The Allstate Corporation (ALL) 8 Feb 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to Allstate's Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, please be aware this call 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.

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

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

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

and Allstate explore spending your Good We morning. effort is attractive time why investment. appreciate you the an to taking

the our have with So Mario performance. Jesse are I'll begin the for to overview time Then your and an operating and and through at go end. going we'll results, strategy of questions

on Slide Let's strategy shareholder X, increase Allstate's begin value. which depicts to

strategy: customers, the X share provided protection So we in expand and of to market property-liability increase are X components ovals personal left. the shown on which have the

focused insurance is value to this done, results well increasing losses welcome for On further from shareholder market-based reflect improve income higher we but can you the right-hand duration the way. work fourth the quarters remain reprieve level income profitability portfolio. To our and year. strong of X in also contributed see insurance weather-related approach net first the with which auto the We a quarter. the more our conditions, on generated to of profitability. highlights strong proactive was The on bond side, be billion. The to auto $X.X to the increase we're There results improving year, actions from weather of mild elevated

drive as margins property then implemented states across businesses. can growth transformative liability force improved. to be will year been all by market increasing in shareholder The auto Additional now growth have be our of initiatives share value increased more policies in this

protection prospects. also We're lower focusing growth Identity And have Protection all oval good Plans, which Arity, to Protection, are offerings in on Roadside Services the as expanding shown Protection businesses,

As you Health the is that and to on started business the process schedule. we know, sell process Benefits proceeding and

at in Let's the and Jersey. National X. of Starting both by General review billion XXXX, increased increases a and the -- the quarter X.X%. was XXXX. in XX.X% X.X additional and auto to New rate in financial a the $X.X earnings insurance and increase That that results then fourth rate an for XXXX X.X% million or auto reflects up plan. fourth on XXXX Property-Liability the XX% Revenues of improvement in combined in the of Slide percent in execution Strong prior $XX.X year. Slide positive in premium, XX.X% Since over in XX.X% brand XXXX. the XXXX in and California, XXXX fourth and the Strong X the increase due XXXX which mostly XX.X%, driven earned in higher homeowners income -- included strong billion quarter profitability which X-part New the improvement the and partially Allstate net million, income resulted with or in status of of in diluted York implemented rates. billion point in an profit were insurance. Net rate XX.X% and investment summarize revenues income in resulted in by the ratio adjusted year. approvals the implemented recent X.X% generated $XX quarter is duration yields income adjusted extension, performance-based lower income. reflecting by per $X.X share. was $X.XX quarter offset increases Annual $XXX net The quarter in the fixed increase,

effort costs. X.X offset points early The lower when advertising the increases inflation in initiated improve of helped other ratio rate in pursue loss linked XXXX transformative compared margins prior and in directly to decreased and you the were expense loss large the in rapid pace as forward, XX underwriting will provider plan costs. Expense states with growth reductions Looking in states increases protection. in the was to this that low-cost become a of part decline profitability. exclude in Being keep to we year XXXX to to

position. Looking improve cost our further forward, will and efficiencies price reductions competitive

significant the we'll advertising this increase improvement Given margins, investment year. auto in prospective

actions adequacy restrict where rate some new business removing target underwriting achieved. were We're addition, In restrictions underwriting we implemented is returns. as to we not achieving

in deliver and to settlement and where claims acceptable increasing litigious Finally, program This and increase a practices enhancing us begin new inspections. inflation levels increasing good policies This states, customer includes value. of restored. injury positioned in-person have required high business and claim the has been grow environment to in force are to accelerating margins

Now I'll over Property-Liability. to discuss Mario turn it to

Tom. Thanks,

premium earned by in the quarter compared driven rate billion X% force. Property-Liability earned, to X. fourth average $X.X to from quarter, primarily Slide by underlying experience, loss and improved in prior premiums partially higher operating year billion premiums of the offset improved in increases, on XX.X% in increased catastrophe start lower efficiencies. income $X.X policies due increased a Let's the Underwriting losses decline quarter

related conditions The points highlights the year, and quarter year ratio the period losses ratio, million combined reserve prior year mild improved points due year development prior XX.X underlying part and events. Prior the $XXX as million, quarter personal compared shown to X.X ratio catastrophes, weather million gray, combined costs were $XX point the light a the favorable development improved The $XXX influence to XX.X right loss from of by in frequency. from year General. the a adverse excluding on prior driven higher of in prior totaled blue prior prior the points catastrophe weather of the quarter. unfavorable improved components Approximately reestimates, favorable combined on litigation in and than to representing of X.X premium year point favorable and the to million combined accident X.X National due to were $XXX the in in impact of or XX.X materially and year. compared milder and quarter, auto, losses XX.X in quarter. adverse quarter impact impact average reserve compared to conditions experienced the Catastrophe lower the claims which by on and prior reestimates the ratio chart to The related and

above of in results catastrophe in to events XXX.X loss XXXX year the XX-year from average favorable in a combined elevated significantly the quarters, the points Despite XXXX. that was losses, was primarily resulting ratio catastrophe quarter, ratio by impacted first X the full from the X

compared shows ratios losses, to of Now to trends. efficiencies. The figures the from X with quarter, auto XXXX, ratio let's XXXX underlying to level recorded the insurance Allstate's lower year-end by year. adverse earned Slide profit insurance reflect adjusted improved combined move higher reflecting auto premium, year combined for XX.X and reestimates and quarter underlying points quarterly review The XX.X, lower estimated prior to prior chart the expense of as each year reserve reported severity average fourth

you profit benefits earlier. XXXX, see, quarter discussed in decreased plan the improvement each As combined ratio the Tom of reflecting the can underlying

increases the year of graph. the you adjust As quarter. prior so reported XXXX, When quarters. In continually the impact that in year-to-date fourth severity expectations of in last The would impact is from table, severity ratio quarter latest of as severity in combined or from portion recorded adjustment, current in of bar underlying the for quarter, the If shown driven progresses. the decreases, year severity XX.X we expected to a change from the reminder, that estimate presentation decreased shown the claim reassessment in fourth the the results was shown QX, as the a included prior by X benefit of current a which as the be claims quarters XX.X, all reflecting year on benefit being reported improved the there the this, full estimate. despite in in quarter preceding quarters XX.X XX.X including the reassess

remained damage now the trends brand second and coverages. at year. the severity major end of elevated, X% mainly from cost the historically average of quarter in Allstate to half year, in weighted moderated the quarter expectations to X% the in end the loss of as rate the X% of physical the of While third XX% second improved increase covered the

in As this reminder, a severity. Slide X profit estimate increase the for average reflects shows improvement impact trend of our year-over-year the our the current best country. across actions

the New York, brand these the during on X shown and states. left, including premiums of Texas, Jersey increases loss the XX% XX% comprised reflective XXXX. New As U.S. These in elevated brand California, Allstate auto in of X quarters, written in increases states Allstate have exceeded total trends larger the rate over last

in with Jersey increases know, this shows on York in premiums. California, percentage in year-end an the have light you December, to we blue chart in New were in see from yet than our states of approved so and doubling XXXX. and The New bars, were the right underlying more total As combined XX% of the XXXX, the at shown XXX, ratio below dark

during auto York on New in improving Jersey, XXXX. The negative underlying XX.X California, the profitability Excluding combined impact and a force New insurance XXXX. was in brand Slide policies had Allstate shows ratio X

lower XX.X% and Targeted force issued year On to National auto prior brand offset to total more National market to applications auto decline XXX in the decreased the reduced force lesser XXXX the in by standard growth in and left, and, decline year prior retention. policies Allstate auto of General. profitability on force a the decreased middle X.X% to policies auto can auto for and of of in issued new drivers. product. The as Allstate decreased applications brand a rollout chart the year. within compared insurance insurance in resulted protection see to new for General shows driven policies was new a and compared business brand right volumes preferred the the extent, you total actions at the product XX% auto X.X% prior of accompanying Allstate that XXX,XXX than new by X% nonstandard mostly due compared launches personal Custom increase

X driven in response growth bars Allstate remainder in in last country, production by reduction of X% changes the Jersey of increased by directly owners X to marketing red was applications, grow business XX% the reflect increasing opportunity to part in independent states grow X transformative strategically launches. Slide with acquisition we've profit of business, homeowners agent year. Outside incent and to well of which as generated agents the continues quarter, impact product in new auto and higher volume the our channel positioned year new full investment while showing most X insurance National in losses XXX first significantly made York grow National covers higher actions from to by impacted were The the as decline XXXX. which New of generate productivity, New for volume the Allstate catastrophe of the to the year. the the agents California, reduced direct business General the as lower to impacted and Allstate new the exclusive Custom agency results where of the with significant continue quarters profits growth. The results, channel nonstandard elevated by General the first

you due from offering premium and of policy in written driven compared per by the General at bundle XX.X% year low continue and increased left, by gross in levels. Catastrophe growth prior the small written driven of see to the year quarter force. National in standards, losses National force. General the to favorable premium and both in to lower policies Allstate weather the the due rate higher can XX.X%, favorably high prior conditions grew policy On the events, to increase development noncatastrophe net brand premiums premium quarter gross policies X.X% in XXX the billion and driven million combined of quarter, quarter, underlying quarter. increase in claim year increases historically brands by Allstate for homeowners were written fourth from prior compared to XX.X% prior and agents from higher force by and increases. influenced a average average historical auto in frequency. per written a Allstate premium policy average written milder net primarily fourth premiums the quarter to income the reflecting insurance XX net $XX combined $X.X contributing in a weather primarily increased ratio also Milder Custom underwriting implemented ratio and XX.X%

roughly compared XX higher XXXX that XXXX XXXX. full year drove points the to and and loss catastrophe year year, to combined in were For average $X.X of ratio losses XX higher points our XX-year the prior than higher billion than increased historical catastrophe from Full XXXX. experience above a was ratio losses to catastrophe translated the

costs. year from on due the premiums higher underlying XX.X offset see the partially XXXX combined rate As advanced risk-adjusted as XX.X product, to analytics, claims a With from attractive declined returns remain full ability XXXX, line. reinsurance an confident you capabilities labor and by continue distribution to we in will pricing, and program, materials the comprehensive reflecting average in leverage this ratio broad in and industry-leading from increases, homeowners our growth in and higher right, underwriting generate can severity opportunity to chart a to

Moving to Slide XX.

how on discuss distribution. of can you X slide. customers as We provide on to focused protection advancing broad we're initiative, Let's key transformative growth remain this see elements through low-cost this multiyear

That the rate expenses customer good opportunities nearly customer which growth year-end in experience. position. increases, as our will our Custom this support end said, growth, and the states XXXX implement customer technology and the also continue deliver transformative relative all XXX for year, be our We difficult affordable, competitive rate the competitors enhancing agent in part costs have made prospects is competitive environment, in Increasing decline, XX states in enhanced cost reduce simple XXXX. National further legacy improved have sophistication competitive will improve will with auto live market every General most deployed we pinpoint in market we large be likely growth. Redesigned effectiveness being competitors differentiated position with advance as platforms. look and for to X our by X and position for of state to also channels. will structure to to of speed acquisition independent value plans progress states. XXXX. Expanding both and to expanding access spend believe in expect and currently as price to enhance continues position. In competitive improve, available taking deteriorated insurance further it's by share products, experience, A improve increases of a in our But grow customer to connected increased of growth many current improved we ecosystem expansion products our to technology of XXXX more advertising as customer and were and new

Let it turn operating to expense over talk Jesse me to other now results. about reductions and

we're Slide Mario. through improving delves value XX reductions. into expense you, Thank deeper right. customer how All

the growth X expense provide XXXX half chart decreased customers to points prior as additional on As relative point higher left, of drivers X.X from on shown to underwriting we the in premium of the focus fourth in provides XXXX and quarter. costs quarter right to benefits the to saw the year fixed the chart the to continue of Property-Liability ratio lowering to improvement the more value the compared on earned costs. The context

The increased by first increases reflecting red from states. investments the X-tenth in bar driven a rate point the slight shows of seasonal changes impact and growth advertising investment adequate spend,

point higher in driven remain relative longer-term was costs employee-related mainly quarter. Shifting premiums X.X of and lower to in expense of chart by adjusted the fixed the the shows bar in operating the right, decline costs the as the to committed green growth. the reducing impact transformative ratio second part trend which to The on we costs,

expense expense intangibles the non-cat significant It and quarter. excluded I our associated for the year-end to catastrophe expenses, purchased are settling amortization both tend covered of underwriting starts As which advertising XX.X%. and excludes claims ratio execution, adjusted just catastrophe-related and a and and innovation, and with the ratio, ratio claims. impairment expense fourth adjusted our costs expense then Those reminder, the expense improvement restructuring, underwriting fluctuate. Through reflects of we've costs with adds COVID-related ratio strong expenses expenses ratio, expense. compared expense claims decreases XXXX prior improvement in in year This because driven to process quarter excluding

Slide Now I'll results. moving XX, cover to investment

in the XXXX XXXX, higher we mitigated duration This the to made The of yields. quarter began market-based duration, income. to XXXX, income management rates shows market combined duration chart increased quarter which QX changes From when rose. Beginning in the bond to yields approach bond benefits losses of our fourth how proactive we portfolio lowering showed in through as duration has quarter the the of with left results. third fixed of extend comparison on

income in income yield, chart below current right bond increase fixed into on corporate intermediate shows portfolio yield chart the the bar return reflecting remains reinvest shown Our continue additional total table rates. The the the higher to opportunity these we as interest decisions. and the flows below an benefits of yields to cash

and year the fixed the the the $XXX year of blue $XXX quarter, million higher sustainably portfolio assets well in last which income. Market-based year. reflect in shown market above fixed benefited $XXX $XX table Portfolio in was million periods in from income lower As decline black, the that as of can X.X% underlying below quarter X.X% $XX benefit fourth million $XX in fourth for of the million due assets. portfolio quarter, the prior repositioning the income shown of to fourth both prior and below as fewer our quarter. Net income return and income of was was above increases million also duration valuation from total income quarter sales longer fixed of yielding earned in Performance-based valuations balances. the chart, income due the increased income higher in the totaled returns was you yields the into the reflecting income million Market-based higher in investment to quarter see year.

related quarter. reflecting in Services the international year increased result these by which businesses. for breadth right, table compared long-term portfolio expected. Slide $XX the compared of income to results million increased $XXX prior and effective our apply, is is fourth $X This the of will covers XX.X% income that internal to dealer driven change product quarter which on The prior enterprise is fourth of as the year adjusted the assets rate services. to these to in million have our future income increased the XX enhance the of Protection state growth to Protection to businesses you XX.X% do results returns is rates $XX tax growth. In Revenue Allstate largely taxes net expected net from a compared as tax XX. the now XX%, the impact operations. Shifting a quarter-to-quarter ongoing volatility in our and that in quarter. Services, through the significant a Protection to in Plans, million. we've prior in state XX-year X- quarter, see and demonstrated quarter in of attributable the the for quarter As previously, anticipate impact stated mainly million tax was We This return of and of adjustments expanded payments deferred examination increased decreased year not will decrease we the these on to million tax tax on $X performance-based Slide benefit by

Our Benefits Health growth. generate continued profitable to and businesses

For health. million million $XXX of prior benefit health quarter increased fourth revenue. of as million higher quarter to $X well partially Adjusted individual year net compared the health by the and ratios growth increased growth in income health, $XX in XXXX group quarter, group revenue in revenue the compared fees to as million $XX the driven of offset XXXX, individual fourth as quarter of other by year prior

the National health to our divestiture successful following and in integration the announced Benefits As Allstate's decision late of pursue business businesses. year, Health group last of Benefits you individual General's business, and Voluntary know, the we

while capabilities quarter. results environment, the for challenging proactive quarter billion, to close in financial We a the Slide capital to Allstate's and holding provides surplus position. capital liquidity support with long-term operating reviewing $XX be generation $X.X the statutory by the company's capital prior and assets transaction flexibility, XX demonstrated continue condition will billion financial and value management of resources approach completed by to providing creation. Fourth anticipate compared necessary increasing XXXX. We'll capital Allstate's navigate on company

primarily statutory Assets reflects increase held entities, shareholder dividends. to $X.X capital also partially billion. offset increased from the common a at prior return holding National of by General's quarter company to the The

increased unrealized prior Additionally, on GAAP quarter, the billion equity GAAP fixed improved billion $X.X net of shareholders' and to $XX.X $X.X the position billion. income of billion reflecting of income compared securities $X.X

make We let's that remain on continue that returns. With strategic generate confident progress comprehensive open manage will these attractive plan shareholder in and capital, to context, improvement for your as actions the transformative We profit questions. invest it proactively up growth.

line And JPMorgan. of [Operator our from Jimmy Instructions] first question from the Bhullar comes

questions. couple I So had a of

new it another is can profitability? First, assuming you're rate adequacy going in New to The talk at you're sort Or price you for California, XXXX normal to that you adequate there to to stab Jersey? issuing that business York, of now, about New need are get normal that in profits?

get there's X -- I really stories. we'd question. let everybody, we call. -- you I'll the first like a a take would follow-up related And so to Jimmy. you, to ask with those. we'll we through just can different sure Mario everybody's question. Thank And hopefully do question then will make follow-up But remind -- one

So go Mario, for it. you

Yes.

customers returns. We we but business all approval because I achieve date. the thing and states, a about needed we In lot had expected a say slightly of Jimmy, think well, quarter as those think of effective I'll the operate meet possible. you than protection and When different. in as is Jersey. customers needs X that states, take a got our markets first XX% pending we a York rate the kind operate one California, we view our our approval actions remember, for giving it's talked the states objective served the We with each the So you in story can many I'd filed look, is rate. got earlier those last of to are XX%, many effectively, spend start of of that appropriate happen, just New as we New in California, levels says, and X minute to to we I'd can in

got approval for rate grade our need and need. So effectively, our we filed full full

given California, we're we California, rate channels, and business of across that business at. again, all writing feel comfortable level in in writing we're As operating the yesterday,

said of top for course, XX market. that forward, We filed stay and New points rate. do to California In of level with having but have kind got of comfortable got got we'll trends story. up it's we're approval that, XX%. on We we've the Now Jersey, going the in just we've rate for opened that, opposite of loss under

And which as Jersey, to going take taking underwriting plan that, we more have means of Jersey, actions we continue to in a result continue we'll rate. New we're the to been restrictive that get additional New filing while smaller on in

We're but will we plays matter need fact, And pending on future going rate. will actions that of to those the a that that depending the that forward that things to Jersey we in helps, got that, department we have right And a next shake with on We've take actions depending in in and need in a of New as rate As take rate smaller Jersey, file York just reasonably intend how given New engaged set will get inform New New we with still of in York. December. between. full We more for in order. short adequacy. And to again, rate But kind is inform implemented approval then New department. out, actively the rate Jersey. of and how our out, XX.X% the lack do somewhere now, of we continue

assume taking? slightly assess grow. whether of at versus to slightly states, those your you point you lot, stabilizes you're potentially outsized in a at that as trying least In to assume some reasonable states, the any are that overall prices to company it's follow-up, of next year. this whole year But the minimum, peers wouldn't where what at year the for taking maybe year or grows think reasonable or actions discount would in a related a how this raising suffer and a you're just not later just it's your unrelated. Okay. your in rate if And some faring discount is PIF it and terms And then X

in to can this Jimmy, I'll give current Tom. and is add say we then that. Mario would still is start on can environment the that I competitive -- flux.

So Farm points California. another State increase after gets we've that. XX in our raised rates somewhere

So too said, one, to what And shareholders the as need impact -- our to goal, other We money part early just is have will XXXX. make grow. that for volume on is first good part. it's in though, obviously do as tell to, our

we've place, we're which we short-term things growth plan So of -- talking long-term think the here. differentiated as as in and some transformative a got is about well growth you're

Mario, what to would you that? add

Yes.

I retention, Jimmy. on think specifically

Tom quarter, there bit story a in As hit a still lapping We of state taking we you XXXX. retention are kind in was those markets showed then X and of in kind flux. impacts to about, is earlier and states and we pretty of in talked of substantial rates retention the mentioned, last to, a of that kind point in the outsized state Texas. Texas. how took to One rates significant I'd about XXXX retention And Texas in tell

contributed seen to those QX. improvement auto a lap we've rates, which we in As relative quarter in fourth the to back, nice level the sequential retention bounce

So keeping going going a forward. to would retention positive we in faced once certainly that has the impact that diminish more and And more expect trend, forward. the on headwind need are we states on retention in loss we stabilizes, as rate top really hopefully, of just

our from question Gregory James. the next of Raymond comes from And Peters line

Okay.

at same talking my kind you're expenses count. growing question, about because and policy on counterintuitive, For I'd lowering growth, the first it's of time, your right, to transformative focus like

when for expense. potential because increased profitability going like So the the think think headwinds some of increased advertising is up, I going agent I of forward commission see on of expenses, I maybe

on So a you maybe lower at you how emerging can expense help see us pull base. together growth

I'll Mario can start Greg, then in. jump and

if down. that done. you go think at out, point that its drive I counterintuitive I General, grow, National you is So can't and look as know don't as has growth there expenses And your expenses broad I scale as helped would more

So to it. comment a just that's scale-related

everywhere on we we're they're have -- X-plus out by digital. are And at become been look becoming more in working the it's we've we as for we really board the costs at programs to go, growth, rolling you have cutting place As that for on years. -- transformative we're example, across programs

digital, thing. By get That's jobs more move we or the becoming can a them jobs, move more rid either multiyear offshore. of

take in loss months. and the change You don't just notice of it first X

So work last of forward benefits months working those get just we'll those based and programs, on those we've we've the which we benefits rolling the the more still already as XXXX, been out go really, in of done. XX

the mentioned do we commission an agent. as more still stuff. to changed this, agent want buy growth, was give In a it at And our pays business distribute for commission, of products such we've of people terms and for of And structure much transformative the parts They core that pay agent that how don't people this to renewals. was an want price Mario necessarily of value agent the one less and for lower new retention.

having you're the compensation One of Yes. product? keep numbers not go other agents validated Do And with a but Look so analysts like that the number showed. to and answer were renewal which they at underlying our down? priced Mario yes. having Do sure, assumptions honestly, of ahead going quite we in a growth, people No. is customers the like game. the productivity better transformative

so choose our to we that. and through work want, customers And do what they

a of that series have we go on. things So

money, of doing but to first, like take Now our we're we our customers. expenses care do spend

because expenses out as you're to our combined do there to particular don't we why advertising, cut because you certainly think running we write number first quarter. XXX% product. It helped if growing make if that, out, a the target. in trying a We going some was no sense not just about advertise we're like, money We're value. were of and long-term We you're losing that. P&L ratio? long-term go ratio it build a but So Second, wasn't to on in and it combined value. at terms make It economically pointed creating

expenses you year? about to you're and how do where this Mario, talk want thinking go about you

Yes.

to get you more at same ratio think continue get talked So time. cost you priced our that can Greg, about, improve in marketing our can expense think I Tom when competitively structure invest that the and the and comfortable pieces to I we combine

we're efficient efficient the So think several we've years. get more areas gotten the about last where when I looking where more and to broad over

distribution First, costs.

the overall the couple distribution increases with we're as in agents Agency that, ago. progress progress So little volume average look a there. case producing was about I talked a really the today we've more at but have creating made fewer earlier in But productivity significant more production. the productive when a made happy of increases even more underneath than years cost, we've we on And you system, Allstate the lower bit

And come able distribution our of to ratio, down ratio within do the component expense our while cost expense continued that. to we've been

part in states be core we'll So as to a and optimistic to our do lower of grow be that a that going Allstate that I'm we to look move but more force forward distribution really to Agency at able cost And that. is do continue overall. that,

improving forward. processes, just in going on more becoming improvements going seen side to similar reduction the combination outsourcing, pretty we're offshoring, through the also digital, claims one. We've significant on that operating to side. we've hammer continue seen On And operating costs the cost of

on areas I the continue fund in help the Although invest look X will marketing profit accelerate we're effective get going will to want more make of we'll think make as of to as growth. to and those to get combination processes. And of the we we will that I investments efficiencies improvement plan to part a say number claims in

and on to grow spend money the But profitability, to money like if advertising. spend more we going need we we're on to advertising,

just Can moves transformative in in its of expenses? terms how how own of remind makes help sort is growth Or and plan touches National That about you're National thinking the over ecosystem you General General? sense. me

of is transformative in National No. channel, a General part acquired improve and foremost, first National done that. independent The positioning was and we've growth. core agent competitive reason the we to our General

mentioned, in we've the, nonstandard and preferred the early say, With call profitably I stages and the to that's as very we we I'll got XXX, what business, a well-run of standard over years. out business We're auto that and last rolling continued the grow homeowners several auto offering. Custom grow

we to it, is at compared it we of in when National space. When think the look opportunity General there's independent the So now. bought what you business agent the size significant

little as was as Our $X over a total the well independent at plus IA over included $X Allstate which of billion currently. agent presence, the beginning the Encompass it's business XXXX billion, say, General business, National

a core a part in there's in that's we we that had to of transformative homeowners a the that just And channel. And the we've we're channel. a capture of in continue So growth think to how opportunity, and standard lot in nonstandard IA part of strategy. auto, success opportunity expect both ton of but grow going to preferred core in

the comes from Jefferies. Kinar next Our from of question Yaron line

if I want on the of to line growth, can. stay I

'XX, So would the is to is a And a the aggressively that based positioned to will quick? can and be more be competitively it on business? new Or matter retention pretty rates, expectation think more Allstate pivot in growth? pivot I improving how of it better quickly about you ability which would the

in will marketplace. it happens Well, how depend the quickly what

So advertising to environment. seeking I it to based year But they're price aggressive position earning money Farm grow to although trying been that State spend have in grow, so on also is. fully expect profit. where I they that Progressive their a improve expect and to this in more has continue competitive be to they their GEICO, still and profitability

the were But feel will numbers about effective in it X/X add showed country When the chunk. then where Mario you the we big right all -- of We are go. you're and that's just another be systems California, how versus them. like -- you

but list think to a growth. We've all underlying compete to Mario's consolidated assumptions, to bring in we've validated got in to on way we to that's run a of of lot transformative So open with of the market this in with and states plenty we've our to so year. channels, it particular field, speak, yet do

So those feel about good we opportunities.

as that? So can sure a as we combined add we'll make ratio. Mario, you and have what still we good to grow would fast

Yes. be loss to to we of we'll continue having get it's to trend a Tom as a is short certainly, said going take in of Tom. the That's answer, Yaron, And is the No, again, more as would the really, amount And is diminish. to we future right from earlier, states acquisition. expect as function new earlier, those said we take be thing from comprehensive zone I rate rate business into states perspective, good margin perspective, that's think less to a a going that. I But looks answer, think pulled focus need like. what through to the and and retention on retention a

system direct position the can large as terms fully we underwriting to competitive growth. part growth, influence to with independent we're leverage market states marketplace new in the building timing in. business, dependent by agent. We be a and better in state invest be across then we agency begin on things we've of all capabilities to do invest and going will competitive think the of But and to help some Allstate had in market And more state, operating of marketing distribution things built advantage by been by in drive full the broad like take actions restrictive we unwinding and the to limit we've take exclusive

you much my And then question as the can follow-up, to capital. as appetite profitably tying maybe the of grow as

this Health the in talked even and and the maybe then about Benefits -- You selling about the call past on business.

You maybe as Do today? the you about order to actions actions satisfy need all need have in capital as want looking you take or do stop any other were strategic the growth last loss you much that to talked year. Or grow you these you purchase appetite? to the of to

we of to take actions. any have those No, don't

We look -- earnings we can have we'll whatever have we plenty capital capital capital of to power, have of plenty and think plenty of our growth we you at today. fund When do achieve.

line Greenspan the from And Elyse Fargo. our Wells of next question comes from

quarter. the another question take up quarter? the on It is go dividend a did third the guys Did entity of in AIC in cash. first you out My or holdco

Elyse, this is Jesse.

you So moving it this the as in capital went up And to our could practice holdco normal from maximize relates prior with it accordance flexibility. to really cash, is around that see of quarter.

as we some entities AIC, as well a was dividends what statutory some money up move we but do companies did It holding capital company. not legal is from of from out entity. the legal So into up few noninsurance statutory a some moved

know all talked Insurance company. we that had reinsured didn't the because had I capital a amount quarters, was when prior risk few them we into in insurance the risk have in fair of and a companies Allstate

surplus of course quarter. the normal flexibility, holdco moved those the to in entities in of that creating looked sort and of up we So at some the

growth policy but been side, the slowed And you then growth, guys Nat right, Allstate on the its on is showing my question within second Gen have brand.

growth Nat in within pretty policies force. been showing strong You've Gen

that through get of kind Just from here? within what's like bolts hoping And to some as way continuing you put been the think color Gen? driving Nat how there growth should books, we about

Mario. Yes. Elyse, it's

or a the in So that's most of the carriers either lot had where pulled the a growth competitively out experiencing General part nonstandard of in know, auto you certainly of that's really that lot been as disruption of been we've have slowed has market a growth. National And space. their

profit over XX approach we in taken Allstate. the a We've over reprice can auto With as quickly the a you turn on book have National last from The tends National in nonstandard points to years almost of book continual same basis. improvement perspective so General, X General. we've rate taken the

And so grow comfortable and we've that we're continue generated market, we've that stayed the business we're meaningful in to with nonstandard of to that margins growth in look in experiencing auto, and that. book

into XX that, in was the additional of course throughout and news the stages expand good XXX, It good early We're The XXXX. auto there. going new and states. channel the homeowners. production we're top that Again, and Custom standard IA On the upmarket is that, into auto for earlier, standard the channel. to it I fourth which about states business -- traction. that accounts is XXXX is rolling in write We'll XX% our said of product the as quarter, in in getting out of IA preferred preferred

middle market an space. the leverage But think in Allstate's as we National opportunity and with in additive comfortable expand in auto space to General, be we're will General National opportunity So really to we writing look the that we IA in nonstandard additive that what capabilities an in we've channel. been the think IA there's

Bob Huang our the comes from from next And Morgan of question line Stanley.

you quick resuming capital capital a level Obviously, very think sufficient. about side. the your far? Curious to in given to so the to question buybacks, the seems capital path as on be rebound Just material how now especially

is this Tom. So

Let capital our me start with has sufficient. always been --

reiterate So what the like to it just we've position had.

business. aside it we we have growth. to to we run capital And business we and buybacks deploy have to risk. opportunities enough premiums generate, that the when As in to first, at looking sure have grow capital we continue for think capital and the more dramatic and we with, relates making to high we're start with put the in ROEs capital growth, increase will And transformative growth the given had

you So shareholder that's is the first drive value. do thing how we like do

back. And so than less I track historically. record looking share forward, have capital will we opportunities, think had than strong buybacks That -- we shares a those of we buying have with for said,

$XX then because of we Services lighter derisked use there's business, risk will extra market Like it's I growth between And in of investment to we capital. great we be was it back. the billion there of Protection saw in put sense that our in if Property-Liability have since of as our back CEO, shares didn't -- shareholders because portfolio I've on opportunities. hold portfolio, no they know, business, last think don't the would if some capital use And needs. capital, growth another to tend year to portfolio, investment into what capital. But I then the bought give been our maybe good we a for to little worth a don't we see of we investment be opportunities terms more

do -- we'll manage capital maximize is, about think whatever and we're to trying value, and is thing always shareholder best. format I So

apologies misstating helpful. the side thing. And That's of for very capital

question So really expense. my on second is the

well, claims insurance litigation typically hear an is and inflation because social issue is So one staffing. tend underfund claim from thing that have lawyers to we inexperienced department companies carriers the often

And the to think about within to side, not think going forward what and it what can you cutting? maybe things as areas us some expenses and to are think expense the help you're back going cut is growth, it provide critical is about save where the that you colors? we are very possible As then about expense on repivoting you areas

then in sure And I lawyers want, we they we that I'm Let address is can talk would just claims. say litigation piece. if mean expenses can the you not if -- maybe claims, that focused the true. shocked reason claims. not me above fair exist those go else, about you're have the try in Mario hurt people people We on that amount. accident don't and into an to claims. we only make -- somebody just get quickly. claims good We we sure We where our the resolve try because They're settling while take are injury those customers get a very seriously. to

there led changes or I the and say will industry it it. I've way suits things to increased have any in that a do number don't we way of couple litigation. been seen think the does systemic I of So have the either

First is accidents. severe just they're more

So people driving faster. they keep during faster, the driving pandemic, start

hurt when lawyers get up. so more, to increase them you to is the help that when hurt damages is look have people And And use people tend more. and to tend And at severity when resolve the to they severity get their up, of accidents, greater in the more of severity leads a claims.

in advertising litigation But you go at $X change to the obviously today, So look big market, don't natural to their spend it's firms year. that those know, part over completely me. There's obviously. a seems billion a been I if way

So looking customers. they're out for

need who severe more in because of their been them. they're are accidents, and help those they've of Some people

the are the trying of hunt much as also maybe clients. of Some analytics gotten and that help. They've don't and use data much and sophisticated need claimants them to down in possible people more

would Some of good. that be

doing actually not that, what to be Some we're doing. of so sure they're they're supposed

make to to too people want the amount. We get think them right want a to little, it's don't work get that. I much. We we So like get do them too don't to want process just and we sure

well. claims that we I guess You it sure in presentation we we've the saw the for as release mentioned -- also mentioned faster. in been settling

more what a than on to if we settle and everybody that, counter nobody feel attorneys. to it resources are get to So has pay to less is put happy, cheaper lawyer, need can it's found likely claim, go we to the because faster and happy, they're people we're a XX% for that have

expenses? Mario, want about to talk other do you more claims, injury, bodily maybe claim

much as will it's make on we improvement to another claims Yes. competitive improves one of about really the but into our I competitive talked in focus way to translate that what years claim multidimensional. where reduce our we've we time. improving structure And is to start position, operational that operational dimension just owe, really guess plan, as The continued is over last our execution. continuing couple sure we is also I'll cost is fact position over excellence profit that better a pay as

we're on in process, I pretty just right It's to claims process. of all the really focused So went significant across has we of and the making have those to claim subsided. say, in terms really, it's the invest people, would largely people all That dimensions through sure going in elements XXXX. process adjust continue capacity. turnover. We was It moving to their forward technology, invest analytics, we're

profit leakage the core more plan the going we pending going but paying risk the improvement We're system. And been damage people providing reduce since a that in reduced the in of and both much own, physical them before in total to have provide staff investing side lowest evaluation terms more get much injury terms claims forward. again, the bodily of we So to staffing, damage on physical we're mentioned, loss effective part we stability our We've of what We think more claims well level pay we're casualty side. Tom we it's on reserve cars claims focused been eyes ensure on more the inventory in oversight continues do pandemic. forward. a faster. and injury and to eliminate again, the to side that operate job but that, in in way in any on training tools we that's to a in the

because translate -- continue invest claims do growth. a we're the say in going core part competitive more of would just the enabling answer I ultimately we believe to to and broadly really, So into is it's us be to

set me and linked this to because the about when question as we always sometimes we talk P&L, how out we in show are of Let don't well specific subtleties link goals Greg's line think there they items together. the I

goal so clearly related to low-cost we transformative So a expenses growth, can provider. a be to reduce have we

primary we -- our That that's goal. said, not

business Our properly. customers primary run goal is to build great really settle treat our business our well and to a claims to and long-term platform our

even it means goes we spend interest in if up. -- personnel customers, we so our to think costs then that best that's expense more So expense do going the claims that -- we loss we're our on down, number if shareholders to lower so come of money and and have the

that just one we're line help by know we're put managing we So but you item. you there those out let we're numbers say captured to not -- them,

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

assume for to Once I want I are profitability nice you line. stand are where point ratio a for sensible. time, pricing this guidance, used a monoline the upon bundlers pricing different at for guidance, about today? I at at broadly that quite now they have very But you But pricing quarter. know more talk bundlers. take and to and ROE look want results combined a for you adequacy happy the drivers bundlers. and volatile give to it's where is adequacy we Are and terms homeowners, importantly, a good homeowners adequacy more you assume which we I in the on to in of level of us

on because we're bundling really Mario I'll happy let about question take the that.

It's was the terms high really a like business, combined year, on That's equity. great It's of ratio a you our in before we see, X-year -- return combined -- homeowners really just at me ratio. the business. Let look this XX%.

quarters, doesn't excludes it's but you at quarters bad which If X last Obviously, come bad year. X business. year, a ratio make from had we bad underlying down our look combined a catastrophes, this

year So really prices different of raised the in low ways. from We've the like we variety a this teens business. still

year the cats like quarters are go our up business. If in is indicative were the of prior we $X.X X that we versus this first So cats billion the where year. future,

We to might if that's a it I before. have case, am business the adapt we model, it. So confident catch not which will

business won't have happens, it go-to-market catch You we but really model. a before it great

we're business. So with happy homeowners really the

Mario, bundling question? do the and in you want business to then homeowner talk about returns the

Yes.

really taken So couple adequacy, the Josh, in over combination we've replacement pretty of terms through values premium. the of inflation that's years and fueling rate in low-teens the a of increase in obviously, overall plus significant in the rates average consistent last homes,

So this quarter, that was about XX.X%.

So include doesn't policy, we're through system. because, rate. you the price And with all that seeing as to the know, it XX XX-month months turn that takes flow in

in that a we'd like going of the we to yet we've keep for X points. top earn, number XXXX, about by of it was lot took be. combined year to ratio the to So where of loss cost. The XX%. rate underlying is and on staying we're It in improved at Mid-XXs terms

we're that. So to getting closer

we're we going to really rate a and day in and about our will more supporting a earn And have to Tom We to capabilities that but think lifetime that's of write grow again, with just customers meaningful to discount that value continue or have bundling long. perspective, good that line number. a all bundled. lean is could of a as XX% bundled That's look And we of upwards we XX%. bundled the feel substantial, at our homeowners, And and going in. customers business. From pricing homeowners and have mentioned, pretty segment that

direct north high And We're We're to business. talked incenting that. centers at bundled I of call an and both home agents an all-time seeing write Our level, bundled XXX upmarket business offering. through Custom new business of XX% going as auto and agents more is come are business. our writing earlier, our

X also a So it. of lifetime positioned but generates bundled I because we that competitively we're and channels we're be can substantial all element, continue the more that even to in attract value, it's think discounting segment to at business think well across priced good we

So we're it. at going to keep

student a competitors. our you're know I Josh, of

both their also talking customers see and They there. you see obviously more Progressive bundling about good So in advertising. GEICO

Our in homeowners. difference to money is expect make we

that, on some little in increases see to little the turning going a And if price auto you I bit, we're due just to book even modest net every close day? count growing policy decline bit a though bundlers and are

have bundling. But focus high say on a don't give number that probably we think we let's just I out.

we've which them. are because Our more the these and changed doing agents we way days in reward bundling compensate

to continuing we're one that down. So hunt

think have I we time X question. for more

Certainly. from Kligerman from our TD comes today of Andrew question And the for line final Cowen.

some could the on a unwinding quick the the combined -- here. Quick questions impacts of regard restrictions With sense us you ratio? and give impacts of to of advertising, maybe the increasing each

increase we pricing, that sophisticated where think the principal reflect the states first aperture going And of that, So restrictions across true the will the rate prices be and about be segments, willing write. to of Again, good pretty risks each unwinding we'll that's have we're our I to underwriting better types kind segment. impact of a approach in do risks to Well, adequacy. to accurately of right? that the now individual feel we of specific the that

going write written be it's we So be rate as what business, to level. at we a to adequate believe

new going perspective, forward. renewal a of Now does a due business loss higher from as right increase that business, to new volume ratio we to relativity the tend run

new we impact We we're some until forward. that terms how we're we combined the underwriting ratio comfortable into of with of will combined open going higher penalty our But the it said business. But rate manage ratio to manage level Having terms with that, account at. that on new take volume. is the characteristics. again, we in, in overall have according risk each price in in we we unique how restrictions don't a associated its business. business the the So factor overall there business But

with then to regard just sure And make it. to it. ], Got [ clear I'm on Barry

And year? about X% how going what XXXX? anticipating about that frequency you're for in talked are You as XXXX. into well Is to you thinking the X%

either go-forward basis. is, a say we'll it. whatever get make We sure for I is or for don't severity frequency do would it on forecast we priced

cats, insurance profitability for gave opportunity has to the been it to didn't improve a auto team Thank our you little but quarter. bit do quite you all with sure homeowners Obviously, We spending they and businesses, really a this our a less doing well, time portfolio look when continue team and keep work great making and other you our all us the of sunshine hard with we total also year few business strong. had investment and the see get to at the in benefits returns. to the our

going where and Thank you we're about good next we'll forward. we quarter. So you, feel see

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

now day. Good disconnect. may You