Q2 2025 The Allstate Corp Earnings Call

This conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue. Please simply press star one again.

Today's program is being recorded and now I'd like to introduce your host for today's program Alister Gammon head of Investor Relations. Please go ahead Sir.

Yeah.

Good morning, everyone welcome to all the things I think a quarter or 2025 earnings call yesterday.

The market, we issued our news release and Investor supplement filed our 10-Q and posted related material on our website at Allstate investors.

Today, our management team will share perspective on our strategy and how allstate is creating shareholder value.

And then we will open up the lines for your questions.

Noted on the first part of the presentation. Our discussion will include non-GAAP measures for which there are reconciliations are provided in the news release and Investor supplement. We will also make forward looking statements about allstate's operations actual results may differ materially from those statements. So please refer to our 2020 for 10-K.

And other public filings for information on potential risk and now I'll turn it over to Tom.

Good morning, Thank you for investing time at Allstate.

Start with second quarter results in Allstate's strategy to create shareholder value. Then we will have time to address your questions. So let's start with slide two so allstate's strategy has two components. That's shown on the left increase personal property liability market share and expand protection provided customers.

The top right is an overview of second quarter results revenues were $16 $6 billion in the second quarter at five 8% increase compared to the second quarter of 2024.

Total policies enforced increased $208 million, it's four 2% over the prior year and is being led by Allstate protection plans.

Personal property liability policies enforce increased by eight tenths of a point net.

Net income was $2 1 billion and adjusted net income was $1 6 billion or $5 94 per diluted share.

Adjusted net income return on equity was 28, 6% over the trailing 12 months.

We create shareholder value by delivering excellent operating yourself to see up top drawing the personal property liability business suit to transform to growth strategy.

Spanning protection services, and proactively investing $77 billion portfolio.

So let's go through those three points starting on slide three.

Transformative growth is five phases, and we're now sadly in phase four with progress in each of the five sub components, New Allstate branded auto insurance products, which are more affordable simple connected or being implemented the new auto insurance product is available in 40 States and we're rolling out the same type of product for homeowners.

And we're in 16 states now.

New products are also available in the independent agent channel in 34 states expanding our risk appetite from National General strong non standard auto risk position.

Underwriting expenses have been reduced supporting more competitive pricing, while maintaining margins.

Increased sophistication of pricing plans and marketing programs have helped increase new business through expanded distribution.

Claims processes have been enhanced following the pandemic related inflation, which is helping us control our claim severity and then our new technology systems have been deployed which position us to leverage advanced computing and large language models.

Customer access has also been significantly expanded as you can see in the middle of the slide New business is almost double five years ago, reaching $10 8 million policies over the last 12 months.

This is the broadest distribution platform in the industry with new business spread almost evenly between Allstate agents independent agents and directly through call centers or over the web as you can see from that first set of pie charts on the left.

Total policies enforced increased to $37 7 million, reflecting the highly successful acquisition of National General and rapid growth in direct sales.

The property liability business is a terrific business with $56 billion of annual earned premiums and excellent underwriting results.

Turning to slide core protection services, while smaller is still a really significant business with 170 million policies enforced $3 $2 billion of revenue in a quarter of a $1 billion of income over the last 12 months.

It is comprised of five businesses protection plans.

Auto dealer protection offerings, roadside assistance era D and identity protection revenues were $867 million in the quarter, which generated $60 million of income most of which is from protection plans, which are described in the bottom section of the slide.

Protection plan sells protection for consumer electronics mobile devices appliances, and furniture is protection is basically embedded in the sales processes of a broad group of exceptional distribution partners.

Revenues increased by 16, 6% over the prior year quarter, reflecting rapid growth in appliance protection over the last several years and success in expanding internationally adjust.

Adjusted net income was $51 million due to higher revenue moderating claims and support costs and operational efficiencies.

Each of the protection services business.

Has their own success story parity. For example is two trillion miles of driving data is now expanding its services to insurance companies and making inroads into mobility intelligence.

Turning to slide five shareholder various also created by proactively managing the $77 billion investment portfolio is really an integrated component of our enterprise risk return decision, making investment income was $754 million in the quarter, representing a total return of one 4% for the quarter and five.

4% in the last 12 months.

This diversified portfolio of fixed income and grow that says Leverages top investment talent to deliver top quartile performance as shown in the table on the right.

A larger part of the portfolio is in fixed income securities, which provides consistent cash flow and high liquidity, our strong credit skills and active management generated first and second quartile performance.

We reduced our public equity holdings in the second quarter, given the increased risk of inflation due to the new trade policies. As this is the impact of this becomes clear we'll adjust that position. We also have strong results and the performance based portfolio of private equity real estate investments, which is a combination of fund participation co investments and direct transactions.

The higher returns on these investments is more than active despite the greater variability in our reported income now I'll pass it over to Mario.

Tom Let's take a look at second quarter property liability results on slide six.

The property liability business delivered strong results generating nearly $1 $3 billion of underwriting income this quarter as average premium increases exceeded moderating cost the.

The combined ratio of $91. One was a 10 point improvement from the prior year quarter, driven by improved underlying trends and $376 million favorable prior year non catastrophe reserve re estimates ship.

Shifting to auto insurance on the top right. The combined ratio was 86 in the quarter of nine nine point improvement from the second quarter of 2024 due to improved frequency and moderating severity trends.

Mario Rizzo: The property liability results on slide six. The property liability business delivered strong results, generating nearly $1.3 billion of underwriting income this quarter as average premium increases exceeded moderating costs. The combined ratio of 91.1 was a 10-point improvement from the prior year quarter, driven by improved underlying trends and $376 million in favorable prior year non-catastrophe reserve re-estimates. Shifting to auto insurance on the top right, the combined ratio was 86 in the quarter, a 9.9-point improvement from the second quarter of 2024 due to improved frequency and moderating severity trends. Over the past several quarters, we've seen the favorable impacts of our comprehensive auto insurance profit improvement plan in our financial results. Our auto book of business is now broadly profitable, including in previously profit-challenged markets like California, New York, and New Jersey, and we are focused on investing in profitably growing auto market share.

Property liability results. On slide 6.

Over the past several quarters, we've seen the favorable impacts of our comprehensive auto insurance profit improvement plan in our financial results. Our auto book of business is now broadly profitable, including in previously profit challenged markets like California, New York, and New Jersey, and we are focused on investing in profitable growth.

The property liability business delivered, strong results generating nearly 1.3 billion dollars of underwriting income. This quarter has average premium increases exceeded moderating cost.

<unk> auto market share.

The combined ratio of 91.1 was a 10-point improvement from the prior year, quarter driven by improved, underlying Trends and 376 million in favorable, prior year non-catastrophe. Reserve re estimates

Homeowners results are shown in the bottom right graph.

Underlying margins remained strong in the homeowners business with an underlying combined ratio of 58, six but were offset by $1 $6 billion in catastrophe losses, leading to a combined ratio of 102 in the court.

Shifting to auto insurance on the top, right? The combined ratio was 86 in the quarter, a 9.9, Point improvement, from the second quarter of 2024, due to improved frequency and moderating severity trends.

While quarter to quarter results can be volatile in the homeowners business due to catastrophe losses, we continue to have strong conviction around our ability to grow homeowners and generate excellent long term returns on capital as demonstrated by a combined ratio of approximately 92 over the past 10 years Allstate's homeowners.

Mario Rizzo: Homeowners' results are shown at the bottom right graph. Underlying margins remain strong in the homeowners' business, with an underlying combined ratio of 58.6, but were offset by $1.6 billion in catastrophe losses, leading to a combined ratio of 102 in the quarter. While quarter-to-quarter results can be volatile in the homeowners' business due to catastrophe losses, we continue to have strong conviction around our ability to grow homeowners and generate excellent long-term returns on capital, as demonstrated by a combined ratio of approximately 92 over the past 10 years. Allstate's homeowner capabilities represent a competitive advantage in the industry. Turning to slide seven, let's discuss growth trends in the property liability business. In the chart to the left, you can see the composition of Allstate's 37.9 million property liability policies enforced, with growth results for the quarter shown at the bottom of the chart.

Over the past several quarters. We've seen the favorable impacts of our comprehensive auto insurance, profit Improvement, plan in our financial results. Our auto book of business is now broadly profitable including in previously, Prophet challenged markets like California, New York, and New Jersey and we are focused on investing in possibly growing auto market share.

Capabilities represent a competitive advantage in the industry.

Homeowners results are shown in the bottom right graph.

Turning to slide seven let's discuss growth trends in the property liability business.

And the chart to the left you can see the composition of all states $37 9 million property liability policies in force with gross result with growth results for the quarter shown at the bottom of the chart.

Underlying margins remain strong in the homeowner's business with an underlying combined ratio of 58.6, but we're offset by 1.6 billion dollars in catastrophe losses. Leading to a combined ratio of 102 in the court.

Auto insurance with $25 2 million policies in force shown in dark Blue accounts for two thirds of total property liability policies and year over year growth turned positive during the quarter ending the second quarter at plus 0.5% above prior year.

While quarter and quarter results can be volatile in the homeowner's business. Due to catastrophe losses, we continue to have strong convictions around our ability to grow homeowners and generate excellent. Long-term Returns on Capital as demonstrated by a combined ratio of approximately 92 over the past 10 years. All states homeowner capabilities represent a competitive advantage in the industry.

The homeowners business accounts for approximately 20% or $7 6 million property liability policies and continued to grow in the second quarter, increasing two 3% relative to the prior year quarter.

Turning to slide 7. Let's discuss growth Trends in the property liability business.

To the right, we provide more detail for auto and homeowners insurance growth rates by brands.

Mario Rizzo: Auto insurance, with 25.2 million policies enforced, shown in dark blue, accounts for 2/3 of total property liability policies, and year-over-year growth turned positive during the quarter, ending the second quarter at plus 0.5% above prior year. The homeowners' business accounts for approximately 20%, or 7.6 million property liability policies, and continued to grow in the second quarter, increasing 2.3% relative to the prior year quarter. To the right, we provide more detail for auto and homeowners' insurance growth rates by brand. We underwrite auto and homeowners' insurance business through Allstate agents and direct-to-consumer using the Allstate brand. For higher-risk direct channel customers, we also use the Direct Auto brand, which we acquired with National General. We provide those same products in the independent agent channel using the National General brand. Collectively, these represent what we call our active brands in market.

In the chart to the left, you can see the composition of of all states, 37.9 million property, liability policies, and force with gross result with growth results for the quarter shown at the bottom of the chart.

We underwrite auto and homeowners insurance business through Allstate agents and direct to consumer using the Allstate brand.

For higher risk direct channel customers. We also use the direct auto brand, which we acquired with National General.

Auto insurance with 25.2 million policies in force, shown in dark blue accounts. For 2/3 of Total Property liability policies and year-over-year. Growth turned positive during the quarter ending the second quarter at plus 0.5% above prior year.

We provide those same products in the independent agent channel using the National General brand.

Collectively these represent what we call our active brands in market.

Auto policies in force inactive brands increased two 4% compared to the prior year quarter.

The homeowners business accounts for approximately 20% or 7.6 million property, liability policies and continued to grow in the second quarter. Increasing 2.3% relative to the prior year quarter.

Allstate brand policies in force were negatively impacted by declines in New York, and New Jersey, where we continued to focus on profit improvement as our primary operating objectives.

To the right, we provide more detail for auto and homeowners insurance growth rates by brand.

We underwrite Auto and homeowners insurance business through Allstate agents and direct to Consumer using the Allstate brand.

Approval of pending requests for our new affordable simple and connected auto insurance products. In these states will open these markets for growth as margins have improved significantly over the course of 2025 <unk>.

For higher risk. Direct Channel customers. We also use the, the Direct Auto brand, which we acquired with National General.

Excluding New York, and New Jersey, Allstate brand increased over the prior year quarter.

Mario Rizzo: Auto policies enforced in active brands increased 2.4% compared to the prior year quarter. Allstate brand policies enforced were negatively impacted by declines in New York and New Jersey, where we continue to focus on profit improvement as our primary operating objective. Approval of pending requests for our new affordable, simple, and connected auto insurance products in these states would open these markets for growth, as margins have improved significantly over the course of 2025. Excluding New York and New Jersey, Allstate brand increased over the prior year quarter. National General and Direct Auto continue to grow at 11.3% and 22.8% respectively, reflecting our strong capabilities in the non-standard auto insurance market in both the direct and independent agency channels. As part of transformative growth, we decided to sunset the insurance brand and use the Allstate brand in both the exclusive agent and direct channel.

We provide those same products in the independent agent Channel, using the National General brand, collectively, these represent what we call our active brands in Market.

National General and direct auto continued to grow at 11, 3% and 22, 8%, respectively, reflecting our strong capabilities in the non standard auto insurance market in both the direct and independent agency channels.

Auto policies and force, inactive Brands, increase 2.4% compared to the prior year quarter.

As part of transformative growth, we decided to sunset the insurance brand and use the Allstate brand in both the exclusive agent and direct channels.

Allstate brand policies and force were negatively impacted by declines in New York, and New Jersey where we continue to focus on profit Improvement as our primary operating objective.

And then the new National General customer 360 product is rolled out across states, we discontinued offering encompass policies for new business.

Approval of pending requests for our new affordable, simple and connected auto insurance products in these states, would open these markets for growth as margins have improved significantly over the course of 2025.

Excluding New York and New Jersey Allstate Brands increased over the prior year Court.

The continued decline in policies in force and these two inactive brands has created a drag on auto and homeowner's insurance growth rates.

In homeowners insurance, we continue to see steady growth in policies in force and the Allstate brand as Allstate agents continued to bundle at historically high rates and we delivered strong new business growth in the direct channel.

National General and Direct Auto, continue to grow at 11.3% and 22.8% respectively, reflecting our, our strong capabilities, in the non-standard auto insurance Market. In both the direct and independent agency channels,

Moving to slide eight let's dive deeper into how expanded distribution generated a 21% increase in personal property liability new business in the second quarter.

Mario Rizzo: And as the new National General Custom 360 product is rolled out across states, we discontinue offering Encompass policies for new business. The continued decline in policies enforced in these two inactive brands has created a drag on auto and homeowners' insurance growth rates. In homeowners' insurance, we continue to see steady growth in policies enforced in the Allstate brand, as Allstate agents continue to bundle at historically high rates, and we deliver strong new business growth in the direct channel. Moving to slide eight, let's dive deeper into how expanded distribution generated a 21% increase in personal property liability new business in the second quarter. Auto insurance new business in the middle of the chart increased by 24.8% over the prior year quarter and was distributed almost evenly across distribution channels.

As part of transformative growth, we decided to Sunset the Easterns brand and use the Allstate brand in both the exclusive agent and direct channels.

Auto insurance new business in the Middle of the chart increased by 24, 8% over the prior year quarter and was distributed almost evenly across distribution channels.

And as the new National General custom 360 product is rolled out across States, we discontinue offering Encompass policies for new business.

The continued decline in policies. Enforced in these 2, inactive brands has created a drag on auto and homeowners insurance growth rates.

New business was strong across all three channels as Allstate agents were more productive and both the direct and independent agent channels continued to deliver strong new business growth.

Homeowners insurance, new business growth was driven by the exclusive agents and direct distribution channels.

In homeowners insurance. We continue to see steady growth in policies and force in the Allstate brand, as Allstate agents. Continue to bundle at historically High rates and we deliver strong new business growth in the direct Channel.

Independent agent production declined as we focus on rate adequacy across a number of states, but we expect to resume homeowners expansion plans and rate adequate markets going forward in this channel.

Contribution. Generated, a 21% increase in personal property, liability new business in the second quarter.

While new business growth is encouraging retention remains in a central focus to accelerate and sustain growth.

Mario Rizzo: New business was strong across all three channels, as Allstate agents were more productive, and both the direct and independent agent channels continued to deliver strong new business growth. Homeowners' insurance new business growth was driven by the exclusive agent and direct distribution channels. Independent agent production declined as we focused on rate adequacy across a number of states, but we expect to resume homeowners' expansion plans in rate adequate markets going forward in this channel. While new business growth is encouraging, retention remains an essential focus to accelerate and sustain growth. We continue to execute our SAVE program to show Allstate customers' value every day. Employees and Allstate agents are working to improve 25 million customer interactions this year, including proactively reaching out to customers to ensure that they have the right protection at the most affordable price.

Auto insurance new business in the middle of the chart increased by 24.8% over the prior year quarter, and was distributed almost evenly across distribution channels.

We continue to execute our save program to show Allstate customers value every day.

Employees in Allstate agents are working to improve 25 million customer interactions this year, including proactively reaching out to customers to ensure that they have the right protection at the most affordable price.

New business was strong across. All 3 channels, as all state agents were more productive and both a direct and independent agent channels continued to deliver strong new business growth.

Homeowners insurance new, business growth was driven by the exclusive agent and direct distribution channels.

This program is designed to deliver an industry, leading customer experience, while enhancing affordability for our customers.

Independent agent, production declined, as we focus on rate adequacy across a number of states, but we expect to resume homeowners expansion, plans, in rate adequate markets going forward in this channel.

We will continue to execute our transformative growth strategy, and making bat and make investments and expanded distribution pricing sophistication marketing and technology, all focused on delivering sustainable and profitable market share growth now I will turn it over to Jeff.

While new business growth is encouraging retention. Remains an essential Focus to accelerate and sustained growth.

We continue to execute our save program to show All-State customers value every day.

Thank you Mario let's move to slide nine for an overview of how allstate's capital management strategy creates shareholder value.

Strong earnings resulted in an adjusted net income return on equity of 28, 6% for the latest 12 months. The completed the divestitures of the employee voluntary benefits business on April <unk> and the group health business on July one for a combined three 5 billion.

Mario Rizzo: This program is designed to deliver an industry-leading customer experience while enhancing affordability for our customers. We will continue to execute our transformative growth strategy and make investments in expanded distribution, pricing sophistication, marketing, and technology, all focused on delivering sustainable and profitable market share growth. Now I'll turn it over to Jesse.

Employees and Allstate agents are working to improve. 25 million customer interactions this year, including proactively reaching out to customers to ensure that they have the right protection at the most affordable price

This program is designed to deliver an industry-leading customer experience while enhancing affordability for our customers.

That represented a 25 time multiple of the latest 12 month earnings for those businesses.

Transactions position the businesses for success and allow us to reallocate capital Allstate strategic growth opportunities.

Thomas Wilson: Thank you, Mario. Let's move to slide nine for an overview of how Allstate's capital management strategy creates shareholder value. Strong earnings resulted in an adjusted net income return on equity of 28.6% for the latest 12 months. We completed the divestitures of the employee voluntary benefits business on April 1 and the group health business on July 1 for a combined $3.25 billion. That represented a 25-time multiple of the latest 12-month earnings for those businesses. The transactions position the businesses for success and allow us to reallocate capital to Allstate's strategic growth opportunities. We continue to return capital to shareholders through shareholder purchases and dividends. In the past year, Allstate paid $1.1 billion of common and preferred shareholder dividends. Earlier this year, the quarterly common stock dividend was increased 9% to $1 per share.

We will continue to execute, our transformative growth strategy and make and B and make investments in expanded. Distribution, pricing sophistication, marketing, and Technology, all focused on delivering sustainable and profitable market share growth. Now I'll turn it over to Jeff

We continue to return capital to shareholders through share repurchases and dividends in the past year Allstate paid $1 1 billion of common and preferred shareholder dividends earlier. This year, our quarterly common stock dividend was increased 9% to $1 per share.

Thank you, Mario. Let's move to slide 9 for an overview of how all states Capital Management strategy, create shareholder value.

Strong earnings. Resulted in and, and, and adjusted. Net income return on Equity of 28.6% for the latest 12 months.

We've also returned cash to shareholders by repurchasing $445 million of common stock in connection with the $1 $5 billion share repurchase authorization, we announced in February of this year.

we completed the Devastators of the employee voluntary, benefits business on April 1st, in the group health business on July 1st for a combined 3.25 billion that represented the 25th time, multiple of the latest 12-month earnings for those businesses,

Let's wrap up on slide 10.

Allstate delivered excellent financial results in the second quarter.

Our growing customer base of 208 million policies enforced with broad protection offerings under an exceptional brand with extensive distribution.

The transactions positioned to businesses for success and allow us to reallocate Capital Allstate, strategic growth opportunities.

Hence one of growth execution is positioning allstate for profitable personal property liability growth.

Protection services segment led by Allstate Protection plans continues to grow rapidly and broaden allstate's customer base.

Thomas Wilson: We've also returned cash to shareholders by repurchasing $445 million of common stock in connection with the $1.5 billion share repurchase authorization we announced in February of this year. Let's wrap up on slide 10. Allstate delivered excellent financial results in the second quarter. We're serving our growing customer base of 208 million policies enforced with broader protection offerings under an exceptional brand with extensive distribution. Transformative growth execution is positioning Allstate for profitable personal property liability growth. The protection services segment, led by Allstate protection plans, continues to grow rapidly and broaden Allstate's customer base. A proactive approach to managing the investment portfolio is aligned with enterprise risk and return objectives, and sound capital management will continue to deliver value for shareholders. Allstate remains committed to executing our strategy and is well-positioned to grow property liability market share, expand protection for customers, and deliver value to our shareholders.

We continue to return Capital to shareholders to share our purchases and dividends in the past year, All-State paid 1.1 billion, dollars of common and preferred shareholder dividends earlier this year. The quarterly common stock dividend was increased. 9% to $1 per share.

Our active approach to managing the investment portfolio is aligned with enterprise risk and return objectives and sound capital management will continue to deliver value for shareholders.

We've also returned cash to shareholders by repurchasing. 445 million of common stock in connection with the 1.5 billion. Share repurchase authorization. We announced in February of this year.

Let's wrap up on slide 10.

Allstate remains committed to executing our strategy and is well positioned to grow property liability market share expand protection for customers and deliver value for our shareholders with that let's open up the line for questions.

Allstate delivered excellent Financial results in the second quarter for serving. Our growing customer base at 208 million policies, in force with broad protection offerings under an exceptional brand with extensive distribution.

Certainly and as a reminder, ladies and gentlemen, we ask you. Please limit yourself to one question and one follow up you may get back in the queue. As time allows our first question comes from the line of Jimmy <unk> from Jpmorgan. Your question. Please.

Transformative. Growth execution is positioning all state for profitable personal property liability growth.

Hey, good morning, I had a couple of questions first just on the fifth growth can you talk about the sort of potential tailwind and headwind for growth I would assume that the inactive brands are going to continue to decline, although the impact of that on your overall results should diminish over the next few quarters.

The Protection Services segment, led by Allstate Protection Plans, continues to grow rapidly and broaden our customer base across all states. Our proactive approach to managing the investment portfolio is aligned with enterprise risk and return objectives. Sound capital management will continue to deliver value for shareholders.

Thomas Wilson: With that, let's open up the line for questions.

It seems like at some point, you'll be in a growth mode in New York, New Jersey overall.

Q1: Certainly. And as a reminder, ladies and gentlemen, we ask you to please limit yourself to one question and one follow-up. You may get back in the queue as time allows. Our first question comes from the line of Jimmy from JP Morgan. Your question, please.

Allstate remains committed to executing our strategy and is, well, positioned to grow properties liability market, share. Expand protection for customers, and deliver value for our shareholders with that. Let's open up the line for questions.

Overall, youre not raising prices as much as you were but just talk about.

Sort of what the had been still bins are two growth in personal auto so that one gets a better idea on where it's headed from.

Jesse Merten: Hey, good morning. I had a couple of questions. First, just on PIF growth, can you talk about the sort of potential tailwinds and headwinds for growth? I would assume that the inactive brands are going to continue to decline, although the impact of that on your overall results should diminish over the next few quarters. And then it seems like at some point you'll be in a growth mode in New York, New Jersey. Overall, you're not raising prices as much as you were. But just talk about sort of what the headwinds and tailwinds are to growth in personal auto PIF so that one gets a better idea on where it's headed from the level in the last couple of months.

Certainly and as reminded ladies and gentlemen, we ask you. Please limit yourself to 1 question and 1 follow-up. You may get back in the queue as time allows our. First question comes from the line of Jimmy from JP Morgan your question, please.

From the level in the last couple of quarters, a couple of months.

Hey, Jimmy let me start with the growth one a little higher level and then I'll ask Murdo. If you go into auto so first.

Why do you want growth more growth because we're having a 28% return on equity and they say you can grow you can deploy capital and then your <unk> goes up.

And then you're like Okay, what kind of growth do you want.

In the personal property liability business, we obviously have had huge growth in revenues.

And that translates into not just higher absolute dollar earnings per share, but it also translates into higher investment income, which you can see because of the investment portfolio.

Thomas Wilson: Hey, Jimmy, let me start with the growth one at a little higher level, and then I'll ask Mario to go into auto. So first, why do you want growth? You want growth because we're in a 28% return on equity, and they've said you can grow, you can deploy capital, and then your PE goes up. And then you're like, OK, what kind of growth do you want? In the personal property liability business, we obviously have had huge growth in revenues, and that translates into not just higher absolute dollar earnings per share, but it also translates into higher investment income, which you can see because the investment portfolio goes up. And then, of course, you also want to have PIF growth, as you point out. And there's PIF growth in homeowners you see has been terrific, particularly when you take out the inactive brands.

Hey, good morning. Um, I had a couple of questions first just on Fifth growth. Can you talk about the sort of potential Tailwinds and headwinds for growth? I would assume that the, uh, inactive brands are going to continue to decline, although the impact of that on your overall results, should diminish over the next few quarters. And then it seems like at some point, you'll be in a growth mode, in New York, New Jersey, uh, overall, you're not raising prices as much as you were, but just talked about, uh, sort of what the headwinds Tailwinds are to growth in personal Auto fift. So that 1 gets a better idea on where it's headed from, um, from the level in the last couple of quarters, uh, couple of months.

And then of course, you also want to have Pip growth as you point out.

And Theres Pip growth in homeowners you see has been terrific, particularly when you take out the.

Inactive brands.

And then and then Mario I'll talk about what we're doing in auto insurance, but we are completely committed to growth.

They say you can grow uh you can deploy capital and then your PE goes up.

And believe that transformed the growth is working today.

And we will continue to build momentum. There then you can go a little broader and say well how are we doing in growth and protection services and you can see that expenditure growth story as well so.

We have a variety of ways that we're focused on continuing to leverage our capital or you want to jump into auto insurance yeah. Thanks for the question Jimmy So maybe ill start with be inaccurate brand comment you made which is which is spot on.

Thomas Wilson: And then Mario will talk about what we're doing in auto insurance. But we are completely committed to growth and believe that transformative growth is working today and will continue to build momentum there. Then you can go a little broader and say, well, how are we doing in growth in protection services? And you can see that's been a terrific growth story as well. So we have a variety of ways that we're focused on continuing to leverage our capital. Mario, you want to jump into auto insurance?

And the business in those brands, because we're not writing any new business in those brands continues to decline.

Uh, and then you're like, okay, what kind of growth do you want? Uh, in the personal profit liability business? Uh, we obviously have had huge growth in revenues, uh, and that translates into not just higher absolute dollar earnings per share, but it also translates into higher investment income, which you can see because the Investment Portfolio goes up. Uh, and then, of course, you also want to have Pip growth, uh, as you point out, uh, and there is PIP growth uh in homeowners. You see has been terrific uh particularly when you take out the uh the inactive Brands, uh and then uh and then Mario will talk about what we're doing in an auto insurance. But we are completely committed to growth.

We would expect the rate of decline to diminish going forward. So so I think youre exactly right on that one.

And then maybe I'll jump to the tailwind and I think Tom touched them. All when you talk about transform to growth I think all the components of transformative growth.

Whether it's the new product offering with affordable simple connected customer 360, and D. I, a channel new technology higher and more sophisticated marketing.

Mario Rizzo: Yeah, thanks for the question, Jimmy. So maybe I'll start with the inactive brand comment you made, which is spot on. You know, as the business in those brands, because we're not writing any new business in those brands, continues to decline, we would expect the rate of decline to diminish going forward. So I think you're exactly right on that one. Then maybe I'll jump to the tailwinds. And I think Tom touched them all when he talked about transformative growth. I think all the components of transformative growth, whether it's the new product offering with affordable, simple, connected custom 360 in the IA channel, new technology, higher and more sophisticated marketing, our broad distribution capabilities, the improvements in competitive position, all the components of transformative growth have created tailwinds for us that are really generating significant amounts of new business.

Our broad distribution capabilities, the improvements and competitive position all the components of transformative growth have created a tailwind for us.

Are really generating significant amounts of new business, and we're going to continue to leverage and build on.

Those capabilities going forward and then I'll end with New York and New Jersey.

And believe that transformative growth is working today. Uh, and we'll continue to build momentum there. Then you can go a little broader and say, well how we doing in our growth and Protection Services. Uh, and you can see that's been a terrific growth story as well. So, uh, we have a variety of ways that we're focused on continuing to leverage our Capital. All right. You want to jump into auto insurance? Yeah. Uh, thanks for the question, Jimmy. So, uh, maybe I'll start with the inactive brand comment you made, which is, which is spot on, uh, you know, as the, the business and those Brands because we're not writing any new business in those Brands continues to decline, uh, we would expect the rate of decline to diminish going forward. So so, I think you're, you're exactly right on that 1. Uh, then maybe I'll jump to the the Tailwind.

The punch line.

Those two stages, we are now generating an underwriting profit both in New York and New Jersey, we've been working closely with the two insurance departments over the last several years to get our rates.

To an adequate level and we feel confident.

But we're at a point where we.

We are rate adequate give.

Given the rates week rich.

<unk> approval for including upcoming race in New York that are going to be effective.

Mario Rizzo: And we're going to continue to leverage and build on those capabilities going forward. And then I'll end with New York and New Jersey. The punchline in those two states is we're now generating an underwriting profit both in New York and New Jersey. We've been working closely with the two insurance departments over the last several years to get our rates to an adequate level. And we feel confident that we're at a point where we are rate adequate, given the rates we've received approval for, including upcoming rates in New York that are going to be effective in August. So we feel good about the positioning. The last domino that we need to fall is we've made filings for our new affordable, simple, and connected auto product in both of those states.

In August so we feel good about the positioning the last Domino that we need to fall is we've made filings for our new affordable simple and connected auto product and both of those states as soon as we get regulatory approval. We think we can broaden our risk aperture a bit in those states and look to lean in and start to grow and so we're optimistic.

That'll happen here in the second half of the year.

Okay. Thanks, and then how do you think about the lifetime profitability of the business that you are putting on an independent agency indirect horses.

And I think Tom touched them all when he talked about transformative growth, I think all the components of transformative growth, uh whether it's the new product offering with affordable, simple connected, custom 360 and the IIA Channel new technology uh higher and more, sophisticated marketing are broad, distribution capabilities, uh the improvements in competitive position. All the components of transformative growth have created Tailwind for us that are really generating significant amounts of new business. And we're going to continue to leverage and build on uh those capabilities going forward. And then I'll end with New York and New Jersey that the the punchline in those 2 States is. We're now uh, generating an underwriting profit both in New York and New Jersey. We've been working closely with uh the 2 Insurance departments over the last several years to uh, get our rates uh, to an adequate level. And we feel confident um, that we're at a point where uh, we, we are rate adequate

The captive business, which obviously wasn't growing in the past that was highly profitable so.

Last year, there were concerns that you weren't growing now doing concerns you're making too much money.

Mario Rizzo: As soon as we get regulatory approval, we think we can broaden our risk aperture a bit in those states and look to lean in and start to grow in those. So we're optimistic that that'll happen here in the second half of the year.

And maybe the profitability of the newer growth isn't that big but just talk about like sort of the margin profile of independent agency indirect that you're writing versus captive agents.

Sure.

Jimmy I'll start and then Martin.

Thomas Wilson: OK, thanks. And then how do you think about the lifetime profitability of the business that you're putting on in independent agency and direct versus the captive business, which obviously wasn't growing in the past but was highly profitable? So I think last year there were concerns that you weren't growing. Now there are concerns you're making too much money, and maybe the profitability as the newer growth isn't as great. But just talk about sort of the margin profile of independent agency and direct that you're writing versus captive agents.

Uh, given the rates we've uh, received approval for including uh upcoming rates in New York that are going to be effective, uh, in August. So we feel good about the positioning the last Domino that we need to fall. Is we've made filings for our new affordable, simple and connected Auto product in both of those States. Uh, as soon as we get regulatory approval, uh, we think we can broaden our, uh, risk aperture a bit in those States and look to lean in and start to grow in those. So we're we're optimistic that that will happen here in the second half of the

Jump in as well so.

Everything we write we like like the right lifetime value, we have a very sophisticated analytical system, which folks said marketing costs distribution expenses lifetime value.

Not just by channel, but by risk level by expected retention.

And so.

We feel really good about lifetime value, we have a really good clean book.

How should we go next question <unk>.

Okay, thanks and then how do you think about the lifetime profitability of the business that you're putting on in independent agency and direct versus uh, the captive business? Which obviously wasn't growing in the past? That was highly profitable. So I think, um, last year their concerns you weren't growing now they're concerned. You're making too much money and and and maybe the profitability is the newer growth. Isn't that great? But just talk about like sort of the margin profile of independent agent.

Question comes from the line of Gregory Peters from Raymond James Your question. Please.

Agency, and direct that you're writing versus captive agents.

Jesse Merten: Jimmy, I'll start, and then Mario might want to jump in as well. So everything we write, we like the lifetime value of. We have a very sophisticated analytical system which looks at marketing costs, distribution expenses, lifetime value, not just by channel but by risk level, by expected retention. And so we feel really good about lifetime value. We have a really good clean book.

Good morning, everyone.

So I guess, the first question I'll focus on frequency and technology.

Uh, Jimmy, I'll start, and then I might want to jump in as well. Uh, so

Can you talk a little bit about the frequency trends and one of the things that seems to be popping up more and more is.

Embedded technology and accident avoidance technology, that's specifically going into cars.

Everything. We write, we like, like the right lifetime value of. We have a very sophisticated analytical system which looks at marketing costs distribution expenses, lifetime value, uh, not just by Channel, but by risk level, uh, by expected retention. Um, and so, um,

And the longer term consequences of autonomous driving and just curious for your updated views on that.

Would be a really good about lifetime value. We have a really good clean book.

Yes.

Let me start and then Mario maybe you can jump into account or sometimes makes sense. It makes sense, so well good morning, Greg.

Thomas Wilson: Should we go to the next question?

Q1: Our next question comes from the line of Gregory Peters from Raymond James. Your question, please.

So first on autonomous driving.

Q2: Good morning, everyone. So I guess the first question I'll focus on is frequency and technology. Can you talk a little bit about the frequency trends? And one of the things that seems to be popping up more and more is embedded technology and accident avoidance technology that's specifically going into cars and the longer-term consequences of autonomous driving. I'm just curious for your updated views on that.

Should we go next question? Our next question comes from the line of Gregory Peters from Raymond James. Your question, please?

I think 15 years ago, or 14 years ago, we did some scenario planning on autonomous driving and.

So what impact will have on auto insurance.

And the conclusions. We came to then are still pretty much applicable today. It was that there is an engineering issue to be solved and then there is also an economic issue. If you saw I believe they are.

Good morning everyone. Um, so, uh, I guess the first question I'll focus on uh, frequency and Technology. Um can you talk a little bit about the frequency Trends and 1 of the things that seems to be popping up more and more is

John can I would just out of way more I believe the engineering problem has been solved.

embedded technology and accident avoidance technology that's specifically going into cars and you know the longer term consequences of autonomous driving and just curious for your updated views on that.

Thomas Wilson: Let me start, and then Mario, maybe you can jump into current results on frequency. Does that make sense?

And that the economic issue is still in front of it.

Jesse Merten: Well, good morning, Greg. So first, on autonomous driving, I think 15 years ago, 14 years ago, we did some scenario planning on autonomous driving and said, you know, what impact will it have on auto insurance? And the conclusions we came to then are still pretty much applicable today. It was that there is an engineering issue to be solved, but then there's also an economic issue to be solved. I believe John Zajinski and I were just out at Waymo. I believe the engineering problem has been solved and that the economic issue is still in front of it. It's called 280 million cars in the United States. It'd have a value of over $4 trillion. And if you want to fix the whole system, you've got to turn over that whole fleet. It will happen over time. Those economic barriers will come down.

It's called 280 million cars, the United States that have a value of over four trillion dollars and if you want to fix the whole system and get a turnover that old port that whole fleet it will happen over time.

Those economic barriers will come down but in the meantime, what we've seen is what we thought would happen which is that our frequency kind of gradually comes down if that speed turns over but the cost of repairing cars goes up as those cars get more expensive.

Side view mirrors are worth a thousand bucks an ounce at a $200.

Because they got those little flashers on them so.

So well, good morning Greg. Um so uh first uh on autonomous driving. Um I think 15 years ago, 14 years ago, we did some scenario planning on autonomous driving. Uh, and uh, said you know what impact will it have on auto insurance? Uh, and the conclusions we came to then are still pretty much applicable today. It was that there is an engineering issue to be solved but then there's also an economic issue to be solved. I believe the John jinsky and I were just out of whmo I believe the engineering problem has been solved.

<unk> seen that play out we think that'll be a continued trend. That's one of the reasons why we are leaning in heavily into equity and telematics, which is S cars get connected not only will it change.

And that the economic issue is still in front of it.

Often they get into an accident and how much it costs fixed.

Jesse Merten: But in the meantime, what we've seen is what we thought would happen, which is that frequency kind of gradually comes down as that fleet turns over. But the cost of repairing cars goes up as those cars get more expensive when side view mirrors are worth $1,000 now instead of $200 because they've got those little flashers on them. So you've seen that play out. We think that'll be a continued trend. That's one of the reasons why we are leaning in heavily into airity and telematics, which is as cars get connected, not only will it change how often they get in an accident and how much it costs to fix that, but it will help improve the overall efficiency of the personal transportation system.

But it will help improve the overall efficiency of the personal transportation system and while we don't talk much about it from a strategy standpoint, we believe that we've got great Optionality with arity <unk> leverage if you want to.

Talk about current frequency I think Greg might be also like just current results yet.

Sure. Thanks, Craig for the question so.

Look I think broadly on frequency, what we and the industry have experienced really over the last let's call. It six quarters or so is kind of a continuation of maybe the trend prior to COVID-19 of this downward.

That's called 280 million cars in the United States that have a valuable of 4 trillion dollars. And if you want to fix the whole system, you got to turn over that Old Port. That whole Fleet, it will happen over time. Uh those economic barriers will come down but in the meantime, what we've seen is what we thought would happen, which is that a frequency kind of gradually comes down as that Fleet turns over but the cost of repairing cars goes up as those cars get more expensive, uh, when you know side view mirrors are worth a thousand bucks now, instead of 200 dollars because they got those little flashers on them. So, uh, you've seen that play out, uh, we think that'll be a continued Trend. That's 1 of the reasons why we are leaning in heavily into airity and telematics.

Trend in auto frequency, obviously, there was a lot of noise during COVID-19 and post COVID-19 is driving behavior shifted around quite a bit, but what we're seeing favorable frequency and it's driven by the kinds of things <unk> talked about from a technology perspective, whether it's flying spot monitoring.

Which is as cars. Get connected, not only will it change.

Jesse Merten: And while we don't talk much about it from a strategy standpoint, we believe that we've got great optionality with airity to leverage it today. Mario, do you want to talk about current frequency? Because Greg might be also like, you know, just current results.

Lane departure warnings other advanced safety features that are in vehicles that I think are showing up.

Mario Rizzo: Yeah, sure. Thanks, Greg, for the question. So look, I think broadly on frequency, what we and the industry have experienced really over the last, let's call it, six quarters or so is kind of a continuation of maybe the trend prior to COVID of this downward trend in auto frequency. Obviously, there was a lot of noise during COVID and post-COVID as driving behavior shifted around quite a bit. But we're seeing favorable frequency, and it's driven by the kinds of things Tom talked about from a technology perspective, whether it's, you know, blind spot monitoring, you know, lane departure warnings, other advanced safety features that are in vehicles that I think are showing up in improved auto frequency for the industry.

Improved auto frequency for the industry. The other data point I'd use it as we look at our <unk> telematics data over the last year or so we've seen.

Miles per operator drop around 3% or so which is likely also contributing to <unk>.

<unk> ability and frequency but.

Favorable frequency is certainly a component of the loss cost trend that we've seen and you saw in the supplement pure premium is down almost 3% year over year, that's mainly favorable frequency kind of partially offset with a with higher severity.

How often they get in an accident and how much it costs to fix trans that, but it will help improve the overall efficiency of the personal transportation system and, uh, while we don't talk much about it from a strategy standpoint, we believe that we've got great, optionality with arity to leverage it to that, merge. We want to talk about. Current frequency is Craig might be also like, you know, just current results. Yeah, uh sure thanks. Greg. For the, the question. So uh, look, I think broadly on frequency what we and the industry have experienced really over the last. It's called 6 quarters or so is kind of the continuation of maybe the trend prior to Coe of this downward uh, Trend in Auto frequency. Uh, obviously there was a lot of noise during Co and postco as driving behavior, shifted around quite a bit. But uh, but we're seeing favorable frequency and it's driven by the kinds of things. Tom talked about from a technology perspective, whether it's you know, a blind spot monitoring, uh you know, Lane departure, warnings other, uh, advanced

Particularly in the injury coverages, but but favorable frequency trends that have persisted over a long period of time.

Mario Rizzo: The other data point I'd use is as we look at our airity telematics data over the last year or so, we've seen mile per operator drop around 3% or so, which is likely also contributing to favorability and frequency. But, you know, favorable frequency is certainly a component of the lost cost trend that we've seen. And you saw in the supplement, Pure Premium is down almost 3% year over year. That's mainly favorable frequency, kind of partially offset with higher severity, particularly in the injury coverages. But favorable frequency trends that have persisted over a long period of time.

Alright, thanks for that detail.

For my follow up question to.

The reinsurance.

Program, you put up some details on how the reinsurance structure has changed.

This year end.

Safety features that are in vehicles that I think are showing up, uh, in improved Auto frequency for the industry. The other data point I use is, is we look at our area telematics data over the last year. Or so we've seen, uh, miles per operator, drop around 3% or so, which, uh, is likely also contributing to, uh, favorability and frequency, but, um, you know,

Didn't really talk about it during your prepared remarks, but probably worth covering it looks like you have more limit this year versus last year.

Maybe you can just walk us through some of the decisions of how the program works this year versus last year.

Just go through that I would just point out that we look at reinsurance really as a source of capital and so when Jess is managing capital whether that's a we use preferred instead of common or we're using debt or any other source of cat reinsurance to just wait for us to get canceled.

Favorable frequency is clerks, certainly a component of the Lost cost Trend uh, that we've seen and you you saw in the supplement, uh, pure premiums down, almost 3% year-over-year. That's mainly favorable, frequency kind of uh, partially offset with uh with higher severity uh in in particularly in the injury coverages. But but favorable frequency trends that have persisted over a long period of time.

Q2: Thanks for that detail. I'm going to pivot for my follow-up question to the reinsurance program. You put up some details on how the reinsurance structure has changed this year. And you didn't really talk about it during your prepared remarks, but probably worth covering. It looks like you have more limit this year versus last year. Maybe you can just walk us through some of the decisions and how the program looks this year versus last year.

Yeah. Thanks for the question, Greg I think so a couple of things one reminder, as.

As you pointed out we do post a relatively robust supplement that everyone can go through and understand the program and I won't go through each and every detail, but we did add with some scenarios. So that you can understand better how the reinsurance programs all work together in the event that there is a catastrophe.

Thanks for that detail. I'm in a pivot for my follow-up question, um, to the reinsurance, um, program, uh, you put up some details on how the reinsurance structure has changed. Um, this year. And I you didn't really talk about it during your prepared remarks but probably worth covering. It looks like you have more limit this year versus last year. Um, maybe you can just walk us through some of the decisions and how the program looks this year versus last year.

Jesse Merten: Well, Jess going through that, I would just point out that since we look at reinsurance really as a source of capital. And so when Jess is managing capital, whether that's we use preferred instead of common or we're using debt or any other source of capital, reinsurance is just a way for us to get capital.

It sounds as though the reinsurance program and what we ended up placing as always rooted in our economic capital framework and risk return decision, making that allows us to mitigate risk on both a per event and aggregate basis. So if I take it to the highest level and again I won't go through all the individual components are.

Mario Rizzo: Yeah, thanks for the question, Greg. I think so a couple of things. One, reminder, as you pointed out, we do post a relatively robust supplement that everyone can go through to understand the program. And I won't go through each and every detail, but what we did add was some scenarios so that you could understand better how the reinsurance programs all work together in the event that there's a catastrophe. As Tom said, though, you know, the reinsurance program and what we ended up placing is always rooted in our economic capital framework and risk and return decision-making that allows us to mitigate risk on both a per event and aggregate basis.

Just go through that. I would just point out that this we look at reinsurance really is a source of capital and so when Jess is managing Capital, whether that's uh, we use preferred instead of, uh, common or we're using debt or any other source of capital, reinsurance is just a way for us to get canceled.

Total catastrophe reinsurance limit that we purchased this year across all programs was just over $11 billion, that's up $2 billion from last year, and we saw about a 10% risk adjusted decrease in the cost. So that's a very good outcome, we got more coverage for less on a risk adjusted basis.

And we had really good support from both the reinsurance and catastrophe bond markets and that demonstrates really the strength of our program.

Yeah, thanks for the question, Greg. I I think so, a couple things 1 reminder, uh, as you pointed out, we do post a relatively robust supplement that everyone can go through to understand the program and I won't go through each and every detail. But what we did, add was some scenarios so that you can understand better how uh the reinsurance programs all work together in the event that there's a catastrophe.

Our renewal placement process began just after the law wildfires.

Literally while they were being extinguished and we still have strong support from again, both traditional reinsurers in the cat bond partners that we work with.

Mario Rizzo: So if I take it to the highest level, and again, I won't go through all of the individual components, you know, our total catastrophe reinsurance limit that we purchased this year across all programs was just over $11 billion. That's up $2 billion from last year. And we saw about a 10% risk-adjusted decrease in the cost. So that's a very good outcome. We got more coverage for less on a risk-adjusted basis. And we had really good support from both the reinsurance and catastrophe bond markets. And that demonstrates really the strength of our program. You know, our renewal placement process began just after the LA wildfires, literally while they were being extinguished. And we still had strong support from, again, both traditional reinsurers and the cat bond partners that we work with to place the program. So we renewed during the most recent period.

The program.

So we renewed during the most recent period, we did renew our Florida program.

And we did add some aggregate limit on U S homeowners and I think you probably saw that we added $325 million of limit on an aggregate basis. So if you think of the overall program. We now have $825 million of Cat AG limit.

And aggregate basis. So if I take it to the highest level and I again, I won't go through all of the individual components. You know, our total catastrophe reinsurance limit, that we purchased this year across all programs was 11, just over 11 billion dollars. That's up 2 billion dollars from last year and we saw about a 10% risk, adjusted decrease in the cost.

So that's a very good outcome. We got more coverage for Less on a risk-adjusted basis.

That's placed about $58 million to be clear has already been utilized for expected recoveries, but that leaves us with $767 million remaining aggregate limit on top of our very robust per occurrence. So.

I think at a high level summary of what we did the changes we made and really again just going back to all of these placements are done through our risk and return lens, but we understand as Tom noted how.

And we had really good support from both the reinsurance and catastrophe Bond markets and that demonstrates really the strength of our program. You know, our renewal placement process began just after the LA wildfires literally while they're being extinguished and we still had strong support from again, both traditional reinsurers and the cat Bond partners that we work with to place the program.

Mario Rizzo: We did renew the Florida program. And we did add some aggregate limit on US homeowners. And I think you probably saw that we added 325 million of limit on an aggregate basis. So if you think of the overall program, we now have 825 million of cat ag limit that's placed. About 58 million, to be clear, has already been utilized for expected recoveries. But that leaves us with 767 million remaining aggregate limit on top of our very robust per occurrence. So that's, I think, a high-level summary of what we did, the changes that we made. And really, you know, again, just going back to all of these placements are done through a risk and return lens that we understand, as Tom noted, you know, how are we effectively using this alternative capital source to lower our capital requirements and manage risk.

How are we effectively using this this alternative capital source to lower our capital requirements and manage risk.

Got it thanks for the answers.

Thank you and our next question comes from the line of Rob Cox from Goldman Sachs. Your question. Please.

And this is Jack on for Rob.

I guess I was looking at the strong exclusive growth.

That is kind of just supporting auto Pip growth there as you look at that strong exclusive agency growth.

Over the past four quarters does that really been driven by either bundling increase entrepreneurial efforts on the agents or what are you seeing any shift in customer preferences towards an NDA for it first of all I E or direct.

And so we renewed during the most recent period. We did renew the Florida program and we did add some aggregate limit on U.S. homeowners. I think you probably saw that we added $325 million of limit on an aggregate basis. So if you think of the overall program, we now have $825 million of cat A limit, which is placed about $58 million, to be clear. It has already been utilized for expected recoveries, but that leaves us with $767 million remaining aggregate limit on top of our very robust per occurrence. So, that’s I think a high-level summary of what we did, the changes that we made, and really, you know, again, just going back to all of these placements are done through a risk.

Yeah.

Yes, Rob this is Mario resolved I'll jump in.

Q1: Got it. Thanks for the answers. Thank you. And our next question comes from the line of Rob Cox from Goldman Sachs. Your question, please.

Return lens that we understand, as Tom noted. Um, you know, how are we effectively using this alternative capital source to lower our capital requirements and manage risk?

On that question. So just to give you more context again with respect to our transformative growth strategy in the Allstate exclusive agent channel we've been on a multiyear transformation journey with our agents.

Got it. Thanks for the answers.

Q2: Hey, this is Jack on for Rob. I guess I was looking at the strong exclusive growth that is kind of supporting the auto PIF growth there. As you look at that strong exclusive agency growth kind of over the past four quarters, has that really been driven by either bundling, increased entrepreneurial efforts on the agents, or are you seeing any shift in customer preference toward maybe the A force versus IA or direct?

Thank you. And our next question comes from the line of Rob Cox from Goldman Sachs. Your question, please.

Where we're looking to drive an increased level of productivity in the agency channel and reduce distribution costs and really focused agents on delivering value that consumers want with our relationship with a local agent and we've been really successful as we've executed on that strategy.

Segment and agents into different tiers, depending on performance, we provide support depending on those tiers.

Mario Rizzo: Yeah, Rob, this is Mario Rizzo. I'll jump in on that question. So just to give you some more context again with respect to our transformative growth strategy and the Allstate exclusive agent channel, we've been on a multi-year transformation journey with our agents where we're looking to drive an increased level of productivity in the agency channel and reduce distribution costs and really focus agents on delivering value that consumers want with a relationship with the local agent. And we've been really successful as we've executed on that strategy. We've segmented agents into different tiers depending on performance. We provide support depending on those tiers. We've made a number of changes to the compensation program over time. And we've been working on delivering tools to our agents that enable them to live into what customers really value, as I said, with an agent relationship.

Hey, this is Jack on, for Rob. Um, I guess I was looking at the, um, strong exclusive growth, uh, that is kind of supporting the auto pip growth there, as you look at that strong exclusive agency growth, uh, kind of over the past 4 quarters. Has that really been driven by either bundling increase entrepreneurial efforts on the Asian store? Are you seeing any shift in customer preferences toward? Maybe the E8 Force for z, i a or direct.

A number of changes to the compensation program over time, and we've been working on delivering tools to our agents that enable them to live into.

So when customers really value as I said with an agent relationships. The net result of that is when you look back over the last several years, we have fewer total agents.

But our agents are as productive as they've ever been and you see that once again this quarter with <unk>.

Productivity increases up over 20%.

Our agents continue to invest in their small businesses.

We do things like invest more in marketing and rollout new products and deliver new technology. All the things we talked about with transformative growth is showing up as as more and more productive agency system.

Yeah, Ross uh this Mario resolved, I'll jump in uh on on that question. So just to to give you more context again with respect to our transformative growth strategy and the All-State exclusive agent Channel. We've been on a a multi-year uh transformation Journey with our agents uh where we're looking to drive an increased level of productivity in the agency channel uh and reduce distribution costs and really focus agents on, delivering value that consumers. Want uh, with a relationship, uh, with the local agent. And we've been really successful, uh, as we've executed on that strategy, we've segmented agents in the different

Higher levels of new business, and we're going to continue.

Here's, uh, depending on performance, we provide support, depending on those tears, we've, uh, made a number of changes to the Compensation Program over time, and we've been working on, delivering tools to our agents, that enable them to live into. Um,

To leverage those capabilities, our objective function is to grow across all channels.

Mario Rizzo: The net result of that is when you look back over the last several years, we have fewer total agents, but our agents are as productive as they've ever been. And you see that once again this quarter with productivity increases up over 20%. And our agents continue to invest in their small businesses. And as we do things like invest more in marketing and roll out new products and deliver new technology, all the things we talk about with transformative growth, it's showing up as a more productive agency system and higher levels of new business. And we're going to continue to leverage those capabilities. Our objective function is to grow across all channels. We think there's certainly more opportunity, just given the composition of our book in the direct and in the agent channels. But that doesn't mean we're going to de-emphasize the Allstate agency channel.

Think there's certainly more opportunity just given the composition of our book and the direct and in the independent agent channel, but that doesn't mean, we're going to deemphasize. The Allstate agency channel, we're going to look to continue to grow.

The way that customers want us to grow in that in any way that they want to engage with us.

Got it and then a quick question on the Canadian business, a peer of Yours recently announced it was exiting Canada, highlighting some vertical wise distribution. It was top mark shareholders could you guys just provide us some insight on the performance of your Canadian business and any updates on kind of your long term view of that market.

We like Canada, we think we can win there.

Okay.

Yes.

I can't speak for what people are doing what they're doing it.

Mario Rizzo: We're going to look to continue to grow the way that customers want us to grow in this in any way that they want to engage with us.

Everyone's got their own idiosyncratic issues, but we expect to win in Canada.

So what customers really value? As I said with an agent relationship, the net results of that, uh, is when you look back over the last several years, we have fewer total agents. Um, but our agents are as productive as they've ever been and you see that once again, this quarter with, uh, productivity increases up over 20%, uh, and our agents continue to invest, uh, in their small businesses and and as we do things like invest more in marketing and roll out new products and deliver new technology. All the things we talked about with transformative growth. It's showing up as, uh, as more of a more productive agency system, um, and higher levels of new business, and we're going to continue, uh, to to leverage those capabilities, our objective function is to grow across all channels. Uh, we think there's certainly more opportunity, just given the composition of our book in the direct and in the independent agent channels. But that doesn't mean we're going to de-emphasize, the All-State Agency Channel. We're going to look to

Thank you and our next question comes from the line of David Mclean from Evercore ISI. Your question. Please.

Continue to grow, uh, the way that customers, uh, want us to grow and that, uh, in any way that they want to engage with us.

Q2: Got it. And then a quick question on the Canadian business. A peer of yours recently announced it was exiting Canada, highlighting some verticalized distribution of the top market shareholders. Could you guys just provide us some insight on the performance of your Canadian business and any updates on kind of your long-term view of that market?

Got it and then a quick.

Hey, Thanks, good morning.

The piece of monthly auto if growth if I just look at a number of units added.

That's slowed a bit over the course of the second quarter still positive, but it slowed a bit I was wondering if you could just discuss some of the moving pieces there seasonality.

Canadian business. A peer of yours recently announced. It was Exxon Canada. Highlighting some verticalized distribution of the top Market shareholders. Could you guys just provide us some insight on the performance of your Canadian business and any updates on on kind of your long-term view of that market?

Thomas Wilson: We like Canada. We think we can win there.

Uh, we like Canada. We think we can win their.

Anything else, that's that's impacting that and how we should think about the.

Jesse Merten: I can't speak for why people are doing what they're doing. Everyone's got their own idiosyncratic issues, but we expect to win in Canada.

The cadence as we get into the back half of the year.

Yeah.

Everyone's got their own idiosyncratic issues but we expect to win in Canada.

Good morning, David I don't think we Couldnt I know, we can't give you an answer on a monthly number that would give you confidence.

Q1: Thank you. And our next question comes from the line of David Motley from Evercore ISI. Your question, please.

Thank you. And our next question comes from the line of David Milton from evercore isi your question, please.

Q2: Hey, thanks. Good morning. The piece of monthly auto PIF growth, if I just look at a number of units added, that's slowed a bit over the course of the second quarter, still positive, but it's slowed a bit. I was wondering if you could just discuss some of the moving pieces there, seasonality, anything else that's impacting that, and how we should think about the cadence as we get into the back half of the year.

And how to make judgements for July August September all kind of stuff I would I would go up a level and say lets just look a transformative growth.

And then as Transformers working.

Hi, Mario went through that you know it has five components to it.

Five phases, we're clearly in the amendment phase four.

And all of the underlying assumptions, we thought were true.

Turned out to be true and we're actually executing on them. Just just because you say youre going to build a new tech ecosystem doesn't mean, it's going to work and just could you say you can improve the effectiveness and invest more in marketing doesn't mean at work and we've proven and done all of that so we feel highly confident that the growth trajectory will keep going up but I think.

Hey, thanks. Good morning. Um, the piece of monthly Auto pif growth. I just look at a number of units added, um, that slowed a bit over the course of the second quarter still positive, but it slowed a bit. I was wondering if you could just discuss some of the moving pieces there, um, seasonality, um, anything else that's um, that's impacting that and how we should think about, um, the Cadence as we get into the back half of the year.

Jesse Merten: Morning, David. I don't think we could--I know we can't give you an answer on a monthly number that would give you confidence in how to make judgments for July, August, September, all kinds of stuff. I would go up a level and say, let's just look at transformative growth and its transformative growth working. Mario went through that. You know, it has five components to it. We're five phases. We're clearly in the middle of phase four. And all the underlying assumptions we thought were true turned out to be true, and we're actually executing on them. You know, just because you say you're going to build a new tech ecosystem doesn't mean it's going to work. And just because you say you can improve the effectiveness and invest more in marketing doesn't mean it'll work. And we've proven and done all that.

Looking at it by month.

I don't think is going to tell you much different things happen in different programs happen, we're rolling out different types different states happened people go on vacation.

Good morning, David. I don't think we could. I know we can't give you an answer on a monthly number that would give you confidence uh in how to make, you know, judgments for July, August September, all kind of stuff. Uh I would I would go up a level and say let's just look at transformative growth. Uh and is transformative growth working

I would just be giving you anecdotal information, which wouldn't really help get forecast.

Got it no helpful. I appreciate that.

And then just maybe for my follow up.

Just on the inactive brands within the auto business.

Could you just remind me.

From Mario, went through that, you know, it has 5 components to it. Uh, we're 5 phases. We're clearly in the middle of phase 4, uh, and all the underlying assumptions we thought were true. Uh, turned out to be true and we're actually executing at them, you know, just just because you say you're going to build a new tech. Ecosystem doesn't mean it's going to work and just cuz you say, you can approve.

When that process started.

Jesse Merten: So we feel highly confident that the growth trajectory will keep going up. But I think looking at it by month, I don't think it's going to tell you much. Different things happen. Different programs happen. We're rolling out different stuff. Different states happen. People go on vacation. You know, it's just--I would just be giving you anecdotal information, which wouldn't really help your forecast.

Of of not writing new business and that that drag I think inactive brands are a little under 5% of the pits count now and auto.

I guess, how much longer until we really start lapping those headwinds.

Just to sort of level setting that.

I'll, let Mario talk about maybe the future I mean, I don't think we're not gonna do forecast by insurance policies and stuff because we've got a customer we'd like to keep the customer.

Q1: Got it. No, helpful. I appreciate that. And then just maybe for my follow-up, just on the inactive brands within the auto business, could you just remind me when that process started of not writing new business and that drag? I think inactive brands are a little under 5% of the PIF count now in auto. I guess how much longer until we really start lapping those headwinds? Just sort of level-setting that.

Times offer them alternatives inside the house.

But I'll just go back to when we started transferring to growth or is a little over five years ago. One of the things we said was.

We're spending 200 or $250 million here on the <unk> brand to sell to direct customers. When he said you know.

And when we started that.

<unk> spending maybe I don't know, maybe it's 750 or $1 billion. So we had a chance to develop a second brand that would be for direct it was 2011 over time, they and progressive kept driving up their spending and so we get that in 2019.

Jesse Merten: I'll let Mario talk about maybe the future. I mean, I don't think we're not going to do forecasts by insurance policies and stuff because we've got a customer. We'd like to keep the customer. We sometimes offer them alternatives inside the house. But I'll just go back to when we started transformative growth, it was a little over five years ago. One of the things we said was we were spending $200, $250 million a year on the insurance brand to sell to direct customers. And we said, you know, and when we started that, you know, Geico was spending maybe, I don't know, maybe $750 or $1 billion. So we had a chance to develop a second brand that would be for direct. That was in 2011. Over time, they and Progressive kept driving up their spending.

19, and we're like you know what.

We can keep pouring money at insurance, who were never going to have the brand Allstate has so let's get rid of the <unk> brand, let's take that incremental money that still are behind the Allstate brand.

Let's sell Allstate brand direct which we had not done aggressively at that point.

And let's sell it at a lower price than we sell to Allstate agents. So you can buy allstate branded ASC product direct over the web at 7% to 8% cheaper than you would buy through an agent and that's because when you buy into a nation you get to help them in Asia and figure it out you should be prepared to pay for it.

Jesse Merten: And so we get to 2019, and we're like, you know what? Like, well, we could keep pouring money at insurance, and we're never going to have the brand Allstate had. So let's get rid of the insurance brand. Let's take that incremental money. Let's throw it behind the Allstate brand. Let's sell Allstate brand direct, which we had not done aggressively at that point. And let's sell it at a lower price than we sell to Allstate agents. So you can buy Allstate-branded ASC product direct over the web at 7% to 8% cheaper than you would buy it through an agent. And that's because when you buy it through an agent, you get the help of an agent. And you know, if you get help, you should be prepared to pay for it. So that was the concept behind what we did. Encompass was slightly different.

So that was the concept behind what we did encompass was slightly different encompass was we wanted to have a stronger platform in independent agent business.

National General had their platform.

Said was, but we were spending 200, 250 million dollars a year on the insurance Brands to sell, uh, to direct customers. And we said, you know, we're and when we started that, uh, you know, Geico was spending, maybe I don't know, maybe it was 750 or billion dollars, so we had a chance to develop a second brand, that would be for direct. That was the 2011 over time, they and Progressive, kept driving up their spending. And so we get the 200 and 2019. And we're like, you know what, like we could keep pouring money at insurance and we're never going to have the brand all said to have. So let's get rid of the insurance brand. Uh, let's take that income out of money. Let's throw it behind the Allstate brand.

It was built on non standard insurance, but it had a good tech platform and so we went to non standard and what he said.

Were not as successful we want to be in the IAA channel.

We have to decide whether in or out.

With encompass we've decided to sell encompass theres only one difference is we want to buy you first.

We're gonna give encompass to you and youre going to fold it into your business and drive growth.

Has been incredibly successful as well so those were the that was the logic behind it.

Jesse Merten: Encompass was we wanted to have a stronger platform in the independent agent business. National General had that platform. It was built on non-standard insurance, but it had a good tech platform. And so we went to non-standard, and we said, look, we're not as successful. We want to be in the IA channel. So we have to decide whether we're in or out. With Encompass, we've decided to sell Encompass. There's only one difference is we want to buy you first. And then we're going to give Encompass to you, and you're going to fold it into your business and drive growth. And that has been incredibly successful as well. So those were the--that was the logic behind it. Mario, do you want to talk about sort of the--to me, this is like the recent efforts that are going on?

You want to talk about sort of that.

You may dislike the recent efforts that are going on and maybe I'll break up insurance and encompass separately because I think there's two different stories. There. So we really over the last couple of years have stopped selling new business and insurance and what you see out of that brand runs off as natural attrition and policies, but.

Not sell Allstate brand direct which we had not done aggressively at that point. Uh, and let's sell it at a lower price than we sell to Allstate agents. So you can buy Allstate branded ASC products direct over the web at 7 to 8% cheaper than you would buy it through an agent and that's because when you buy it through an agent you get the help of an agent and you know if you get help you should be prepared to pay for it. Uh, so that was the concept behind what we did Encompass was slightly different Encompass. Was we wanted to have a stronger platform in independent aging business. Uh, National General had that platform.

Also in a number of states as Tom mentioned, we're looking to to proactively offer insurance customers a different policy, sometimes that's affected sometimes it's not but that's really both contributing to whats happening in insurance and that will continue to run off over time with encompass.

As we rollout the customer 360 product, which is now in 34 states.

And that has been incredibly successful as well. So those were the that was the logic behind it. Mario, do you want to talk about sort of the the

Mario Rizzo: Yeah, and maybe I'll break up insurance and Encompass separately because I think there's two different stories there. So we really, over the last couple of years, have stopped selling new business in insurance. And what you see as that brand runs off is natural attrition in policies, but also in a number of states. As Tom mentioned, we're looking to proactively offer insurance customers a different policy. And sometimes that's effective. Sometimes it's not. But that's really both contributing to what's happening in insurance, and that'll continue to run off over time. With Encompass, you know, as we roll out the custom 360 product, which is now in 34 states, once that product is in market, we shut off the Encompass brand for new business. And we also shut off what I would call the legacy National General middle market brand and only write custom 360.

Once that product is in market, we shut off.

The encompass brand for new business and we also shut off what I would call them the legacy National General Middle market brand. So.

Really right customer 360, so again once more interstate with customer 360, it essentially becomes a renewal book that as Fritz overtime. So that's that's the approach, we're taking and as those books gets smaller the impact should diminish.

It's a really good point, if you look at the slide on.

The inactive brands and you look at homeowners, you'll see that.

And that impact on Nash.

National General homeowners is down because specifically, what Mario said, which is we've got a much better product with customer 360.

We're really good at home orders, we know we can we can look at.

Grow aggressively in that channel, but youll see national General is down because we're doing that transition itself.

Mario Rizzo: So again, once we're in a state with custom 360, it essentially becomes a renewal book that attrits over time. So that's the approach we're taking. And as those books get smaller, the impact should diminish.

I mean, it's like the recent efforts that are going on. Yeah. And and maybe I'll I'll break up uh, insurance and Encompass separately because I think there's 2 different stories there. So we, uh, really over the last couple of years have stopped selling, new business, and insurance. And what you see as that brand runs off is uh, natural attrition in policies, but also in a number of states, uh, as Tom mentioned, we're looking to to proactively offer Insurance customers, a different policy and sometimes that's effective, sometimes, it's not but that's really both contributing to what's happening in Insurance. Uh, and that will continue to to run off over time with Encompass, you know, as we roll out, the custom 360 product, which is now in in uh, 34 states. Uh, once that product is in Market, we shut off. Uh, the Encompass brand for new business, uh, and we also shut off. What what I would call the the Legacy National General Middle Market brand, so uh and only write custom 360. So again 1

Got it makes sense. Thank you.

Thank you and our next question comes from the line of Bob Tien Huang from Morgan Stanley. Your question. Please.

Jesse Merten: Yeah, it's a really good point. If you look at the slide on the inactive brand and you look at homeowners, you'll see that impact on National General homeowners is down because specifically what Mario said, which is we got a much better product with custom 360. We're really good at homeowners. We know we can grow aggressively in that channel. But you see National General is down because we're doing that transition still.

Once we're in a state with custom 360, it essentially becomes a renewal book that at trips over time. So that's that's the approach we're taking. And as those books get smaller the impact, should diminish.

Hi, good morning.

So maybe the first one on competitive environment and this is something we kind of anecdotally addressed but as you grow in this environment. It feels like more and more competitors are in that call. It 80 of the Ninety's combined ratio for personal auto.

And then everyone is talking about pivoting to growth just curious how you think about just the new.

New business retention AD spending efficiency as we head into this environment, where more and more folks are ready to fight with you.

Yeah, and that's a really good point. If you look at the slide on uh the inactive Brands. Uh and you look at homeowners, you'll see uh that impact on. Uh National General. Homeowners is down because specifically what Mario said which is we got a much better product with custom 360. Uh, we're we're really good at homeowners. Uh, we know we can we can, uh, grow aggressively in that channel. But you see, National General is down because we're doing that transition still.

Mario Rizzo: Got it. Makes sense. Thank you.

Q1: Thank you. And our next question comes from the line of Bob Jian Huang from Morgan Stanley. Your question, please.

Got it, makes sense. Thank you.

Well first let me just I think the summary would be we think we are.

Extremely well positioned to grow and earn attractive returns for shareholders.

Jesse Merten: Hey, good morning. So maybe the first one on competitive environment, and this is something we kind of anecdotally addressed. But as you grow in this environment, it feels like more and more competitors are in that, call it, 80s and 90s combined ratio for personal auto. And then everyone is talking about pivoting to growth. Just curious to how you think about just new business retention, ad spending efficiency as we head into this environment where more and more folks are ready to fight with you.

Given what we've done with the business. So that's.

Obviously, we have some competitors who are.

Tougher competitors than others, but we feel competent to be able to.

Address all of those and when so.

When you say well why do you say that well look at our distribution. We've got the broadest distribution. We can go direct we can go independent agent and we go I'll say Asia and as Mario talked about productivity and performance in those.

Thank you. And our next question comes from the line of Bob. Jen Huang from Morgan, Stanley. Your question, please? Hey, good morning. Uh, so maybe the first 1 on competitive environment. This is something we we kind of anecdotally addressed but, but as you grow in this environment, it feels like more and more competitors are in that, call it 80s and 90s combined ratio for personal Auto. Uh, and then everyone is talking about pivoting to growth. Just curious to how you think about just a new business retention ad spending efficiency as we head into this environment where more and more uh folks are ready to fight with you.

Thomas Wilson: Well, first, let me just--I think the summary would be we think we're extremely well positioned to grow and earn attractive returns for shareholders given what we've done with the business. So that's--and obviously, we have some competitors who are tougher competitors than others, but we feel competent to be able to address all of those and win. So you know, we say, well, why do you say that? Well, look at our distribution. We've got the broadest distribution. We can go direct. We can go independent agent. And we go Allstate agent. And as Mario talked about the productivity standard performance in those, we're feeling really good about the ability for those businesses to deliver. Why are they delivering? Well, because we have good prices and we've got good new products. So they're not just out selling it because they like us.

Feeling really good about the ability for those.

<unk> delivered why are they delivering well because we have good prices and we've got good new products.

Um well uh first let me just I think the summary would be. We think we're uh extremely well positioned to grow and earn attractive returns for shareholders.

They're not just selling it because they like us they are selling it because it makes sense for them.

And so we've got that's improving customer value, whether that was reducing our expenses to stay to make sure. We can have more competitive prices and still maintain margins as you point out.

Because we don't believe that just cutting price to grow it makes sense that we have reduced prices in some states maybe Mario when I talk about that given where margins are.

But we don't think that's going to take us to a place where we're writing bad business, we have high standards as Howard yet.

Uh, given what we've done with the business. So that's, uh, and obviously, we have some competitors who are, uh, tougher competitors than others. But we, we feel competent to be able to, uh, address all of those in win. Uh, so you know, we say, well, why do you say that? Well, look at our distribution, we've got the broadest distribution and we can go direct. We can go independent agent and we go All State Agent and as Mario talked about the productivity standard performance in those.

The last piece I would leave you with is from an advertising standpoint, we've done quite well on that.

And that's also a few hours.

Thomas Wilson: They're selling it because it makes sense for them. And so we've got this improving customer value, whether that was reducing our expenses to make sure we could have more competitive prices and still maintain margins, as you point out, because we don't believe that just cutting price to grow makes sense. Now, we have reduced prices in some states, and maybe Mario will want to talk about that given where margins are. But we don't think that's going to take us to a place where we're writing bad business. We have high standards, is how we do it. The last piece I would leave you with is from an advertising standpoint. We've done quite well on that. And that's also fueling our growth.

Yes, the only thing.

And Bob.

Well just to close out the question Bob.

As we think about the growth investments, we're making have been making and we will be making going forward.

<unk> tend to focus a lot on the marketing investment because it is so important but.

You mentioned rate adjustments and now that we've been in market with the new affordable simple connected.

Product and with customer 360, we go back and continually refined prices as we get more data.

And we've improved pricing in a number of stage it in.

We're feeling really good about the ability for those, uh, businesses to deliver. Why are they delivering? Well, because we have good prices, uh, and we've got good new products. So, uh, they're not just selling it because they like us, they're selling it because it makes sense for them. Uh, and so we've got this improving customer value. Whether that was reducing our expenses to make sure we could have more competitive prices and still maintain margins. As you point out, um, because we don't believe that just cutting price to, uh, grow makes sense. Now, we have reduced prices in some states and maybe Mario want to talk about that given where margins are, uh, but we don't think that's going to take us to a place where we're riding bad business. We have high standards as...

Those products those are investments that helped drive growth, we continue to refine underwriting guidelines and standards.

Mario Rizzo: Yeah, the other thing I'd add, Bob, oh, just to close out the question, Bob, you know, as we think about the growth investments we're making, have been making, and will be making going forward, you know, we tend to focus a lot on the marketing investments because it is so important. But you know, Tom mentioned rate adjustments. You know, now that we've been in market with the new affordable, simple, connected product and with custom 360, we go back and continually refine prices as we get more data. And we've improved pricing in a number of states in those products. Those are investments that help drive growth. We continue to refine underwriting guidelines and standards, you know, as our profitability has improved. And again, those show up as investments in the business. And then we're doing a number of things on retention.

How it gets the last piece? I would leave you with is from uh an advertising standpoint. We've done quite well on that. Uh, and that's also fueling our growth

As our profitability has improved and again those show up as investments in the business and then we're doing a number of things on retention I talked about during the prepared remarks, our safe program and how critically important retention is.

Yeah, the other thing I'd add, Bob.

We would expect given that the book is.

Well priced and margins are strong.

Less need for rate going forward, which will certainly help but we're doing things proactively with both employees and the allstate agents to proactively reach out to customers and improved retention. So we're really kind of a surround sound approach to drive growth going forward.

Okay. Thank you.

My second question is if it's a little bit more hypothetical earlier in the year. There were about seven states that are considering increasing speed limit and then New York was one of those states.

Mario Rizzo: I talked about during the prepared remarks our SAVE program and how critically important the retention is. You know, we would expect, given that the book is well priced and margins are strong, less need for rate going forward, which will certainly help. But we're doing things proactively with both employees and the Allstate agents to proactively reach out to customers and improve retention. So we're really, it's kind of a surround sound approach to drive growth going forward.

Obviously, you've talked about achieving profitability in New York State just curious about as we think about increasing speed limited Interstate highways from 65 to 70.

Will that have any impact on your frequency or severity, especially given that you've just recently achieved profitability in New York like how should we think about that does that matter at all just as kind of Korea.

Well of course first thing I'd do is make sure your customers are safe.

Jesse Merten: OK, thank you. My second question is a little bit more hypothetical. Earlier in the year, there were about seven states that are considering increasing speed limits. And then New York is one of those states. Obviously, you've talked about achieving profitability in New York State. I'm just curious about, as we think about increasing speed limit in interstate highways from 65 to 70, will that have an impact on your frequency or severity, especially given that you just recently achieved profitability in New York? Like, how should we think about that? Does that matter at all? Just kind of curious.

Uh, help Drive growth, uh we continue to, to refine underwriting guidelines and standards. Uh, you know, as as our profitability has improved and again, those, uh, show up as investments in the business. Uh, and then we're, we're doing a number of things on retention. I talked about during the prepared remarks are save program and how critically important the retention is, uh, you know, we would expect given that the the book is uh, is well priced. And margins are strong, uh less uh, need for rate going forward, which will certainly help. But we're doing things proactively with both employees, and the Allstate agents to proactively reach out to customers and improve retention. So, we're really, it's kind of a surround sound approach to, uh, to drive growth going forward.

And so if the public sector side they want to.

Kris the speed limit for whatever reasons as it is that's the way it happens.

Obviously don't prospectively price and say because of the speed that it went from 65 to 70, we're going to raise prices I would just say I'm incredibly comfortable with the precision with the data we have and be able to price accurately for every individual customer. That's that's where this is really heading whether that's telematic.

Other data we have on people, it's really about giving the right price for each individual person and we're well down that path. So whether it's it changes in the public sector and in that whether it's autonomous driving or whether it's increased competition.

Okay, thank you. Uh, my second question is is is is a little bit more hypothetical, uh, earlier in the year. There were about 7 states that are considering, uh, increasing speed limit. And then New York is 1 of those States. Uh, obviously you've talked about achieving profitability in New York state, um, just curious about as we think about increasing speed limiting interstate, highways, from 65 to 70. Will that have an impact on your frequency or severity? Especially given that you just recently achieved profitability in New York like possibly think about that. Does that matter at all? Or does it kind of car?

Thomas Wilson: Well, of course, the first thing you want to do is make sure your customers are safe. And so if the public sector decides they want to increase the speed limit for whatever reason, as it is, that's the way it happens. You obviously don't prospectively price and say, because the speed limit went from 65 to 70, we're going to raise prices. I would just say I'm incredibly comfortable with the precision, with the data we have to be able to price accurately for every individual customer. That's where this is really heading. Whether that's telematics, other data we have on people, it's really about giving the right price for each individual person. And we're well down that path. So whether it's it changes in the public sector and in that, whether it's autonomous driving or whether it's increased competition, we're really good.

We're really good and it doesn't mean any of it is going to get easier, but we're not going to have these kind of issues I would just say, we're getting better all the time.

Okay got it thank you.

Okay.

Thank you and our next question comes from the line of Mike Zaremski from BMO. Your question. Please.

Yeah.

Hey, Thanks, good morning a.

A question on specifically on the direct to consumer.

Strategy in.

Personal lines.

And do you expect that engine to be very different for a much larger over time.

Kind of thinking kind of macro level, and if yes would that lead to a higher advertising expense or meaningfully higher advertising expense or just kind of I know you guys have.

Thomas Wilson: And it doesn't mean that any of it's going to get easier or we're not going to have these kind of issues. I would just say we're getting better all the time.

Um, well, of course, the first thing you want to do is make sure your customers are safe. Uh, and so if the public sector side, they want to increase the speed limit for whatever reasons as it is. That's the way it happens. Uh, you obviously, don't prospectively price and say, because the speed limit went from 65 to 70, we're going to raise prices. Uh, I would just say I'm incredibly comfortable with the Precision. With the data, we have to be able to price accurately for every individual customer. That's that's where this is really heading whether that's telematics other data we have on people. Uh, it's really about giving the right price for each individual person and uh we're well down that path. So uh whether it's it changes in the public sector and and and that whether it's autonomous driving, or whether it's increased competition. Uh, we're really good and it doesn't mean any of its going to get easier or we're not going to have these kind of issues. I would just

say we're getting better all the time.

Playing like Theres different funnels in terminology, you don't know as much but what would be more of a shift.

Jesse Merten: OK, got it. Thank you.

Q1: Thank you. And our next question comes from the line of Mike Zarepski from BMO. Your question, please.

In terms of the type of advertising expense.

Okay, got it. Thank you.

Good question Mike.

Q2: Hey, thanks. Good morning. The question is specifically on the direct-to-consumer strategy in personal lines. You know, do you expect that engine to be very different or much larger over time? I'm kind of thinking kind of macro level. And if yes, would that lead to a higher advertising expense or immediately higher advertising expense? Or would it just be kind of, I know you guys have explained like there's different funnels and terminology. I don't know as much, but would it be more of a shift in terms of the type of advertising expense?

Thank you. And our next question comes from the line of Mike tzki from BMO your question, please?

On direct.

It'll be as big as many people want to buy from us.

So I would say that like or that's the way we're positioned to do you want to buy direct from us or over the web we got it if you want to buy from our independent agent who represents multiple companies.

Really nowhere trust insurance companies or you wanted to buy direct from us.

Our agents because you wanted help but you believe in the Allstate brand, where there in all different ways.

You see the.

I think it will grow as part of the book.

Because when you look at the new business. So it's a third of new business, but it's less than a third of the current policy. So over time, you would expect to see that shift as we grow overall market share. So.

Okay. Thanks. Good morning. Um, the question specifically, um, on the direct to Consumer, um, strategy and and, um, personal lines. Um, you know, do you expect that engine to be very different or or much larger, uh, over time? Um, I'm kind of thinking kind of mecho level and if yes, would that lead to a higher advertising expense or a meaningful higher advertising sense or would just be kind of, I know you guys have explained like there's different funnels and terminology, I don't know as much but what would be a more of a shift um in terms of the type of advertising spent

Thomas Wilson: Good question, Mike. On direct, it'll be as big as many people want to buy from it. So I would say that, like, that's the way we're positioned. If you want to buy direct from us or over the web, we got it. If you want to buy from an independent agent who represents multiple companies because you don't really know or trust the insurance companies, or you want to buy direct from us through our agents because you want help, but you believe in the Allstate brand, we're there in all different ways. You see, I think it will grow as part of the book just because when you look at the new business. So it's a third of new business, but it's less than a third of the current policy. So over time, you would expect to see that shift as we grow overall market share.

Very good about that as it relates to advertising I know a couple of people brought this up in their write ups last night. So let me maybe go into advertising for a second because I think it's important it's one of the five components of transfer of growth. If you remember one of them was increased sophistication and investment in customer acquisition.

All of our markets.

And we've done that we both increased our sophistication and we've increased our investment I think there was a.

A little bit of confusion when you looked at the numbers was it down was it up when you look for the six first six months of this year, we're spending more money in marketing.

And I can tell you that the economics of that spending are really good and they're better than they were last year because of a more sophisticated and our brand consideration is higher so we like that part of it but it doesn't work just in your point, it's interesting because it doesn't just work with that.

Thomas Wilson: So I'm feeling very good about that. As it relates to advertising, I know a couple of people brought this up in their write-ups last night. So let me maybe go into advertising for a second because I think it's important. It's one of the five components of transformative growth. So you remember one of them was increased sophistication and investment in customer acquisition. That's all about marketing. And we've done that. We've both increased our sophistication, and we've increased our investment. I think there was a little bit of confusion when you looked at the numbers. Was it down? Was it up? When you look for the first six months of this year, we're spending more money in marketing. And I can tell you that the economics of that spending are really good.

Um, good question, Mike, um, on Direct, uh, it'll be as big as in many people want to buy from me, so I would say that like we're that's the way we're positioned. If you want to buy direct from us or over the web we got it. If you want to buy from an independent agent who represents multiple companies because you don't really know or trust the insurance companies or you want to buy direct from us uh through our agents because you want help. But you you believe in the All-State brand. We're there in all different ways. Um, you see, the I think it will grow as part of the book just because when you look at the new business, so it's a third of new business, but it's less than a third of the current policy. So over time, you would expect to see that shift as we

We grow overall market share. So

Two other parts.

Transforming growth or expand customer access that's called distribution.

And improve customer value so expand distribution you see it and what we've got with a third of the business coming through each of those three channels. So that's clearly working so you do more advertising. It gets more directed at direct advertising also helps in the Allstate agent channel.

And then improve customer value is really about the cost reductions we've taken some of which show up in the issuance and encompassed piece.

Thomas Wilson: And they're better than they were last year because we're more sophisticated, and our brand consideration is higher. So we like that part of it. But it doesn't work just in your point. It's interesting because it doesn't just work with that. Two other parts of transformative growth are expand customer access. That's called distribution and improve customer value. So expand distribution, you see it in what we got with a third of the business coming through each of those three channels. So that's clearly working. So you do more advertising. It gets more directed. That direct advertising also helps in the Allstate agent channel. And then improve customer value is really about the cost reductions we've taken, some of which show up in the insurance and Encompass piece, but also what we've done with the new ASC product. So the marketing pieces work and the other pieces.

But also what we've done with the new ASC products, so that the marketing pieces of work in the other pieces. So when you look at the breadth of that we feel highly confident that the overall total will grow and it will grow the way customers want to buy you aren't Allstate agent. We got that you want to go through an independent agent, where therefore, you want to buy direct.

Point. It's interesting because it doesn't just work with that.

And we'll take as much of the market, where you can get and we still got about.

90% of the market to go capture so I'm not worried about half an hour than any of us.

That's helpful. My follow up's on.

More home insurance specifically.

Based on what kind of data we continue to see if it looks like competitors.

Mostly independent agency competitors are trying to play catch up to kind of your results and tweaking, our terms and conditions et cetera.

Thomas Wilson: So when you look at the breadth of that, we feel highly confident that the overall total will grow, and it will grow the way customers want to buy. You want an Allstate agent? We got that. You want to go through an independent agent? We're there for you. You want to buy direct? And we'll take as much of the market we can get. And we still got, you know, about 90% of the market to go capture. So I'm not worried about tapping out on any of those.

2 other parts of uh Transformer growth are expand customer access that's called distribution uh and improve customer value so expand distribution. You see it? In what we got with a third of the business coming through each of those 3 channels. So that's clearly working. So, you do more advertising, it gets more directed that direct advertising also helps, uh, in the Allstate agent channel, uh, and then improve customer value, is really about the cost reductions. We've taken some of which show up in the e insurance and Encompass piece. Uh, but also, uh, what we've done with the new, a ASC product, so the the marketing pieces work and the other piece. And so, when you look at the breadth of that,

I'm just.

I'm curious you are you.

Do you agree that there's just kind of about the wind at your back because of the competitive environment more so than it has been historically.

The industry is pivoting or or is that is that does that statement kind of.

Not true in the growth the.

Q2: Yeah, that's helpful. My follow-ups on more home insurance specifically, you know, based on kind of data we continue to see, it looks like competitors, mostly independent agency competitors, are trying to play catch-up to kind of your results and tweaking their terms and conditions, etc. I'm just, you know, I'm curious, do you agree that there's kind of the winds at your back because of the competitive environment more so than it has been historically as the industry is pivoting? Or is that statement kind of not true? And the growth, the healthy growth you've seen over the last year, the acceleration has just kind of been due to other items?

We feel highly competent that the overall total will grow and it will grow the way customers want to buy. You want to all estate agent? We got that. We want to go through an in independent agent. We're there for you. You want to buy direct and we'll take as much of the market we can get, and we still got, you know, about 90% of the market to go capture. So, I'm not worried about tapping out in any of those.

The healthy growth that you've seen over the last year.

Acceleration is just kind of been do that.

Other other items.

Let me make three overall comments that Mario fill in the details when we are really really good at homeowners.

Two I think the competitive environment.

Has it gotten people have gotten in it or trying to followers, but three.

Yeah that's that's helpful. My my follow-ups on um more home insurance specifically, you know, if if based on kind of data we continue to see if it looks like competitors. Um, mostly independent agency competitors are are trying to play catch-up to kind of your results and tweaking their terms of conditions Etc. Um I'm just you know,

We are getting better every day.

And we don't expect our competitive advantage to diminish as we go forward, even though other people are.

Doing some of the things that we did five or seven years ago.

Yeah, Mike the only thing I'd add is.

I think if you look back 12 to 18 months.

Um, I'm curious. You are you do you agree that there's there's kind of a the winds at your back because of the competitive environment, um, more so than it has been historically. As as as the industry is, is pivoting or or is that is that is that statement kind of not true and the, the growth you, you know, the Healthy Growth that you've seen over the last year acceleration is just kind of been due to other other items.

Thomas Wilson: Let me make three overall comments and let Mario fill in the details. One, we are really, really good at homeowners. Two, I think the competitive environment has gotten people have gotten in and are trying to follow us. But three, we are getting better every day. And we don't expect our competitive advantage to diminish as we go forward, even though other people are doing some of the things that we did five or seven years ago.

There were there was less competition I would say in the homeowner market I think the market has gotten a bit more competitive recently, but all the capabilities that Tom mentioned are the reason, we never backed away from the homeowner markets and stayed and we were able to take advantage of the competitive environment and I think.

It's those same capabilities that position us to continue.

To be able to grow in homeowners and grow effectively and when you look at the things that we're delivering to really build on the strength that we have in homeowners, our new affordable simple and connected homeowner product, which is in 16 states.

Mario Rizzo: Yeah, Mike, the only thing I'd add is I think if you look back 12, 18 months, there was less competition, I would say, in the homeowner market. I think the market has gotten a bit more competitive recently. But all the capabilities that Tom mentioned are the reason we never backed away from the homeowner market and stayed, and we were able to take advantage of the competitive environment. And I think it's those same capabilities that position us to continue to be able to grow in homeowners and grow effectively. And when you look at the things that we're delivering to really build on the strength that we have in homeowners, our new affordable, simple, and connected homeowner product, which is in 16 states, is another step forward, I think, that differentiates our product pricing and underwriting capabilities relative to our competitors.

Um let me make 3 overall comments in that Mario fill in has the details 1. We are really really good at home owners. Uh, 2, I think the competitive environment uh has gotten people have gotten in and are trying to follow us but 3 um we are getting better every day. Uh and we don't expect our competitive advantage to diminish as we go forward. Even though other people are uh doing some of the things that we did 5 or 7 years ago.

As.

Other step forward I think that differentiates our product pricing and underwriting capabilities relative to our competitors.

It's a much more digitally focused products our product with a much better customer experience from a sales perspective, we're going to continue to leverage that.

Going forward and our distribution capabilities play in this space are all state agents are bundling at rates that are at all time high is around 80% and you saw really good growth.

Yeah, Mike. The the only thing I'd add is uh, I think if you look back 1218 months, uh uh there were there was less competition. I would say in the homeowner Market, I think the market has gotten a bit more competitive recently, but all the capabilities that Tom mentioned are the reason we never backed away from the homeowner markets, uh and stayed. And we were able to take advantage of the competitive environment and uh I I think it's so safe.

And the direct channel and we're going to continue to build on that growth and we think we have additive growth opportunity in the independent agent channel with customer 360, So we love our capabilities in homeowners, we have been able to grow that business and growing profitably over the long term and we're going to continue to take advantage of those capabilities so that they get.

Mario Rizzo: It's a much more digitally focused product with a much better customer experience from a sales perspective. We're going to continue to leverage that going forward. And our distribution capabilities play in this space. Our Allstate agents are bundling at rates that are at all-time highs, around 80%. And you saw really good growth in the direct channel. And we're going to continue to build on that growth. And we think we have additive growth opportunity in the independent agent channel with custom 360. So we love our capabilities in homeowners. We've been able to grow that business and grow it profitably over the long term. And we're going to continue to take advantage of those capabilities.

Go to the Pip numbers, because I know youre focused on even though growth comes in many forms of call protection services investments and everything else.

The overall pip growth in homeowners to 3%.

Over 4% in the Allstate brand, which is what Mario was just talking about.

Getting smaller and national general and encompass and quite honestly I'm fine with that because they weren't any good returns back to the lifetime value conversation. This is about increasing lifetime value not just one measure called fifth it's about driving overall shareholder value.

Capabilities that position us to continue, uh, to be able to grow in homeowners and grow effectively. And when you look at, uh, the things that we're delivering to, to Really build on the strengths that we have in homeowners, our new affordable, simple and connected homeowner product, which is in 16 States. Uh, is, uh, another step forward. I think that differentiates our product pricing and underwriting capabilities, relative to our competitors. Uh, it's a much more digitally focused products. Our product, uh, with a much better customer experience. From the sales perspective, we're going to continue to leverage that, uh, going forward and our distribution capabilities. Play in this space. Are Allstate, agents are bundling at rates that are at all-time highs around 80% and you saw really good growth, uh, in the direct Channel, and we're going to continue to build on that growth. And we think we have additive growth opportunity in the independent agent Channel with custom 360. So we, we love our capabilities and homeowners. We've been able to grow

Okay.

Okay.

Thomas Wilson: So if you again, again, go to the PIF numbers because I know you're all focused on PIF, even though growth comes in many forms: growth protection services, investment income, and everything else. The overall PIF growth in homeowners is 2.3%, over 4% in the Allstate brand, which is what Mario was just talking about. We're getting smaller in National General and Encompass. And quite honestly, I'm fine with that because they weren't earning good returns. Back to the lifetime value conversation. This is about increasing lifetime value, not just one measure called PIF. It's about driving overall shareholder value growth.

Thank you.

Thank you and our next question comes from the line of Alex Scott from Barclays. Your question. Please.

Hey, good morning.

I had a follow up on retention and just wanted to see if you could shed a little more light on.

What you're seeing across the channels just trying to understand is it the.

Grow grow that that business and grow it. Uh, profitably over the long term, and we're going to continue to take advantage of those capabilities so that if they again, again, go to the, the pith numbers, because I know you're all focused on this, even though growth comes in many forms called Protection Services investing and everything else. Uh, the overall tip growth in homeowners 2.3%.

Loose of Asian network, and retention associated with maybe more people going online or something or is it maybe some churn.

The direct to consumer in some of the policies you've grown into more recently, maybe just have a quicker.

Duration to them.

Over 4% in the All-State brand, which is what Mario is just talking about. Uh, we're getting smaller and National General, and Encompass, and quite honestly, I'm fine with that, because they weren't in good returns back to the lifetime value conversation. This is about increasing lifetime value. Not just, uh, 1 measure called pif. It's about driving overall, shareholder value growth.

I wanted to better understand retention and.

Mario Rizzo: Thank you.

Q1: Thank you. And our next question comes from the line of Alex Scott from Barclays. Your question, please.

Yeah.

Thank you.

In light of it being a critical driver driver of Pip revenue.

Q2: Hey, good morning. I had a follow-up on retention and just wanted to see if you could shed a little more light on, you know, what you're seeing across the channels. I'm just trying to understand, is it the exclusive agent network and retention associated with maybe more people going online or something? Or is it maybe, you know, some churn in the direct-to-consumer and, you know, some of the policies you've grown into more recently? Maybe just have a quicker, you know, duration to them? I just want to better understand retention and just in, you know, in light of it being a critical driver of PIF right now, I think.

Yeah.

Thank you. And our next question comes from the line of Alex Scott from Barclays. Your question, please?

Yeah. Thanks, Alex This is Mario I'll, So I'll give you a little color on retention I think the headline on our retention for us is really over the last.

Hey, good morning. I had a follow up on retention and just wanted to see if you could shed a little more light on.

Couple of quarters, we've seen retention levels stabilize but theyre still down relative to where it is where they were a year ago and I think when you look at.

Our retention broadly, it's certainly going to vary by risk segment by.

Customers that shop, more frequently and maybe shop direct to consumer versus.

Is that using exclusive agent or an independent agent, but but I think the broader issue with retention is.

You know what, you're seeing across the channels. I just trying to understand is it the exclusive agent Network and retention associated with maybe more people going online or something or is it maybe, you know, some churn in the direct to Consumer and you know, some of the policies you've grown into more recently, maybe just have a quicker, uh, you know, duration to them. I I just want to better understand retention and just in

The issue of affordability.

And the industry.

As we and the industry had to raise prices to.

Mario Rizzo: Yeah, thanks, Alex. This is Mario. So I'll give you a little color on retention. I think the headline on retention for us is really over the last couple of quarters, we've seen retention levels stabilize. But they're still down relative to where they were a year ago. And I think when you look at retention broadly, it's certainly going to vary by risk segment, by customers that shop more frequently and maybe shop direct-to-consumer versus those that use an exclusive agent or an independent agent. But I think the broader issue with retention is the issue of affordability in the industry. You know, as we and the industry had to raise prices to combat what was, you know, just historically high levels of inflation, I think what we've seen is more customers shop and more customers switch and decide from their current insurance carrier.

you know, uh in light of it being a critical driver of pip right now, I think

Combat what was.

Historically high levels of inflation.

What we've seen is more customers shop and more customers switching to fact.

From from their current insurance carrier.

And on the one hand that creates tailwind from a new business perspective, because you've got more people out there shopping but it certainly creates challenges.

Challenges and opportunities quite honestly from our perspective, two to improve retention going forward.

As I said earlier, we're not sitting back and waiting for retention to get better.

We're doing things proactively around reaching out to customers, making sure that they have all the.

Central discounts that are available to them, but they have the right protections the right product.

Yeah, thanks, Alex. This is Mario. I'll, I'll give you a little color on retention, I think, I think the headline on retention for us is really over the last, uh, couple quarters. We've seen retention levels stabilized, but they're still now relative to where, where they were a year ago and and I think when you look at, uh, retention broadly, it's going to vary by risk segments by, uh, uh, customers that that shop more frequently and maybe shop, uh, direct to Consumer versus, uh, those that use an exclusive agent or an independent agent, but but I think the the broader issue with retention uh, is is the issue of affordability. Uh, in the industry. Uh, you know as the as we and the industry had to raise prices to uh combat what was uh, you know, historically high levels of inflation.

The right coverage levels and limits and those kinds of things.

To make sure that we can offer them the most affordable price possible, that's really at the heart of the save program and then I think additive to that.

Mario Rizzo: And on the one hand, that creates tailwinds from a new business perspective because you got more people out there shopping. But it certainly creates challenges and opportunities, quite honestly, from our perspective to improve retention going forward. And as I said earlier, we're not sitting back and waiting for retention to get better. We're doing things proactively around reaching out to customers, making sure that they have all the potential discounts that are available to them, that they have the right protection, the right product, the right coverage levels and limits, and those kinds of things to make sure that we can offer them the most affordable price possible. That's really at the heart of the SAVE program.

As I mentioned earlier, just given where our margins are in the profitability of the book Broadway, We would anticipate just needing less rate.

In the near term, which certainly causes less disruption in the book, but we're focused on leaning in and doing things proactively to change the trend line on retention and when we're successful doing that.

I think that will generate sustainable and profitable pro sports.

Got it that's helpful.

Question I have is on California homeowners market. There would just be interested if you could give us an update on how you're thinking about that market.

And maybe additionally, if there's any action that you feel will be necessary as some of those more mature kind of sunset.

Mario Rizzo: And then I think additive to that, as I mentioned earlier, just given where our margins are and the profitability of the book broadly, we would anticipate just needing less rate in the near term, which certainly causes less disruption in the book. But we're focused on leaning in and doing things proactively to change the trend line on retention. And when we're successful doing that, I think that'll generate sustainable and profitable growth.

And you're able to take action if you need to.

Um, I think what we've seen is, uh, more customers, uh, shop and more customers switch and defect, uh, from, from their, uh, current insurance carrier, uh, and, and on the 1s from a new business perspective, because you got more people out there shopping, but it certainly creates, uh, challenges and opportunities quite honestly, from our perspective to, uh, to improve retention going forward. And, uh, as I said earlier, we we're not sitting back and waiting for retention to get better. Uh, we're doing things proactively around reaching out to customers making sure that they have all the, uh, potential discounts that are available to them. But they have the right protection, the right product, um, uh, the right, coverage levels and limits and those kinds of things, uh, to make sure that that we can offer them the most affordable price possible. That's really at the heart of the save program. And then I think additive to that, uh, as I mentioned earlier, just given where our margins,

Let me address homeowners availability, specifically Mario can talk about what we're doing in California.

First.

With increased severe weather in most of America's Networth tied up in their houses is really important because.

Are and the profitability of the book, broadly. We would anticipate just needing less rate uh in in the near term which certainly causes less disruption in the book but we're focused on leaning in and doing things proactively to change the trend line on retention. And when we're successful doing that uh I I think that'll generate sustainable and profitable approach.

Homeowners insurance, which is why you see availability being such an issue.

Q2: Got it. That's helpful. Second question I had is on California and the homeowners market there. We'd just be interested if you could give us an update on how you're thinking about that market and maybe additionally if there's any action that you feel will be necessary as some of those moratoriums kind of sunset and you're able to take action if you need to.

Got a helpful.

And it's.

California, It doesn't work today.

But it could it works in Texas, Texas has the same number actually is more catastrophe losses, both types and in gross dollars Benzos, California.

The second question I had is on California and the homeowners market. I would just be interested if you could give us an update on how you're thinking about that market.

Yes, it's got a homeowners market that's pretty function.

you know maybe additionally if if there's any action that you feel will be necessary is some of those moratoriums kind of sunset uh and you're able to take action if you need to

Thomas Wilson: Let me address homeowners' availability specifically. Mario can talk about what we're doing in California. First, with increased severe weather and most of America's network tied up in the houses, it's really important to get those homeowners' insurance, which is why the availability being such an issue. And in California, it doesn't work today, but it could. It works in Texas. Texas has the same number, actually has more catastrophe losses both in types and in gross dollars than does California. Yet it's got a homeowners market that's pretty functional. And we like it, and other people like it. So it can work. You just need assistance to do that. California is on a path to try to create a sustainable insurance. Whether they get all the way there or not will be dependent on what they do and what other companies do. So I want to talk about California.

And we like it and other people like it. So it can work you just need assistance is that California is on a path to try to create a sustainable insurance, whether they get all the way there or not will be dependent on what they do and what other companies too. So I'm talking about California, yes. The only thing I would add Alex is in California, and I think there's a recency here last.

Let me address homeowners' availability, specifically Mario, can talk about what we're doing in California. Um, converse, um,

with increased severe weather in most of America's net worth tied up in the house is it's really important that they have.

Weak.

Commissioner Lora Department announced really the last component.

The sustainable insurance strategy, which related to using wildfire models. They had previously come out with a they were thinking about recouping reinsurance costs. We think that's a constructive approach by the departments.

And certainly a step forward relative to where we were before which was you just couldn't recoup the cost of doing business and homeowners market in California, and that's one of the reasons that we stop writing new business over a long period of time.

We're reviewing the details of that.

Mario Rizzo: Yeah, the only thing I'd add, Alex, is in California, I think there's a recency here. Last week, Commissioner Lara and the department announced really the last component of this sustainable insurance strategy, which related to using wildfire models. They had previously come out with how they were thinking about recouping reinsurance costs. We think that's a constructive approach by the department and certainly a step forward relative to where we were before, which was you just couldn't recoup the cost of doing business in the homeowners market in California. And that's one of the reasons that we stopped writing new business over a long period of time. We're reviewing the details of that release. And at some point, we'll make a sustainable insurance strategy filing with the department. Too early to kind of tell you which way we'll fall on that one. For now, it's the status quo.

Of that release and at some point, we'll make.

Sustainable insurance strategies filing with the departments too early to kind of.

Homeowners insurance, which is why I see availability being such an issue. Um, uh, and uh, it California, it doesn't work today. Uh, but it could, it works in Texas, Texas. Texas has the same number it. Actually, has more catastrophic losses, both in types and in Gross dollars than those California, uh, yet it's got a homeowners Market. That's pretty functional. Uh, and we like it and other people like it, so it can work. You just need assistance to that. California is on a path to try to create a sustainable Insurance. Whether they get all the way there or not, will be dependent on what they do and what other companies do just want to talk about California. Yeah. The only thing I'd add Alex is in California and I think this there's a recency here last week, uh, commissioner Lara, and the

Tell you, which way will fall on that one for now it's the status quo, we're not writing new business.

In California.

But we'll take a look at what the what the details are in and we will do a filing and then we'll let you know what we decided.

Got it thank you.

Thank you and our next question comes from the line of Josh Shanker from Bank of America first question. Please.

Yes, thank you very much.

I there was a huge surge in the number of policies in Allstate roadside assistance.

Wondering if that a solution for persistent and see if you could cross sell them with the roadside assistance or the captive agents.

Mario Rizzo: We're not writing new business in California. But we'll take a look at what the details are, and we'll do a filing, and then we'll let you know what we decide.

Selling that more persistently around what's happening there and why is that happening.

Yeah.

So.

Youre right the more things you sell people the more opportunity you have to make them happy.

Of that release. And at some point, uh, we'll make a a sustainable Insurance strategy filing with the Department, uh, too early to kind of, uh, tell you which way we'll fall on that 1. For now, it's the status quo, we're not writing new business, uh, in California. Um, but we'll take a look at what the, uh, what the details are and, and, uh, and we'll do a filing and then we'll, we'll let you know what we decide.

Thomas Wilson: Got it. Thank you.

And the frequency of use of roadside is greater than the frequency of use of <unk>.

Q1: Thank you. And our next question comes from the line of Josh Schenker from Bank of America. Your question, please.

Insurance and so it makes people happy surround you want to talk about what we're doing then yes, I think you hit it. We are also bundling roadside with Arco policies that amazing. So so that's one of the reasons also you'll see upsurge in the number of pharmacies that for Ya study.

Got it. Thank you. Thank you. And our next question comes from the line of Josh hanker from Bank of America question, please?

Q2: Yeah, thank you very much. Sort of offbeat, there's a huge surge in the number of policies in Allstate roadside assistance. I'm wondering, is that a solution for persistency if you could cross-sell them with the roadside assistance? Are the captive agents selling that more persistently around? What's happening there, and why is it happening?

So it's a good product bundled with DARPA, where times under the value for our customers.

This is really important.

Can you talk about your success rate on bundling right now broadly with maybe how the business is growing five years ago. This is borrowing more successful as a stretch right now or is it hard to get people buying multiple items.

Yeah, thank you very much. Um, sort of offbeat, there's a huge surge in the number of policies in Allstate roadside assistance. I'm wondering if that's a solution for persistency—if you could cross-sell them with the roadside assistance. Are the captive agents selling that more persistently around? What's happening there? And why is that?

Thomas Wilson: So you're right. The more things you sell people, the more opportunity you have to make them happy. And the frequency of use of roadside is greater than the frequency of use of auto insurance. And so it makes people happy. Sir, do you want to talk about what we're doing there?

I would say in total Josh were.

Allister Gobin: Yeah, I think you hit it. We are also bundling roadside with auto policies that our agents sell. So that's one of the reasons also we are seeing an upsurge in the number of policies that we are selling. It's a good product bundled with auto. It adds added value for our customers, which is really important.

Mario talked about the bundling on homeowners insurance is talked about.

Bottom line there.

We have.

We're doing much better our tech stack is much better to enable us to do that.

But we think there's tremendous opportunity ahead of us whether that's a renters, we need to take a run at renters and do better Renter's.

So uh, you're right. The more things you sell people, the more opportunity you have to make them happy uh and the frequency of use of roadside is greater than the frequency of use of auto insurance and so it makes people happy surround you want to talk about what we're doing there. Yeah, I think you, you hit it. We are also bundling roadside with auto policies that uh an agent sells. So that's 1 of the reasons. Also, we are seeing uh, upsurge in in number of policies that we are selling.

It's a good product bundle with auto. It has added value for our customers, which is really important.

Mario Rizzo: Can you talk about your success rate on bundling right now broadly with maybe how the business was running five years ago? Is bundling more successful as a strategy right now, or is it hard to get people to buy multiple items?

Boats I could go down the list of other stuff as well.

We have a great potential there previously.

Some operational barriers and technology barriers to join up with the new Tech system.

Uh, can you talk about your success rate on bundling right now? Broadly, with maybe how the business is running? Five years ago, is Broad is burning more successful as a strategy right now, or is it hard to get people to buy multiple items?

There was some kind of gone away.

Thomas Wilson: I would say in total, Josh, where Mario talked about the bundling at homeowners, Sara just talked about bundling there, we're doing much better. Our tech staff is much better to enable us to do that. But we think there's tremendous opportunity ahead of us, whether that's our renters. We need to take a run at renters and do better at renters. Boats, I could go down a list of other stuff that we have great potential that previously we had some operational barriers and technology barriers to doing it with the new tech system that was kind of gone away.

Alright, Thank you very much.

Okay.

Thank you and our next question comes from the line of.

Christian gets up from Wells Fargo. Your question. Please.

Hi, Good morning, how do you expect the drag on auto pissed growth from New York, and New Jersey to be in the balance of the year because even if you re open for new business in the second half assuming you get the rate increases you currently have filed I'm guessing you might see some retention headwinds to kind of offset that or are most of the retention issues in the past just given the large rate hike.

Over the last couple of quarters and these are a little bit more muted.

We are committed to growth in total.

And.

Mario Rizzo: All right, thank you very much.

Uh, I would say in total Josh, we're, uh, Mario talked about the bundling and homeowners, uh, Sharon just talked about funding there. Uh, we have, uh, uh, we're doing much better. Our Tech stack is much better to enable us to do that. Uh, but we think there's tremendous opportunity ahead of us, whether that's, uh, renters. Uh, we need to take a run at renters, uh, and do better renters, uh, boats. I could go down the list of other stuff that, uh, we have great potential that have previously. We had some operational barriers and Technology barriers are doing it with the new tech system. Uh, there was some kind of gone away.

It wouldn't really help you much to give you a set of what we think is going to happen in New York and New Jersey, We just look at the breadth of the new business look at what we're doing in total target I'd say program. Our goal is to increase market share on personal property liability.

All right. Thank you very much.

Q1: Thank you. And our next question comes from the line of Christian Gitzop from Wells Fargo. Your question, please.

Thank you.

our next question comes from the line of

Q2: Hi, good morning. How do you expect the drag on auto PIF growth from New York and New Jersey to be in the balance of the year? Because even if you reopen for new business in the second half, assuming you get the rate increases you currently have filed, I'm guessing you might see some retention headwinds to kind of offset that. Or are most of the retention issues in the past just given the large rate hikes over the last couple of quarters, and these are a little bit more muted?

Christian gets up from Wells Fargo. Your question, please?

Hi, good morning. How do you expect?

The drag on.

We're already doing it in home.

I just point that out and we think auto is coming.

Yeah.

And then just for my follow up in respect to tariffs you've talked about a mid single digit and types of loss cost trends. Previously can you provide an update on your expectations given a few more changes changes in recent weeks and can you potentially quantify what percent of your premiums would be outside of your target profitability. If we assume those increased costs materialize today because I'm just.

Growth from New York and New Jersey to be in the balances of the year. Because even if you reopen for new business in the second half, assuming you get the rate increases you currently have filed, I’m guessing you might see some retention headwinds that kind of offset that. Or are most of the retention issues in the past, just given the large rate hikes over the last couple of quarters? And these are a little bit more muted.

Thomas Wilson: You know, we're committed to growth in total. And it wouldn't really help you much to give you sort of what we think is going to happen in New York and New Jersey. If we just look at the breadth of the new business, look at what we're doing in total, talk about the SAVE program. Our goal is to increase market share on personal property liability. We're already doing it in homes. I just point that out. And we think auto is coming.

Trying to get a sense of like what percent of your premiums you may receive a little bit more regulatory scrutiny for getting rate hikes, just given you're potentially running at a much better profitability versus the mid Ninety's Toronto.

So.

Okay.

I would just answer we're going to manage through whatever the impact of tariffs are and were managed to a price that they were not this is not we don't see this the same as the pandemic related increase where used car prices are up 60% in 18 months.

Uh, you know, we're committed to growth in toes and we don't like it. It wouldn't really help you much to give you a sort of what we think is going to happen in the New York/New Jersey. We just look at the breadth of the new business. Look at what we're doing in total; talk about the SAFE program. Our goal is to increase market share on personal property liability. Uh, we're already doing it in home, uh, I just point that out and we think, uh, OTO is coming.

Q2: And then for my follow-up in respect to tariffs, you've talked about a mid-single-digit impact to lost cost trends previously. Can you provide an update on your expectations given a few more changes in recent weeks? And can you potentially quantify what percent of your premiums would be outside of your target profitability if we assume those increased costs materialize today? Because I'm just trying to get a sense of like what percent of your premiums you may receive a little bit more regulatory scrutiny for getting rate hikes, just given you're potentially running at a much better profitability versus the mid-90s for auto.

If in fact tariffs have an impact on the cost to either replace or repair parts, which we think is likely given all the trends that are going on it's totally manageable and we factored it into how we're running the business today.

Factored in their prospective stuff because we don't sell that'd be claimed today.

And then for my follow-up and respect to tariffs, you talked about AIDS, single digits and type to Lost cost Trends. Previously, can you provide an update on your expectations, given a few more change changes in recent weeks. And can you potentially quantify, what percent of your premiums would be outside of your target profitability? If we assume those increased cost materialized today because I'm just trying to get a sense of like, what percent of your premiums, you may receive a little bit more regulatory scrutiny for getting rate hikes. Just given your potentially running at a much better.

So as you know, sometimes three or four months. It gets some car speaks so we're in good shape.

Thomas Wilson: So I would just answer we're going to manage through whatever the impacts of tariffs are, and we'll manage through it profitably. We're not--this is not--we don't see this the same as the pandemic-related increase where used car prices went up 60% in 18 months. If, in fact, tariffs have an impact on the cost to either replace or repair parts, which we think is likely given all the trends that are going on, it's totally manageable. And we factored it into how we're running the business today. We factored in the prospect of stuff because we don't sell every claim, you know, today. It takes us, you know, sometimes three, four months to get some cars fixed. So we're in good shape.

Profitability versus the mid-90s Toronto.

So, um,

Yeah.

Thank you.

Let's do one more question.

Okay, Great and our final question then for today comes from the line of chip.

Lee from <unk> Your question please.

Uh, it I would just answer. We're going to manage through whatever the impact that terrorists are and we'll manage to approximately. We're not, this is not. We don't see this the same as the pandemic-related increase or used car prices are up 60% in 18 months.

Hi, Thank you for taking my question.

I have a follow up question on making sure so.

Okay, and then to Don to say.

If we can't chemical WAF I can't even an E mail to all.

Maybe the impact of these initiatives initiated patient Tommy.

But it's just a natural improvement from one of the top.

It takes us you know sometimes 3 4 months to get some cars fixed. So we're in good shape.

So the safe program insane enterprise wide effort to improve customer interactions $25 million.

Q2: Thank you.

Thank you.

Thomas Wilson: Let's do one more question.

Q1: OK, great. And our final question then for today comes from the line of Ching Li from KBW. Your question, please.

Let's do 1 more question.

Total.

$10 million in personal property liability price related reductions more than 5% since the highlights some of the 25 is also obviously property liability.

Q3: Hi, thank you for taking my question. I have a follow-up question on retention. So Allstate implemented the SAVE retention program. Can you add more details on maybe the impact of these initiations versus the natural improvement from smaller rate cuts?

Okay, great. And our final question then for today comes from the line of Ching Lee from KBW. Your question, please?

We've Ah.

<unk> already achieved our $25 million goal.

But we are slightly behind on the $10 million for that so we're going to do better than the $25 million and we still have a goal to get to that.

Hi um thank you for taking my question. Um I have a follow-up question on retention so um um also implemented um the safe retention program. I can you add more details on?

Maybe the impact of these initiate initiate patients um versus the natural improvement from smaller wake up.

Yeah.

Thomas Wilson: So the SAVE program is an enterprise-wide effort to improve customer interactions, 25 million in total, 10 million in personal property liability, price-related reductions more than 5%. So it's a highly--some of the 25 is also obviously property liability. We've already achieved our 25 million goal, but we are slightly behind on the 10 million for that. So we're going to do better than the 25 million. And we still have a goal to get to 10.

Got it thank you.

Not a whole lot of song.

Affordable simple connected auto product.

Now, let's say is available in 40 states and representing I can't.

Thank God.

Audio Rollouts can.

Can you provide some more details on.

And you may have.

Conversion rate okay. Thank you I'll keep going up.

Basically it's a traditional Quebec yeah.

We don't breakout retention new business, but I would just say look at it is we started with affordable and simple and connected because that's what customers want we've made great progress on affordable. This product is much better on simple, we're able to really clean up the whole acquisition process. I think we saw some room to go on connected.

So the safe program is an enterprise-wide effort to improve customer interactions, 25 million uh in total uh 10 million in person property, liability price related, reductions more than 5%. So it's a highly. Some of the 25 is also obviously a property liability. Uh, We've uh, already achieved our 25 million goal, but we are uh, slightly behind on the 10 million for that. So we're going to do better than the 25 million and we still have a goal to get to that.

Q3: Got it. Thank you. My follow-up is on the affordable, simple, connected auto product. So now it's very available in 40 states and representing a significant expansion for the rollout. Can you provide some more details on the new business conversion rate or retention of these products versus the traditional products?

Got it. Thank you. Um,

um, my collab is on the

And so as this journey not a thing we really like the new product, we'd like it's it's close rates, we like its profitability customer satisfaction, but we don't break out the specifics but.

Affordable, simple connected, um, Auto products. So, um, now say available in 40 States, um, and representing a significant expansion,

um, for the roll out. Um,

Can you provide some more details on?

<unk>.

Rolling out our new auto product across this company and as fast as we did is really a tremendous accomplishment and we feel really good about the impact kind of Atlanta.

Thomas Wilson: Yeah, we don't break out retention in new business. But I would just say, look, we started with affordable and simple and connected because that's what customers want. We've made great progress on affordable. This product is much better on simple. We're able to really clean up the whole acquisition process. I think we still have some room to go on connected. And so this is a journey, not an end thing. We really like the new product. We like its close rates. We like its profitability. We like the customer satisfaction. But we don't break out the specifics. But, you know, rolling out a new auto product across this company and as fast as we did is really a tremendous accomplishment. And we feel really good about the impact that'll have on them. Thank you very much for tuning in.

Thank you very much for tuning in we went a little long but.

Thank you for investing in all states and we will talk to you next quarter.

The new business conversion rate or retention of these products versus the traditional, um, products. Yeah. Uh, we don't break out retention and new business, but but I would just say like it's we started with affordable, simple and connected because that's what customers want. We've made great progress on affordable. This product is much better and simple. Uh, we're able to really clean up the whole acquisition process. I think we still have some room to go on connected. Uh, and so it's this journey, not a a thing. We really like the new product. We like, it's, it's close rates. We like it its profitability. We like, the customers satisfaction but we don't break out the specifics. But, uh, the, you know, rolling out a new auto product across this company. And as fast as we did, is really a tremendous accomplishment, and we feel really good about the impact that I have on. Uh, let me thank

Thomas Wilson: We went a little long, but thank you for investing in Allstate. And we'll talk to you next month.

Q1: Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you very much. Uh, for tuning in. We went a little long. Uh but uh, thank you for investing in all state and we'll talk to you next month.

Thank you, and thank you. Ladies and gentlemen, for your participation. In today's conference, this does conclude the program. You may now disconnect good day.