The Allstate Corporation (ALL) FY Conference June 05, 2025 09:40 AM ET Speaker0 Welcome, everyone. Thanks for joining. Good morning. Adam Klauber. I run our insurance group here. First, please read our website for disclosures for compliance, blah blah blah. Thank you. But we are really lucky enough to have Allstate. And this is, I think, the second year Allstate's joined at the conference, which we really, really appreciate. And it seems obvious as a local company, we're local. But, you know, we've really a ...

Accessibility StatementSkip Navigation More than 75 children, ages 9 to 12, participated in a youth clinic led by grassroots partner Black Star, a national community platform focused on accelerating the growth and visibility of Black soccer players, coaches and fans. "As part of our ongoing commitment to youth empowerment, Allstate is proud to support initiatives that create safer spaces and more opportunities for young athletes to thrive," said Elizabeth Brady, executive vice president and chief marketing, ...

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Core Insights - The Allstate Corporation's operating performance was weak during 2022-23 due to higher claims costs linked to the inflationary environment, resulting in lower underwriting profitability [1]. Group 1: Company Performance - The Allstate Corporation faced challenges in its operating performance primarily due to increased claims costs [1]. - The inflationary environment has negatively impacted underwriting profitability for the company [1].

Core Viewpoint - The Allstate Corporation reported a first-quarter 2025 adjusted net income of $3.53 per share, exceeding the Zacks Consensus Estimate by 56.2%, but showing a year-over-year decline of 31.2% [1]. Financial Performance - Operating revenues increased by 8.9% year over year to $16.8 billion, although it fell short of the consensus estimate by 1.9% [1][2]. - Property and casualty insurance premiums rose by 8.8% year over year to $14.7 billion, while net investment income grew by 11.8% year over year to $854 million, surpassing the Zacks Consensus Estimate of $821.4 million [3]. - Total costs and expenses increased by 14% year over year to $15.7 billion, driven by higher claims and operating costs, with catastrophe losses rising to $2.2 billion from $731 million a year ago [4]. Segment Performance - The Property-Liability segment's premiums earned increased by 8.7% year over year to $14 billion, but fell short of the Zacks Consensus Estimate by 1%. Underwriting income decreased to $360 million from $898 million in the prior year [6]. - The Protection Services segment reported revenues of $860 million, up 14.2% year over year, with adjusted net income slightly increasing to $55 million from $54 million [7]. - The Allstate Health and Benefits segment saw premiums and contract charges rise by 1.9% year over year to $487 million, missing the Zacks Consensus Estimate by 1%, while adjusted net income dropped by 46.4% year over year to $30 million [8]. Financial Update - As of March 31, 2025, Allstate had a cash balance of $840 million, total assets of $115.2 billion, and total equity of $22.1 billion, reflecting increases from the end of 2024. Book value per common share was $74.61, up 19.8% year over year [9]. Market Position - Allstate currently holds a Zacks Rank 3 (Hold) [10].

Financial Data and Key Metrics Changes - Revenues for the first quarter were $16.5 billion, an increase of 7.8% compared to the first quarter of 2024 [7] - Net income was $566 million, with adjusted net income at $949 million, translating to $3.53 per diluted share [7] - Adjusted net income return on equity was 23.7% over the last twelve months [7] Business Line Data and Key Metrics Changes - The property liability business generated $360 million of underwriting income, with a combined ratio of 97.4%, which was 4.4 points higher than the prior year due to $3.3 billion in gross catastrophe losses [14] - The auto combined ratio was 91.3%, with average earned premium increases outpacing losses [15] - Homeowners policies grew by 2.5% year-over-year, while total property liability policies increased by 0.1% in the quarter [19] Market Data and Key Metrics Changes - New business applications for auto insurance were 31.2% above the prior year, with strong growth across all distribution channels [20] - The company reported a 27% increase in personalized new business items compared to the previous year [12] - The homeowners business is experiencing mid-teens revenue growth, indicating a strong market position [72] Company Strategy and Development Direction - The company aims to increase personal property liability market share and expand customer protection [7] - A transformative growth strategy is being executed to improve customer value and lower costs, which has led to improved expense ratios [10] - The company is focused on expanding distribution channels, enhancing agent productivity, and increasing direct sales [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the rationality of the competitive market, with no aggressive rate reductions expected [34] - The company is optimistic about sustaining new business levels and improving retention through initiatives like the SAVE program [39] - Management highlighted the importance of maintaining profitability while managing potential impacts from tariffs and inflation [93] Other Important Information - The company completed the sale of its employee voluntary benefits business for $2 billion [9] - A $1 billion share repurchase program was instituted, with $100 million already executed in the first quarter [76] Q&A Session Summary Question: Views on competition and pricing aggressiveness - Management noted a reduction in the rate of increases in auto insurance and characterized the market as rational, with no aggressive rate reductions expected [33][34] Question: Insights on policy in force (PIF) count and retention - Management indicated that new business levels were up significantly, and retention is stabilizing, with efforts in the SAVE program aimed at improving customer interactions [37][41] Question: Capital position and allocation strategy - Management expressed comfort with the current capital position and outlined a balanced approach to capital allocation, focusing on growth and shareholder returns [75][76] Question: Impact of California's competitive environment on bundling strategy - Management acknowledged that competitors facing challenges in California could create opportunities for the company, particularly in the auto business [82][84] Question: Retention and SAVE program effectiveness - Management emphasized the importance of addressing customer defection triggers and improving customer experience through the SAVE program [108]

Financial Data and Key Metrics Changes - Revenues for Q1 2025 were $16.5 billion, an increase of 7.8% compared to Q1 2024 [6] - Net income for the quarter was $566 million, with adjusted net income at $949 million, translating to $3.53 per diluted share [6] - Adjusted net income return on equity was 23.7% over the last twelve months [6] Business Line Data and Key Metrics Changes - Property liability business generated $360 million in underwriting income, with a combined ratio of 97.4%, which was 4.4 points higher than the prior year due to $3.3 billion in gross catastrophe losses [13] - The auto combined ratio was 91.3%, with average earned premium increases outpacing losses [14] - Homeowners policies grew by 2.5% year-over-year, while total property liability policies increased by 0.1% in the quarter [17] Market Data and Key Metrics Changes - New business applications for auto insurance were up 31.2% compared to the prior year, with strong growth across all distribution channels [18] - The homeowners business generated mid-teens growth in revenue, indicating a strong growth opportunity [70] Company Strategy and Development Direction - The company aims to increase personal property liability market share and expand customer protection [6] - A transformative growth strategy is being executed to improve customer value and lower costs, which has resulted in a 6.7-point improvement in the adjusted expense ratio [9] - The company is focused on expanding distribution channels, enhancing agent productivity, and increasing direct sales [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the industry is operating with good profitability and does not foresee aggressive rate reductions despite competitive pressures [31] - The SAVE program aims to improve customer interactions and retention, with a goal of enhancing affordability and overall customer experience [39] - Management expressed confidence in the company's strategy and ability to deliver value for shareholders and protection to customers [28] Other Important Information - The company completed the sale of its employee voluntary benefits business for $2 billion on April 1, 2025 [8] - A $1 billion share repurchase program was instituted, with a quarterly dividend increase to $1 per share [8] Q&A Session Summary Question: Views on competition and pricing aggressiveness - Management indicated that while there is a reduction in the rate of increases in auto insurance, the market remains rational with a focus on profitability [31][33] Question: Sustainability of recent improvements in policies in force - Management noted that new business levels are up significantly, and retention is stabilizing, with efforts in the SAVE program aimed at improving customer retention [36][39] Question: New applications and advertising impact - Management confirmed that new business levels are being maintained and that there is potential for further growth with product rollouts and advertising investments [44] Question: Impact of tariffs on auto insurance margins - Management stated that they will manage through tariff impacts and are prepared to adjust pricing as necessary to maintain margins [92] Question: Retention challenges and SAVE program effectiveness - Management acknowledged that retention remains a challenge but emphasized efforts to improve customer experience and affordability through the SAVE program [104][108]

The Allstate Corporation First Quarter 2025 Earnings Presentation 05.01.2025 Forward-looking statements and non-GAAP financial information Allstate Delivers Excellent Returns While Advancing Strategy Allstate's Strategy To Create Shareholder Value Increase Personal Property-Liability Market Share Expand Protection Services Leveraging Allstate brand, customer base and capabilities A strong start to 2025 The Allstate Corporation 2025 PAGE 2 ➢ First quarter highlights o Total revenue of $16.5 billion increased ...

Core Insights - Allstate reported $16.8 billion in revenue for Q1 2025, an 8.9% year-over-year increase, but fell short of the Zacks Consensus Estimate of $17.13 billion by 1.91% [1] - The company's EPS for the quarter was $3.53, down from $5.13 a year ago, but exceeded the consensus estimate of $2.26 by 56.19% [1] Financial Performance Metrics - Combined Ratio for Property-liability was 97.4%, better than the average estimate of 98% [4] - Expense Ratio for Property-liability was 21.4%, lower than the average estimate of 22.5% [4] - Loss Ratio for Property-liability was 76%, slightly above the average estimate of 75.2% [4] - Loss Ratio for Auto was 69.3%, better than the average estimate of 71.5% [4] - Property-Liability Net Premiums Earned were $14.03 billion, a year-over-year increase of 8.7%, but below the average estimate of $14.17 billion [4] - Property-Liability Other Revenue was $488 million, a 13.5% year-over-year increase, slightly above the average estimate of $485.47 million [4] - Property-Liability Net Investment Income was $783 million, an 11.5% year-over-year increase, exceeding the average estimate of $741.90 million [4] - Allstate Health and Benefits Net Investment Income was $25 million, an 8.7% year-over-year increase, slightly below the average estimate of $26 million [4] - Allstate Health and Benefits Other Revenue was $131 million, a 2.2% year-over-year decrease, below the average estimate of $132.46 million [4] - Accident and health insurance premiums and contract charges for Allstate Health and Benefits were $487 million, a 1.9% year-over-year increase, below the average estimate of $491.66 million [4] - Corporate and Other Net Investment Income was $22 million, a 22.2% year-over-year increase, below the average estimate of $25.06 million [4] - Premiums earned by Allstate Protection for Homeowners were $3.66 billion, a 16% year-over-year increase, slightly above the average estimate of $3.64 billion [4] Stock Performance - Allstate shares returned -4.2% over the past month, compared to the Zacks S&P 500 composite's -0.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Group 1 - Allstate reported quarterly earnings of $3.53 per share, exceeding the Zacks Consensus Estimate of $2.26 per share, but down from $5.13 per share a year ago, representing an earnings surprise of 56.19% [1][2] - The company posted revenues of $16.8 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.91%, compared to $15.42 billion in the same quarter last year [2] - Allstate has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates two times during the same period [2][6] Group 2 - The stock has increased approximately 3.1% since the beginning of the year, while the S&P 500 has declined by 5.5% [3] - The current consensus EPS estimate for the upcoming quarter is $3.22 on revenues of $17.18 billion, and for the current fiscal year, it is $16.94 on revenues of $69.45 billion [7] - The Zacks Industry Rank for Insurance - Property and Casualty is in the top 17% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]