ALL - Earnings call 3 2023 | The Allstate Corporation

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Operator

Thank you for standing by, and welcome to Allstate's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Brent Vandermause, Head of Investor Relations. Please go ahead, sir.

Brent Vandermause

Thank you, Jonathan. morning. Good Third Conference Allstate's XXXX Quarter to Call. Earnings Welcome have session. prepared remarks, question-and-answer will we After a the of and following investor on Yesterday, close website supplement, release our our filed and news our allstateinvestors.com. XX-Q at posted material market, related we issued

here Our on these provide results management to perspective our and team strategy. is

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

Thomas Wilson

time with and to Good Allstate. in our morning. walk We an of Mario then I'd performance. start appreciate Jess and will operating results through and investment overview like your

Let's begin on Slide X.

share. customers, X So Property-Liability personal our protection market the in the expand X shown to components: strategy's over are And provided left. on increase which

On profitability. this side, good our platform, plan. auto improving can After again quarter. General that sale and the improving the National to with progress decided to benefits on the Allstate's We insurance see the see National highlights a you strategy is Allstate's individual created done, the successful but General's made more trend was be of you right-hand pursue quarter. We acquisition health and of and There Benefits for voluntary Health can well-positioned businesses. really group of part integration benefits business, businesses, we've

set XXXX. completing this capabilities. could potential platform to a distribution channels anticipate aligning and now by positions transaction of us be products, that success growth, Our in complementary additional with a broader We maximized achieve

liability and transformative We also set profit the as initiatives growth stage share progress growth margins personal for in improve. market to made executing

to offerings progressed The our Protection of with second growth. also Allstate protection part broaden strategy Plans

XXXX property increased quarter insurance, $XX.X was Revenues the The third in year primarily at $X.X reflects fixed XXXX Property-Liability auto XX%. million equity liability actions, in increases, earned prior including premiums proactive $XXX Net Let's which billion. billion advantage premium duration of Slide and yields. portfolio income holdings the investment X.X% in resulted on financial and by lowering of above X. of extending and fixed earned results growth increase higher of the take the review income to reflecting higher driven public income rate homeowners has

underwriting million compares million, the performance. $XX billion Net XXXX. of and underwriting per of reflects of $X.XX diluted Property-Liability loss recorded income loss that's an share liability $XXX quarter net loss of million, $XXX improved third profit in which $X.X adjusted to

was and profit While insurance cost Jersey. require New improvement trends execution York of California, and encouraging, loss the New plan, continued auto remain in particularly improvement elevated

that execution the Starting rates XXXX, The on update through an with components XXXX. X provides of including X XX.X% of of brand Allstate rates. Slide the plan. since the X of quarters first has X.X% implemented

X.X% in rate implemented XX% increases XXXX months through additional General X the and an National XXXX. in first of

to back to pursue to increases We restore margins levels. insurance target will continue rate auto

plan. the we and Second, are core a reducing low-cost plan importantly, profit to transformative have is the operating path expenses Expenses down, of provider improvement both further to protection. growth become a to reductions. And

in returns. growth classes business where target new we business restricted we've are achieving Third, not areas and of

That removing a includes the states in these of Fourth, are and we've restrictions enhancing customer required accelerating value. to settlement success practices high in litigious some segments. claim some claims areas, and had environment in-person inflationary injury deliver increasingly and increasing the Given inspections. in selectively we're

Slide Turning to X.

profit [ an model capabilities last average over the and current income insurance years roughly improvement generated XX profit an margins That XX.X million. approximately competitive environment. why the touch and represents business on an have $X.X base of auto will of [ us a billion capabilities average Let's ] environment, In we industry, have with the in same generates similar Allstate's the this industry-leading combined auto continue record. of annually. in to believe of $XXX companies underwriting about which ratio Only top in work progress current ] X-point the outperformance other competitive insurance made improving a will XX insurance these margins. incremental a enable the few

appears Progressive claim The for raised has insurance significantly auto rapid carriers a profits prices lesser lowering Expense XXXX. including companies, impact increasing with to which also degree, expenses. and individual being The prices for rise result, customers. has on policies on new increased eroded spending, by Farm losses. pursued in State responding auto a since most severities is to prices but Allstate force large be the competition reductions company's lowering industry and each profit advertising many and auto has are dependent in its underwriting plan. insurance growth incurring as by moderated GEICO

force in a the large declined, policies in grown. has GEICO's As has X will have of capabilities amount, Allstate Progressive achievement the in policies improvement enable its plan declined in force Mario particularly environment. states. while will Allstate's discuss, profit by larger brand competitive

agent created management. medical with these realized aligning such General's with be benefits business offerings, our additional the gave integration. exceeded Now platform combining group primarily combine substantial can X the Benefits broader has Slide channel General Allstate's unit business with of National potential We a that X. to the also into Health benefits for and us and and individual improve position product The set goals Property-Liability let's health was our network on by in capabilities we've and opportunity in value to acquired insurance, voluntary a review sale as acquisition independent Successfully business strong of National distribution businesses.

generates $XXX new shown that markets annualized offering of when up. sales. XX years and charges in comprehensive benefits of successful the those trillion been you which middle separates health and employer is businesses, the premiums X voluntary all and Benefits We've $X a Health million add group the there provided individual preeminent Allstate contract and billion and with benefit $X product for

billion, health $XXX sales. new General's the targets both small all The products, fee it's revenues group businesses. revenues The of fee and and protection and income. businesses underwriting X% individual adjusted Benefits market, Health and generates the net health which of has of million through of is in you total have case income corporate which $X.X the million trailing size $XXX spread and million proprietary in business revenue. $XXX in and months, is third-party XX which the charts provided premium in can between for National the both see bottom And X kind pie of

can when are have to up, The from over ranging voluntary Fortune XX,XXX policies accelerated a greater right-hand roughly side. the of The force. these on them that the range with in employer companies you health XX benefits shown and relationships potential alignment wide businesses with businesses and small add of market million be businesses companies growth group X.X in

business transaction attractive we expect and financial in its With completed to profile results, be the XXXX.

In initiative connected the capital, further of we addition the strategy top gains of to allocating initiative market improving to value. was growth simple profitability protection to Slide to The share Property-Liability position continue and shown as the heart is improve customer and strategically the Affordable, transformative at fine components as X. improve. implement margins

the cost that discuss distribution and your live a our week. the access market at experiences Allstate Customers broad better experience will needs success the in high-quality connectivity access further protection access. new We're low Mario to meets with expanding in network. business of hassle-free app choose however will with have this a enhance to our they customer

Phase moving various is transformative of growth each it from scaling model towards We're X. element stages X at Phase maturity. building new While of in

to to the results. over it Now I'll Property-Liability go turn Mario through

Mario Rizzo

Tom. Thanks,

Let's start X. on Slide

Our improvement improved decline were underwriting the million higher XX% to year point offset average plan loss prior improvement premiums, the prior which policies compared which in margins. million in $XXX partially quarter, of despite in in in The our by XXX.X chart combined X.X The is improved comprehensive quarter, force. loss to auto the compared loss driven $XXX year X.X compared the increased ratio auto improving ratio a year. ratio. Property-Liability a on the premium increase prior highlights right quarter profit earned in by catastrophe the the due the of to points to the components quarter

X combined excluding unfavorable the combined point second by X.X underlying liability in sequentially $XX reserve primarily continued annual Protection adverse ratio to the and million And the on coverages. runoff driven prior improved in quarter. at elevated reserve national general compared auto ratio review. inflation. the or of impact versus Prior was estimates, personal million point $XX XXXX million year $XXX X.X Allstate quarter severity year points were despite property of quarter attributable catastrophes, to by injury The XX.X the

X insurance Slide Now profit auto trends. review to let's Allstate's to move

lower higher and of XXX.X ratio year third auto reserve favorable prior adverse quarter the reestimates year reflecting XX.X recorded combined premium, prior efficiencies. quarter, to insurance The was points earned expense

continuously as severities As the assess progresses. a claim we year reminder,

For developed, year example, last influenced severity reported we year, as increased current trends. XXXX expectations, which quarterly the ultimate report

trends in cost loss the quarter. elevated, remain of While third pace increase the historically moderated

major average as last the X% coverage the to improved end severity weighted of brand to Allstate estimate quarter. As compared of XX%

ratio combined the XX.X quarterly year drove third and point severity profit improvement chart average the impact reported through for ratios to in quarter. our quarter for The continued the and XXX.X Higher on graph or improvement the from estimates XXXX X left current from adjusted combined first of the the the underlying full favorable with the on as severity in removing reported the as improved bar XXXX severity level in reported claims the year. of execution adjusted improvement shows in sequential quarterly of when quarters a the the X.X plan current figures XXXX sequential underlying to third for quarter premium

in profitability. our or of the levels achieving proportion are target progressing comprehensive towards The a actions portrays chart right of resulting on higher the portfolio how

the in the combined Premiums quarter, of Allstate loss ratio impact XX% the shows the up underwriting from combined which Excluding was XX% percentage The Slide the Allstate policies XX.X. large XX states auto with from year-end actions profitability. states, ratio in to improve underlying and on points to underlying below force the an third almost the at from second brand in XXXX, insurance X quarter. from XXXX generated in auto portfolio improved of XXX XX doubling brand XX%

exceeded increases have last over X rate XX% the quarters. brand Allstate

quarter Texas last trends XX% over of in required retention increases. the X% implementation business loss prior Elevated rate months. due in largely partially also in in third to driven driven prior quarter, reduce prior combined actions auto XX.X% issued policies the applications chart, declined Allstate states. by Jersey to compared to shown and York brand growth New New the to unprofitable decreased the by compared new lower California, XX% driven increases in the and rate year. year, in by the the by force New of declined middle year to compared lower XX

while these As a declined, X in states compared Policies the to remaining combined large declined X.X% prior decreased quarter. result, retention through force has whereas in has profitability year the the by third states X.X%, improved. by

On we take General deeper at Slide XX, the look book. a Auto National

margins coverages. The reserve including given While reserve auto and to higher impacted as unfavorable the fee-based remains expense higher were non-catastrophe average prior prior underlying excel nonstandard The quarter product, business year-to-date revenue the its the insurance in XX.X offset combined $XX to strengthening and loss reestimates liability features efficiencies. with third year by XX.X in periods. and claims million quarter year across premiums the capabilities National cost largely General date, market. expectations of by primarily consistent of ratio Reflecting

XX% in see growth profitable business. from the of right, which written is more coming general overall of XXXX can you than national nonstandard the chart quarter in is the auto on the insurance third auto, As premium the

of middle-market the product, contributing also X/X is and Custom now available U.S. is XXX, Our in to new growth. market nearly

businesses, results National insurance the covers loss While custom run we which an driven XX impact which General as the and lowest are catastrophe growth. XXX, on underwriting incurred having losses. be off in legacy QX, Slide Encompass implement will higher by homeowners

brands written and primarily see both by net and policy left, On in premium Allstate the increase higher in average premium the a written gross in force. National X.X% prior you policies driven increase quarter. the per can XX.X% General year from

X.X and written higher ability by points by combined the year as by partially risk-adjusted and increased through by ratio to additional improved policy lower severity. X.X months remain of XXXX, increases driven frequency our attractive prior earned returns XX.X driven expense compared average per We underlying implemented ratio, as year prior to home costs. X throughout insurance points replacement rate quarter, the premium higher compared business. of gross generate an well first lower to in The confident premium, a the XXXX, quarter, by inflation homeowners the Brand in offset implemented Allstate XX.X% and

customer transformative as part XX of expanding growth. access Slide on highlights progress

with are of and billion only enhance to share agent approximately the in and exclusive channel U.S. major distribution competitive or channel. personal roughly continue Allstate's capabilities distribution. this We at represents premium channels lines agent carrier market offerings the The branded across direct independent agent, and majority $XX XX%

Our personalized value exclusive offering strength, local agents continue advice to $XXX be billion in a this market. customers

agent applications York New per has X% While New Jersey year. and overall, exclusive new auto so decreased California, excluding XX.X% increased by business by far this agency,

In addition, high bundling programs. to as have continues driven to to performance at of sale Agent improve to modifications they all-time over of compensation XX%. new point adapt an compensation

profitably to potential business nonstandard to presence The policies great National XX.X% Expanded positioned independent the grow also We independent XX increase XXXX. through of during platform. agents. force Allstate auto, growth represented in states National in agent independent onto converting agent have continues their strategically in channel. X% Encompass acquisition General grow while of General and auto in legacy nonstandard Allstate General's National

leverage in this expertise we reduction and in volume homeowners, As since most new year the place standard the channel volume new direct most significant was Allstate's of effective should profitable advertising. The a to another reduce business growth. represent had impacted decline this channel source in and this by the was business auto

capabilities forward. this so growth be have in another moving improved source our it We will channel, of

over I'll remainder to results. now the of discuss And our it hand Jess to

Jesse Merten

on Slide enterprise of monitoring our investment We right. return I'll based changes All economic portfolio XX investment you, and discuss current considerations. Thank and start in risk repositioned conditions continuous Mario. proactively environment, the to on market results.

chart was in the to interest longer prior on contribution million the income market-based year, of the of income flat equity quarter, shown net $XXX reflecting Market-based and higher in portfolio. $XXX the quarter bonds, of As the fixed with the investment relatively year public million portfolio a holdings in income left, last the totaled third from blue, but shown quarter, a of above million repositioning into duration $XXX reduction rates. higher

began right duration rates increased, the losses some market-based interest as we flexibility duration the increasing rates. would the changes that to on shows as comparison year, has of but as increased, increased began reposition made not bond it chart In to only reduced the interest rates middle in increased. rise. in The reflect XXXX, we yields rates provided Starting to which of last income. the belief portfolio to we duration reducing This

years. ranged seen last X the quarter-to-quarter These underlying focused and positive on over are positions in On across enhances real as portfolio, the multiple XX, investments. our have including value We with than timber investments diversified agriculture across a closer on expect hold bars let's we years. Slide energy, long-term chart The and X.X% take returns at creation, diversified income look is volatility estate to where to returns. funds longer-term performance-based which equity and offers XXX anchored more names, and is portfolio quarterly the negative in X.X% from vintage private the infrastructure, diversification a left,

Protection quarter. volatility year The X.X% quarter, by businesses. to products annualized which portion is with X, compared businesses to increased and in Plans, equity the this in prior of years. XX% third Revenues X- expanded growth. in the returns growth XX quarter the XX.X% has reflecting Increase X-year right X portfolio covers Services prior Slide compared Protection driven mainly to XX results the on $XXX private international these from benefit the million XX%. increased is year Allstate benchmarks and shown public and of outperformed accepting equity of over our The and

Allstate severity quarter mix claims lower due appliance the lower-margin partially we at Protection. at Roadside furniture the that of income Protection you the $XX of offset right, to and invest as were compared improved In net in higher Identity by Plans. adjusted quarter, $X a million at the expenses business higher third margins Allstate in will These year growth million Allstate and prior to the on primarily decreased see table and

XX. to Shifting Slide

as Our good National and results. business scale in added the Both we increased XXXX General and had income with acquisition Health Benefits and revenues capabilities. also significantly

third in and the charges a individual was compared driven premiums, by revenue other health partially health and the XXXX, For increased by $XXX of employer quarter, $XX group voluntary reduction of contract in by million to increase which prior year revenues quarter million offset in benefits. an

lower in Adjusted in year expenses. increased net and income group health of revenue to million $XX quarter XXXX the million to due of individual compared increases third prior $X primarily quarter operating the and

Now let's XX of to statutory discuss as surplus. move Slide ratio such premiums capital differs to this traditional from how to Allstate's approach the clarify used management capital evaluate methods to and to

operating required On the bottom capital events to discrete for the of tail an to of basis negative components is capital, is catastrophe target of and we Stress losses. at summarized capital the the lower meet capital capital X Capital cover requirements. our as of the high auto management we the slide, Base ongoing establish is multiple hand framework. left additional evaluate layer profitability such impacts, occurrence needed to which

is to severe reserve the component. of model types, capital. more the highly rating a incorporates amount severity to frequency capital each breaks breakdown and diversification in extremely right ratio flexibility. out and to the determine surplus comprehensive also extensive This events, agency contingent and uses of for high considerations that a individual The than use right of regulatory benefits sophisticated is amount determine simulations premiums risk and provide sophisticated for strategic We and low

the in surplus when not but for many billion ratio is included, subsidiary denominator. $X.X of our Company, of statutory For Insurance premiums for companies premium the over are to calculating capital included example, the Allstate the

the large events catastrophe framework ratio. tail particularly a than simple also for This of better reinsurance use assesses

shareholder and to flexibility creation. Our actions manage to maximize proactive provide model capital value sophisticated

recap XX strategic turn state let's and all close, priorities. to To Slide

plan making profitability return continue progress insurance We to on targeted levels. our auto to

Benefits initiatives. With has Allstate pursue open for investment expanding, our will growth our increased management the of to Health and priorities advance continuing We income. support let's the Proactive shareholders. creation Plans we're Protection value divestiture on business, is and your context, transformative these to that strategic Allstate line questions.

Operator

[Operator first James. Peters Gregory the question Instructions] Raymond of comes our from from line And

Charles Peters

at was which was strategy. and question, going the unpack just it deck. I'm X, running Slide elevated because to for customers. in first separate And scaling a there roll the and your I'm curious the I I'm guess at and customers models. And new if how model. slide new accounting you're and looking running growth release for slide transformative on to the the X out focus about about talks the model versus is curious your building lot the expenses you nonstandard? of it's standard point this nuances versus And different you're model, I'm thinking needs as of about I preferred

Thomas Wilson

question. good Greg,

increasing about to Let liability. personal to about -- low-cost is the couple me value however is raising they customers. about core got segment transformative of available At to components. also being first, people share the in in customer a get and ] market but being want so the to profit and respect your growth that also It's insurance of [

it So I point, had that assumptions at that proven we underlying going out into this we've the would say work. made

do through raises We people, know or different direct agents with that. So close exclusive we whether available through that's can works lower bundling know and independent -- agents more we We that's true. that also that know being [indiscernible]. through price

we're customers. you. also is fast, People mean process to the slick. you middle we can new ways have [ to simpler bunch in pops the don't it it's side. through We're offers renters than go X their that there, customer sales you raise pick it for of deductible your making pick finding by value, minute as don't making deductible, questions. attach didn't for go which a and which for know slide more the to dig saw don't but specifically the you takes slick, on less with more I then We it, the great you, really piece, It's right-hand up ] is one, connected, protection it in are into is have a I

so And on to We we are fewer their that people the. forward. apps think going phone relaunched have going

their get helpful, either app So people just having their compelling. it's not access where or at could ID but look bill card is an

that. expanding are we So

So GasBuddy. on you'll see their

You course, related can money directly which save do. to how buying get what of to figure on out we gas, is,

things bunch add. either a to We whole or that have added of we've going other

For are through terrific example, with telematics experience through LifeXXX, product. our that we really a it's and Arity detection crash do terrific on and

a there's of we're doing expand So to things that. variety

As we're lower expenses. would just it's to say it I relates investing that don't technology. I but our We're have to invest the continuing new to backing it's we this. we that, off in we're expenses, an overall after over objective, know have expense, on in not

the underlying the that that have build we've yes. rolling. it's it's we to do We it's out of on you screen. it, We've need we One things is high the but out confidence see what that it's -- was technology answer proved scalable. working, to assumptions can scale it, And the built

you -- to this. think to to that. expect find -- continue to in should cost of reduce expenses I into like hot like today ways running But we're us because there's live don't So

we can. various sell can as we as we As to customers, much as the as it many people want relates to stuff of segments

However to they want come.

the make buy which to think the a want marketplace. company, independent If to as call the buy to We And exclusive and is easy what its you can, want, what center, if for you're they simple make to agent. want you have you on is prepared agent. and differentiated an just We you do direct you agent it we'll want web. buy an or pay want sure to through that's we an in agent, want cost you as you to just an give whether

Charles Peters

comments, you on states. give I my follow-up, And could us the know an Slides going update sense. XX. problematic detail slides. to I'm in you but X the to provided I'm guess and makes that pricing pivot I if Well, could wondering you -- your for was thinking if

auto X, do running XX% in Slide look? XXXX, of think your you might think is to we If -- look you of in XXX. how business the forward above chart I said this

Thomas Wilson

referring Which to, Greg? chart you are

Charles Peters

at Slide looking yes. I'm X,

Thomas Wilson

Yes. York depends. are happens we as depends and Jersey. all what I But states. clear, to me it you give New X those be But some very not to digits course, California, in in going well. in X mean, of can Mario continue all color it lose New let millions

So far, getting serve afford Mario do customers talked we about serve to aware growing, has be on? Like we is it's as us want those this $X.XX been to executed next not on this the can't that. by you step able comment not they're because out. smaller we've to of. The we've talking who we figured want not -- to dollar. Mario, like or just not to

Mario Rizzo

to We've about Tom X about -- the pending states. been talked is taken volumes, give pretty down we a and about And additional significant X business this rates rates states. XX%. all we've across year, you it's earlier, across little and to color we've pending X got right, like restrict talking Just new significant actions all

auto. We of have New or high auto single I filed opening ranging digits we in California back We filed for York our York to books implemented low got we believe, another across closed filing pending a And May, We've XX.X% New in New rates rate digits year. low middle in just XX%. teens that the in an from in Jersey. double XX%

pending department. rates with significant got the we've So

filings X where next thing states can't, quarter. customers can't and get at are we well what as get the on we shareholders the for then to we is As need smaller in our would the all for now if states, do And if we beginning on action those that filings fourth mentioned, resolution those rate other is right additional to in that's pending. we across do we're take to as of XX the the year Tom action believe currently

Operator

from question Alex the line of [Operator Sachs. And Instructions] Scott our next Goldman from comes

Unknown Analyst

for Marley It's Alex. on

touch of person Could overall little about now how remarks reduce accidents How the changes we increasing then to versus claim more? So you maybe you this? And in to mentioned should in-person you assessed impactful LAE the near-term costs. how current a loss think in that remote? [ on is inspections then this ]? are prepared for And this many bit were

Mario Rizzo

Mario. is I'll question. this your Marley, answer

restricting -- improvement and increases, costs, total to broadly things preexisting achieving states well could loss would I we'll replaced. doing, new improving by more the of business We aren't start damage inspections target or the shops more in-network going on where also plan, So that believe doing processes. rate thing that fourth different doing of component our where cases, improving say, that components more physical profit versus pay of piece opportunities, you're inspections identify like oversight same profitability repaired a of to be be what in and would operational we processes levels I cars is describing both property as what for, the we in-person well operational around taking in and of back auto reducing as out-of-network as is able side that but owe, pay not claims,

to quick [ ensure to right photo execute inspections we're thing to on the ] and that in the system, do eliminating that's think excellent more claims owe, we able we to to in continuing that. to manage operationally in and claims in-person invest we're prepared the again, leakage to do leverage cost is what capabilities organization and claim we what any be in best forward, going to So intend addition to doing physical loss but paying

goal. next can of expense of inclusive committed investments ratio end We the expense LAE that terms still ratio. the We're part by both. are The we'll year. adjusted do of the make to as in So in ratio, XX our of hitting think claims we the

Unknown Analyst

from I strikes? to seeing of get UAW wanted the it. severity drivers on medical and just then inflation any that in Got impacts thoughts longer-term terms your you're And

Mario Rizzo

Sure.

we So that X% about quarter. you'll improved we'll expectations that XX% from in came we start physical And being has damage talked talked auto about from All note our coverages. last improvement severity with medical inflation. the about currently, which

unchanged. continue be kind is treatment attorney It that didn't all Our inflation, have economic outlook that consistent more we social components higher drivers but up. where were pursued, and of injury driven injury and with of get being severities the the quarter. And of both behind medical it's severity levels of to inflation on casualty last worse, representation, kind

time, But headwinds as take those on talked -- processes some as be to physical for seen about our Over to again, I will claims the those inflationary side, good adapted us. trends, as continue into progress. we've damage account we've we

settle real injury terms to in looking we're claims settlement claims. well a on improvement claims as of So as seen reduction in faster earlier and injury we've in the cycle, times pending

models We're AI analytics process. likelihood those process like claim and where being manage that we have injuries by potentially further accidents out using and likely the and a claimant that higher contact of get and ahead can to attorney are accelerate identify the represented time things so testing of overall

things to during we're in I help proactively severity the So mitigate that. continue And injury And stability of do some quarter. trends some to see impacts. we'll those doing inflationary we like did said,

Operator

Wells next the our Instructions] Fargo. [Operator Elyse from question line from of comes And Greenspan

Elyse Greenspan

in doing Do about you some first on your aggregate quarter, looking buy reinsurance. of protect during additional the on to side have position? terms you stop-loss looking any update the reinsurance to what capital question, you're My guys spoke

Jesse Merten

Jess. is This Thanks. Elyse. Yes,

have We our general. talked lot reinsurance about in a program

don't this have talked know, specific we about our about As cover. updates potential recently program transaction. more the capital the levels. reinsurance that aggregate robust reduces overall we point, you have a We've At

where risk a or I've looking we're find can done, economically talked the we and number we'll that at we target do get not of times, whether to about we extent And capital. can structure it. a reduce overall As

move done And we we'll it other and economically, can't look options. on extent get at the to

say, this no updates. So it quarter, I as relates would to

to available continue capital, that. the to we some be on talk be sources into interested what But and might understanding We attract industry this at have anything in them firm to about new point available. don't make

Elyse Greenspan

question, the any potential by perspective with guys the then looking you benefits And business. you guys that second got owning business? into benefits capital highlighted my a there from credits diversification transaction a Were you're that

Thomas Wilson

Of course, yes.

our into they're here. there, overall but position we So factor that

Operator

the of line from from Michael our And BMO. Instructions] Zaremski [Operator comes question next

Unknown Analyst

This for is Jack on Mike.

Just to fee one and structure. Allstate's commission captive distribution question changes on

I'm has change impact company's it organic think to you growth expect And meaningful how does also levels? you expense ratio? do just earlier, a I overall the bundling this expect driven wondering greater mentioned benefit rates. to

Thomas Wilson

way Well, do stuff the you we do the various else share think the agents go on whole them that making well of that to -- the that all what I transformative Yes, technology that package in compensated in and want to and customers market they're so up But sure there's and changes? for Mario, you growth. when yes, doing about want do to account drive That with specifically includes marketing think what everything do. talk they growth. pieces will that they're supported

Mario Rizzo

Yes.

you what several So a as again, distribution I of where if changes particularly of productivity the continuation years driving what seeing most we're states would is And set would in happen. characterize which of time. you we to think of purposefully -- the over higher if hoped had costs I agent we reduced the exclusive exactly take started volume but reduced impacts out was intended recent really we're also the ago, large drive X system, distribution what levels

benefited distribution quarter, see ] expense you we by cost from the X So perspective. [ in the from an Xx or standpoint,

So the system the benefits improve. we're more exclusive productivity continuing distribution and but agency the of see importantly, continues lower to of to impacts costs.

So, again, out states, X up production overall you X.X%. take those was

agents Pro XX%. categories, up top was Average elite you And group, segment XX%. and production of look productivity that level tier into their at we emerging was up over our agents, when X of Elite,

So will kind growth they're but states on driving continue invest shopping certainly of become and different take to profitability. real we focused levels their into us asset marketplace, of in target the lean shows agents to of increased as the back that a levels hit businesses that advantage growth for in as that begin

out they've in we're of of So terms the take time. cost system distribution of agency how our really and the been at performance we've fact both same that the able encouraged, adapted channel, to the

Operator

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

Joshua Shanker

in I about paid incurred you historically, look to Historically, -- it's back. Allstate model hard at pretty far loss and have a and And ratio. analyze goes a XX% try at run short-tail that that lines. if reserves

X losses. that's astonishingly For at every for you XQ it in dollar low of the previous ran XX%. And 'XX. true an future put the quarters, reserves loss X in for But

and you're feel had I in does is reserve elevated of needed loss to time it normal resuming any of that to period just gone know more get But my the over that unusual the that period ratio you quarters put you try pay into now losses right. that lot this reserves put there Is a over reserve? the and incur than reserves past -- it on sort a company of trend? Or model. of different more X was that something its

Thomas Wilson

here. then Maybe and can start Jess in fill I'll

the reserves we up need up. right, First, and put are put it think we Josh, need to put up what think but we we when we to

around not put as it the we When needed I've reserves you and at bounce It pandemic [ -- that numbers but paids you -- adjust year, know all up. painful levels, last looking happened As been impending I to look that we for felt ] with the I'm through we was in don't have, that. depends a to at specific lot. enough what

it. say would some answer may have I Jess just have may So for

] to through and believe, anything don't Jess you just [ walk Jess, put it. we you like think -- we when think help up right I see are model I your and Brent with we and reserves But could add? them the

Jesse Merten

to was in the of would wouldn't period historical what periods, No, you're also we've keep you a when period trend, see year, pay-to-incurred what that. extreme way saw it you So I which year. loss think going have acceleration with this and trend cost that our ratio different you you that, severity a acceleration, you've is get seen was last in over right? that I should mind same seen the the agree

at acceleration underlying think a that I period you're trend. of that time is just the component of the and the looking clearly So

Joshua Shanker

years severity indulge you'll different the geographic lot really maybe with the long its change, next XX if a has me And for Allstate obviously, losses term properties people over seen over have changed severity question, climate and And the another cat-exposed trend footprint catastrophe. of trend of away the like versus trend between property? Are trends cat -- exposed generally a and the Midwest along longer non-cat-exposed states trend compare Illinois term does than weather the coast? from the property how lot in But very seeing a severity up. from

Thomas Wilson

you Mario if to me Let then start in. and guys just want jump

even homeowners. would more on like in see great results you start auto insurance, just XX the those industry And saying First, better homeowners, with built a in make money business we've we I model than we're over years. really

said, to insurance. You is an do to a see which that's [indiscernible] That and we prefer lot year not this have buy people catastrophes which of catastrophes, happen, have. underwriting why loss,

you we're that Storms say, what's comfortable When cat look and work. driving are losses. underneath So now. more that, those that okay, severe

inflationary traditional you are losses that's will So storm a both just the at just or a damage. fact the causes a have loss whether a storm, the that normal just severe have it of a pressures. more hail Underneath more increase the or that that storm and you severity one, tornado hurricane,

get whether And so a hurricane, down it. you by knocked it's the underlying goes house that cost burn lumber or down up, of your

of we're manage it. catastrophes. kind impact compounding it at have state. said, you on good That a by We So

pressure it the So a perhaps Southwest the losses along you're in would state because have less Coast on have correct, the than or Illinois would East less catastrophe coast.

though there. factored prices of those that in of have seen the it. those factors increased spend We that both So we -- and think that -- things you've in, both raise all we do

So been by the has both insurance homeowners [indiscernible]. those dramatic factors. in driven prices Anything increase

Mario Rizzo

to and The drivers are the Josh, that of the the across as I mentioned, in Yes. increase of And severity. the cost will to add, what severity, Tom country. vary take principally, labor an it's you homes. only extent the different of I'd influence parts underlying rates Obviously, think a on repair costs back step state-specific inflation say, thing have and homeowner its and material it's

more I larger or get it's it's of we any to think whether by and amplified those a cat because large just -- homes. volume repair event, just exposed cat have driven that exposed when not a there's costs than

Operator

[Operator from of the Tracy Instructions] from And our comes next Barclays. question line Benguigui

Tracy Dolin-Benguigui

really to to the Health Benefits selling focus and business restore impetus the a Is unlock lean some and more capital? capital to and Or core on impetus organization was more offerings? your of the contingency become

Thomas Wilson

know any sale. Neither. relationship nor to was few it you I And about. shareholder a asking of in pursue us a to wrote

it is. you tell just what me Let

if requirements. They're things capabilities to mean to have businesses. we broader get year. we it So complementary of And selling the health a like distribution, look we When I billion the because more harvest manage they low said a best businesses. we We products, terrific as that. make -- almost good platform, don't the Those credit. growth a businesses today. it's can we're from network like we value such more future, we capital network way a have set capture though, forward are the the think we had that we management of $X.XX

we build and can take time those, said money. We would it us

that those hand, On could But go we created. let already the success of access other the we've exist. us that requires to

way your nothing optimize needing saying, you've with choose with to manage to created. had sell nothing has us the the to to to sometimes shareholder it do to with this. decided and is to do the right path. It to should do shareholder this a you had we value, have So latter success go which coming everything money, you of is let company, the It

Tracy Dolin-Benguigui

hit assuming maybe sale? your the implied any in But you Okay. model might you a be I range byproduct, you of early, from kind from valuation mind, target have relief as internal could but whatever have capital would

Thomas Wilson

businesses. capital low are These

the to I'd appropriate businesses I because lot. So you say, we this like price would there the high message first, on do like be carry a -- out the would

low businesses. Secondly, capital they're pretty

that We've we other with to it opportunities. whatever the do profit is, now, to additional of not with to plenty decision don't a going sale there. we decide make got grow want and what we'll We lot right So need share so we're doing price will And market then get generate capital. to. growth when liability. We're

Tracy Dolin-Benguigui

buybacks Okay. Or resume road? the path could move down to your potentially or it AIC accelerate down to

Thomas Wilson

growth, Organic those use there. to the capital. would that are to you we have There's shares have buying out back. options options all All --

a We it. letting be no have -- go is now, business. capital. an can even business the plans by set it we're help of on focused great greater Right for We this

do. going we're to So that's what

Jesse Merten

Tracy, I capitalization the at philosophy, we would as company add, keep the we to -- know, the our capital extent can. tend holding that we And to you

I we at need a us believe that. would do capital to So to have cause don't want AIC that

the don't capital think I level at him the AIC. in Tom comes. would a where holding we extent decisions we'll need time capital for So the capital management have make keeping I have to when we the But think we to philosophy the of with remain as it's company make, said,

it go So from and know up philosophy holding would away we why of keeping the I don't company.

Tracy Dolin-Benguigui

your I just Got quickly business you it. on at years. anymore. duration a And X.X mean of extending commentary your don't life have now asset

the Benefits optimal forma Health of How You about duration asset remaining duration and divest to pro think the your plan you relative liabilities? business. your to

Thomas Wilson

it enterprise standpoint. risk an and at from look Well, we return

amongst want asset want -- various do best classes. is the do we figure So allocate how the John team much portfolio. first thing out to allocate how capital amongst then to they and his And to say, investment we the that

right you a I maybe at on we would at the out today. look comment to if John, point So at Slide time. you the are calls made XX, where that want make we right

John Pintozzi

that And we are by to is cash cash can other Yes. add amount duration short-term I'd we one -- $XX liquidity position and things just when the between consider I turn maturities just can the keep into doing billion. we're and flexibility that short thing in order close another you of we year-end, hold that to that that portfolio. in the lengthens out to just that assure appropriate you

out income lengthening the that the economic that into portfolio market that liquidity. in case building additional capturing to the some So the believe change, period resilience of adequate us, the income giving we're for would both of longer preserve also is capture a environment providing while we time,

Tracy Dolin-Benguigui

Okay.

like it strong Is of mismatch that fair? sounds liquidity with durational So position. because you feel comfortable your

Thomas Wilson

that set In life and of life date Property-Liability a they're in matching we let's have the a liabilities. much naturally factor recurring. is In liabilities shorter, off. terms figure and business Property-Liability the business then to but than the stuff different some you of Well, are maturity the business, business can little course, in out the scores, match you

Is claims. So be -- that, that or if one. and for get to you you'd here having X another you a claim separate physical and a damage it you pay off for claim XX so match days

case liquidity And our set it's overall more capital large management. of So also really underwriting risk we about and I would out in is a there income. up part point mess on

has so it. duration And on that a long really

John Pintozzi

back you us. other the the long-term a thing reverted look Yes. at if add, to duration, of slide, to we've just really blue been X Tracy, what's the line average for more depicts

interest at were of where we Fed was thought the interest given in rate right We with was a rates in duration, So and exposure. point happening what a in general. time level level that of we lower were lower a

to Now rates longer run We what up tendency us. a go central has to back that for been want climbed have pretty back aggressively.

Operator

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

David Motemaden

improving from business. of you're would there It the you like saw frequency was bit. the as around describe a just was it a it seeing. could I just that shrinking I especially the looks had hoping that little question sounded of maybe be I that. guys like and touch you units. some you benefit was sort what you're third what are in seeing, would guys you on up But I on just you hoping Could that quarter. put numbers think trends could some mix

Mario Rizzo

is then in think, that driving which about When driver, think long-term features safety the trend remains Thanks the about terms be forward. we below times, improve look back of vehicles, all data, miles it headline which last disclosing rush trend. a at We combine to frequency, frequency the revert in the question. help in the to since skewing year, a when at activity. telematics auto There continues look was up look profitability. is think levels, we which more frequency, But other mid-single where nonpeak and day. embedded it's to a I'll the and you XXXX. are continues less look And to now just each compared a better that think digits driving at about tailwind pre-pandemic for qualitatively benefit of you our trends, to premium but auto to at frequency from still hours. when pure will little a more it talk going David, person is we it's number continue Mario. more to we overall hour for to It's way -- loss you for

But that in period in quarters, last we we're of been pretty stable driving the stability and feel trend several has terms a over like of behavior.

up is a net-net So small frequency premium. of pure It's component modestly.

impact just X.X% a premium, the [ and in you when up to X% give year-over-year said we it's the So in was intra-year you up ]. quarter, about of pure severity couple adjust numbers, out

is year people So you can frequency ago. again, more impact that were see the drive having, as they modest a bit a than

David Motemaden

Got And it. more bit little so maybe stable there those at levels? saying it's a you're out now, flattens

Mario Rizzo

when the pretty of our David, been over stable quarters book. miles terms has we driven the in Yes, for trend look last at several

David Motemaden

TAM distribution closely. follow-up, on channels. I a then for channel on And -- question the to like you by my XX, pretty track add appreciate it it. and information the Slide this just hoping looks guys I was Got

at the I'm growing expense that how channels. impression the TAM under been shrinking the it's channel, independent of direct agent I exclusive agent has and Within that been guess, -- the and

I'm signs backdrop, that you trend can exclusive your to seeing start agency channel? within wondering and just you grow buck you're if sort that think of So given that

Thomas Wilson

of Let me thoughts. -- [indiscernible] maybe a couple

it. that those. the there's straight customer to amongst First, assume on lot actually, for of And want like analysis competition there's it's a of People a tend to line. all

for to an do shop are place them insurance from come for good somebody just they it. and want So buy value, about independent to take also The want other to providing to to where should better company. our which effort the to give that away from Mario people in agent a an reduce them don't X. is talked of want share cost want the agents the customers work some They around

direct grown. because But has obviously, lot dollars channel, advertising also a the with growing connectivity, it's the direct of certainly On billions going increased to channel of it.

So it's overall an I ecosystem, I say. would guess,

company like, at Allstate. we And like we People it a there. to look be have so -- from to want want buy and

agent. those to them, name, channel. go a to to that in in The We direct the be And even thing proposition. want then various agent want brand shop technology for don't better then that want Allstate channel, they want doing have. an it someone they -- around is independent to be to to if what things with directly if using person we they want that the want and we do there between work, value everything to for make same are buy

we not think David's deductible, it. we kind had what we so different to position. should agent the to which offer But you in being stuff. be, offers bunch a So able deductible showed X an of in that you whole it package cell phone, them what's here's Imagine now of have what ask a pre-populate with, David you put stuff, your this

So and of we really we want it for our And at look organic all between sort there. of there as moves customers. to be it

it and just to question. we customers So other better just competition lose. we'll think that the the job it's more going constant is going not buy to take do X way. Jonathan, X a win for It's want is that to like to a

Operator

for [Operator comes Shields today KBW. the of Meyer from Instructions] Our from final question line

Unknown Analyst

just growth of questions my on Meyer. for Most in on answered, Jane are It's X the XXXX.

expectation key would be driver. still that color So and great? the next for year? what Any Is plan your is be the growth nonstandard auto on

Thomas Wilson

biggest share market so aggressive where states in you starting Mario starting roll some give Mario in of has I impact out, more a the a we're capture number growth. the would Allstate got transform brand. will way to -- first, to to say growth specifics. he's that grow the the

the So XXX comfortable Custom agent independent nonstandard I driver grow would California. we're talked New business, York, New in and biggest happens that of continued now unclear is and there. we think, Mario about, expansion will say -- the right Jersey The what on thing the biggest the through we're

impact impact states, it policies talking overall growth than that measure else That those that to a anything book different you in those percentage get you're will And for may biggest be the get our they're given certainly, properly the on but to priced force business, we'll in would about, will in need or that? we smaller Mario, policy. large states. of add be

Mario Rizzo

risk think thing means the only ahead state risk that Yes. it's look I recognize segment to business state, been and to in look segment, of we're taking Jersey. important by as a New us, terms I sense we same The level. add by profitable. rate begin for the I'd just it just That X And approach we've local manage because to as the it's that in market, that's -- York, is more and by we we growth. taken make really market think And talked growth doesn't growing forward approach improve to on profitability, X New California, groupings and more think -- we're that's got of get about at before we emerging. states where that can Tom we've about and is even get investing economically

the beginning the auto. you are building of with channels in if we've a leverage made lot marketing and channel, like been agent independent there's what in states got a levels and building target XXX we've with agent and we're we've momentum that exclusive in make that transformative the divide we're Custom things growth, them, states the number of investments, we've and of there direct to the profitability, the capabilities built things improvements do the nonstandard of rest capabilities local The at like already

system a like right more to when grow. to feel are is So the positioned grow we us much as we time effectively for

that And the capabilities target growth. in ready-to-grow into those we profitability. more building to category in of to as levels into terms think And transformative in forward out will growth we we continuing states look and we've been states of invest leverage look with XXXX, fall

Thomas Wilson

profitability X shareholder We'll me let a things conversation great make drive capital What's long-term growth. combined strategic very which X the see We kind increases, to and we investment transforming close opportunity. Thank going summarize had. you returns this those points, think with So great next quarter. growth, much. sustainable value, you of then allocation,

Operator

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

You Good now disconnect. day. may

The Allstate Corporation (ALL) 2 Nov 232023 Q3 Earnings call transcript