The Allstate Corporation (ALL) 4 Aug 222022 Q2 Earnings call transcript

Thank you for standing by, and welcome to the Allstate Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. And now I'd like to introduce your host for today's program, Mark Nogal, Head of Investor Relations. Please go ahead, sir.

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

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

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

investment next topic hosting we on strategy. be Additionally, Allstate's investor special will September our call on X, focusing

to turn Now over I'll it Tom.

time Thank today. morning. you Allstate your investing for with good Well,

Let's start on X. Slide

left. strategy business Allstate's are ovals has in increase protection We're personal to market capabilities X our digital Allstate also distribution which we components: base the offers value distribution. building expanding increase expand X and transformed shown brand, services, property-liability leveraging So with the insurer the Protection by We're the customer diversifying growth. expanding a and by broad and low-cost share shareholder on

transformative been advertising reduce also half raising we will broadly increases the of auto in on a to negative and new we're brand actions where margin focus a impact the on in on of profitability. comprehensive year, environment while huge actions and we XXXX, generating a a X.X% panel capture have this we we claims And of insurance declined expenses improvement, plan rate the of Allstate growth. guidelines business On environment. advance continue investments. -- will implement changed we high profitability business includes for Underwriting executing be growth, half Protection when increases manage We're These quarter inflationary premiums. we're policy returns. are earning operating which excess the slightly businesses executing home implemented although made now acceptable volume, have growth In growth. our second adequate to in first right, the loss continue this and quarter, where this progress market the likely to not earnings invest to in in countrywide while to were growth reducing improve current also a profitability share. second Services And to the we'll profitable are levels strategy, The strategy have cost model That requires file rates. strategy that as on to

Given late the inflation the which XXXX. know, mitigate business, lower the exposure beginning bond negative duration last you by bond reduction the in half $X.X approximately year, the interest valuations on impact as in billion portfolio helped to insurance auto to higher we reduced first rates, of of

position this capital us strong shareholders cash maintain to high to enabled environment. Our returns in

factors average higher quarter of year year. in the as Moving of property prior million was reflected million XXX.X is duration the to income review net prior of quarter and $XXX share. and It's year last time below revenues combined below earned performance of quarter, and loss offset associated by led of $XXX achieved diluted exceptional more despite from resulted The the X, in which and partially the in the and growth. $XXX current Total per in net million our Net costs achieving XX%. X.X% derivative bond the to year, property the development decreased in policy adjusted years reserve Net Higher recorded investments unacceptable equity second investments was valuations premiums last X.X%, premiums portfolio increasing Slide quarter losses derivatives these on prior committed a were income adjusted was lower equity the returns a of between quarter $X.XX on we obviously $XXX substantially prior we loss net with income report since on report X.X% upward in second liability liability the $X.X second quarter. income which performance-based billion the of or in return levels ratio gains the million in detail. The investment on loss XX% only and in standpoint. let's and the year which remain sales, to an fixed losses were loss at months, our XX long-term XX% equity this combination shortening. but over

through let Glenn more walk our to in property to over detail. Now me liability results turn -- talk it

Thank you, Tom.

by the on the to claims compares right combined in ratio reviewing of last point is XX.X ratio A increasing auto profitability increase X. which been earned start results level the combined has XXX.X, underwriting a for severity underlying recorded is increasing leading underwriting of an year's shown underlying quarter. combined insurance of increases. ratio reflect on ratio The chart on drove of left. chart to which and the second high Let's year's higher loss of X.X quarter recorded as The faster Slide severity second XX.X the inflation, than rate XX.X this the

this there minutes. quarter, negative few reserve a strengthening prior cover X.X positive reductions. one the which expense other was from large The points in impact I'll impact The year was from on

detail. profitability rising more move talk X and in Slide Let's and costs about loss to

ratio the that year, As those targets, combined chart, the auto for you X history you meeting of and first exceeding we or supported this And sophistication, underwriting, is our management. expertise know, the combined on and in shows then by the ratio quarters target a see year mid-XXs. long have a of claims expense which pricing we insurance by have which can

quarter were And well pre-pandemic environment high is pandemic levels. we rapidly up Because you'll X the damage much than severities better was combined is the greater. increased the auto of severity because XX% XX%, impacts. full for as due underlying had million, from target about coverages. X%, comparison of today, over report the there, was year XXXX, totaled reserve significant $XXX the The injury quarter frequency physical Auto in of than that increase XXX.X in respectively, damage ratio the primarily an average non-catastrophe combined and Now XXXX some the still by which but went XXXX to on inflationary XXX.X year outlier collision, ratio strengthening bodily incurred see we're though, we the which year second quarter-to-quarter results incurred. costs prior claims, and move below rising increased to early frequency even year-to-date. And also to incurred most in environment property for it's X impact, and injury the and the during points, claims

left collision damage damage. let's rates year The stay used causes property the go Slide prices and if first go At current, year, car values. reserve to time, the chart go from used to of of same the So back have to XX% an and to than which And parts more OEM They the X, and half this on for XXXX like beginning looking physical increased and you labor during have for at gone the severity XXXX. rise increases coverages level. elevated up continue began into development. car we'll prior shows deeper in

after are cars right anticipated long of be to delays that now those the the we we right trends amount on shows the claim end are calendar the would Now year, taking a though after time relatively The payments that XXXX end short-duration gross for these on of for and losses losses increase chart claims. even coverages repaired X made the the the months physical year. of damage the paid

year. to was $X.XX for that billion, see from it months XXXX is you about XX from XX% paid the Now XX which about would our for the expectation above chart can claims losses be prior

increases. the prior totaled million other development, year quarter. the can reserve compared see the injury, large right line prior exceeded non-catastrophe bar even the that billion, estimate left at is the million dash But a from You second paid and the primarily which the on $XXX homeowners, of our bars and auto actual driver by in were quarter, to losses higher the of $X.XX All commercial the $XXX of from end it. to far year

insurance XX beginning of the the inclusive Slide locations, XX%, brand as Let's shown rates rate X.X%. premium increase provinces. annualized how had in been Those and are to X Since map, to broad increases expected country, year, implemented of discuss at increases we been auto to have X states and rates we've will Canadian higher go rate and increased have increases Allstate by over the profitability. where be on improve written the across implemented auto

or York not any California. in been to able Now rate we adequate rate get New in in increase have

And second needed rate X.X% or our rate In New higher there that rate risk And significantly represents need below X% in Similarly, our more which overall than gave in recently levels the states flex XX% is auto actions price approved. of process we as premium, X% to which there there. for indication markets, are an risk, new premium. the underwriting implemented adequate and was, auto California, quarter, leveraged filed adequate rate the of current adequate we channels in implementing achieve we York segments to business indicated a there. get cannot significantly reducing us it restrictive where return. than annual less an our about represents the filings the we're about increase, of is again until

look and our of left. What increases insurance. shown Let's target the we and on that and blue move to we've Slide prior with, by the catastrophe X, magnitude with and months XXX, start of bar. required auto first impact combined year rate increases losses, recorded combined see here the will Starting path reserve by how points are normalized and profitability, for by prospectively. along to year, a the these green average illustrates on insurance bar. already what's X-year taken that's at combined the represented ratio ratio auto X Through in the you improves ratio the impact our going impacting first is To the actions removing to X.X that of the we'll

bar rate premium. second implemented fully into the reflects of green The estimated earned actions when impact already

national these XXXX. across brands. earned and will actions market on are and in general over and fully $X.X effective Those are of additional be of by billion an quarters premium the earned the Allstate They already that total implemented end renewing So coming policies.

severity course, described whether on it's would costs to ratio combined will just from which increase, inflationary loss I there. of Now impacts or higher what frequency, continue the increase

So achieve cost increases to increases must rate prospective our the come target returns. that exceed loss

auto in our we us a target just achieve gives business expenses, such ratio I everything in the where actions described, mid-XXs non-rate our with track and to Now insurance. combined new reducing as expect combined

largely of timing be the relative these increases in premium increases of and Now and that will pace on dependent costs. the loss

So look X, industry-leading business. we'll at a take again on Page our homeowners

our know, products. home improves and economics that a of auto of and bundle and you As insurance, the portion customers, both the overall significant retention

We of have underwriting, a topic discussed a differentiated we and a capabilities, last in differentiated ecosystem capabilities includes call. our reinsurance, special homeowners. product, That in claim lot those

long-term show of results system. Our underwriting the strength the

the average XX.X, ratio produced is in reported same as XXXX, of that that left. And billion X-year in $XX $X.X period. combined Our billion industry lost on profit since while the over shown the underwriting chart

which catastrophes combined been And unfavorable full XXX.X, primarily have and ratios historically prior second results, reserve ratio quarter most quarter Now quarter catastrophes. was estimates. higher our points year combined reflected of second year non-catastrophe this X.X to than at and year due again higher second

combined recorded is year-to-date XX.X. ratio home Our for

combat homeowners and in continue taken changes has increases respond sophisticated see features our and replacement is that certainly that, to we've we not pricing material labor rate. to immune product the in, Now we're and environment To values, to insurance costs. in inflationary

broaden Allstate on in our see And in on where statistics, agents net grew policy right to the XX.X% that operating premium written that's key remain some quarter, of position by you shows chart of from the really the we've base relationships. If second X.X% grown a a customer the homeowners the good year. on Allstate prior we brand that

heard grow turn you've special our positioned and over but of last say to So call, And to the homeowners to we're advantage Mario. topic to in with only competitive maintain I'd well me business. we like at not several line it that as certainly that, times really have,

Glenn. Thanks,

Protection share quarter, net oval, distribution. enable mentioned, a invest product when is Services core of which I all X.X% the achieving while in property-liability the delivery. shareholder adjusted highlight adequate want of gains losses increasing time, the Revenues, expense driven of is XX in $XX second we Plans. warranties on investments the by with growth growing new but to as these are to committed are initiation today, the flywheel force components shown Policies year low-cost of a the elements the market market personal to increase continue Adjusted compared XXXX, year new Building Protection for million lower to derivatives, same net $XXX in for ratio into also increased ongoing insurer broad that decrease X.X%, and and growth XX on improving digital expiring impact is we decreased us the to XX. favorable to to business. and we in of value, strategy Tom million profitability, earlier fully retail Plan sales a As pieces Protection are and growth in in building XXXX X-point to insurance Transformative launched a increase the as transformative remain being the will tank. versions primarily we scale environment income in of Allstate Slide discussed made with the digital these million growth on compared by a $XX lower specific and Slide did initiative prior multiyear position X goal foundational excluding designed growth the calls. by personal and sales share I businesses, strategic and quarter improvement have to year-end property-liability to insurance first, to made businesses by pricing XXXX; represents At success. possible the get auto we product items: future won't quarter. secondly, technology compared reflecting our the year-end quarter, investments of quarter prior experience relationship for the beta

General set Benefits and health group XXXX businesses individual our also attractive Slide see portfolio, the of year Adjusted million Moving growing. to $XXX products policyholders. can Health protect a quarter primarily offset health higher and prior group It $X of left. acquisition growth revenue, individual Revenues X.X% National to millions benefit in XX. Allstate also increased that added quarter, growing quarter, million year income primarily The health. second both the is of by to the is an of individual in of from driven you as the of and net million in XXXX businesses. ratio, in by driven which $XX by for increased prior partially increased on was

current internal now shown fixed the this dark had of $XXX in the XX in year million includes were chart year million quarter, an such an gains are that sales, left. let's our equity taken results income asset higher was million, blue, in the a of prior and Now asset strong lower. estate types estate infrastructure, Performance-based million The a have last of portfolio return yield. to shift real is quarter, real XXXX. than which and as prior segment. Slide shown performance quarter while investing portfolio's in which and rate diversify over $XXX benefiting mix including which from The $XXX shown on remains our exceptional totaled Market-based portfolio second as on private XX.X%, private the are we $XX as well was to on months of the $XXX income, XX the yields as with other was below in Net quarter, above the equity investments quarter, in in risk reflecting in portfolio above performance-based the investments blue, In expectations. yields, performance, income increase return income below long-term position performance-based higher the million which overall inflation review investment investment the performance possibility given and return the recession.

conditions and market reported total a March credit and market statements, quarter reflect in based public results decline As a negative will prior valuations. quarter a reflect economic the higher due from of lag, so the portfolio the interest are and reminder, sponsored The spreads, second our and for X.X% results and performance-based negative to returns year-to-date was lowering quarter X.X% X future XX on value bonds equity quarter. rates return financial

public of than negatively of And the the sales prior market value bank are the broad longer-duration $X.X While recession portfolio, in and of into lower. market Index indices our is with value which market end for recession billion Aggregate impacted were interest spread rate derivatives. to it impact position portfolio results was equity risk to these long-term year. positioning have credit approximately the generate evolve. executed because The value. and and first equity. proactive of also XX% further Index duration income. portfolio the concerns risk market actions, XXXX portfolio These exposure has targets, this and XXX rates mitigated reduced S&P widening significant the the the executed We quarter risk-sensitive sale of continues protect high-yield bonds, the operating use the the shift end right conditions on lower the to loans bonds preserving most to than portfolio through decline the as through negative better rising, Bloomberg U.S. the sales shorter The of XX% illustrates and largely the of to us assets take of towards With higher and quarter, reduced the the chart by opportunities advantage conditions of Bond we

returns first billion X discuss XX the Slide move $X.X to let's cash quarters. Now Allstate's strong to in to shareholders of

year, X.X%, upside have as last share per providing more reduced has by shares the improved. been Over profitability outstanding

authorization. on underwriting to was share income. below year return remaining current net billion $X.X prior income repurchase on primarily our Achieving $X the equity addition, X.X% lower In period, due is the there Adjusted of another auto both adjusted on equity the for range returns homeowners for to target line to questions. With our context, of open that let's back will insurance and ratios combined net up bring XX% long-term billion target income XX%.

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

I the you were to for would to X my go first Glenn, And Slide guess back other running and half. the you're in actions. loss of future the that second them, I half question. as say rate and X XXXX the rate the then like through were my areas arrow caught larger box, first to relative pursuing costs And increases in the attention you

So additional X are what that areas those around maybe on you detail in give chart? you can guys thinking some us

a is Glenn, can jump this Greg, Tom. right I'll do overviewing. of bit you in.

trends mentioned, in increase we seeing in you're that, First, what give some Greg, Glenn, as expect you order cost have them as want on the in increases. go provide also, both booking in -- you're And earnings future. -- future up, where perspective we're -- we With to -- more you historically don't how up would estimates rate take rates. to give loss about know, perspective expect thinking to thinking costs you're don't we're and line-by-line. go like then we we to loss the perspective to do and about We

frequency history thing where typically think to think just look calls Sure. Greg, now. the I is on the unique right our the worst there say or true predict harder that us sure and than frequency time inflation there's certainly not loss behind at of I'll out will know is And We're in been slow you is One loss rate the there. we maybe outpace trend, listening of cost to I the that, this have to when is and other opinion out severity. piece the trends. want it, opposite I a is some

really, been has really frequency Our steady.

And of back it expectation and but just at the out we the now, up rise to it and below is good the big levels, there, that that from taking but to pandemic it look in and Fed with out actions in You as where right is the we anything how crept up out on creep, inflation of to lot conservative the leveled card steadily points as slightly has rate all remains have it severity, low it that need long more in the has. now pre-pandemic continues offset it's to the severe a wild and viewpoint other we're I else side, order there, how industries that. think, a data runs

if a on you, they well we're rate side, it's trouble the costs it. couple move, the I I in as offset understand. on in rates need rate the the I in where some regulators tell time remarks, we of the to and So is get through that the the mentioned loss but slide offset we're isn't now, need across going over the very having quarters, way froze right right it, and earn mid-XXs to those pipeline our case. we meaningful mean broadly, with, coming to good places math gone and But trends. and that because rates you we're the will those relationships those depicts, future prepared combined through we We would ratio and to trends our work getting additional didn't country, working loss

it. Got

to You reference are New be which your are those having in where you're that without the York, is -- rates. which rate well, area do reducing slipped Glenn, states was new other the the Or X to about other of principal out the California, appropriate business slide, approved focus, you talk call you my some in in states states? In think need? there you I X you going getting just answer, problems Slide

cells certain specifics just it's want. where of -- state certain statement. loss give -- profitability rate reading less Glenn that, but there isn't the let that may we or also segments negotiate. are you're I we I'm we have But we cost. if Like it I'll Greg, know less just to get a like your increase, maintain even be really than just not you And the our there. to into saying

that? about specifics also managing So it's some Glenn, why on profitability. give don't you

look it's I and it's is -- the just markets I'll General profit on National because fact build states, channels. exactly that is within even It a both at and right within a performing now, mean well, And really segments right. from quite growth it's that it's states, Yes. standpoint.

the view rearview price can can putting is that business simple want it's we we've already business. not states some new those. where To the -- feel mirror. position about -- where prospective specific very of see we new and looking grow And based The working whether states through, you put on good it's majority business We that Jersey your in be the answer simply, need how get and we're that's risk, new more gotten we're kind so of across rates. shape about profitable, And market, be it we'll to channel, rate. and and we're it's the don't in in in. question, of of we place vast thinking segment another we good we've country, on not on. write profitable states And of that's New But we're to XXX as in on above the as working would the And or that to number at, we're been can disclosures, hard where XX. because we're above our for

question of our Credit line from Kligerman the And Suisse. comes from next Andrew

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

slowed submitted versus wondering like submitting, specifically increase auto just amount that And I'm rate rates what filings. during you the that talking about rate insurance was? of why quarter. the first the the It and looking guys that I'm guess second just I I'm quarter down. through looks slowed materially increase you're

and if then -- you to anything in. make might add, I'll there's can jump a you want comment David, Glenn

forward-looking, you fully down that got what First, Glenn bounces committed conversations about, talked submitting that's to we're you what in are when by you with that the target your What necessary that part increases we combined the continuously. what not to obviously in We're said of saw is levels these to in have around submitting. quarter, implemented we get got quarter. regulators second in obviously ratio early just the what question, rates release of increasing in our you kind is saw implemented. as And

meet there. add chooses down numbers we Glenn, feel are headed states and where anything that? team you to about submit then So it there where to to the and and with good explain some Glenn's want go the regulators, we're so

I add, timing and Yes. through. states about just really is which would it about go

So like -- they if you filed just haven't that really amount at through It cycle. look state, as is at off we went backed it we that David, per states all, the in the large. aren't

countrywide do or the the so And impact states. you than population-wise when is big lesser a medium smaller state

that the that some half seeking half the the have pipeline of level than very I We see more year you'll second to first timing rate large now. and the we're the are itself through And you states going we year. in right think out, it's why of able say to

some large We increases have through. very rate meaningful going states with

in just was points disapproved the above as the to not -- question, just quarters. rate. and you indicator track, the the auto is a that's submitted, slowed -- that ratio noticed another the I business. me combined trending well. Yes. like differences brand for quarter yet. related it. is a of looked last the more can it's X it bit NatGen and been yes, just little given Maybe kind through implemented the just it obviously -- Could in I of I that kind ratio like first businesses second has the in was I leading and been specifically, I does books that had guess something sound or more was for It's combined looking I that's approved quarter. quarter guys just versus few Got I to Allstate of referring counterintuitive referring just see you higher But they're -- the was timing for to those which

you could two? those what's on going just maybe about So talk between

then let let get me you versus do about an then take brand. question, and -- Because on me level that, let it you and Allstate to up and stuff with written David, competitors Glenn asked also just into take astute go jump stand deal and So but it's up NatGen and how of many have it the me versus a we'll like specifics. and the that? into

risk we different the of be versus to at mix. different you, and get a quarter-by-quarter. state said, tends comparisons, sense numbers, whether our need evaluate the them for changes the variance differences better if like using external, you and analysis long-term and strategies them. more directional numbers, external, the got you on That always It's results because when you're it's at That in said, it you our to different quarterly internal it's particularly rather a different understand are look performance. percentage profiles, gives numbers when than So strategies, particularly to or it look

strong First thing -- great I at you have they're would most you we look when asked say so really of competitors, about a is Progressive, to have them. respect

and did that's Progressive wide pandemic the and a year. than them. severity the But then XXXX. we're And had say, for GEICO of again, auto like have last both on report, impacts Allstate, began of what attractive a swings the They in don't frequency as a with prices different As in raising relates it we Progressive, insurance this frequency we're over all prices. and year impact know and tower this related ratio did long claims, they But they driven would combined is earlier by in not all have in particular period and returns. to time, auto inflationary repairs that dealing why, trends quarter better I us

change in they different both had numbers count that people them how claims time. are that the the But frequency from the down and over So and XXXX, sometimes XXXX, course, for of declines everybody we I of statistics was see economy. them reflecting shutting are impact

only whereas we XX%, we about collision, were they So down down year, Last think, XX%. increased by I their were were increased ours -- frequency XX%, collision by XX%, XX%. in and down,

expect down up. you they're year, we frequency, more raise them we're This than So would prices in raise them. and to

small why these short-term customer the It's be different. that will theirs. higher trends call of may a So you hard combined they But say be are have relatively ratio statement they Glenn expect would to that talk, share than the Robinson. it to our

to comparison other be NatGen the It be whole you different. that's see helpful a to could how be of state bunch mix. It so for will could things. And

can't results. the I intuit So exactly

And you will go different mix the risk through so that impacts and show Glenn how results. that

as attractive As it your twice our business obviously that a well. combined done basis, homeowners the our XXX.X also in is And the year, about homeowners lines. strategy, auto higher, ratio industry $X.X we billion quarter, actually insurance. and as ratios. second Glenn we model, an think relates Allstate quite is though, of I The talked requires on with worthwhile looking it combined ratio reported is a quarter. on lower last again, typically had that other underwriting have as to perspective, it's business, put would about, particularly last the was, strength we've capital call, To this than hard On than very income combined leader and on much in at though, business longer-term in it talked as been if our that's about

speed, it took that reshaped profitability, commitment you to As through. relates we which to we precision, business, dramatically

tend models how and doing. our precise, Allstate business both about to you of and be that, do at tend NatGen Glenn, lines talk So look to want versus to we good we're rate? the see business With

that because Tom I the really take good here you and over to good the a frame a because is kind important hit Yes, and it months it deal, the to to you're at want XX double question premium I use of months we've there it since the Well, it's time will. one. an and good you David, look changes time and back and detailed a like me, that after getting answer takes also. is earn NatGen full from daily closing owned the of XX out annualized

and combined this And and to you back as cars NatGen be comparison competitors, points XX Tom Allstate of make lower. brand books to was Allstate first ratio frequency business. their living, there only that about. go between So needed near the of difference nonstandard a just people to way, different the other business back on to more frequency reason XXXX, running much not talking nonstandard like quarter came for use but and about would the was Allstate was lower, was a was a of quicker or true, by

target was ratios. take And mean so that now. can't good on other General, in and say that is at can't period to rates as you rates sustain taking level, of low well, I to need rates, a really over your state to require that current you're places, up bad The National combined you that news hand, the sustain of when level for was would that, maintenance was below running a brand far level refile combined result, the that a in Allstate XX. It's around ratio. time. even news be the is And you some still you the

but in actually filed the of mentioned premium approved hasn't And and flash got while today, And premium earned XX% cycle. that is through. this down like average billion forward yet, of a not system, their to have been then that's already that So we've states before earned frequency up. through policies you've renewing higher earned only been raised premium I all only already now we the going the on $X.X

to fill back you're because took ratio, negative you par appropriately then to but get we of off that running of of whereas we XX there plus General rates to speak, still and to to base, didn't out to earned, that, when National it up got earning fill, so again, a they left hole So go the from an up be is the have XX% combined there. get

earned important few risks differences, the premium levels policies really So one the Three, a and are there's to a there's a is Two, on the points average companies different in and that's different. difference you're are few the right this difference one. across the frequency a now. looking points when is

General, they're it's inflationary their factors fascinating. really own So as book, and think inside policies, how even you the National hitting different about

running their right coverage which damage. tend XX look different think liability their you policy, ratio. full now, If about they're coverage you on like, so highest limits, at have let's about if one. policies collision, in you inflationary points versus on combined have things you to Two, any their a the trend of low say, liability-only don't trend very property Because liability-only is policies,

you that it's If property-liability and minimum just factors of you coverage state of you're hitting $XX,XXX it, have or whether were the you probably a after, us before hit and somebody's total car $XXX,XXX bearing that when Whereas inflation, of full the typically that to you're vehicles. the the a And the there's weight inflation. you have pay to in going of $XX,XXX. limits, value computation inflation change

state and really gives it's NatGen, a diversification willing really growing profitable, where the differently. at all acting even I just now grow. right move on ways, didn't of components, different trend acquired and another a is lot a a one, bit are see different nice looking having these that performing get So it's auto is able that thing place a is us it's that mix, well, we trends as and into it's which nicely, lot of to of The and ways we

Instructions]. [Operator

from question Credit comes Suisse. of from next Our Andrew the line Kligerman

Can you hear me this time?

can. We

sorry I'm that about before.

take material potential year the back loss you we actions. non-rate color of actions improvement more that the and able around potential of a see give much in little Could you that How on might the could be is the could on to question non-rate magnitude First ratio? half some offer?

you the Glenn can items. give

what be want to this you -- do an combined take Glenn, probably ratio. on won't will I able give that year's do do that? you we what for to think you attribution

Yes.

like give it's, this not in I'll other these segment we underwriting business market, said new isn't we're just ones. about, pricing segment actions not where to you got profitable Tom it you've in geez, those earlier, and well, we going we're a our say, as where, the So business segments few and write to let's

So segmentation the change we're to one. of be our pricing, would going

Another the the I payment sophisticated underplayed, at is with market. really we one of think change in in down but the targeting would be, be policies and on expect go times there's business that. pretty changed of how to can big that we're a marketing a we that flow Certainly,

markets? our out I'll the and right categories, and more doing: ads back are when last we improve out, which two, say in we've So one banner putting just allow which lot people is it to grow the sales expense; a one, it we're marketing that We're the dollars where which that when out risk will will quickly new how marketing searching are flat get up business insurance, incentives profitability; auto about us to are agents places. reducing we're with now. And for taken and people and to flow lower there the incentivizing then of

to grow So places, that going limiting intent being in all at look in of some to business nonprofitable segments. how of you you're not growing your really you market, with the put when together you're and your ability

the half And I Got it. that, be that a year? go would ratio very assume the loss as of helpful. into on That's should then back we impact material

our get us think material. to our We to I very Andrew, there's whatever. And out you it sense Those anybody to money and don't underwriting look, actions, going This the drivers. first, to like away, to helpful. raise I'd need it's knowing big should to -- cut the no won't prices, I team, give mean, can where to is assume anybody's go. you're like writing subject are business lose say so we expenses. need

long-term it profitability this second for So combined ratio year. half would the of do is than in more managing what about the the

Why your a What you quarter. and last place, X.X% across And it. more the got the the backwards not think X little pushing rate why rewinding was Was their rate? New rate it not it's or York, thinking have looking fact X and of lot I lot into lot and more about a by difficult? maybe whole the of book Got then all that just a bit, bit over book competitors precluded little increases going back what lot that ago? a more been just that? is a months California in XX% a for But and the

that of of just Well, I address concept. but address with comparison the first, philosophical that part let me the Progressive,

can. are can, We raising everywhere as we we prices fast as

maybe equal we're even in have a -- would highest is of this which long to been time. year So X year, of our period X.X% in up months

half. we're So much at in least we -- expect to and get that second the

Glenn any if anything -- everything book, so depend don't up It to can. we right total smaller in other let's of can, It's places. you price in getting of wasn't you pick getting to get by let's in down there your X.X%. thinking get dial on So we said, got obviously that that's as those XX% does just your California, stuff the or of everywhere it places

it impact as profitability So your much. doesn't

think, everyone's I competitors, our their to again, got relates it As own story.

-- own than is it's than more the frequency up brand in Their XX have inside points XX XXXX. was related different Allstate about ours We our to -- almost story Progressive. General is National

a faster So higher expect at the you attractive and their beginning prices we raise than them to still were the ratio. earning because very would of combined we did year,

the or our So past. leave I We've with I with to where would committed that think completely even our than in to lead situation, you been mid-XXs, regulatory capabilities the story. competitive long possible. run change us a time that, What industry see like the in for their been that no consistent a conclude we're not the everyone a that own when been ratio the to is and has in combined lot higher we've we getting that's business able and has environment

Barclays. from question Benguigui Tracy next from comes of our And the line

to want I on development, X. physical damage loss Slide your touch higher

I in feel close you timely about adequate fashion? talk like trying in can you're presume where could claims you're how cut Do initiative, you close rates? you claims your staff. staff a wondering, transformative up speed you Just Maybe growth clean to in

the doing you'll Tracy, in in category. higher purchase Mario talk a inflationary the and with have getting an prior And our Let that our me amounts year from property leveraging between to look deal accidents that contracts, then change about other we're first to to -- that pay standpoint was talk how can for difference which create at we Glenn, help stuff collision. about and relationships the operating what is people on damage, reserve environment, really customers we to if claims

Mario how flows the through so that about And can system. talk

yes. So

behind let I'll on on staff, claims say we and not with just behind me So claims. not are -- start are emphatically we

team took capability. we estimating good. claims processes, looks we're process, good shape really pending the virtual Our of of The lot using creating of good self-service expenses And has capabilities, a automating done out there. the job terrific in a that

the talked system the we this it. about really industry. dealing part the would be in of is external, with this across And everybody slowdown and With is uniform

capacity decline shop where is in down. in there's level the worked per down staffing body repair way XX% The for point So, per day. the been number example, shops a to industry is of across car the hours

X a hours about a historically it less little a it's shop think and in sitting car day. got a is hours work now done, hours day you So a X a than X or day,

more time doubled, has So it's car get shop on car average doubled. shop moved average a a than materially is that. the time surprisingly, Not in a into that and that of the has the converse to

to So some they you wait those put a hold on fix car and are, get can think drivable until reasonable frankly, choosing to they the of time just check back and to in their time. consumers all it together

that it with than had and coming just through. to a any in dynamic so greater even a are the way coming than I your it's said in cycle the have then you be and delayed different about prior, And repair the for later XX% remarks, being elongated prepared we're like you financials get seeing we point that way it And way planned supplements turned -- through. out higher it the

So job not staff, staffing. to plenty We've and got of didn't a the miss is you, our does want claim it it. terrific to on I team tell the just question chance

Glenn, and Well, stuff things mitigate inflationary also aspects, that in doing parts the some and right? you're fact, buying other

Yes, absolutely.

our in and scale and whether auto, homeowners some or take are one-to-one also customers car shops in some that of relationship we suppliers, parts relationships benefit a more the we've down access repair become is in network and so shop, that way, the can we and to with certain So of and trends. those broader largest we and a auto that parts using costs doubled by in both get network get doubled we cases, the company, and our down industry or as We've direct their materials, can auto, roofing a way. on that to of in this it's buyer able where flooring, large better our control and on have home in the our

don't Mario, reserve talk you piece? a And release why about

Yes.

that. -- I So I -- points to couple are of making guess jump I before worth think just a into

processes external end both adequate. that reserves, of reporting account we very of of comprehensive period, as our that certainly internal second taking our at the data of terms to inputs are That's are the reserves data into First what way on all, end processes the at the based we case estimate and thorough quarter all work in and any the have. we believe, our and

claim, damage may waiting shops, There pay move A first-party So that I the periods, in place past. of question principally we coverage. that's X the third-party coverages: But I'd as in these collision really on have to delays we start. historically body open. guess physical than about are short-tail certainly damage development was your their terms be claim, talked and reported, they specifically, a subject Property It the And customers. different coverage. it's Tom they're fixing mentioned, Tracy, factors. on. gets pretty property is tend up Well, the which same claim Collision in -- same the cars. inflationary is because the Glenn claims is we We're to show damage. be

auto and So that on carrier. just we've can't shops, to get about, from get in lack notice get cars get oftentimes as A carrier's factors taking up claim damage that what as queue are well coupled and that Page other is the been repaired those see repaired, it of those from in because sub the with on on chart carriers. reported PD, the strengthening of longer. the that as to what we as customer. can't of physical on it's property showing a consumers claiming demands but claim showed third-party get payout to changes damage whether is, presentation. consumer that get was oftentimes, a the that talked road in X demand all are remind we've -- waiting And tail what are And repair that is lot they third-party inflation that behavior. the the of much And capacity and months seen longer in of we talking Glenn we you, much you appointment another it's that's we subrogation they And about factors their quarter, and just or an

year In are much with I'd after have tail we've The longer as terms on that seen leave the thing you levels. expectations, the amounts getting than of severity this taking into the in we because of XXXX information the more establish paid past. of account calendar kind significant is we end dollar we're

certainly we're earlier. into about the So that increases that we talked factoring severity

So a just follow-up that. on

up of sequentially. auto Your XX.X% underlying ratio was points loss X.X

there said, you since from component a I also that up of it's accident year? but was your part show the as will raising that was should everything think a loss So same picks first you up quarter ratio year, that that your loss prior trued in

Yes, Tracy.

about gets relative we So severity, as claim our did the entire year. to for slightly severity we talked to when quarter, which we trends this you where increased know, counts that quarter last applied

had the component So information first quarter. there in is had perfect we have would catch-up quarter, in the that been first a reflected

when have And we sense what of so loss that looked first would right just starting able you a your like, what's quantify quarter would have thinking be about better the to point true-up ratio?

about stuff. you around. kinds there's seasonality, does looking it combined ratio bounce summer, there's in the There's of just think driving Tracy, all I the should at think by quarter,

So year looking basis. year big did -- was it it I I it X pretty when at as X quarter. this would It's last we're on a number. quarter year look We that a not -- think at big

question And Newsome line of Sandler. from Piper our from next Paul comes the

we inflationary was regulatory we do as because see well issues? to home in presumably, same we of I you pressure the auto of to that need get thinking about wondering issues the presumably, insurance and in the there the business offset Do side home those the insurance sort have there on rate house.

insurance, saw XX% home you in increase the is Paul, year-over-year.

relationships assumption picking have -- we getting areas. those auto And regulation the underlying need the pressure it. good So have don't we think got regulatory there is in The we when as cars, of Glenn we rates the insurance. we're in price with we they mentioned,

there So few a are states.

yet we've State ago of been that agreed And and homeowners, rate has increase come that was so to a a over to waiting to get year on through. with California

want state-specific it more to a you a regulatory Glenn, broad-based than to So issue tends be pushback. add? anything of

Yes. really go keeps there base it's thing not I that getting It's is premium just the add factors of Home than up, that replacement only level that to tend up. costs go up. that The go would going recent we're type isn't It's different other inflationary of us in Cars, great. a and values space. history, products.

a it's type that in product So of different way.

go do And we've But over and we to premium the as the Paul, heavy average at but I says that it's the you we've need look math Does successful rate? a that. So a got point, an Like not up it we're to year-over-year, not cases. space. there, it's in to to, to in always rate not you they're in deal been reason support rates, regulators. these math. it's back XX% that in with get the is make making the And rate as rates when up like math. mix same It's up looking trend of a most your not auto,

inflation the some of auto side? rate because No, that same the auto to I this -- different was the getting they different the want in we've any as obviously side, well. about is Or if different than you just there improvement so know changes? materially the factors changes really what on that just criteria volumes of and is implementing there is is in underwriting talked home And are on quarter rate dynamics I are curious such. from the than -- home

that? take Glenn, to do you want

good And mean, would in from homeowners We're I inflation. standpoint, the now materially that are customers auto have. everything, make risk we That's similar in do. is continue strengths in spite as this a such a protect a business Yes. an we No, we're a of a standpoint, I and money of equal it where way -- and to there's the not homeowners obviously in that like lot to to balance one of even a homeowners. catastrophe-prone It's or right of write time how works. underwrite to in underwriting over know there's -- are position that, say we we obviously from different. set We very not grow in is good that But homeowners. portfolio we position universal.

Jonathan, question. do X let's just last

final our for comes Bank And question Certainly. Shanker of from from America. the of line today Josh

they'll bundler very of think think I I'm to of second at they're the Progressive Allstate, anyone when guys the Robinson. going are value the skeptical none you success people that I When Allstate the understanding level And call says have. long-term customer, after that

way. bought you in guys hand, NatGen a bigger other nonstandard into the to go On

onto you your those basis work not points XX look unprofitable And in business coming times. in that that And forth understand at years back margin their about losing number customers are X,XXX legacy can't they if when you Progressive come and they're your SAMs going make have talk they Whether that guys confident somewhere. having of or over aren't of whatnot, this are how growing, better NatGen that You in and time. that's Progressive, it's you they're you given a at point books? that that

with Let I that. me see if can deal

in a go up minute. So I'm going to

the really of it's So question we.

Allstate we, so was So in opposed without as we and Allstate nonstandard. to experience we NatGen, is And Josh? now who as

making this on agent Barry, I started got money got business, in and not hey, when may I'm said, you Barry remember went the So really and business. I nonstandard independent we not Karfunkel problem, NatGen, any I'm in to the

So out try business fixing or to it. fix of I the to had either I trouble have get it,

fix by Peter Randell So played more business at And team buying out it, they their have your that and that's I've and get of Encompass out decided a business, exactly claims, well. they're well. that going good which like in. pricing, can I'd our know nonstandard. it was They run what's our took standard out. first you, separate They business, They really and to team to separately. are business then I'm of and separate get but they know then folding that business,

think we're And us expand have a so called, just progressive we not quite guess, the because is there's in Robinson we we a I but great in opportunity to in great the independent for nonstandard the And what's segment. to channel, think there. agent compete for affectionately that opportunity really piece

question. this I so last part I'll the make And just the of --

making you're National seeing running Allstate. and we, as separately General it who in ways say that You from is some

in going course, how the charge see we and that comp that with stops know of? underwriting are there the you proud you, buck you you Tom, you're you're is comfortable very what right that results now understand on Of that and

Yes. policy It's documents, note. agents not that hard set with build to to a procedures difficult business to understand, of relationships processes, and Josh. more It's

for they agent of they on the see getting Score individual where something called kind So -- they're at every business for were example, WAR them. and what look they

that and it's So it's it. we are complicated. they're really like highly know building stuff model wheels And What's it isn't business right. got they do that the what -- it, All doing. is is not to if got confident complicated and on that losses

value. expand going amount services margins on accelerator the profitable its hit time, we're time, can We shareholder transformer focused insurer growth move got more and at we when growth digital to those auto drive the comments we our up. called money the make hard on margins we Protection we as on get We're where forward, First, still we to in good based get of same we that are, and clearly, rebuild homeowners, of on sure your and insurance. make

talk to thank all, on you you September. So and we'll investments in

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

day. You may now disconnect. Good