and government right, are here. reduction of years, we well income, look it's you on a lines. actions the minimize equities into there a fallen period that the of taken increasing slow that we've public rapidly of a X rates reduce at One just kind and take will of that's recent the that liabilities. year of pure of increase are basis grade rates will math securities of time in that those that we part impact $XX rates play credit presentation longer off matched the almost happen just out if I blue billion may that be during buffer of year versus for have I us this and and investments help helping quality, It and interest mean And lower adjusted doesn't have. this associated income pure our subsequently our yield that. way. lengthened beginning we but further long Slide is started duration you're for value exposure stay the some course high see by - to high When

matched time. part off it to periods they're to the So as tends roll happen of over of and then portfolio has cash

rates we So, of long time, remain rates happen that people if in. as for overnight. hopeful like we're period it interest of low we're that some won't out are pull lower interest COVID-induced And ground happen will rate paradigm a it most recover currently the will

Operator

of next the Our Credit from line comes from Suisse. question Zaremski Mike

question, Your please.

Mike Zaremski

of as looking the more related, that I you online past center think customers in versus one Can insurance, a sales of agents, And question, think deck the the seller might from your plan? direct platform agency-based you've to in Allstate said the flavor that believe much part discount existing us but you is flow through offering use how see for the transformation much part statements the I First still of potentially improved program, direct? a and as to is call direct. game of today of how of Allstate saying sales mostly give I a coming be of

Tom Wilson

flows you what about with and Glenn, want sort sales. talk start going [indiscernible] first me overview and you've got if let the Mike, on of and to sales in

little through together the you put business quarter did was you the together. either we Allstate have, format put would but see We brand at two we stuff also same last under centers, if through mostly with or our a Esurance we've bit broken so direct, some new centers. sell the old call XXX% in online so, out and the looked call those manner, usage, And online. And that

how so, we're through planning and direct on out not And agents. how out much breaking comes comes much

for that correct don't you get, for, so direct, You're if in you what paid pay you you buy agent. today an

price you customers the price like going We're saying - agents, the company, X% don't but we new they you those direct reduction how to with hey, into X% relationships. and They you lower buy because that's have as those not So from is existing cross-sell only customers. back their bought are agents. existing happy they for would the for from if

people need it So were anyway is want. there really to go about to they giving that disrupt no

agent, get If agent. we’ll can us have you you call call agent and want a and an and you can agent an you an center you - get local

you to do If as you want well. online, that and it do self-serve, want do to we'll

- year money brand brand. So spent and really of Allstate was that that was the Allstate strategy the and Esurance which is a leverage at throw Esurance millions the to money take of advertising dollars which hundreds

flows that Glenn, more with you So, direct that, so? we Progressive compete work GEICO and could making want talk to how the aggressively you're space. and in sales about do like

Glenn Shapiro

a literally of direct and an is agency we Yes, connective as said, flip Group. that off-ramp so Allstate and the this But would Esurance relatively together for easy built we're as And has team hey, have everything now that around process you we've say, with Allstate and Tom ran switch company be the a decades it to think play in tissue space. and accordingly system. been big had an would that put

to and that a done customer, that for that that really and as separate biggest can it outstanding. channels end And is Esurance channel. was because product, agent that And so continue pick This which common grow between pieces way great away in shovel it set compete In effectively its customers. for call a pandemic do is company we direct we up direct aspire it's that They that an the and we with in near a market you numbers but customer think goes wants run going have, and really connective market business. what term, job removing nothing a exclusive common carriers have to retention they've operation. back really the takes be a we and sales service there. a that is it full those do to click channel. then ways. we was want space of the the channel tissue of both about job now some through incredible of to out as see a It's that the access from channel. is separate be They've to our to done the open work really our in and can But work

Mike Zaremski

and the back the annuity circling question, Last business all we color. do to appreciate

think get Allstate whether a all a lot I asked transaction. we would entertain

I way. different the but maybe know answered ask past, in a you've I'll to So in that try

of pointed of their combined the you longer bid-ask a it special was very the into as portfolio that that of the you've environment that say some part wider higher ago? do rate hopefully transaction things lot than you've duration year guys backed the kind So out the their equity of kind private investments is a well of which a firms with moved assets, one sauce? how So you positioned or of makes interest so would lower right spread of yielding entering

Tom Wilson

a period get some do to at $XX one we've a you time. we billion look care want a if shareholders. we want sure take taken good $XX of mind, customers objectives you to for done of we've make down in to Mike, the annuities billion deal that And that First with what over couple slide of

do And reinsurance been ways we that different away to at to else. do everything left. of the to it kind from whittling open chunks sales, the if and these look so we're are two so everything all ways at it different last we we've all time have And and to

to interest I when you to rates it of - so, rates in. helps obviously earning have that the investment in returns. It's need low And terms interest portfolio you're important - mentioned it something higher gap less you from the don't just think does what lower because factor the are fill you

asset. properties captive more have we so scarce I seen go decided becoming out this like having asset managers I these you've would are think call they the and because - what

of with familiar want annuity all are you So a host whole blocks. throughout there and to buy that is

One, can have themselves. as company part finance money assets stream of you revenue it a for to of take two as with other separately a open So way to objectives. got our their the part it's a We're care money they purchase thing with long then our build to they that customers. and those meets manage people's and that better to

take So to then to red. go of bag. and paid and for want don't in all are it going And the our to to XX-plus these that's some that we get on going left years Las somebody put turn are it customers customers Vegas hole

to want deal sure our shareholders. make Secondly, it's for good we

looking always at we're So, trend that reduce further at opportunities mean, exposure. look I you to line. the

go it's line. - there We have itself. by is is change would a try and reason It that down trend slide we will that no expect to to that

their is So, collecting up like they either because they away. do to roll stop or payments term pass off people

you then can we way expect it do it. if should shareholders and but going find So, we’ll keep do for customers down the right to that

Operator

of comes Bank. from Phil line Our next question Deutsche Stefano from the

please. question, Your

Phil Stefano

now. guess is the the Encompass to so with of So down I plan rally transformative and three strategically talk about brands answer behind my brand brand mind, importance the Allstate the financial. of could you we’re in a part Esurance growth setting the of sun

plan transformative over we As growth about the time? think

Tom Wilson

Tom. it's So

I call There brand. think one amongst some obviously agents. now have would names, what one consumer I we is have And it's but brands right really some brand. we

there Allstate with us be out brand, rolling Depot, growth team starting have I but true Walmart we see the which you will and not Allstate direct, so, is Home Allstate we And January. gotten the of leveraging products. in Same would and Protection a driven have don't just believe backing. on without the kind on

other ways So go if market. you it's - two out are do really to There you point one brand.

or you about Answer Financial on then with So plans touch what agent you're just the as well? National Encompass General independent channel talk doing and Glenn, with could

Glenn Shapiro

point together it's in has really love. with said, And agency a up in the the decisions IA have all through a know stack with won't with out don't that get XX,XXX and XX,XXX a what Yes premier the everything so technology IA a National And always have with from the customers relationships really more those National exactly a General maybe Allstate. the and product the and on made we between Allstate They that in integration goes platform, part important think But most worth locations this along than General non-standard brand, IAs with homeowners capability. sort Encompass. in of with because The space branding I that it it's the existing I to is Encompass that as we reverse we bringing go need our the it is because the high is of capabilities really set is, Tom about National that homeowners’ net at clearly companies, between. General have and have and channel. platform full agents any way and of they I a space, terms into all But capability the two brand. I if in

be was the put space. be of player to most day you market have terms won’t the everything the of overall to able in it top and the capabilities there be that. pertaining very we order But to and to in go any push will be it of we the live space. But short a together as won't we be across. in IA bottom closing number So carrier major that second that, all will been agent size, will Number we will that in through and in X really because together independent and we integrate be capabilities. able those that and go we won't as soon And the that bring one goes products to part That

Phil Stefano

Answer Financial?

Glenn Shapiro

point Financial, it's our marketing in thanks. monetize anybody other some can cover a model. of there on very types the between at cracks comes to we that because point. and sort about us to Answer actually Answer and of just care this But the the point. this way I'm all expense we - different of get - customers take sure at narrowing of on to customers narrowing different from type at they cracks Are - exhaust make that is who cracks really That sorry ways. of care so can't always No, that a Yes, taking fall Financial, it's of is we

sell And a multiple and standpoint they branding from separate so carriers. is Financial Answer

Phil Stefano

I to think in the was going the a acquisition to debt that that your contemplating a what share currently might just broader repurchases? management General we I your you're capital you further mix on of that and purchase. note thoughts that intertwine National point able Q, - and back cash noticed the And find are hoping there for on there. into be was thoughts

Tom Wilson

Mario you that. take could

Mario Rizzo

the Yes announced for Thanks we the National - debt continues when in National be the how question. capital so fund along the terms National deployable of part and was capital the financing Phil. Sure, we'll cash strategy General all to General part acquisition, excess part from within that General. structure our strategy

hasn't that So changed. part

we is So to and dimensions across execute it that expect on fully acquisition. process closed the three progressing all

- and think capital broader Tom In on. terms of this early management I mentioned

assets. billion $X.X the available buy back me undervalued. $X holding think and over to to of stock We almost We got continue excuse readily company is capital We continue available have - got we liquidity liquidity. And to billion ample stock.

Our below XX%. debt-to-cap are ratios

in fourth as share the ways that. do We to what go the to of million financial about the on organization the have the combined of shares and $XXX valuation our So still with ASR current we one us stock million is authorization. relative X strength quarter. really repurchase of feel view of the That good the got led the We part that's on reasons.

beginning, under So that's mentioning point is, on of acquisition program. expect we fully buyback We left the by that said still $X.X from end billion that. General the complete And the as have to year. just we'll the execute impact worth National the we've continue to the and doesn't

Operator

comes question from of the of next Shanker Joshua line Our America. from Bank

question, Your please.

Joshua Shanker

achieving that the throws in COVID release made can in the not long-term on press were about your given possibility basis to a reductions of you reductions what is cost restructuring think goals COVID-normalized price really think out type given but going things? outlook into you job the are a the I maintained are? necessary the ratios. we be you were obviously bit reactions and underwriting curve I'm plan When order of your guidance, you little announcing on asking there On that years guess for comment underwriting a maintain XXXX, and margins your actually

Tom Wilson

sure [technical difficulty] COVID-normalized because I not But what I'm think. Josh, are.

auto I think are to we way answer in shortest on is really insurance. the that attractive returns

viewed running continue really are that system have don't say longer a maybe and years, that. what course achieved your it when which XX-XX for and I'm of an But to we is computing certainly the to is have driving, beyond I be we've behavior, as and When sure what going not goals know overrated. consumer We ends I is will particularly objective think normalization. pandemic we do COVID-normalized, to

And so, given are that in the a people work. time of cars from third to driving their they're and about

less. if when So that and will so small people of portion even big XX% a we we pretty That's a the drop, react people to commute can. of

it what competitive. getting while does, the more I of we maintain kind room us to returns gives think more have it

That you And attractive we're because let assume saying, they comment other money. trouble. good a to are should so, we in really who earning out press not just was have really focused trouble. continue because reduce money. didn't lot release returns. in making we’ll We're people and cost, about on airlines There but the not in there be are today were making go people of people having to We're

do we to need it reason. And so they don't are

in we're insurance in also everybody. talking as don't want more We auto competitive about particular. We getting

the that if in to a that and - away do grow conclusion, anybody it that money. you be both talented given Moving could, you to teams its going your took we're make say can give would farther like way which by question

expense like what we're to that the measure. trust pricing is measure, you but put cost that target have us, linked. it's the trying models price. out lot know And and could And into to on It's the aggressive, point that ratio you and some point do have your so, we earlier, good tied would it's mentioned tightly I a a that to to we but Greg were just of which a trying are

talk to publicly. not about we're that So willing

Joshua Shanker

headwinds on a in just And a some protection quick think as XXXX Do was will Obviously buying record and whatnot. that are or stuff trading square electronics you purchasing yet their trading for for XXXX people at XXXX Amazon plans? one stuck that and consumer year new homes, policy a been Allstate growth. square on face lot a year they've beating of

Tom Wilson

lot up getting terms recent a Walmart say were the than whole This both what Let Depot them you a for But what thing protection with of in then me independently answer IPOs there. would worth do Home Don leveraging for. this more happened? want and we the ask put server Don, being Allstate - talk and that, to for SquareTrade than brand. together any against that are of do about stronger what just you is we in I we is commercial we a paid does it out before which do

Don Civgin

Sure.

strong Josh, So, the first, long trends for a have been time.

with existing growth things combination been year, driven by well It's not that's that. a since doing they've customers the just it's drive all BXB help talked to that thing of customers the then acquisition. in additional So and addressable It's SquareTrade like been It's this of retailers this been off, the able a sudden took which extending been added they've their market. that total which about additional their customers. is customers Mario they've

So than But carriers more electronics, dramatically. it's three and U.S. forth. years consumer it's that's electronics It's growing since it's ago appliances. international were now there business to largely cell furniture, retail. so now the consumer now then It's

they you're So regardless. to last expansion years. by we're year's results, for going which strong board, been COVID, were of kind the This been be consistent the has it's across impacted right, three

was of in themselves online, the really that to wasn't We that lend shopping ones just buying places, been benefit it the year. the the going people it are great people have So COVID warranties that categories are be the customers a have this was we but purchasing. got to customers

So whether you office as it's setting or said. up up our electronics consumer own setting

when good this about has going I years for underlying anyway. have XXXX it talked a have that will been that been year I And wouldn't mistake but to So be impacted, assume good three get you positively continue. and trends then been into it's think those been it would and big

sales more And going probably when dampen - that's so, do on of that's expect power to the to will some across at economy continue point think I hard margin, grow the will the to still I But lack in we the very retail a going them the and predict to well. buying happen suspect how to the that's that's trends underlying happen. in continue strong manner. board,

Joshua Shanker

Thank much. you very

Tom Wilson

Allstate forward is, in the to you to Protection in when XXXX mix policies of change some. Add going look that plans,

per see the as into come, particularly policy. get continue you'll policy we see the amount So you growth dollar to bigger but accelerate as will revenues

warranty get one a or iPad, thing on a thing So just or furniture. for dryer washer for to a policy it's another

a off may and should you expect growth policies. increased and move bigger drop into see gets policies see you you we maintaining dollar company revenue growth, XX% still take So hard of slight as but

Now one wrap I'll take we'll more question up. and then

Operator

the of Paul Our then from Piper. from the Newsome final line for day comes question

Your question please.

Paul Newsome

in changing, driving was bit, peers not just seeing and behavior made some changes some about related regular you're example, terribly these work versus is for but little to had or driving a what specific, revisit you you've are already guess pandemic driving. I hoping comments about could that's you talking nothing I

perspective, well, an insights a were state basis. think from be interesting. As if happening what's kind state, that but there dynamic specific very early natural a that differences from into on seen material was I would is to behavioral of - Again curious you've if I nothing

Tom Wilson

don't public. why have of Glenn, part you we Paul, amount the is recently driven that a million with cars, answer other would I the times company went tracking XX XX that [Aire] that. say, miles

we of this. so math lots good on got And

is of miles share is on impact what frequency. what the and just can with Glenn, driven in you So, terms he saying,

Glenn Shapiro

staying And you the of total able the some state in your where to the when states lot are everywhere got about they question by [Aire] short Yes. trends with absolutely but question, or based to orders of deal for differ have when we've answer or of is There where how and true just of this home the versus are either data in things we're really with or yes. more sort Tom Paul, terms detail. differences driven, billions home commuting pandemic will attitude are see cases a at the And that get stay is formal thanks and in, just into and miles the by have are state it anything in have coming on There and you either The into broad of state. so see data as on. with of shutdowns they informal not interesting to miles getting space. they said, partnership

on of see happen is on made but couple losses we there difference. is differences in go the prevailing of our that of a So we A enough similarities it just rush state, to things, XX% sort tailwind about before, do comments by of hour. see than there more deeper Tom

terms of rush in actually of in rush effect double hour And we so, of as we're hour. people that during areas. a hour traveling the because accidents of fewer areas so more again, than and working it's the states one different fewer metro gets this get frequency true in a we But in insure to through our rush those some we drivers that of predict, obviously non-metro are

And the you're they you And congested not remain. roads, the on not an less that of so, accidents it's still have in and who that are, having zero ones fewer because see traveling, you're accidents, not types accident. are if so two,

So million random it a out of is not is not It is very take XX%. there a of pure them. a before mix and if specific - XX%. you a were accidents XX% It

mix are of so what's are all of level state down at that very different in we to a things detail. the is looking and left And these granular with

go-to-market we pricing before, take, actions as that, take the the are highly So those I mentioned actions we specific.

Tom Wilson

you. Thank next participating. and had for Mark the we'll follow-up things talk to an questions We any you you quarter. get So didn't we excellent obviously for quarter. is thank available all to,

Operator

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

now day may You disconnect. Good

The Allstate Corporation (ALL) 5 Nov 202020 Q3 Earnings call transcript