ALL - Earnings call transcript Q3 2021 | The Allstate Corporation

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Operator

Thank you for standing by and welcome to the Allstate Third Quarter 2021Eearnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Mark Nogal, Head of Investor Relations. sir. ahead, go Please

Mark Nogal

market, Good to Call. to on will After Yesterday team we to of question-and-answer Jonathan. and here news XXXX supplement is website investor have Third results. @allstateinvestors.com. Earnings these session. and the close the Conference prepared related following perspective issued morning. you, our Allstate's release materials Welcome posted Quarter a we our Thank provide remarks, management we our

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

Tom Wilson

your Well, for and us investing you with good thank time today. morning

side, on Slide Let's X. on left-hand start talked Allstate This strategy about before. the which is we've

XX.X%. to its policies right-hand Protection the highlighted have share, key providers. And and expanding retail profit increased two offering are grow continue with expanded the liability on and and force Plans rapidly quarter by the the product The two by third market intersection panel. ovals left results broadening solutions. are the between. those personal protection Property-liability components; We see you Allstate on both network increased of

benefits declined of a now respond income primarily up implemented XXX claims. and net sharp declined in to price growth loss the across Underwriting from almost costs both that reinsurance This increases a quarter. substantially, recoverable, policies year long-term due return substantial the insurance and partially excellent our were to they income we proactively were for income We've were cash from the adjusted and program income. continues investment higher performance-based with us Ida, [Indiscernible]. success, result, of deployment quarter. minutes. transformative Revenues rise return long-term were results costs dollars to the talk includes in the of have was Capital increase net and a to offset billion-and-a-half auto prior in in a primarily related a mixed. we'll settling to couple As loss risk Financially, by shareholders in million the more position Hurricane which significant to force about but results

We this also just in two of divestitures completed the one one life our and week. and earlier businesses, then largest annuity October

That the million that's the as increased and So to to respectively. premiums, and the portfolio. per Income offset the growth, quarter, income partially higher Slide auto and XX.X%, first underwriting sale premiums year, $XXX investment expenses, million, $XXX the income lower and quarter let's net offset Net loss costs. first investment months go as million to to on per lower the the of was the by income share was costs. was lower compared we loss and brand was Allstate to nine [Indiscernible] reflects billion share income that's was of the income the investment income policies was prior income, XX.X% homeowners of property increased reflecting the earlier net the the than both $XXX above which by higher million life XX.X% it's prior-year to performance-based General annuity quarter. prior strong Adjusted compared X. And months. in and reflecting prior-year in XXXX million premium billion income Net recorded or more in the net quarter, that in compared diluted business force homeowners due $XXX $XX.XX in earned and the Net year. almost to largely and the Adjusted prior-year for was for quarter. $XX.X due higher loss income. X investment year up And Revenues below the results $X.XX decreased the prior higher insurance acquisition. and National underwriting a higher compared X liability quarter $XXX from the higher

of through impact initial for on How Let's which the obviously supply created and third longitudinal subsequent And do chain turn adapt quarter the quickly, because us the we results about to pandemic let's slide perspective X. it we is But I put before this requires the would in to pandemic. the the results. the go impact of disruptions, talk volatility do. our

the of in Nevertheless, less promoted the to see fewer perspective, And brand is slides. the off due that's pandemic, the in the dramatically, overall road this offsetting pandemic. the opposite impacted miles margins which average the insurance back some And and with from can cars increases. money pre a auto underwriting the of will accidents severity provided congestion telematics. was around price is world. since a severity during of business rate And product, general hours, results before frequency levels, standpoint Allstate rate we moving see from that just national and parts as level in still number begin in the From economic to modest So aggressive used of The original to From story some couple of improved out the customer significant this pay than below to of was that only year, increased, this reductions so introduced payback year, on for the an prompted we we've a in of led And has through in in in to prices. at that -pandemic to temporary non-standard a driving Auto growth permanent increases for products. set consumer commuting Since the by insurance reductions a reduction, you the debt take claims retention. overall lockdown the -- fewer shelter frequency, equipment chain in material levels dramatically supply on frequency, been column, economic increases accidents. product national however, took take with and resulted auto the increase accident to and relates rather mile. speed drop level. pricing rate into in auto and on really the then, course, really impact a customers while governments occurred it and the is place XXXX, leaned and from our really frequency our right-hand been and substantial there response modest unprecedented as back proactively increased we've to acceptance percentage being driven dramatic has some benefits. large telematics the with which there in Milewise disruption increase the support This Mario you

also the the pandemic a as a is Now, end beginning well. tale and the impact significant on has had of the of portfolio investment this

a So investment the crisis, equity spread valuations down results. in have these of funds. a in out impact kinds a over investing course, early were we decade, really on of had long-term and Then broad-based it negative

success. this But quarter. of some negatively. course, so portfolio, happened with future other the basis, which shareholder long-term a So But interest pandemic returns our is at what the opportunities of on rate you Mario onset whether had third that lead more and unrealized businesses will come going stimulus, have that presented of many strongly. transformative does lower back decline results growth create course, gains years. the And detail positions our the evaluations opposite adapt year, of which and increase income, that's that equity In after But our rates had to the been economic result that in quarter did in through the and an now some portfolio. have we've or the market-based slight this is is it reduce ability are do we in for we've it's to Allstate so what's impacted, X, XX how in X, interest seize see And the happen, go positively, continued this

Mario Rizzo

Tom. Thanks,

Let's prior property-liability underlying quarter. was in recorded primarily X third The of losses, increased XX.X by XXX.X driven to the increased margin review year move combined ratio This points as the to to and well reserve Slide third compared the year results quarter. quarter. chart the of prior the quarter slide bottom catastrophe the re-estimates. non-catastrophe component quantifies year at in prior The as higher of each losses to impact compared the

were accident As commercial the as and in approach impact lower frequency of due auto comprehensive comprehensive most in the billion risk compared adverse increase, of also excluding partially shown charges reserves strengthening you return program. impacts reinsurance X.X were impact expense impact middle of reserve from on higher, Hurricane auto on to lower restructuring the related inflationary wildfires This other the subrogation nearly This negative quarter asbestos, $XXX a related re-estimates drove had loss Non-catastrophe ratio, to and reserve annual intangibles, Ida, quarter business a reinsurance quarter. catastrophe XXXX the review. can in favorable and primarily included the by following the from our of insurance Gross ratio by runoff when underlying following $XXX auto and to to reserve a losses see, in the prior-year losses segment, of the auto combined property-liability was environmental, our lines. chart, the settlements, Higher prior-year the prior of due homeowners purchased the amortization offset quarter. ratio higher severity. of of in of impacted year recorded drove personal long-term of our management primarily million increases catastrophe reduced benefits the $X positively recoveries X.X an net million and demonstrated strengthening and points, in to but the

competitive X, Allstate -- late at XXXX. and of for The insurance accident the finished year year. and the loss quarter auto ratio over Slide implemented bit first due months a frequency, and X XX.X insurance prior higher enhancements to reflects go to Moving underlying profitability. higher earlier increased severity, deeper in brand XX.X on combined loss the this quarter increase costs XXXX pricing to let's auto

XXXX claim of underlying XX.X% to relative third remove was decreased quarter, of XXXX. The to increased -pandemic the frequency of generates chart X.X by by X.X XX.X red prior XX.X% short-term XXXX. this ratio which XXXX points, trends third Increased to which increased XXXX, to points relative you as ago, to on part Favorable X combined but lowered from XXXX, combined frequency compared as ratio claim an underlying relative reductions transformative The some XXXX, combined for however, on quarter the auto cost the reduced pandemic see the to the increased we attractive auto in to frequency the brand pre lower favorable capital. year, XX to in severity, can ratio quarter implemented volatility. compared continue the return ratio years by points experience compares versus left the expenses impacted of favorably Allstate bar. property results. growth, auto damage The combined While levels.

XXXX. losses the XXXX, increased average prices prior the X.X third severities increases in low in reduction shows were This As right, in of we increases increase higher vehicles. manufacturers ratio combined also Tom in the costs in values loss significantly which claims were XXXX, expected core of see the much driven year, OEM the due strengthening chart in the first The increase by equipment for you since left. in as first quarter an quarter. twice the lower both enabled increased beginning prices. claims. insurance auto the second for in higher mentioned, supply CPI accelerated Increases report XXXX, as to part has by repairable have quarters Since accelerating This disruptions resulting the by a as early for chain began points, the in resulted loss this which XXXX. ratio for and on and on quarters the reflects impact parts CPI. combined of the X original year, increasing and late third used quarter two severity increased bar car pandemic, the third Similarly, shows the these vehicles during of to above used the severity markets, lower severities in the throughout XX% roughly total green of can the Increased has car auto of year up increased quarters And XXXX,

X, which Slide profitability. taking let's flip we're to improve So steps out auto the lays to

rates in to exhibiting 's ratio expense strong As After claims you ratio, operating industry-leading time in an long in of XX severities mid-XXs, in increases from range states, the We industry-leading to lowering in the To implemented into filed top, in and the continuing the we to combined in chart and selected terms has we quarter Quarter primarily received proactively XXXX Quarter, fourth that a third maintain XX file Allstate The the rate increases we implemented on higher in Fourth rates auto as be early can year-end on been publicly rate for the execution Fourth increasing see plans in have the XXXX carrot, margins provides insurance already right over maintained quarter written of as in Allstate costs. lower top states. quickly part our a reflect quarter additional have prices period well premium Fourth third third into the expertise. with chart denoted in to and yet Quarter. of September. a with Those adapted operational continuing states actions increases are and ten responding the states improving with effectiveness, as in rates, approvals lower with the with XXXX. results, to

average in rate locations to with increases states in an the Quarter November of first, X.X% year-end. an X% have looking ahead, XX as additional during of X expect increases increase already We we implemented price by pursue Fourth

regulators closely working implementation, lag with to state detailed and decrease premium are support and time We filing, between provide the generation.

into move increased is higher insurance auto prices it next continue reflect we will to be year, severities. As to likely

Cost claims reductions to be of part also efficiencies. We advanced and capabilities growth continue process to transformative as leverage also will implemented. continue

and further improve transformative discuss through turn expectations X cost slide our our commitment Let's to and to structure growth.

settling in we've This business. of expense expect enabling an point coronavirus an achieving the intangibles, of impairment our restructuring, points underlying X.X tend provides by this represents new XXXX. XX variable. and ratio, a measure non-GAAP can additional excluding occurring Property-liability and improvement our further amortization, a purchased levels costs slide, advertising. per strong referred year to our achieved relative drive expense related As within Through this excluding as to you current approximately which improved with of with and expense the with claim months the see insight starts year-end underwriting to an point about comparing the then into adjusted expense more measure of innovation on This also reduction best Over of years, ratio. X XXXX. adjusted chart of adds XXXX we time, X ratio improvement X bottom the be by points the associated trends believe XXXX It ratio price to investments defined expenses, through in quarter, our position claims, execution, catastrophe to we the to We or XXXX relative an from when X average three first over competitors. improvement of expense

enhancements the the combining retirement how legacy a to growth. growth X, automate around the returns. to to and Future higher Transitioning the positions of organization, and flywheel and to distribute for to reductions a growth processes While components model lower let's cost. up continued from transformative slide distribution transformative long-term profitable level of growth go create together success work Operating us organizations efficiency of gains technology. digital combining how show transforming center attractive maintaining -- cost enabling

increase in visual, of a let's expanding to increasing at you analytical further by consumers and share, personal sophistication new puts a value new each enables customer costs, by more the advantage acquisition, and know growth made let's Enhancing top to while improves price property multiyear our position Starting the to -- competitive of sophistication This maintaining position be this more cost - digital commitment value about flywheel insurer know, improving date, better customer progress transformative acquisitions distribution. is Increasing We've the and will broad lower customer our customer expanding deploying component. pricing. low ecosystem. returns. in of initiative technology building a us market customer As access, and a proposition. take a affordable across significant cus distribution with value, attractive investment to liability accomplished

has to broaden us offered the platforms' shareholder costs, technology to solutions flywheel share property-liability additional increase New enable market will lower customers. create and to enable further value. This us

at changes Slide to the XX, which also to let's look are Turning distribution the system, underway.

policies which As chart to brand Encompass, compared you policies on and Property-liability XXX,XXX, prior-year compared of by Allstate the force General, the auto to growth by lines. slightly grew quarter. property consecutive increased policies in can growth XXX,XXX the National quarter, side in X brand of sequentially liability XX.X% including increased see quarter. left contributed the of year-end. slide, driven growth includes third to the prior-year across million enforce for compared prior by personal Allstate policies the And policies

lower a in right year. existing have As decline right slight to the agents. of prior normally shows compared the and channel generated growth Allstate you increase the see by auto new a total volume by X% chart middle A shows to the of the prior can the The year. on appointed in than agents newly increase that section by applications in left. a table more been impacts brand compared personal XX% issued would which the on breakdown from The channel, offset business new generated direct chart

being number General at model As new addition growth the know, new new drive in thousand quarter. XXXX, appointed Allstate in applications you auto beginning higher the a we developing XXX reduced since National agent agents The also added early lower-cost. of we significantly are to of

we before move of now me to to over Q&A. Mark slides it the turn Let cover to remainder the

Mark Nogal

Thanks Mario.

million Revenues, Plans, net written of on realized and gains due Protection services premium the continues of third Depot revenue increased quarter. Home Slide $XXX grow by Moving and million excluding the XX, impact increased profit. focusing XX.X% to a appliances. $XXX losses, to in to the to relationships, launch the protection

X.X the third million in in as driven well increased Allstate net Arity. a sales Policies now by and due XXX was Allstate quarter, of force Plans increase to at level part was and XXXX. growth to was the written the the related to increased national $XX an driven quarter, is by compared Company were of acquisition, milewest protection. in which Our expenses times profitability higher integration in premium and device as Allstate to prior-year Adjusted of XX.X% protection and offset quarterly acquired Protection acquired LeadCloud costs the Transparently., of representing net by driven Already growth. identity general as expanded by when the income growth revenues identity the $X million partially This million higher and operating investments product. in

year let's XX, quarter, investment in income driven $XXX to as chart on left. increases the investments. the equity in in million shown income investment in totaled the $XXX million Slide highlights million shown higher income as was $XXX performance. performance-based gray, quarter, Now which the shift quarter, reflecting by our prior private the above Net which totaled Performance-based in

fee was quarters, yield, a investing, long-term in of higher prior average performance-based income. These shown was large impact Market-based portfolio meaningful below prior-year quarter represent of had idiosyncratic interest-bearing contributors and with $X several approach assets assets million the below XX% average in growth the to from quarter. The somewhat impact As mitigated in years under the a prepayments on of with blue, XXXX income management by nearly reinvestment inception prior. coming results our and broad year-to-date and results. rates income,

year-to-date, for We valuations optimizing rates. was return quarter total per appropriate to by risk an Our changes equity income interest approach offset in active X.X% take in third portfolio horizons. and partially our investment reflecting returns unit the and X% higher

and into role are activities overall return important risk an process, our and generating investment shareholder in Our enterprise integrated play value.

portfolio results performance-based While the returns. investment view longer-term third in with the be continued strong the to we quarter, a on manage

over portfolio provided private equity above time historical last the various strategy return and in portfolio trend total, has and right, broader by over public our we quarters. several experienced On markets, the annualized horizons. have with Consistent our our returns

economic prospective longer-term market and in While with we expect do line performance-based our to returns depend returns future conditions, will on moderate results. our

growth. a Now and provides XX, occurred shareholders, Allstate's of capital combination Slide sheet let's quarter safe balance and outstanding to investing strong and shareholders the cash including market of capabilities $X.X have further the Already move third highlights common reduced generation, excellent position. the billion on General's we increased completed dividends XX strength share share. in while cash leverage to during Significant fourth cash Common to October which shares repurchases returns lines by over last been stock flow returns Allstate through quarter. Xst National months. personal million X% in to integration $XXX for auto successfully the strong acquisition

closed currently capital, executed. York. billion Life We divestitures These Allstate the the factored divestitures was share billion approximately up also New free Company being deployable recently into repurchase of $X.X on which of Insurance program $X in

returns the XX, Allstate to as the creation challenges governance. of Innovation earning and also future. and growth the industry-leading can and by is transformative critical execution, excellent today and creation. Turning address has Slide longer-term requires the value Sustainable delivering let's Allstate's business view excellent finish record on sustainable innovation, our statistics right. our with attractive execution, well implementation and shareholders, in value facing see you to of of customers, risks, to us serving proactive on track for has focus on a management macroeconomic the capital positioned also upper an

shareholder With companies in shareholders top an let's value. and XXX an and XX% example, and line respectively. the questions. attractive returns and context, cash the of the Execution, that will XX is for shares over last As XX% years outstanding your providing of repurchasing X innovation, S&P continue long-term open to drive dividend by XX% creation value and increased Allstate to

Operator

Instructions] [Operator

Operator

of comes from Inc. first from Josh question of America. Our Bank the line

please. question, Your

Joshua Shanker

direct sees there's engine in talk is Yes. of the trying homeowners want with price about for overall does especially their two customer going you're together. Thank understand. your when homeowners and incoming to One a Allstate add centralized I up, cap want relationship pricing guess can dual X, bundles to And footprint, changing the given a to things more and greater bundled with you. without I its the customers. like, geographic of auto business footprint. homeowners I Allstate's if your conversation what customers

Tom Wilson

you I'll Good we've Glenn morning, Josh start bundling is those and customers. and long jump stable, on know, auto as homeowners focused Tom, been can then first are in long-term good, because

putting You a for two get do together. discount those

there's it having So advantage that. place in putting besides X to it And buying an from the customer and of contact. one point just at all we've been good

If It's to are you but customers, at than of are our we exact doing drive in that. more growth auto in what good look to about data agents to our attribution, higher hard because a get And little growth feel this we the our Homeowners year. insurance. be individual it appears doing bundling

to the repositioned of underwriting $X since of do attractive as for almost As investment a X,XXX, back income. of billion late homeowners for of in which don't Gross we've eight over X that because it X believe don't get couple been a is bunch income multiple the course business the much margin years, money One made relates years nine is over point We've on think homeowners I event. a last we've reasons. you to of we need decade thousand you -- or middle

up more put got you losses. the you to are because the results have more capital and big volatile Secondly, tail

that all of bring On grow. to So where bear. it, individual we we as is states we math to grow seek

then we amount there's can the catastrophe a that put we're a think buy, good we reinsurance And there's fair highly even where for get in that. have on if up to the us a the got do of exposure if and it. we but we compensates capital margin way that's have to it return, state a run so sophisticated And we'll we

it. So have -- the sophisticated much highly we geographic into a model focus is really

On need as crack much we code now, don't direct right to homeowners the business, on that. the you direct sell still

have doing claims our homeowners of far. an -- in some with we're view Glenn that table the continue thing Before I the management. [Indiscernible] serve we really touch the our as ability is General will a to And might of But in so platform products, what we Glenn -- on on, reinsurance the have channel National our us the our to want our run can lot upcoming gives agent us, gives independent to programs pricing, because customers. expertise, how

Joshua Shanker

you say, where footprints well? address as just and Glenn, I [Indiscernible] retention cat want can to

Tom Wilson

you if take mind those? both of Glenn, Yeah.

Glenn Shapiro

Sure.

a on but we so and we want and So grow to to home really it, it it, comments leading into a few Tom homeowners got business we handle strong said. as care want

So, course we've past bundling deepened year, discounts. of the over the

of so business, XX-month and CAT our We We've spite right combined there. able to want writing around And CAT-prone about some I profit of areas. really it XX by on big areas, so attractive mean, Were writing write, right a ability write want that tend some I the where said, made $XXX But underwriting having we We and We're around right agency view look to we that broadly. made looking a come for Though point Tom looking it's we've and now, attractive it's stringent last in the to code to. in across we have money more -- now, to direct, business in So in CAT it XX as offset the our able we're true to board we're you how of grow we more couple customers Tom that is guidelines, some overgrown grow where the But some, write months, of in in states. them quarters. incentives at have in, as we don't it. something footprint, areas. the years million we Tom the shifted our over competition last to direct same for at that we're good in create bundle. and back good that diversity without we're we're prone bundling. said, crack cross ratio so pretty to make our the shape. can we're Like, we mentioned other more, pretty To if it write for and book XX.X write can team write but quoting that to to consistently to

of distribution our the and that breadth into In terms IA our of channel. would growing and be

spread, IA both we General the and is of products, will have a run whole our And a broad middle there lot and where be would homeowners to opportunity. home. know, Independent and prone geographic auto areas. new huge not a our in. it that channel National branded, is And sort You Allstate's be market cat Company, as a just Greenfield agents the adding of

Tom Wilson

Hey ask I I [Indiscernible] in trying between industry. me that you're because to let the on think why triangulate going what's understand just

First, We don't have this problem. so in lost far catastrophe million a we about don't bucks profitability billion exposure have homeowners. about $X.X -- and We We $XX believe only we made year. a problem.

we've So of pointed we'd make basis. of Glenn but profit you XX-month look period as out, like underwriting fair still to make over we more sense a but time, when had a of money, longer and amount downs, ups

have don't So problem. a we catastrophe

retention with don't poking have restrict -- you're what and up issues. we to stuff So end at is

I mentioned. used to one products. insurance the part be and your called have in brokers and to though customer insure and of repositioning the there thoughts biggest -- We not a when have I you the did we now insured I of have say, to we were us And used going the homeowners with you am done was it call and decade been latter And that

auto you Vegas. say and here's And the advantage It some business. in I on people, when in another impact our to Company. has through think country maybe your even

policies are a in which business X, said, speak I What what the do want I'll when had we downsizing. So and because X my does our well. got to can't how customers issues they business growth hurt. as to, take X homeowner's I with down auto million by those to competitors year-period. business, what it. bundle It's people for going or a go run know is they Well, they'll do. know good went want is manageable. to Glenn else some over someplace get decide It we competitors like, We are were We we

growth serving along opportunities, we're and money forward way. the make looking customers our have more shareholders We for more to and

Joshua Shanker

Thank you.

Operator

Thank you.

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

Your question, please.

Greg Peters

of next where go your an attention fact And rates. going substantial, and then to that just going Good your X, I'd particularly you've be your some been that rate I pricing that wondering like if how It us is severity competitive you going you positioning with backdrop, by implementing. against going about the like is go think of to states? to given through to could and to raising I where you've was you think so industry And reset be ones identified increases -- on turn morning. year. struck feels most was you're ongoing Page has perspective we chart deployed, of to as other provide most this that's be the when the

Tom Wilson

why Let you on me -- in maybe Glenn, -- and let then, you doing start individually. me jump don't what are

going a threat think we're place. claim, enough a is this never that to in or done. be seems bold decide of don't you the And to way. are ahead I and everybody -- mean, I'd that. it There Because this right else. And markets necessarily I in see there's through same we today. of the firstly, I once kind anybody is about assumes think

are to going expect get would good is did can we is answer is some sure of delivering What know raise plan same know and and through to take Secondly, those to our third we end so we what assumes do. that that and can what you do the which than in which prices terms the increases place shareholders. think going that do key trends had a frequency we we they will make we have in happen do is than that, that of differently. we did. to of a value we trends when don't for we attractive do auto do Glenn We sooner are know And competitors component in you sooner is them returns insurance,

grow so we forward are us. have positioned of transformative choose that's will insurance and to venues, you in -- back where is we course, talk different certainly how place really ago. will hard we up to to we're returns really auto through do been and future, We move go growth I over can are position. they that It's glad our have what dial about if I'm where And the competitive I'm do historically? to that we terms And in able that your profitably. to have the of in reductions where the all glad also cost want share X to that. we strategy. many already be plans to But are do we started us do we we growth know to want years take benefited which getting Glenn, -- positioned that tell,

Glenn Shapiro

Yes. Absolutely.

points to a thanks, important going When that Greg. everyone talk about that is right couple have of or position. to take about everyone you're close competitive you So you hit to And rate.

while, itself. process. So is we as in about this of for going in its used look at is would around what terms about causes of But terms, talk I it's that limit like have broad root really the other the to and think this coverage the severity, vehicle like doesn't cars. a that's be collision than policy of value a part the a which of everything as price is that to is you simplest coverage dated of

across to in that limit no everybody by And turn, happened plus industry. that policy So XX% premium. change real experience on our went with coverage in up the

root clean your it's a So have and to cause severity where something rarity changes. is that you that Clean as is a

reductions address ones. the going expense and So we be talked capabilities of that after about levers bit one and to rate around a certainly think and we've other our it as our claims has for we're will

we other price So X effective took third the in in the third with that and come. far quarter, quarter fourth increases went to more so quarter XX the in

doing a is position everywhere. is about think this made we the we'll a that competitive lot I and broad it from key And just progress. be So

over significantly. significant point, improved therefore the in last with the we made the So progress year starting position our expenses and we we've were competitive out, taken

close of Our significantly, to some business leading greater saw. you that new the rates improved

certainly And rates to gain the keep as that's position is get going goal goal primary we've our that and It's proactively. And it after they pretty to that competitive due. so rate, we doing why where we're take But margins our made. need be. back to we're other

Greg Peters

went And more lowest adjusted us marketplace. expense this. leverage improvements, on for ratio sure where thought to of also is, the some expense Thanks which in pretty the come we Great. Slide give comments get pivot in X, recognize achieved another XXXX, you expense objective, going not going your like where I'm And include you're maybe into you've long-term included color of important and on really a to improvement, terms advertising the that. the in Can think the a lot ratio the step some I this. in feel striking. I is to back color that leaders slide where that's the will on put if terms you've when most objective it's that I among just to presentation. that from. because get wanted clearly introduced you to the then of in to

Tom Wilson

now with the come to cost of advertisement? back the and reduction want do start to components Mario, you

Mario Rizzo

Sure.

I to value distribution by that, drive component legacy we're expense to ratio, retire position. to customer is drive associated objective for the of made. So of level again to talked our really down of reiterate our reducing X-point we've in efficiency and which focusing by progress question General to we've improve down creating we've enhance the it up objective do continuing And years. price by opportunity the really on maybe what is, go several going made your create we've of and underwriting past have is to created costs with the of the Greg, to And to about which more both acknowledgement sight kind and National just continue that to got inclusive and continuing in as claim guess, the -- the and why combined made, as to a is over we've expenses by by the progress we point, we've a synergies lower-cost start thanks additional digitizing improving our costs the addition things like technology XXXX, productive model. do acquisition, distribution line but that progress capture to plans to processes good competitive

to get once to relative value and the can to -- from growth. got operating we an structure, opportunity the underwriting And got plan out how X us there, that's in and deliver accelerate additional we position a we established think the get of goal going both competitors, to and claim and we've our cost it's our we've a So both competitive side. why perspective and a customer ourselves the really to well really more points cost to position higher have on point, price

Tom Wilson

to go advertising So let me then.

in on some And growth transformative Let were $XXX repositioning the am glad of because new, price, have margin ways repositioning reduction reposition it. created, start by frequency use right, did in growth buy started brand. long-term when we out places testing so sophisticated in me We growth breast low, on didn't to you we advertising, more with simple When able it. look I we did able it's to the over to it you you was were invested when million we that boy, for got a more the to because do a brand. do transformative of invest we pandemic, we more to transfer the but sure frequency, do get brand, at competitive the

how we want You do future or that about let increase the in people in be depending What will we much grow. the that that. to know advertising, restocking

come want will the long severity down the be our think the The pricing will we So up. advertising I of or flat to point got some, how as that we longevity move come earlier about we've make sure came because forward, keep up right.

home as pricing go that got right get insurance That advertising. known as bit doing a you've sophisticated going advertising it is the as always every between out really as a other But it's the lot sure in going make that's you more of players. by some of and auto know, to want you before prices. marketing out flywheel we're do to not war well large said, You is getting because there that part

time, your and customer, in the right the the price with complicated. got funnel, really whether math right right funnel, lower You to space getting it's good the upper be is right at to

volatile And so working advertising building dollar is The the this that can't business, reason down kind that customers how it so sophistication, keeping was we're looking And the done. of measure are price. see penned your like a achieve we is in is we down we've to on and took ratio the hit of because costs the spend what your other quarter. out effectively out has on more well you at investment every guidance of it competitive thing how been for expense growth is it really running of

Greg Peters

Thank you for your answers.

Operator

Thank you.

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

question, Your please.

Elyse Greenspan

then upon the take All in more on you're Good business And of loss price that little slow question the bit Can surprised the you side trend with commentary, direct expect growth you first you direct new you the in new ways a right, this growth thanks. on growth was that? guys as the from you during the saw you quarter. would for on level to that given a I push to know saw expand additional business system? [Indiscernible], mentioning. increase, there, in through but guys morning. started quarter My I is and the was the

Tom Wilson

to Elyse, have Glenn but in and -- direct. Glenn let me job his getting done at and fabulous a give team better just that us

of Some some it. is advertisement of lot see is of about, better we just getting at see a because the we're growth that you growth the the you talked

And you closed so the when we've effective prospects we've closed at the We've study capabilities. we in -- getting Glenn what in on, about combine to and Glenn brand what want more we're on put to cost. much just once talk address? the for Allstate

Glenn Shapiro

direct. nice we're sophistication, we're But got of up or making The things our partners of move into capability we're brand be say move we and making marketing, centers, Allstate that doing call would web, year-and-a-half really of any I and directed some those brands chunks a effectiveness I because our years it Tom in prospect with think Yeah. of said we years up. in up Allstate better that agree our because competitors. dog there etc., our what XX getting on the just ground the marketing at as with helps all our have launching the it I whether newer sales, we've

too, take the like The some rising this in in in shop, to bunch they new will we'll And environment customers. were we're situation that's of own only rate whole that we to opposite. a situation. Even other having people business, often but is, for create actually ones own create because tailwind shoppers a where our of lot disrupts price a with it a of this. when retention. some really going expect find better people But our thing we're might to shoppers, a environment see likely be price if taking in in disrupted, Because rate, the headwind you

ours, So customers there and other companies. lot shopping, be will a of

an more Tom customers when what did said, we we're say growth leverage and happens. when transformative for to ways it's we opportunity disruptive we so, did we really to as have buy market did that happy because And

Elyse Greenspan

terms next for a us of think just take margins back margins months is or would in to can done quarter, six know have that We've think question rate, situation? the year. to your this Property-liability. what gone kind at XX is an your so the -- think will rate putting to auto come would Thanks. expectations but give XX target of over that target fourth you months X believe long we specific there, I there? system, about I but range X don't acceptable going the to I'm third the wrong month we level for do we an majority that of you've you to next quarter, policies about it in time if And to a get overall awry, think margins, it second on, the then your the you and months, How my me as correct you

Tom Wilson

that don't in the we as aggressively do to on not to said, other back look say, down. hustle camp What we can he go you I'm in think going inflationary as going don't as his can priority are that going on there. I soon get we're used business. suddenly prices be at we We to because got what's on as can car But is at margins happen of to going can do pressures. it. auto go when to this look I a insurance to time inflation, of the will is the -- it, predict range think inflationary, like That the you the we're at. Glenn future part Well, get lots priorities

the car for I cost being use $XX,XXX Like, think Fed worth and a you're it's it $XX,XXX, not about everybody you else buy transitory. no and what $XX,XXX thinks of matter a thinking

market up to buy same prices. are I at is inventory, in The Parts and distributors people, you prices, embedded it's inventories, with they -- parts there. think oil the not the down thing buy look is where that. true when prices everyday, it gets dealers like system the built go price

prices the transitory the work opportunities take being don't farther will up what all it we take this unknown system, at that to to will down. and push really So see How way part. through really Is the long OEs coming

do So going cross, it's it's up. going will in hard know to is least to keep just you half-life, determine what when they at

until lost And that line. bottom-line the see plans cost. top-line As bottom keep bottom back in insurance. But get out, will their we being basis the line on to dollar margins. margin long point when time will to is underwriting as the or a going it being the on And we then get back auto that the up movement until basis, we in past percentage going same a keep

Glenn, You have that? on better frequency anything can to where a can't really handle you until add would predict you [Indiscernible].

Glenn Shapiro

policy. do we'll tactical Elyse, I completely know of our states add X months have agree. the adjust. to rates, and keep its answer you're that all all so don't and the what the will our rates, But only on the moving the line the because of those in would know correct, tactical almost answer I We exactly, thing that would on be bottom

all the to date about premium it's And where from get the paying from has been X months one to another effective So then it for period. policy customers paying X that. start full point earnings the months they

beginning effect the impactfully see of quarters to and year. the start next more at second rates starting the of really you So year, third in the the but of

Elyse Greenspan

for Thanks color. Okay. the

Operator

Phillips question Thank from line of next comes you, Stanley. Morgan from our Michael the

Your question, please.

Michael Phillips

good Thanks, everybody. morning,

maybe those in states? because cuts, I'm pretty that there everywhere. to I'm impact said upward not. rate want ask in what to are would retentions, you I just those Glenn consumer seeing where is rates. would And targeted Tom be make I to states said sure. I think on there, said, gyrations Quarter, states, confidence down guess rates there of the means to again. moving just First asking recent just cuts confirm much to that are took if think answered our costs up Quarter what question, rate how now be of to question you And want think I this for, be taking sure and going about increases but overlap be, Glenn that then is around rate previous there also have now you that pricing means going rate I and Second an overlap -- current there Just and were same because to some going back in it continue we overlap you're something

Tom Wilson

that? to take want you do Glenn

Glenn Shapiro

Sure.

question remained that the So but we I what car don't pretty believe and was think -- durable where wild with. modest is, page it page into and were will And givebacks significant modest a yes, in same-state. think spiked And the on decreases. not which saw will to place, places environment the and the you prices loss were a swing happening then of would simple shelter and your see be waited those there sort modest were claims. short second back, frequency and with long-standing moving spike, have with people chart, in you start on used see and damage little changing while be it before into will be in were down to was a those there answer lines. and has fact them. increases that X, we've taking just we the quarter. discount. more physical ensure and done it they in them I Actually down, and I way we the subtle do bottom backup, to really some long-standing get as benefit rates see people then And claims inflationary on this costs, having more hyper dramatically paid, start their And auto working one-time

So it's one just it. things of the the And appropriate response our for our retention. time agency the do maintain at many about can one of wonderful It's we we'll everything the -- to things appropriate force. wonderful

and a do their like good force job talking this. through helping really agency changes through policies, Our and us building in customers things relationships of

Michael Phillips

that. for much very you Thank Okay.

about more still that the not of a lift do Companies more and that different The you more go own giving but lot our second a Arity. It's use question, on one it to and more others machine? way Do how think pricing a it business, of income-generating a as I'm Arity. of or plus it telematics of [Indiscernible] we've that of think it and on seen for either think you you And off route. longer-term? curious a you more guess I having piece, second

You route Hartford are and the they that companies that the it recently about go business only one of the more that. off, farming are announced just doing off, farmed and were more that isn't.

Is want Arity? do an machine you generating again, more have how a, do or for income about to it think well? you pricing be it of more So just own as your

Tom Wilson

lot miles effectively XXX been it Michael, We I separate margins, Arity, the thank of business. And other I analysts business we people of created do a outside a more and if which on, operation. billion a that's things Arity, any Company. both with asking We than reviewed data. insurance for we value help significant the good don't is as the and about have you in by scoring think mean, because one was insurance insurance risk efficiently. been has which auto going something of have marketing,

is And telematics things. so a it is do be something files a We exactly talked about, it you've -- what it for service us. it. a to that way somebody the to needed able platform up. collect we One really in we're put with building the a needed do We started, and of will as quite which was number to does to app We and data. mobile get needed

rather And them is said other and we the outside at so do provide this the insurance that said -- it inside service do than will Basically do. to insurance need Company we the because insurance decided we and point, we Company, at we can this companies to a is

all organization built use me to help We So. telematics some can expand capability other to that companies, figure their the effort going data for and started provides and what that that I just call insurance more we a that anyway. data companies beyond to collecting too. working in so they're We them. my price help out Arity get service customers believe But insurance. try insurance would it pull to we're a ourselves to from moved telematics service, service rating are doing other to as

So we a it leader can well that industry. think entire we Arity, are, that the just we we over we the But insurance share. do margin, additional and but than XXX% a might telematics, think of don't rather addition market take being through which can as -- get in capture assumed we

then services It's we been So really around include lead expanded created generation. that. rating organization a to

As started collecting more we data.

people's we Allstate because the SDK in have data from data we customers, have have embedded thoughts. we So other our

data I really high think fidelity XX day, pulling and every data format. same cars over have the We had were that's it's in million

that able data an another million XX we're with current. on combine that buy to also XX We over million

So we're XXX right million per a pulling day data now. cars on

we do building called this and pre that. Arity to the it's not We services the rating buyers state insurers We And servers. do telematics other can and so to all actually can we're -qualify help think IQ. work organization that people can so we for only

we shows has really really and but and I that its of today their total to think value analysts it's don't value expand shareholder what's and in market. substantial it created. grow think see addressable significant up continue don't I been So to hard the saying worth, business value because any expect looking we

Michael Phillips

Okay Tom. Thank you much. very

Operator

Thank you.

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

Your question, please.

David Motemaden

increases? that was the of thought reduce would guess of need take. maybe -- I the initiatives expense that to plan this too down I Hi, just in want thanks. Good considering might about morning. help front that have thought out loss reserve was the third rate of it loss I that take that amount X, X.X high guys for. X% taken be in XXXX. to guess my also, right way it rate especially about of I or I to was guys around would then you had the terms show get the a expense considering what points you the coming -- And you and question on, the if I I the thinking uncertain asking guess that that you of at the where are Slide only increase higher think ratio, quarter you me, guys is it cost a than time road charge, future feels to-date, is

Tom Wilson

grow certainly price to is But prices But the as opposed because us that manage where to the being help do is aggressive accurate being out, as fair it's sort we reductions will expense call-out, an think profitably. to unclear future what we're we're and appropriate, this now David, in now. will increasing we profitability. Well, increasing want inflation overlay

improvement -- our don't to the our the costs going. flywheel Glenn need As Mario you anything add as it future, improve we've competitive come [Indiscernible] been we're which price to we've to raise we much can like expense because this that competitive position pretty But to we prices we'd And in competitive that of up. don't Then that? to using want case, that would so in or need for continue XXXX. in our reductions and are position, improved we we the in loss growth improve to down. expenses extent give significantly opposed we don't future get as as to saying,

Glenn Shapiro

very thing is it prior negative takes for in it And time is talked only to pretty in approved to quickly. add the I'd of about in earn it easy them as The we market one rates in. -- is, and get answers,

estimates and So best the out loss best years need returns. we're the projecting we reflects to we're deliver next over think and rate right the of of going future that to course our costs year taking what

there's we still back. as this So could Tom into and said, for will severity be get were dial where where good overshot a it on situation questions we slightly lot -- to to a it But Inflation would will end. of severity

Tom Wilson

some need to do we're money going Glenn. auto we David, At point, Look, insurance, in make to that. and

components I think as so At in forward, auto up not move our letting on insurance. personal we returns same me expect this or increasing we're you've say to the out of of time, you and property-liability, just expanding of protection. time, the on let us, market as of share call, heard throughout focus improving should we're any circle

continue year we've us All so success shareholder increasing to expect broad-based this of to approach quarter, focus and this good which you to value. should on a really in progress and on had

you us engagement next will to thank So with we your quarter. talk again, and for you

Operator

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

now You may Good disconnect. day.

The Allstate Corporation (ALL) 4 Nov 212021 Q3 Earnings call transcript