Aallstate(US:ALL)2025-07-30 20:24Part I Financial Information Financial Statements Net income for Q2 and H1 2025 reached $2.1 billion and $2.7 billion respectively, driven by higher premiums and asset disposition gains Condensed Consolidated Statements of Operations (unaudited) | (In millions, except per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $16,633 | $15,714 | $33,085 | $30,973 | | Property and casualty insurance premiums | $15,041 | $13,952 | $29,739 | $27,464 | | Total costs and expenses | $14,820 | $15,284 | $30,553 | $29,079 | | Gain on disposition of operations | $890 | $— | $890 | $— | | Net income | $2,099 | $347 | $2,695 | $1,545 | | Net income applicable to common shareholders | $2,079 | $301 | $2,645 | $1,490 | | Net income per common share - Diluted | $7.76 | $1.13 | $9.85 | $5.58 | Condensed Consolidated Statements of Financial Position (unaudited) | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments | $77,437 | $72,610 | | Total assets | $115,894 | $111,617 | | Total liabilities | $91,889 | $90,250 | | Total Allstate shareholders' equity | $24,019 | $21,442 | | Total liabilities and equity | $115,894 | $111,617 | Condensed Consolidated Statements of Cash Flows (unaudited) | ($ in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,837 | $4,025 | | Net cash used in investing activities | ($2,501) | ($3,896) | | Proceeds from disposition of operations, net of cash transferred | $1,885 | $— | | Net cash used in financing activities | ($954) | ($252) | | Treasury stock purchases | ($439) | $— | | Net increase (decrease) in cash | $382 | ($123) | Note 3: Dispositions The company completed the sale of its EVB business for $1.9 billion, generating a $643 million after-tax gain, and also sold its group health business - On April 1, 2025, the company closed the sale of its employer voluntary benefits (EVB) business for $1.9 billion in cash, recording a gain of $890 million ($643 million after-tax) in Q2 202528 - On January 30, 2025, an agreement was reached to sell the group health business for approximately $1.25 billion. The transaction closed on July 1, 2025, and a gain is expected in Q3 202531 Note 4: Reportable Segments Segment performance improved significantly, with Allstate Protection's underwriting income reaching $1.28 billion, while Health and Benefits' adjusted net income declined due to dispositions Segment Financial Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Underwriting income (loss) | | | | Allstate Protection | $1,283 | $(142) | | Run-off Property-Liability | $(3) | $(3) | | Adjusted net income (loss), after-tax | | | | Protection Services | $60 | $55 | | Allstate Health and Benefits | $4 | $58 | Property-Liability Insurance Premiums by Line (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Auto | $9,528 | $9,079 | | Homeowners | $3,771 | $3,255 | | Other personal lines | $779 | $701 | Note 5: Investments The investment portfolio grew to $77.4 billion, with net investment income rising to $754 million in Q2 2025, despite $144 million in net investment losses Investment Portfolio Composition | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fixed income securities, at fair value | $54,435 | $52,747 | | Equity securities, at fair value | $2,397 | $4,463 | | Limited partnership interests | $9,194 | $9,255 | | Short-term investments, at fair value | $9,640 | $4,537 | | Total | $77,437 | $72,610 | Net Investment Income (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Fixed income securities | $602 | $571 | | Limited partnership interests | $74 | $103 | | Short-term investments | $97 | $62 | | Total Net investment income | $754 | $712 | - Net investment losses were $144 million in Q2 2025, primarily driven by losses on sales of fixed income securities of $245 million, partially offset by valuation gains on equity investments of $170 million48 Note 9: Reserve for Property and Casualty Insurance Claims and Claims Expense Net P&C claims reserve increased to $34.9 billion, with H1 2025 incurred claims at $21.1 billion, including $4.19 billion in catastrophe losses, offset by $621 million in favorable reestimates Rollforward of Net P&C Claims Reserve (Six months ended June 30, 2025) | ($ in millions) | Amount | | :--- | :--- | | Net balance as of January 1 | $33,315 | | Total incurred claims and claims expense | $21,064 | | Current year | $21,685 | | Prior years (favorable reestimate) | ($621) | | Total paid claims and claims expense | ($19,523) | | Net balance as of June 30 | $34,856 | - Catastrophe losses for the first six months of 2025 were $4.19 billion, a significant increase from $2.85 billion in the same period of 2024153 - Favorable prior year non-catastrophe reserve reestimates were $378 million for Q2 2025 and $616 million for the first six months of 2025, primarily driven by the auto insurance line41156 Note 12: Guarantees and Contingent Liabilities The company faces various legal proceedings, with an estimated aggregate reasonably possible loss between zero and $72 million pre-tax, including class actions - The company estimates the aggregate range of reasonably possible loss for certain disclosed legal matters, in excess of amounts already accrued, is between zero and $72 million, pre-tax182 - Allstate is defending several putative class actions challenging its depreciation practices in homeowner claims, its valuation methods for total loss auto claims, and its handling of uninsured/underinsured motorist coverage in Arizona184185186 - The Department of Justice filed a civil suit against National General entities alleging violations related to its collateral protection insurance program191 Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights significant financial improvement driven by the 'Transformative Growth' strategy, including underwriting income turnaround and strategic asset dispositions Highlights Consolidated net income applicable to common shareholders surged to $2.08 billion in Q2 2025, driven by higher premiums and the EVB sale gain, with total revenues reaching $16.63 billion - Consolidated net income applicable to common shareholders increased by $1.78 billion to $2.08 billion in Q2 2025 compared to Q2 2024223 - Total revenues for Q2 2025 increased by $919 million to $16.63 billion, primarily due to higher homeowners and auto insurance policies in force and premium rate increases223 - Book value per diluted common share was $82.40 as of June 30, 2025, a 32.6% increase from June 30, 2024225 Property-Liability Operations The Property-Liability business saw a significant turnaround, with the combined ratio improving to 91.1% in Q2 2025 from 101.1%, driven by a lower loss ratio and premium increases Property-Liability Underwriting Results (Q2 2025 vs Q2 2024) | ($ in millions, except ratios) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Premiums written | $15,047 | $14,279 | | Premiums earned | $14,346 | $13,339 | | Underwriting income (loss) | $1,280 | $(145) | | Combined ratio | 91.1% | 101.1% | | Loss ratio | 70.3% | 79.8% | | Expense ratio | 20.8% | 21.3% | | Effect of catastrophe losses on combined ratio | 13.9 pts | 15.9 pts | Allstate Protection The Allstate Protection segment generated $1.28 billion in underwriting income in Q2 2025, a significant recovery, driven by improved auto and homeowners combined ratios due to rate increases - Auto insurance premiums written increased 2.7% in Q2 2025, driven by rate increases and a 24.8% rise in new issued applications250251 - Homeowners insurance premiums written grew 14.3% in Q2 2025, reflecting higher average premiums from rate increases and a 2.3% growth in policies in force251255 - Catastrophe losses for the segment were $1.99 billion in Q2 2025, down from $2.12 billion in Q2 2024. Wind/hail events were the primary cause of losses244272 - Favorable prior year reserve reestimates for the segment were $372 million in Q2 2025, mainly from personal auto lines279280 Run-off Property-Liability The Run-off Property-Liability segment reported a stable underwriting loss of $3 million for Q2 2025, with net reserves for legacy claims decreasing slightly to $1.36 billion Run-off Net Reserves | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Asbestos claims | $738 | $774 | | Environmental claims | $245 | $259 | | Other run-off claims | $377 | $381 | | Total Net reserves | $1,360 | $1,414 | Protection Services The Protection Services segment reported adjusted net income of $60 million in Q2 2025, driven by Allstate Protection Plans' increased premiums, with total policies in force growing 7.4% Protection Services Financial Summary (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Premiums written | $733 | $676 | | Revenues | $868 | $772 | | Adjusted net income | $60 | $55 | | Allstate Protection Plans | $51 | $41 | - Policies in force increased by 7.4% to 169.7 million as of June 30, 2025, mainly due to growth at Allstate Protection Plans290291 Allstate Health and Benefits The Allstate Health and Benefits segment is transforming with the completed sale of its EVB business and pending group health sale, leading to adjusted net income falling to $4 million in Q2 2025 - The sale of the employer voluntary benefits (EVB) business closed on April 1, 2025. The sale of the group health business closed on July 1, 2025295296 - Adjusted net income for Q2 2025 was $4 million, down from $58 million in Q2 2024. Excluding the sold EVB business, adjusted net income decreased by $26 million, primarily due to higher benefit utilization in group and individual health233300 - A goodwill impairment test for the retained individual health business did not result in an impairment, but the excess of fair value over carrying amount was less than 10%, indicating potential future risk298 Investments The investment portfolio grew to $77.4 billion, with a Q2 2025 risk reduction strategy implemented, resulting in net investment income of $754 million despite $144 million in net losses from repositioning - In Q2 2025, the company lowered its allocation to investment risk, reducing public equity securities and high-yield bonds and shortening the fixed income portfolio duration307 Net Investment Income by Strategy (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Market-based | $733 | $667 | | Performance-based | $90 | $121 | | Investment income, before expense | $823 | $788 | - Net losses on investments and derivatives were $144 million in Q2 2025, primarily due to losses on sales of fixed income securities ($245 million) as part of the portfolio repositioning330331 - As of June 30, 2025, 92.3% of the consolidated fixed income securities portfolio was rated investment grade312 Capital Resources and Liquidity Total capital resources grew to $32.1 billion, improving the debt-to-capital ratio to 25.2%, driven by strong net income and unrealized gains, while the company returned capital to shareholders and maintained strong liquidity Capital Resources Summary | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Allstate shareholders' equity | $24,019 | $21,442 | | Debt | $8,087 | $8,085 | | Total capital resources | $32,106 | $29,527 | | Ratio of debt to capital resources | 25.2% | 27.4% | - The Board authorized a new $1.50 billion share repurchase program in February 2025. As of June 30, 2025, $1.06 billion remained available under this program338 - In May 2025, Moody's affirmed AIC's financial strength rating of Aa3 and changed the outlook from negative to stable. S&P affirmed its A+ rating with a stable outlook341 - The parent holding company has deployable assets of $3.98 billion as of June 30, 2025, which will be further increased by proceeds from the group health disposition in Q3 2025347 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance that material information is properly disclosed356 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls357 Part II Other Information Legal Proceedings This section incorporates by reference the detailed discussion of legal and regulatory matters from Note 12 of the financial statements, covering various lawsuits and inquiries - Information regarding legal proceedings is incorporated by reference from the discussion under "Regulation and compliance" and "Legal and regulatory proceedings and inquiries" in Note 12 of the condensed consolidated financial statements359 Risk Factors The company reported no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes in the company's risk factors from those disclosed in the 2024 Annual Report on Form 10-K360 Issuer Purchases of Equity Securities During Q2 2025, Allstate repurchased 1.81 million shares at an average price of $199.46, as part of a $1.50 billion program with $1.06 billion remaining Issuer Purchases of Equity Securities (Q2 2025) | Period | Total number of shares purchased | Average price paid per share | Maximum approximate dollar value that may yet be purchased under the plans or programs ($ in billions) | | :--- | :--- | :--- | :--- | | April 2025 | 592,338 | $193.89 | | | May 2025 | 662,738 | $204.12 | | | June 2025 | 555,570 | $199.85 | | | Total | 1,810,646 | $199.46 | $1.06 billion | Other Information Two executives, Suren Gupta and Thomas J. Wilson, adopted Rule 10b5-1 trading plans for the potential sale of company common stock during the quarter - On June 9, 2025, Suren Gupta adopted a Rule 10b5-1 trading plan for the sale of up to 48,400 shares of common stock362 - On June 27, 2025, Thomas J. Wilson adopted a Rule 10b5-1 trading plan for the sale of up to 201,684 shares of common stock363 Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, officer certifications, and XBRL data files - The exhibits filed with this Form 10-Q include the Restated Certificate of Incorporation, Amended and Restated Bylaws, officer certifications, and Inline XBRL documents367