Allstate Q4 2025 Allstate Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Allstate Corp Earnings Call
Operator: Mode. After prepared remarks, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. Please limit your inquiry to one question and one follow-up. As a reminder, please be aware that this call is being recorded. And now I'd like to introduce your host for today's program, Alastair Govan, Head of-- Head of Investor Relations. Please go ahead, sir.
Operator: Mode. After prepared remarks, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. Please limit your inquiry to one question and one follow-up. As a reminder, please be aware that this call is being recorded. And now I'd like to introduce your host for today's program, Alastair Govan, Head of-- Head of Investor Relations. Please go ahead, sir.
Speaker #1: Code. After prepared marks, there will be a question-and-answer session. To ask a question during the session, you'll need to press *1 on your telephone.
Speaker #1: If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again. Please limit your inquiry to one question and one follow-up.
Speaker #1: As a reminder, please be aware that this call is being recorded. And now I'd like to introduce your host for today's program, Alister Gobin.
Speaker #1: Head of Investor Relations, please go ahead, sir.
Speaker #2: Good morning, everyone. Welcome to ALLSTATE's fourth quarter 2025 earnings call. Yesterday, following the close of the market, we issued our news release and investor on our website at ALLSTATEINVESTORS.COM.
Alastair Govan: Good morning, everyone. Welcome to Allstate's fourth quarter 2025 earnings call. Yesterday, following the close of the market, we issued our news release and investor supplement and posted related materials on our website at allstateinvestors.com. Today, our management team will discuss how Allstate is creating shareholder value. Then we will open up the line for your questions. As noted on the first slide of the presentation, our discussion will include Non-GAAP measures for which there are reconciliations 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 2024 10-K and other public filings for more information on potential risks. Our 10-K for 2025 will be published later this month. Now I'll turn it over to Tom.
Allister Gobin: Good morning, everyone. Welcome to Allstate's fourth quarter 2025 earnings call. Yesterday, following the close of the market, we issued our news release and investor supplement and posted related materials on our website at allstateinvestors.com. Today, our management team will discuss how Allstate is creating shareholder value. Then we will open up the line for your questions. As noted on the first slide of the presentation, our discussion will include Non-GAAP measures for which there are reconciliations 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 2024 10-K and other public filings for more information on potential risks. Our 10-K for 2025 will be published later this month. Now I'll turn it over to Tom.
Speaker #2: Today, our management team will discuss how ALLSTATE is creating shareholder value. Then we will open up the line for your questions. As noted in the first slide of the presentation, our discussion will include non-GAAP measures for which there are reconciliations provided in the news release and investor supplement.
Speaker #2: We will also make forward-looking statements about ALLSTATE's operations. Actual results may differ materially from most statements, so please refer to our 2024-10-K and other public filings for more information on potential risks.
Speaker #2: Our 10-K for 2025 will be published later this month. And now I'll turn it over to Tom.
Speaker #3: Good morning. Thank you for investing time in ALLSTATE. Today we're going to cover financial results and how ALLSTATE is successfully addressing insurance affordability. So let's start on slide two.
Thomas Wilson: Good morning. Thank you for investing time in Allstate. Today, we're going to cover financial results and how Allstate is successfully addressing insurance affordability. Let's start on slide two. Allstate's strategy has two components, as shown on the left: increase personal property liability market share and expand protection provided to customers. On the right are performance highlights. Allstate improved auto and homeowners insurance affordability for millions of customers in 2025. Results benefited from the transformative growth initiatives, which generated strong financial results and increasing growth of property liability policies in force. Shareholders were provided $2.2 billion of cash returns last year, the dividend has been increased, and a $4 billion share repurchase program will be initiated. Slide three is an overview of Allstate's financial results.
Thomas Wilson: Good morning. Thank you for investing time in Allstate. Today, we're going to cover financial results and how Allstate is successfully addressing insurance affordability. Let's start on slide two. Allstate's strategy has two components, as shown on the left: increase personal property liability market share and expand protection provided to customers. On the right are performance highlights. Allstate improved auto and homeowners insurance affordability for millions of customers in 2025. Results benefited from the transformative growth initiatives, which generated strong financial results and increasing growth of property liability policies in force. Shareholders were provided $2.2 billion of cash returns last year, the dividend has been increased, and a $4 billion share repurchase program will be initiated. Slide three is an overview of Allstate's financial results.
Speaker #3: ALLSTATE's strategy has two components, as shown on the left. Increased personal property liability market share and expand protection provided to customers. On the right are performance highlights.
Speaker #3: ALLSTATE improved auto and homeowners insurance affordability for millions of customers in 2025. Results benefited from the transformative growth initiatives, which generated strong financial results and increasing growth of the property liability policies enforced.
Speaker #3: Shareholders were provided $2.2 billion of cash returns last year. The dividend has been increased, and a $4 billion share repurchase program will be initiated.
Speaker #3: Slide three is an overview of ALLSTATE's financial results. Total revenues increased to $17.3 billion for the fourth quarter, and year. Net income applicable $67.7 billion for the to common shareholders was $3.8 billion for the quarter.
Thomas Wilson: Total revenues increased to $17.3 billion for Q4 and $67.7 billion for the year. Net income applicable to common shareholders was $3.8 billion for the quarter and $10.2 billion for the year. Adjusted net income was $3.8 billion, or $14.31 per common share for Q4, and $9.3 billion for 2024, $34.83 per share. The lower table provides a reconciliation of net income for Q4 to the prior-year quarter. In 2024, we earned $1.9 billion. The three primary drivers of increased income were better underwriting losses, lower catastrophes, and the benefit of reserve releases from prior years and adjustments within 2024.
Thomas Wilson: Total revenues increased to $17.3 billion for Q4 and $67.7 billion for the year. Net income applicable to common shareholders was $3.8 billion for the quarter and $10.2 billion for the year. Adjusted net income was $3.8 billion, or $14.31 per common share for Q4, and $9.3 billion for 2024, $34.83 per share. The lower table provides a reconciliation of net income for Q4 to the prior-year quarter. In 2024, we earned $1.9 billion. The three primary drivers of increased income were better underwriting losses, lower catastrophes, and the benefit of reserve releases from prior years and adjustments within 2024.
Speaker #3: And $10.2 billion for the year. Adjusted net income was $3.8 billion, or $14.31 per common share. For the fourth quarter, and $9.3 billion for 2025, $34.83 per share.
Speaker #3: The lower table provides a reconciliation of net income for the fourth quarter to the prior year quarter. In 2024, we earned $1.9 billion. The three primary drivers of increased income were better underwriting losses, lower catastrophes, and the benefit of reserve releases from prior years and adjustments within 2025.
Speaker #3: Net income for the quarter was $3.8 billion. Now let's discuss our success in improving affordability while maintaining margins before going through the details of this performance with Mario, Jess, and John.
Thomas Wilson: Net income for the quarter was $3.8 billion. Now, let's discuss our success in improving affordability while maintaining margins before going through the details of this performance with Mario, Jess, and John. Slide 4 discusses the levers to improve insurance, auto insurance affordability at the industry level, and then we'll go through Allstate's actions. In summary, improving affordability will require a focus on costs, not profits. Let's go through the math. The pie chart on the left shows a composition of auto insurance industry costs from 2020 to 2025. Physical damage costs out of repair and replace vehicles represent the largest share of costs at 43%. Injury costs are 34% of premiums, and expenses are 23%. Over the last 5 years, industry underwriting income was close to zero. To improve affordability, then, costs must be lowered. Some costs move with inflation.
Thomas Wilson: Net income for the quarter was $3.8 billion. Now, let's discuss our success in improving affordability while maintaining margins before going through the details of this performance with Mario, Jess, and John. Slide 4 discusses the levers to improve insurance, auto insurance affordability at the industry level, and then we'll go through Allstate's actions. In summary, improving affordability will require a focus on costs, not profits. Let's go through the math. The pie chart on the left shows a composition of auto insurance industry costs from 2020 to 2025. Physical damage costs out of repair and replace vehicles represent the largest share of costs at 43%. Injury costs are 34% of premiums, and expenses are 23%. Over the last 5 years, industry underwriting income was close to zero. To improve affordability, then, costs must be lowered. Some costs move with inflation.
Speaker #3: Slide four discusses the levers to improve insurance, auto insurance affordability at the industry level and then we'll go through ALLSTATE's actions. In summary, improving affordability will require a focus on costs, not profits.
Speaker #3: Let's go through the math. The pie chart on the left shows a composition of auto insurance industry costs from 2020 to 2025. Physical damage costs out of repair and replaced vehicles represent the largest share of costs at 43%.
Speaker #3: Injury costs are 34% of premiums, and expenses are 23%. Over the last five years, industry underwriting income was close to zero. To improve affordability, then costs must be lowered.
Speaker #3: Some costs move with inflation, other cost reductions will require legislation or regulatory changes. So physical damage costs have increased 47% over the past five years.
Thomas Wilson: Other cost reductions will require legislation or regulatory changes. So physical damage costs have increased 47% over the past five years. Now, a portion of this was because used car prices rose 43% during the pandemic, which has drove up the cost to replace and repair vehicles. That inflation has started to reverse, which will improve affordability since insurance is a cost-plus product. The second largest driver of cost is bodily injury claims, which are when our customers get sued by people that are injured in an auto accident. These costs have increased 52% over the last five years due to more attorney involvement and higher settlements. Tort reform has reduced litigation in Florida, which has enabled the top five insurance companies in the state to request rate reductions of 5.9% in 2025.
Thomas Wilson: Other cost reductions will require legislation or regulatory changes. So physical damage costs have increased 47% over the past five years. Now, a portion of this was because used car prices rose 43% during the pandemic, which has drove up the cost to replace and repair vehicles. That inflation has started to reverse, which will improve affordability since insurance is a cost-plus product. The second largest driver of cost is bodily injury claims, which are when our customers get sued by people that are injured in an auto accident. These costs have increased 52% over the last five years due to more attorney involvement and higher settlements. Tort reform has reduced litigation in Florida, which has enabled the top five insurance companies in the state to request rate reductions of 5.9% in 2025.
Speaker #3: Now, a portion of this was because used car prices rose 43% during the pandemic, which drove up the cost to replace and repair vehicles.
Speaker #3: That inflation has started to reverse, which will improve affordability since insurance is a cost-plus product. The second largest driver of cost is bodily injury claims.
Speaker #3: Which are when our customers get sued by people that are injured in an auto accident. These costs have increased 52% over the last five years due to more attorney involvement and higher settlements.
Injury costs are 34% of premiums and expenses are 23%.
Over The Last 5 Years, industry underwriting income was close to zero.
To improve affordability, costs must be lowered.
Speaker #3: Tort reform has reduced litigation in Florida, which has enabled the top five insurance companies in the state to request rate reductions of 5.9% in 2025.
Some costs move with inflation, other cost reductions will require legislation or regulatory changes.
Speaker #3: Consumers will benefit if states like New York and others work to reduce what I would call fender-bender litigation, so you barely touch somebody and they sue you.
Thomas Wilson: Consumers will benefit if states like New York and others work to reduce what I would call fender bender litigation, so you barely touch somebody, and they sue you and also work to control exorbitant damage costs. For example, in New York, the average Bodily Injury settlement is twice that of Florida and the countrywide average. Louisiana and Georgia have recently addressed litigation, which we are hopeful will reduce the costs of suits against our customers. Uninsured and Underinsured Motorist costs have increased 72%, which means responsible drivers are now carrying more of the load. This can be mitigated by enforcement of laws requiring insurance coverage and raising mandatory coverage limits. Changing laws or regulations so that insurance companies lose money at the underwriting level will not create a stable and affordable set of choices for consumers.
Thomas Wilson: Consumers will benefit if states like New York and others work to reduce what I would call fender bender litigation, so you barely touch somebody, and they sue you and also work to control exorbitant damage costs. For example, in New York, the average Bodily Injury settlement is twice that of Florida and the countrywide average. Louisiana and Georgia have recently addressed litigation, which we are hopeful will reduce the costs of suits against our customers. Uninsured and Underinsured Motorist costs have increased 72%, which means responsible drivers are now carrying more of the load. This can be mitigated by enforcement of laws requiring insurance coverage and raising mandatory coverage limits. Changing laws or regulations so that insurance companies lose money at the underwriting level will not create a stable and affordable set of choices for consumers.
So, physical damage costs have increased 47% over the past five years. Now, a portion of this was because used car prices rose 43% during the pandemic, which drove up the cost to replace and repair vehicles.
Speaker #3: And then also work to control exorbitant damage costs. For example, in New York, the average bodily injury settlement is twice that of Florida and the countrywide average.
That inflation is starting to reverse which will improve affordability. Since the insurance is a Cost Plus product.
Speaker #3: Louisiana and Georgia have recently addressed litigation, which we are hopeful will reduce the costs of suits against our customers. Uninsured and underinsured motorist costs have increased 72%, which means responsible drivers are now carrying more of the load.
The second largest driver of cost is bodily injury claims, which are when our customers get sued by people that are injured in an auto accident.
These costs have increased 52% Over The Last 5 Years due to more attorney involvement in higher settlements.
Speaker #3: This can be mitigated by enforcement laws requiring insurance coverage and raising mandatory coverage limits. Changing laws or regulations so that insurance companies lose money at the underwriting level will not create a stable and affordable set of choices for consumers.
Court reform has reduced litigation in Florida, which is enabling the top five insurance companies in the state to request rate reductions of up to 5.9% in 2025.
Speaker #3: Now, ALLSTATE has successfully addressed the issue of insurance affordability with customers, as shown on slide five. Customer value has been improved by using renewal processes for auto and homeowners insurance to optimize coverages and discounts.
Thomas Wilson: Now, Allstate is successfully addressing the issue of insurance affordability with customers, as shown on slide 5. Customer value has been improved by using renewal processes for auto and homeowners insurance to optimize coverages and discounts. The Show Allstate Customers Value Every Day, or SAVE program, reduced 7.8 million customers' premiums by 17% on average by adjusting coverage and other changes in 2025. We continue to roll out the new auto and homeowners affordable, simple, and connected insurance products. Auto insurance rates for the ASC products were reduced in 32 states with an average reduction of 9%. We also expanded direct purchase options, which have lower prices. Jess is going to go through the impact of this on this year's earnings, which was substantial in terms of the top line, but we managed margins well.
Thomas Wilson: Now, Allstate is successfully addressing the issue of insurance affordability with customers, as shown on slide 5. Customer value has been improved by using renewal processes for auto and homeowners insurance to optimize coverages and discounts. The Show Allstate Customers Value Every Day, or SAVE program, reduced 7.8 million customers' premiums by 17% on average by adjusting coverage and other changes in 2025. We continue to roll out the new auto and homeowners affordable, simple, and connected insurance products. Auto insurance rates for the ASC products were reduced in 32 states with an average reduction of 9%. We also expanded direct purchase options, which have lower prices. Jess is going to go through the impact of this on this year's earnings, which was substantial in terms of the top line, but we managed margins well.
Consumers will benefit if states like New York and others work to reduce what I would call fender bender litigation. So, you barely touch somebody and they sue you, and then also work to control exorbitant damage costs.
For example, in New York, the average bodily injury settlement is twice that of Florida and the countrywide average.
Speaker #3: The SHOW ALLSTATE CUSTOMERS VALUE EVERYDAY, , or SAVE program, reduced $7.8 million customers' premiums by 17% on average by adjusting coverage and other changes in 2025.
Louisiana Georgia have recently addressed litigation which we are hopeful will reduce the cost of suits against our customers.
Uninsured and underinsured motorist costs increased 72%, which means responsible drivers are now carrying more of the load.
Speaker #3: We continue to roll out new auto and homeowners affordable, simple, and connected insurance products. Auto insurance rates for the ASC products were reduced in 32 states with an average reduction of 9%.
This can be mitigated by enforcement laws, requiring insurance coverage and raising mandatory coverage limits.
Speaker #3: We also expanded direct purchase options, which have lower prices. Jess is going to go through the impact of this on this year's earnings, which was substantial in terms of the top line, but we managed margins well.
Changing laws or regulations so that insurance companies lose money at the underwriting. Level will not create a stable and affordable set of choices for consumers.
Now all state is successfully, addressing the issue of insurance affordable with customers as shown on slide 5.
Speaker #3: Operational excellence also supports affordability while maintaining margins. The transformative growth initiative has lowered expenses. Improving claims processes also enabled us to offer lower prices.
Thomas Wilson: Operational excellence also supports affordability while maintaining margins. The Transformative Growth initiative has lowered expenses. Improving claims processes also enable us to offer lower prices. Allstate's strategy is to deliver strong results while successfully adapting to a changing external environment. Mario will now provide an update on the Transformative Growth initiative to increase Property-Liability market share.
Thomas Wilson: Operational excellence also supports affordability while maintaining margins. The Transformative Growth initiative has lowered expenses. Improving claims processes also enable us to offer lower prices. Allstate's strategy is to deliver strong results while successfully adapting to a changing external environment. Mario will now provide an update on the Transformative Growth initiative to increase Property-Liability market share.
customer value has been improved by using renewal processes for auto and homeowners insurance to optimize coverages and discounts
Speaker #3: So ALLSTATE's strategy is to deliver strong results while successfully adapting to a changing external environment. Mario will now provide an update on the transformative growth initiative to increase property liability market share.
That shows Allstate customers value Everyday or Save programs. We will reduce 7.8 million customers' premiums by 17% on average by adjusting coverage and other changes in 2025.
Speaker #2: Thanks, Tom. Let's move to slide six, which shows how ALLSTATE has benefited from transformative growth. In the top left, you can see the progress made on competitive prices.
Mario Rizzo: Thanks, Tom. Let's move to slide 6, which shows how Allstate has benefited from Transformative Growth. In the top left, you can see the progress made on competitive prices. We've reduced the adjusted expense ratio by 6.6 points since 2018, which allows us to offer lower auto and homeowners insurance prices while maintaining margins. We also increased the sophistication and precision of pricing models, enabling more accurate pricing. Allstate now has the broadest distribution in the industry. Customers can shop for Allstate coverage through Allstate agents, independent agents, and directly by phone or via the web. We acquired National General in 2021 to strengthen independent agent channel capabilities and expand non-standard auto insurance offerings. We increased direct sales using the Allstate brand and improved Allstate agent productivity.
Mario Rizzo: Thanks, Tom. Let's move to slide 6, which shows how Allstate has benefited from Transformative Growth. In the top left, you can see the progress made on competitive prices. We've reduced the adjusted expense ratio by 6.6 points since 2018, which allows us to offer lower auto and homeowners insurance prices while maintaining margins. We also increased the sophistication and precision of pricing models, enabling more accurate pricing. Allstate now has the broadest distribution in the industry. Customers can shop for Allstate coverage through Allstate agents, independent agents, and directly by phone or via the web. We acquired National General in 2021 to strengthen independent agent channel capabilities and expand non-standard auto insurance offerings. We increased direct sales using the Allstate brand and improved Allstate agent productivity.
We continue to roll out new, all the new Auto and homeowners, uh, a portable simple connected, Insurance products, auto insurance rates for the ASC price reducing 32 states with an average reduction of 9%.
Speaker #2: We've reduced the adjusted expense ratio by 6.6 points since 2018, which allows us to offer lower auto and homeowners insurance prices while maintaining margins.
We also expanded direct purchase options, which have lower prices. Jess is going to go through the impact of this on this year's earnings which was substantial in terms of the Topline but we managed margins. Well,
Speaker #2: We also increased the sophistication and precision of pricing models, enabling more accurate pricing. ALLSTATE now has the broadest distribution in the industry. Customers can shop for ALLSTATE coverage through ALLSTATE agents, independent agents, and directly by phone or via the web.
Operational excellence also supports affordability while maintaining margins, the transformative growth initiative, has lowered expenses, improving claims processes. Also enable us to offer lower prices,
So all states strategy is to deliver strong results. While successfully adapting to a changing external environment.
Speaker #2: We acquired National General in 2021 to strengthen independent agent channel capabilities and expand nonstandard auto insurance offerings. We increased direct sales using the ALLSTATE brand and improved ALLSTATE agent productivity.
Mario will now provide an update on the transformative growth initiative to increase property liability market share.
Thanks Tom, let's move the slide 6 which shows how Allstate has benefited from transformative growth.
In the top left, you can see the progress made on competitive prices.
Speaker #2: We enhanced the product portfolio by introducing the affordable, simple, and connected auto insurance product in 43 states and the new homeowners insurance product in 31 states.
Mario Rizzo: We enhanced the product portfolio by introducing the Affordable, Simple, and Connected auto insurance product in 43 states and the new homeowners insurance product in 31 states. We also have ASC renters available in 30 states. In the independent agent channel, Custom 360 Auto and Homeowners Insurance products are available in 36 states. These new products create value for customers by improving affordability, broadening our risk appetite, and expanding availability for consumers. Sophisticated marketing has enhanced acquisition capabilities and economics. Marketing investment increased to $2.1 billion in 2025, up from $900 million in 2019, enabling us to effectively reach more consumers with a more competitive price and better customer experience. At the bottom of the slide, you can see the results.
Mario Rizzo: We enhanced the product portfolio by introducing the Affordable, Simple, and Connected auto insurance product in 43 states and the new homeowners insurance product in 31 states. We also have ASC renters available in 30 states. In the independent agent channel, Custom 360 Auto and Homeowners Insurance products are available in 36 states. These new products create value for customers by improving affordability, broadening our risk appetite, and expanding availability for consumers. Sophisticated marketing has enhanced acquisition capabilities and economics. Marketing investment increased to $2.1 billion in 2025, up from $900 million in 2019, enabling us to effectively reach more consumers with a more competitive price and better customer experience. At the bottom of the slide, you can see the results.
Speaker #2: We also have ASC renters available in 30 states. In the independent agent channel, custom 360 auto and homeowners insurance products are available in 36 states.
We also increase the sophistication and precision of pricing models enabling more accurate pricing.
Speaker #2: These new products create value for customers by improving affordability, broadening our risk appetite, and expanding availability for consumers. Sophisticated marketing has enhanced acquisition capabilities and economics.
All State now has the broadest distribution in the industry. Customers can shop for All-State coverage through All-State agents independent agents and directly by phone or via the web.
We acquired National General in 2021 to strengthen independent agent Channel, capabilities, and expand non-standard auto insurance offering.
Speaker #2: Marketing investment increased to $2.1 billion in 2025, up from $900 million in 2019, enabling us to effectively reach more consumers with a more competitive price and better customer experience.
We increase direct sales using the Allstate brand and improved All-State agents productivity.
Speaker #2: At the bottom of the slide, you can see the results. Personal lines, new business increased from 5.5 million in 2019 to 11.6 million in 2025, more than doubling.
We enhance the product portfolio by introducing the affordable, simple and connected auto insurance product in 43 States and the new homeowners insurance product in 31 States.
Mario Rizzo: Personal lines new business increased from 5.5 million in 2019 to 11.6 million in 2025, more than doubling. New business is now also balanced between Allstate agents, independent agents, and the direct channel. Total personal lines policies in force increased from 33.5 million to 38.1 million, with a more balanced distribution across channels. These proof points demonstrate that Transformative Growth is working. Turning to slide 7, we are now into phases 4 and 5 of Transformative Growth, focusing on rolling out new platforms and decommissioning the existing ones. In these phases, we continue to broadly focus on the 5 components of Transformative Growth, shown in the gray boxes in the middle of the page, as we scale the new model and retire legacy technology and processes. Now, let's turn to slide 8 to discuss protection services.
Mario Rizzo: Personal lines new business increased from 5.5 million in 2019 to 11.6 million in 2025, more than doubling. New business is now also balanced between Allstate agents, independent agents, and the direct channel. Total personal lines policies in force increased from 33.5 million to 38.1 million, with a more balanced distribution across channels. These proof points demonstrate that Transformative Growth is working. Turning to slide 7, we are now into phases 4 and 5 of Transformative Growth, focusing on rolling out new platforms and decommissioning the existing ones. In these phases, we continue to broadly focus on the 5 components of Transformative Growth, shown in the gray boxes in the middle of the page, as we scale the new model and retire legacy technology and processes. Now, let's turn to slide 8 to discuss protection services.
We also have ASC renters available in 306.
In the independent agent channel, Custom 360 auto and homeowners insurance products are available in 36 days.
Speaker #2: New business is now also balanced between ALLSTATE agents, independent agents, and the direct channel. Total personal lines policies enforced increased from 33.5 million to 38.1 million, with a more balanced distribution across channels.
These new products create value for customers by improving affordability, broadening our risk appetite, and expanding availability for consumers.
Sophisticated marketing has an an has enhanced acquisition capabilities and economics.
Speaker #2: These proof points demonstrate that transformative growth is working. Turning to slide seven, we are now into phases four and five of transformative growth, focusing on rolling out new platforms and decommissioning the existing ones.
Marketing investment increased to 2.1 billion in 2025 up from 900 million in 2019 enabling us to effectively reach more consumers with a more competitive price and better customer experience.
Speaker #2: In these phases, we continue to broadly focus on the five components of transformative growth shown in the gray boxes in the middle of the page, as we scale the new model and retire legacy technology and processes.
At the bottom of the slide, you can see the results.
Personalized, new business increased from 5.5 million in 2019 to 11.6 million in 2025, more than doubling.
Speaker #2: Now, let's turn to slide eight to discuss protection segment is comprised of five services. The protection services businesses: protection plans, dealer services, roadside assistance, ARETI, and identity protection, where protection is embedded in other offerings.
New business is now also, balanced between all state agents independent agents and the direct Channel.
Mario Rizzo: The protection services segment is comprised of five businesses: protection plans, dealer services, roadside assistance, Arity, and identity protection, where protection is embedded in other offerings. In 2025, the protection services segment grew policies in force by 3.3% to 172 million, while revenue increased 11.7% to $3.3 billion for the year. Adjusted net income was $218 million in the quarter or for the year. Policy growth in this segment was led by protection plans, which continues to expand both domestically and internationally, as you can see on the lower right. Domestic revenue increased 8.1% over the prior year quarter, while international revenue increased 39.7%.
Mario Rizzo: The protection services segment is comprised of five businesses: protection plans, dealer services, roadside assistance, Arity, and identity protection, where protection is embedded in other offerings. In 2025, the protection services segment grew policies in force by 3.3% to 172 million, while revenue increased 11.7% to $3.3 billion for the year. Adjusted net income was $218 million in the quarter or for the year. Policy growth in this segment was led by protection plans, which continues to expand both domestically and internationally, as you can see on the lower right. Domestic revenue increased 8.1% over the prior year quarter, while international revenue increased 39.7%.
Total personal lines policies and force increased from 33.5 million to 38.1 million with a more balanced distribution across channels.
These proof points demonstrate that transformative growth is working.
Speaker #2: In 2025, the protection services segment grew policies enforced by 3.3% to 172 million, while revenue increased 11.7% to 3.3 billion net income was $218 million, in 2020, in the quarter.
Turning the slide 7. We are now into phases 4 and 5 of transformative growth focusing on rolling out, new platforms and decommissioning. The existing ones.
Speaker #2: For the year. Policy growth in this segment was led by protection plans, which continues to expand both domestically and internationally, as you can see on the lower right.
In these phases, we continue to broadly focus on the fifth, shown in the gray boxes in the middle of the page, as we scale the new model and retire legacy technology and processes.
Now, let's turn to slide 8 to discuss Protection Services.
Speaker #2: Domestic revenue increased 8.1% over the prior year quarter, while international revenue increased 39.7%. The business generated $49 million in adjusted net income in this quarter, up 32.4% from the prior year quarter.
Mario Rizzo: The business generated $49 million in adjusted net income in this quarter, up 32.4% from the prior year quarter. Now, I'll turn it over to Jess to discuss the property liability business.
Mario Rizzo: The business generated $49 million in adjusted net income in this quarter, up 32.4% from the prior year quarter. Now, I'll turn it over to Jess to discuss the property liability business.
The protection services segment is comprised of 5 businesses protection, plans dealer services, roadside assistance, parity and identity protection. Where protection is embedded in other offerings.
Speaker #2: Now I'll turn it over to Jess to discuss
Speaker #2: the property liability business. All right.
Thomas Wilson: All right. Thank you, Mario. Starting with slide 9, the property liability business generated strong results in 2025. The table on the left shows full year 2025 results. Premiums earned increased 4.4% in auto insurance and 15% in homeowners insurance, with auto policy growth of 2.3% and homeowners policy growth of 2.5%. At the bottom of the table, you can see that the auto combined ratio improved by 10 points compared to the prior year. This is due to strong underlying performance, as well as lower catastrophes and favorable prior year reserve releases. Excluding the benefit of reserve changes in lower catastrophes, the auto insurance combined ratio was about 90. The homeowners insurance combined ratio of 84.4 reflects continued strong underlying performance and lower catastrophe losses when compared to last year.
Jesse Merten: All right. Thank you, Mario. Starting with slide 9, the property liability business generated strong results in 2025. The table on the left shows full year 2025 results. Premiums earned increased 4.4% in auto insurance and 15% in homeowners insurance, with auto policy growth of 2.3% and homeowners policy growth of 2.5%. At the bottom of the table, you can see that the auto combined ratio improved by 10 points compared to the prior year. This is due to strong underlying performance, as well as lower catastrophes and favorable prior year reserve releases. Excluding the benefit of reserve changes in lower catastrophes, the auto insurance combined ratio was about 90. The homeowners insurance combined ratio of 84.4 reflects continued strong underlying performance and lower catastrophe losses when compared to last year.
Speaker #3: Thank you, Mario. Starting with slide nine, the property liability business generated strong results in 2025. The table on the left shows full year 2025 results, premiums earned increased 4.4% in auto insurance, and 15% in homeowners insurance, with auto policy growth of 2.3% and homeowners growth policy growth of 2.5%.
In 2025, the protection services. Segment, group policies, enforce by 3.3% to 172 million to increase 11.7% to 3.3 billion dollars for the year. Adjusted, net income was 218 million in 2020 in in the quarter for for the year. Uh policy growth in this segment was led by protection plans which continues to expand those domestically and internationally, as you can see, on the lower right.
Speaker #3: At the bottom of the table, you can see that the auto combined ratio improved by 10 points compared to the prior year. This is due to strong underlying performance, as well as lower catastrophes and favorable prior year reserve releases.
Speaker #3: Excluding the benefit of reserve changes and lower catastrophes, the auto insurance combined ratio was about 90. The homeowners insurance combined ratio of 84.4 reflects continued strong underlying performance and lower catastrophe losses, when compared to last year.
The business generated 49 million dollars in adjusted net income. In this quarter up 32.4% from the prior year quarter,
Speaker #3: For the full year 2025, auto insurance generated 5.7 billion of underwriting income, and the homeowners insurance generated 2.4 billion. The right side of this slide shows earned premium impacts of actions taken to improve affordability, which are included in our financial results.
Jesse Merten: ...For the full year, 2025, auto insurance generated $5.7 billion of underwriting income, and homeowners insurance generated $2.4 billion. The right side of this slide shows earned premium impacts of actions taken to improve affordability, which are included in our financial results. The chart shows the cumulative auto insurance earned premium impact from rate decreases and save actions taken through 2025. By the end of the year, the total impact was $810 million, or approximately 2% of 2025 auto earned premiums. Improved affordability supports growth. Turning now to slide 10. Auto claims process improvements are helping to offset increasing loss costs, support increased affordability, and contributed to favorable reserve adjustments. On the left side is an overview of improvements that we've made to physical damage claim processes.
Jesse Merten: ...For the full year, 2025, auto insurance generated $5.7 billion of underwriting income, and homeowners insurance generated $2.4 billion. The right side of this slide shows earned premium impacts of actions taken to improve affordability, which are included in our financial results. The chart shows the cumulative auto insurance earned premium impact from rate decreases and save actions taken through 2025. By the end of the year, the total impact was $810 million, or approximately 2% of 2025 auto earned premiums. Improved affordability supports growth. Turning now to slide 10. Auto claims process improvements are helping to offset increasing loss costs, support increased affordability, and contributed to favorable reserve adjustments. On the left side is an overview of improvements that we've made to physical damage claim processes.
Now, I'll turn it over to Jeff to discuss the property liability business. All right, thank you Mario, starting with slide 9, the property liability business. Generated, strong results in 2025 the table, on the left shows, full year 25, 2025 results, premiums earned increased 4.4% in auto insurance. And 15% in homeowners insurance with auto policy growth at 2.3% and homeowners grow.
Policy growth of 2.5%.
Speaker #3: The chart shows the cumulative auto insurance earned premium impact from rate decreases and save actions taken through 2025. By the end of the year, the total impact was $810 million, or approximately 2% of 2025 auto earned premiums.
Excluding the benefit of reserve changes and lower context fees, the auto insurance combined ratio was about 90.
Speaker #3: Improved affordability supports growth. Turning now to slide 10, auto claims process improvements are helping to offset increasing loss costs, support increased affordability, and contributed to favorable reserve adjustments.
Speaker #3: On the left side is an overview of improvements that we've made to physical damage claim processes. These processes are being enhanced by optimizing the method of inspection, focusing on adjuster training, and using advanced computing capabilities.
The homeowners insurance combined ratio of 84.4 reflects continued strong underlying performance and lower catastrophe losses. When compared to last year for the full year, 2025 auto insurance generated $5.7 billion of underwriting income, and the home and homeowners insurance generated $2.4 billion.
Jesse Merten: These processes are being enhanced by optimizing the method of inspection, focusing on adjuster training, and using advanced computing capabilities. On the right, you can see what we're doing to manage injury costs. We redesigned our operating model to accelerate payments to injured parties where appropriate, utilizing new tools and quality assurance processes to enhance claim handling. Predictive models are also being used to identify potentially injured parties earlier, earlier in the process to resolve claims promptly and control liability. On slide 11, you can see that auto insurance growth accelerated and broadened geographically in 2025. These graphs show the distribution of policy growth by state and percentage of premiums written. For example, on the right-hand chart, you can see that at the end of 2025, less than 30% of premiums were in states that were not growing.
Jesse Merten: These processes are being enhanced by optimizing the method of inspection, focusing on adjuster training, and using advanced computing capabilities. On the right, you can see what we're doing to manage injury costs. We redesigned our operating model to accelerate payments to injured parties where appropriate, utilizing new tools and quality assurance processes to enhance claim handling. Predictive models are also being used to identify potentially injured parties earlier, earlier in the process to resolve claims promptly and control liability. On slide 11, you can see that auto insurance growth accelerated and broadened geographically in 2025. These graphs show the distribution of policy growth by state and percentage of premiums written. For example, on the right-hand chart, you can see that at the end of 2025, less than 30% of premiums were in states that were not growing.
Speaker #3: On the right, you can see what we're doing to manage redesigned our operating model to accelerate payments to injured parties where appropriate, utilizing new tools and quality handling.
Cases and save actions taken through 2025.
Speaker #3: assurance processes to enhance claim also being used to identify potentially injured parties earlier in the process, to resolve claims promptly and control liability. On slide 11, you can see that auto insurance growth accelerated and broadened geographically in 2025.
By the end of the year, the total impact was 810 million or approximately 2% of 2025 Auto earned premiums, improved affordability, supports growth.
Turning now to slide 10, auto claims process improvements are helping to offset increasing loss costs, support increased affordability, and contributed to favorable reserve adjustments.
Speaker #3: These graphs show the distribution of policy growth by state and percentage of premiums written. For example, on the that at the end of 2025, less than 30% of premium were in states that were not growing.
On the left side is an overview of improvements that we've made to physical damage claim processes.
Speaker #3: Staying on that chart and moving to the second blue bar from the right, 14 right-hand chart, you can see states were growing policies enforced by 4 to 10%, and represented more than 30% of premiums.
Jesse Merten: Staying on that chart and moving to the second blue bar from the right, 14 states were growing policies in force by 4 to 10% and represented more than 30% of premiums. Comparing the left graph for 2024 to the right graph for 2025 shows a reduction in red bars, higher blue growth bars, and a shift towards the right, which is higher growth. We now have 20 states growing policies by at least 4% and are growing in 38 states that represent more than 70% of countrywide written premium. Turning to slide 12, the homeowners insurance business continues to grow and generate industry-leading returns. Premiums earned have increased each year since 2021. Policies in force have also grown steadily, supported by expanded distribution and new products.
Jesse Merten: Staying on that chart and moving to the second blue bar from the right, 14 states were growing policies in force by 4 to 10% and represented more than 30% of premiums. Comparing the left graph for 2024 to the right graph for 2025 shows a reduction in red bars, higher blue growth bars, and a shift towards the right, which is higher growth. We now have 20 states growing policies by at least 4% and are growing in 38 states that represent more than 70% of countrywide written premium. Turning to slide 12, the homeowners insurance business continues to grow and generate industry-leading returns. Premiums earned have increased each year since 2021. Policies in force have also grown steadily, supported by expanded distribution and new products.
These processes are being enhanced by optimizing the method of inspection, focusing on adjuster training, and using advanced computing capabilities on the right. You can see what we're doing to manage injury costs.
Speaker #3: Comparing the left graph to 2024, for 2024 to the right graph for 2025 shows a reduction in red bars: higher blue growth bars and a shift towards the right, which is higher growth.
We redesigned our operating model to accelerate payments to injured parties, where appropriate, utilizing new tools and quality assurance processes to enhance claim handling.
Predictive models are also being used to identify potentially injured parties earlier earlier in the process to resolve claims promptly and control liability.
Speaker #3: We now have 20 states growing policies by at least 4% in our growing and 38 states that represent more than 70% of countrywide written premium.
On slide 11. You can see that auto insurance growth accelerated and broadened geographically in 2025.
These graphs show the distribution of policy growth by state and the percentage of premiums written.
Speaker #3: Turning to slide 12, the homeowners insurance business continues to grow and generate industry-leading returns. Premiums earned have increased each year since 2021. Policies enforced have also grown steadily, supported by expanded distribution and new products.
For example, on the right hand chart, you can see that at the end of 2025 less than 30% of Premium were in states. That were not growing.
Speaker #3: We target a low 90s recorded combined ratio for homeowners and an underlying combined ratio in the low to mid-60s. The underlying combined ratio for 2025 was 57.9, which demonstrates the effectiveness of our differentiated model with advanced risk selection, new products, pricing sophistication, and efficient claims handling.
Jesse Merten: We target a low 90s recorded combined ratio for homeowners and an underlying combined ratio in the low to mid-60s. The underlying combined ratio for 2025 was 57.9, which demonstrates the effectiveness of our differentiated model with advanced risk selection, new products, pricing sophistication, and efficient claims handling. The recorded combined ratio was 84.4, which is well below the industry average. Allstate's average combined ratio over the last 10 years was 92.0. This business remains a competitive advantage and growth opportunity for Allstate. With that, I'll turn it over to John.
Jesse Merten: We target a low 90s recorded combined ratio for homeowners and an underlying combined ratio in the low to mid-60s. The underlying combined ratio for 2025 was 57.9, which demonstrates the effectiveness of our differentiated model with advanced risk selection, new products, pricing sophistication, and efficient claims handling. The recorded combined ratio was 84.4, which is well below the industry average. Allstate's average combined ratio over the last 10 years was 92.0. This business remains a competitive advantage and growth opportunity for Allstate. With that, I'll turn it over to John.
Staying on that chart and moving to the second blue bar from the right. 14 states were growing policies. Enforced by 4 to 10% in represented, more than 30% of premiums.
Comparing the left graph to 2024.
Speaker #3: The recorded combined ratio was 84.4, which is well below the industry average. All states' average combined ratio over the last 10 years was 92.0.
42024 to the right graph for 2025. Shows a reduction in red bars, higher blue, growth bars, and a shift towards the right, Which is higher growth. We now have 20 States, growing policies by at least 4% in our growing and 38 states that represent More than 70% of countrywide written premium
Speaker #3: This business remains a competitive advantage and growth opportunity for all states. With that, I'll turn it over to John.
John Dugenske: Thanks, Jess. Good morning, everyone. Let's turn to slide 13 to discuss the investment portfolio. The portfolio continued to perform well, with net investment income rising to $3.4 billion in 2025, more than $350 million higher year-over-year, while maintaining strong risk discipline. Over the past 12 months, total portfolio carrying value increased from approximately $73 billion to $83 billion due to operating and investment cash flows. That growth, combined with higher fixed income yields, led to a meaningful increase in investment income. From a return perspective, market-based assets generated a 6.1% total return, materially higher than last year, due to increased bond prices from lower interest rates and higher equity returns. Performance-based investments delivered a 5.8 return, down slightly year-over-year, consistent with broader performance in private markets.
Speaker #2: Thanks, Jess. Good morning, everyone. Let's turn to slide 13 to discuss the investment portfolio. The portfolio continued to perform well, with net billion in 2025, more than $350 million investment income rising to $3.4 higher year over year, while maintaining strong risk discipline.
John Dugenske: Thanks, Jess. Good morning, everyone. Let's turn to slide 13 to discuss the investment portfolio. The portfolio continued to perform well, with net investment income rising to $3.4 billion in 2025, more than $350 million higher year-over-year, while maintaining strong risk discipline. Over the past 12 months, total portfolio carrying value increased from approximately $73 billion to $83 billion due to operating and investment cash flows. That growth, combined with higher fixed income yields, led to a meaningful increase in investment income. From a return perspective, market-based assets generated a 6.1% total return, materially higher than last year, due to increased bond prices from lower interest rates and higher equity returns. Performance-based investments delivered a 5.8 return, down slightly year-over-year, consistent with broader performance in private markets.
Turning decide 12, the homeowners insurance business continues to grow and generate industry-leading returns premiums earned his increased each year since 2021, all season for us, have also grown steadily supported by expanded distribution in new products.
Target a low 90s recorded, combined ratio for homeowners in an underlying combined ratio in the low to mid 6 weeks.
Speaker #2: Over the past 12 months, total portfolio carrying value increased from approximately $73 billion to $83 billion. Due to operating and investment cash with higher fixed income yields, income.
The underlying combined ratio for 2025 was 57.9 which demonstrates the effectiveness of our differentiated model. With Advanced risk selection, new products pricing sophistication and efficient claims handling
Speaker #2: From led to a meaningful increase in investment a return perspective, market-based assets generated a flows, that growth, combined higher than last year. Due to increased bond prices, from lower interest rates and higher equity returns.
The recorded combined ratio is 844 which is well below the industry. Average, all States average combined ratio over the last 10 years was 92.0 this business remains a competitive advantage and growth opportunity for all states with that. I'll turn it over to John. Thanks, Jess. Good morning everyone. I want to turn this slide 13 to discuss the Investment Portfolio.
Speaker #2: Performance-based investments delivered a 5.8% return, down slightly year over year, consistent with broader performance in private markets. During the year, we took several delivered actions as private markets adjusted to a tighter capital and liquidity backdrop in 2025.
John Dugenske: During the year, we took several delivered actions as private markets adjusted to a tighter capital and liquidity backdrop in 2025. This included selling approximately $270 million of fund net interest in the secondary market, accelerating and deepening expectations for financial reporting, and moderating new commitments in response to lower industry-wide distributions. Let's wrap up with slide 14 for an overview of Allstate's significant cash returns to shareholders. In 2025, Allstate paid over $2.2 billion in common shareholder dividends and share repurchases. The quarterly stock dividend will increase by 8% to $1.08 per share, payable in cash on 1 April 2026, to stockholders of record at the close of business on 2 March 2026.
John Dugenske: During the year, we took several delivered actions as private markets adjusted to a tighter capital and liquidity backdrop in 2025. This included selling approximately $270 million of fund net interest in the secondary market, accelerating and deepening expectations for financial reporting, and moderating new commitments in response to lower industry-wide distributions. Let's wrap up with slide 14 for an overview of Allstate's significant cash returns to shareholders. In 2025, Allstate paid over $2.2 billion in common shareholder dividends and share repurchases. The quarterly stock dividend will increase by 8% to $1.08 per share, payable in cash on 1 April 2026, to stockholders of record at the close of business on 2 March 2026.
The portfolio continued to perform well with net investment, income rising to 3.4 billion dollars in 2025 more than 350 million higher year-over-year while maintaining strong risk discipline.
Speaker #2: This included selling approximately $270 million of fund interest in the secondary market, accelerating and deepening expectations for financial reporting, and moderating new industry-wide commitments in response to lower distributions.
Over the past 12 months, total portfolio carrying value increased from approximately 73 billion dollars, to 83, billion dollars, due to operating and investment. Cash flows that growth combined with higher fixed income yields led to a meaningful increase in investment income.
Speaker #2: Let's wrap up with slide 14 for an overview of Allstate's significant cash returns to shareholders. In 2025, Allstate paid over $2.2 billion in common shareholder dividends and share repurchases.
For a return perspective, market-based assets, generated a 6.1% total return, materially higher than last year due to increased bond prices, from lower interest rates and higher Equity returns.
Speaker #2: The quarterly stock dividend will increase by $1.08 per share, payable in cash on April 1st, 2026, to stockholders of record at the close of business on March 2nd of 2026.
Performance-based investments delivered a 5.8% return, down slightly year-over-year, consistent with broader performance in private markets.
During the year, we took several delivered actions as private markets adjusted to entire capital and liquidity backdrop in 2025.
Speaker #2: Additionally, a $4 billion share repurchase program has been 8% to authorized and execution will begin upon completion of the existing $1.5 billion share repurchase quarter of 2026.
John Dugenske: Additionally, a $4 billion share repurchase program has been authorized, and execution will begin upon completion of the existing $1.5 billion share repurchase program, which will be completed in Q1 2026. In the last 5 years, Allstate has purchased 18% of common shares outstanding, and in the last 10 years, Allstate has purchased 39% of shares outstanding. Now, let's move to questions.
John Dugenske: Additionally, a $4 billion share repurchase program has been authorized, and execution will begin upon completion of the existing $1.5 billion share repurchase program, which will be completed in Q1 2026. In the last 5 years, Allstate has purchased 18% of common shares outstanding, and in the last 10 years, Allstate has purchased 39% of shares outstanding. Now, let's move to questions.
This included selling approximately 270 million of funded interests in the secondary Market. Accelerating and deepening expectations for financial reporting and moderating new commitments to responsible industrywide distributions.
Speaker #2: In the last five years, Allstate has purchased 18% of common shares outstanding, and in the last 10 years, Allstate has purchased 39% of shares outstanding.
For an overview of all state significant cash returns to shareholders.
Speaker #2: Now, let's move to
In 2025 Ally paid over, 2.2 billion dollars in common shareholder, dividends and share repurchases.
Speaker #3: Certainly.
Jesse Merten: Certainly. Our first question comes from the line of Gregory Peters from Raymond James. Your question, please.
Operator: Certainly. Our first question comes from the line of Gregory Peters from Raymond James. Your question, please.
Speaker #3: the line. questions. Of Gregory Peters from Raymond James. Your question, please.
Speaker #4: Good morning, everyone. So I'd like to, for the first question, focus on the regulatory and legislative changes slide. And I know there's been some attention in the marketplace to certain states announcing more proactive approach towards rate relief for their consumers.
Gregory Peters: Good morning, everyone. So, I'd like to, for the first question, focus on the regulatory and legislative changes slide. And I know, there's been some attention in the marketplace to certain states announcing a more proactive approach towards rate relief for their consumers. I also recognize that this is very much a state-by-state process for you guys. So I was wondering if you could provide us some color on how the regulatory environment, how you think it might change for you guys in terms of what regulators might ask you to do over the next 24 months or so, in terms of rate relief?
Gregory Peters: Good morning, everyone. So, I'd like to, for the first question, focus on the regulatory and legislative changes slide. And I know, there's been some attention in the marketplace to certain states announcing a more proactive approach towards rate relief for their consumers. I also recognize that this is very much a state-by-state process for you guys. So I was wondering if you could provide us some color on how the regulatory environment, how you think it might change for you guys in terms of what regulators might ask you to do over the next 24 months or so, in terms of rate relief?
The quarterly stock dividend will increase by 8% to 1.8 cents per share payable in cash on April, 1st 2026 to stockholders of record at the close of business on March 2nd of 2026.
Speaker #4: I also recognize that this is very much a you could provide us some color on how the regulatory environment, how you think it might change for you guys in terms of what regulators might ask you to do over the next 24 months or so in terms of rate relief.
In The Last 5 Years, all state has purchased 18% of common shares outstanding and in the last 10 years, all state has purchased 39% of shares outstanding. Now, let's move to questions.
Certainly. And our first question comes from the line.
Of Gregory Peters from Raymond James. Your question, please.
Thomas Wilson: Thank you for the question, Greg. Of course, predicting politics is, you know, probably should get on Polymarket to do that. But, so first, I would say the numbers we showed are countrywide numbers. So this issue of affordability for consumers is an issue everywhere. So our SAVE program, we were everywhere. We, every state, we go after every customer, they all care about the amount of money, and the costs are, have increased a lot recently. Obviously, accelerated by the pandemic on physical damage, but then, underneath that, for a long time, it's been the bodily injury costs, where, you know, if you make a mistake and you run into somebody and bash them in the side of the car, you don't feel like you should be sued for, you know, $100,000.
Speaker #5: Thank you for the question, Greg. Of course, predicting politics is probably should get on polymarket to do that. But so first, I would say the numbers we showed are countrywide numbers.
Thomas Wilson: Thank you for the question, Greg. Of course, predicting politics is, you know, probably should get on Polymarket to do that. But, so first, I would say the numbers we showed are countrywide numbers. So this issue of affordability for consumers is an issue everywhere. So our SAVE program, we were everywhere. We, every state, we go after every customer, they all care about the amount of money, and the costs are, have increased a lot recently. Obviously, accelerated by the pandemic on physical damage, but then, underneath that, for a long time, it's been the bodily injury costs, where, you know, if you make a mistake and you run into somebody and bash them in the side of the car, you don't feel like you should be sued for, you know, $100,000.
Good morning, everyone. Um, uh, so, uh, I'd like to, for the first question, focus on, um, the Regulatory and Legislative Changes slide.
Um, and I know there's been some attention in the marketplace to certain states.
Speaker #5: So this issue of affordability for consumers is an issue everywhere. So our SAFE program, we were everywhere. Every state we go after, every customer, they all care about the amount of money.
Um, and not seeing them more, proactive approach towards regularly for their consumers.
I also recognize that this is very much a state-by-state, um, um, process for you guys. So I was wondering if you could provide us,
Speaker #5: And the costs are have increased a lot recently. Obviously, accelerated by the pandemic on physical damage, but then underneath that, for a long time, has been the bodily injury costs.
some color on how um, the regulatory environment, how you think it might change for you guys in terms of what Regulators might ask you to do over the next uh 20 24 months or so uh in terms of rate relief,
Speaker #5: We're if you make a mistake and you run into somebody and bash them in the side of the car, you don't feel like you should be sued for $100,000.
Speaker #5: And so I'm hopeful that what this will do is put the attention on that needs to change. People don't need to be paying for lawyers and for friend-to-vendor lawsuits.
Thomas Wilson: I'm hopeful that what this will do is put the attention on that needs to change. Like, people don't need to be paying for lawyers and for fender bender lawsuits. And so this is really an issue everywhere in the country. As I mentioned, Florida's done some really good work, and it's turned into benefits for customers. So, you know, Florida should be acknowledged that. Other states are starting to get this. You know, there's been a long-standing discussion between US regulators and the trial attorney as to what's fair and right, and we obviously think that our customers should pay less for litigation against them, and we'd like to see everybody take this on.
Thomas Wilson: I'm hopeful that what this will do is put the attention on that needs to change. Like, people don't need to be paying for lawyers and for fender bender lawsuits. And so this is really an issue everywhere in the country. As I mentioned, Florida's done some really good work, and it's turned into benefits for customers. So, you know, Florida should be acknowledged that. Other states are starting to get this. You know, there's been a long-standing discussion between US regulators and the trial attorney as to what's fair and right, and we obviously think that our customers should pay less for litigation against them, and we'd like to see everybody take this on.
Speaker #5: And so this is really an issue everywhere in the country. As I mentioned, Florida has done some really good work, and it's turned into Florida should be acknowledged.
Speaker #5: Other states are starting to get this. There's been a long-standing discussion between us regulators and the trial benefits for customers. So attorney as to what's fair and right.
Um, thank you for the question Greg. Uh, of course, predicting politics is, uh, you know, probably should get on poly Market to do that. But, um, but I, I, so first, I would say the numbers, we showed our Countrywide numbers. So this issue of affordability for consumers is an issue everywhere. So our safe program, we were everywhere. We every state we go after every customer, they all care about the amount of money, and the costs are have increased a lot recently. Uh, obviously accelerated by the pandemic on physical damage but then, um,
Speaker #5: And we obviously think that our customers should pay less for litigation against them. And we'd like to see everybody take this on.
Underneath that, for a long time, has been the bottom of the injury costs where, you know, if you make a mistake and you run into somebody and bash them in the side of the car, you don't feel like you should be sued for, you know, $100,000.
Speaker #4: Okay. I guess, related to this, I thought the slide that slide 11 where you talked about your enforced growth, as you're dealing with, I think you said you lowered prices for 2025.
Gregory Peters: Okay. I guess, I thought the slide that, on slide 11, where you talked about your in-force growth as you're dealing with, I think you said you lowered prices for 7.8 million customers in 2025, and you highlighted where you're growing. You know, we're hearing in the marketplace that certain mutuals and other companies might be getting more aggressive in the marketplace around auto and home. So maybe you could step back and give us some perspective on sort of the competitive landscape as you see it today, both in auto and home across the country.
Gregory Peters: Okay. I guess, I thought the slide that, on slide 11, where you talked about your in-force growth as you're dealing with, I think you said you lowered prices for 7.8 million customers in 2025, and you highlighted where you're growing. You know, we're hearing in the marketplace that certain mutuals and other companies might be getting more aggressive in the marketplace around auto and home. So maybe you could step back and give us some perspective on sort of the competitive landscape as you see it today, both in auto and home across the country.
Speaker #4: And you highlighted where your that certain mutuals and the marketplace around auto and home. So maybe you could step back and give us some perspective on sort of the competitive landscape as you see it today, both in auto and home across the country.
Uh, and so I'm hopeful that what this will do is, uh, put the attention on where it needs to be. So people don't need to be paying what we're—lawyers in, for a friend of mine—or lawsuits. Uh, and so this is really an issue everywhere in the country. As I mentioned, Florida has done some really good work, uh, and it's turned into benefits for customers. So, you know, Florida should be acknowledged. But other states are starting to get this. Um, you know, there's been a long-standing, uh, discussion between, uh, us, regulators, and the trial attorney as to what's fair and right, and we obviously think that our customers should pay less.
Uh, for litigation against them.
Uh, and we'd like to see everybody take this on.
Okay.
Thomas Wilson: It does seem to be people looking for, you know, what's lurking around the corner. So let me talk about competition. We've always been in a highly competitive market in all of our products, so this is nothing new. Sometimes it changes, as you point out, by state, sometimes it changes by company. But, you know, the way in which you compete is, you know, very broad. You understand this. First, you have to have a product that's differentiated, you gotta have to have an attractive price, you gotta have a great brand, you gotta have broad access, and you gotta, advertising is a game of precision and scale these days. And Transformative Growth that Mario went through addresses all of those, right? So we've been at this for a while.
Speaker #5: It does seem to be people looking for what's lurking around the corner. So let me talk about competition. We've always been in a highly competitive market in all of our products.
Thomas Wilson: It does seem to be people looking for, you know, what's lurking around the corner. So let me talk about competition. We've always been in a highly competitive market in all of our products, so this is nothing new. Sometimes it changes, as you point out, by state, sometimes it changes by company. But, you know, the way in which you compete is, you know, very broad. You understand this. First, you have to have a product that's differentiated, you gotta have to have an attractive price, you gotta have a great brand, you gotta have broad access, and you gotta, advertising is a game of precision and scale these days. And Transformative Growth that Mario went through addresses all of those, right? So we've been at this for a while.
Um, I I guess as related to this, I was I taught the slide that a slide 11.
Speaker #5: So this is it changes as you point out by state. Sometimes it changes by nothing new. Sometimes company. But the way in which you compete is very broad.
Where you talked about your enforced growth as, as you're dealing with. I think you said, you lowered prices for 7.8 million customers and 2025.
Speaker #5: You understand this. First, you have to have a product that differentiated. You have to have an attractive price. You got to have a great brand.
Speaker #5: You got to have broad access. And you got to advertising is a game of precision and transformative growth at Mario went through addresses all of scale these days.
Speaker #5: those, right? So we've been at this for a while. If you And look by product then, and you say, "Okay, in auto insurance," we have three really aggressive competitors.
And you highlighted where you're you're growing. Um, you know, we're hearing in the marketplace that certain mutuals and other companies might be getting more aggressive in the marketplace around auto and home. Um, so maybe you could, um, step back and give some some perspective on sort of the competitive landscape as you see it today both in auto and home across the country.
Thomas Wilson: If you look by product then, and you say, okay, in auto insurance, you know, we have three really aggressive competitors. They've been the same three competitors for a while, Progressive, GEICO, and State Farm. Progressive, as you know well, has been growing rapidly. GEICO's lost a couple of points of market share, and State Farm picked up, but not quite that amount of market share gain. So, volume tends to go. They just pointed out there's a bunch of states where we think we're picking up share. So if you're over four points, there's not 4% more cars in the United States in total or in any of the states. So if you're over four points, you're picking up market share. So, our Transformative Growth plan has helped us pick up market share.
Thomas Wilson: If you look by product then, and you say, okay, in auto insurance, you know, we have three really aggressive competitors. They've been the same three competitors for a while, Progressive, GEICO, and State Farm. Progressive, as you know well, has been growing rapidly. GEICO's lost a couple of points of market share, and State Farm picked up, but not quite that amount of market share gain. So, volume tends to go. They just pointed out there's a bunch of states where we think we're picking up share. So if you're over four points, there's not 4% more cars in the United States in total or in any of the states. So if you're over four points, you're picking up market share. So, our Transformative Growth plan has helped us pick up market share.
Speaker #5: They've been the same three competitors for a while, Progressive, GEICO, and State Farm. Progressive, as you know well, has been growing rapidly. GEICO has lost a couple of points in market share.
Speaker #5: And State Farm picked up, but not quite that amount of market share gain. out there's a bunch of states where we think we're picking up share.
Speaker #5: So if you're over four cars in the United points, there's not 4% more states. So if you're over four points, you're picking So volume tends to go. our transformative growth plan has helped us pick up market share.
Speaker #5: So if you're over four cars in the United points, there's not 4% more states. So if you're over four points, you're picking So volume tends to go.
Uh, it it does seem to be, uh, people looking for, you know, what's lurking around the corner? So let me talk about competition. We've always been in a highly competitive market and all of our products. So this is nothing new. Uh, sometimes it changes, as you point out by state, sometimes it changes by company. Uh, but, you know, the the way in which you create is that, you know, very broad. You understand this. First, you have to have a product that's differentiated, you got to have to have an attractive price, you got to have a great brand, you got to have broad access uh and you got to advertising is a game of appreciation and scale these days uh and trade.
Thomas Wilson: Homeowners is kind of same, but a little different because about half of the business is done by mutuals, so as you point out, they have different profit requirements. That said, we've been able to grow that business. It's what we think is higher than market share, with a fair amount of constraints on tax-free losses, and earn economic rents better than the industry by a large margin. So we feel really good about continuing to compete in auto insurance, continuing to compete in home insurance. In fact, we think home insurance has more growth potential. We think we can dial up growth, and so Justin and Mario may want to comment on these two.
Thomas Wilson: Homeowners is kind of same, but a little different because about half of the business is done by mutuals, so as you point out, they have different profit requirements. That said, we've been able to grow that business. It's what we think is higher than market share, with a fair amount of constraints on tax-free losses, and earn economic rents better than the industry by a large margin. So we feel really good about continuing to compete in auto insurance, continuing to compete in home insurance. In fact, we think home insurance has more growth potential. We think we can dial up growth, and so Justin and Mario may want to comment on these two.
Form of growth at Mario, went to addresses all of those, right? So, we, we've been at this for a while. Um, if you look by price, then
Speaker #5: different because about half of the They just pointed business is done by mutuals. So as you point out, they have different profit requirements. That said, we've been able to grow that business.
Speaker #5: What we think is higher than market share with a fair amount of constraints on catastrophe losses. And earn economic rents better than the industry by a large margin.
Uh, you say okay in auto insurance. Uh, you know, we have 3 really aggressive competitors. They've been the same 3 competitors, for a while Progressive Geico State Farm. Progressive as you know, well has been growing rapidly, a Geico's lost a couple of points and market, share and safe Farm picked up, but not quite that amount of market share gate. So uh,
Speaker #5: So we feel really good about continuing to compete in auto insurance, continuing to compete in home insurance. In fact, we think home insurance has more growth potential.
Speaker #5: We think we can dial up growth. And so Justin, Mario may want to comment on these two. So specialty lines, we also we don't talk much about it.
Thomas Wilson: So specialty lines, we also, we don't talk much about it, and, you know, there are some specialty lines insurers which have valuations which seem relatively large on compared to us. And yet, when I look at our growth, our size, our scale, like, where everybody's good, in many ways better. And then in our protection plans business, that's also a highly competitive business. So, we didn't get Walmart and Home Depot because we're no good. We got it because we compete on the things I was talking about. And Mario already talked about international, but maybe you guys want to comment on what you're seeing at the ground level in auto and home, and then in protection plans.
Thomas Wilson: So specialty lines, we also, we don't talk much about it, and, you know, there are some specialty lines insurers which have valuations which seem relatively large on compared to us. And yet, when I look at our growth, our size, our scale, like, where everybody's good, in many ways better. And then in our protection plans business, that's also a highly competitive business. So, we didn't get Walmart and Home Depot because we're no good. We got it because we compete on the things I was talking about. And Mario already talked about international, but maybe you guys want to comment on what you're seeing at the ground level in auto and home, and then in protection plans.
Speaker #5: And there are some specialty lines insurers which have valuations which seem relatively large on a compared to us. And yet when I look at our growth, our size, our scale, like where everybody's good in many ways better, and then in our protection plans business, that's also highly competitive business.
Speaker #5: So we didn't get Walmart and Home Depot because we're no good. We got it because we compete on the things I was talking about.
Cars, uh, in the United States in total or in any of the states. So, if you're over 4 Points, you're picking up market share, so we are transforming a growth plan, has helped us pick up market. Share homeowners is kind of the same, but a little different because about half of the business is done by Mutual. So, as you point out, uh, they have a different profit requirements that said we've been able to, uh, grow that business. Uh, it's what we think is higher than market share with a fair amount of constraints on, uh, uh, catastrophe losses, um, and earn of economic rents better than the industry by a large margin. So,
Speaker #5: And Mario already talked about international, but maybe you guys want to comment on what you're seeing at the ground level in auto and home and then in protection plans.
Speaker #3: Yeah, sure. So I think, Greg, where I would start is Mario covered transformative growth. And when I think about the competitive environment, I really go back to all of the efforts and investments we've made in transformative growth.
Jesse Merten: Yeah, sure. So, you know, I think, Greg, where I would start is Mario covered Transformative Growth, and when I think about the competitive environment, I, I really go back to all of the efforts and investments we've made in Transformative Growth. So think, focusing on affordability, right? This isn't the first quarter we've been focused on affordability. It's in ASC, Affordable, Simple, and Connected, and we've rolled out significant number of states with that new product. We continue to drive down expenses and focus on claims, again, to lower costs. Marketing sophistication makes us better able to compete in this environment. And then, you know, the broad platform that we have, the broadest platform in the industry, exclusive agents, independent agents, and direct business, allows us to compete differently in all the different product lines that Tom went through.
Jesse Merten: Yeah, sure. So, you know, I think, Greg, where I would start is Mario covered Transformative Growth, and when I think about the competitive environment, I, I really go back to all of the efforts and investments we've made in Transformative Growth. So think, focusing on affordability, right? This isn't the first quarter we've been focused on affordability. It's in ASC, Affordable, Simple, and Connected, and we've rolled out significant number of states with that new product. We continue to drive down expenses and focus on claims, again, to lower costs. Marketing sophistication makes us better able to compete in this environment. And then, you know, the broad platform that we have, the broadest platform in the industry, exclusive agents, independent agents, and direct business, allows us to compete differently in all the different product lines that Tom went through.
Speaker #3: So think focusing on affordability, right? This isn't the first quarter we've been focused on affordability. It's in ASC, Affordable, Simple, and Connected. And we've rolled out significant number of states with that new product.
Speaker #3: We continue to drive down expenses and focus on claims. Again, to lower costs, marketing sophistication makes us better able to compete in this environment.
We feel really good about continuing to compete at auto insurance, continue to compete in home insurance. In fact, we think home insurance has more growth potential. We think we dial up growth and so just in Mario may want to comment on these 2. So specialty lines. Uh, we also, uh, we don't talk much about it. Uh, and, you know, there are some specialty lines insurers, which have valuations, which seem, uh, relatively large on them, compared to us. Uh, And yet, when I look at our growth, our size, our scale, like, where everybody is good in, in many ways better. Um, and then in our protection plans business, uh, that's also a highly competitive business. So, uh, we didn't get Walmart in Home Depot because we're no good. We got it because we compete on the things I was talking about.
Speaker #3: And then the broad platform that we have, the broadest platform in the industry exclusive agents, independent agents, and direct business allows us to compete differently in all the different product lines that Tom went through.
and Mario already talked about International but maybe you guys want to comment on what you're seeing at the ground, level in auto and home and then in protection plans,
Speaker #3: So I feel good about the investment. the lines, the results show that. And I think when you go through So as Tom said on slide 11, we showed we have six states growing greater than 10%, 14 from 4 to 10%.
Jesse Merten: So I feel good about the investment, and I think when you go through the lines, the results show that. So as Tom said on slide 11, we showed we have 6 states growing greater than 10%, 14 from 4% to 10%. So that's 20%, or sorry, 20 states that are picking up share. We have 38 states growing in total, and they make up about 70% of our premiums. So in the auto line, we're showing proof that Transformative Growth works. If I flip to home, homeowners insurance is growing in 36 states. We've got ASC in 31 of those states, and we have some significant launches in the back half of the year. The reason that's important is we can better compete on a direct basis in homeowners when we have the ASC product.
Jesse Merten: So I feel good about the investment, and I think when you go through the lines, the results show that. So as Tom said on slide 11, we showed we have 6 states growing greater than 10%, 14 from 4% to 10%. So that's 20%, or sorry, 20 states that are picking up share. We have 38 states growing in total, and they make up about 70% of our premiums. So in the auto line, we're showing proof that Transformative Growth works. If I flip to home, homeowners insurance is growing in 36 states. We've got ASC in 31 of those states, and we have some significant launches in the back half of the year. The reason that's important is we can better compete on a direct basis in homeowners when we have the ASC product.
Yeah sure. So you know I think Greg where I would start is Mario covered transformative growth and when I think about the competitive environment I I really go back to
Speaker #3: So that's 20% or sorry, 20 states that are picking up share. We have 38 states growing in total. And they make up about 70% of our premium.
Speaker #3: So in the auto line, we're showing proof that transformative growth works. If I flip to home, homeowners insurance is growing at 36 states. We've got ASC in 31 of those states.
Speaker #3: And we have some significant launches in the back half of the year. The reason that's important is we can better compete on a direct basis in homeowners when we have the ASC product.
Speaker #3: We see great traction. And I think we've proven that that's a product that can be sold on a direct basis when we get ASC into the market.
Jesse Merten: We see great traction, and I think we've proven that that's a product that can be sold on a direct basis when we get ASC into the market. So we're seeing very good trends in elevated production levels, particularly on the web, in the homeowners line. And then, as Tom said, it's good to give one of our specialty lines, renters, some attention. We have, I think Mario mentioned, 30 states in ASC. The renters line is growing faster than auto and home, so we're picking up share in growing the renters line, and we're doing it all at profitable levels. So it continues to run below target profitability. So as I look across those lines, and there's other specialty lines we could talk about, but I think we're seeing the results of investing in Transformative Growth.
Jesse Merten: We see great traction, and I think we've proven that that's a product that can be sold on a direct basis when we get ASC into the market. So we're seeing very good trends in elevated production levels, particularly on the web, in the homeowners line. And then, as Tom said, it's good to give one of our specialty lines, renters, some attention. We have, I think Mario mentioned, 30 states in ASC. The renters line is growing faster than auto and home, so we're picking up share in growing the renters line, and we're doing it all at profitable levels. So it continues to run below target profitability. So as I look across those lines, and there's other specialty lines we could talk about, but I think we're seeing the results of investing in Transformative Growth.
Speaker #3: So we're seeing very good trends in elevated production levels, particularly on the web in the homeowners line. And then as Tom said, it's good to give one of our specialty lines renters some attention.
All of the efforts and Investments we've made in transformative growth. So think focusing on affordability, right? This isn't the first quarter we've been focused on affordability. It's in ASC affordable, simple and connected and we've rolled out significant number of states with that new product. We continue to drive down expenses and focus on claims again to lower costs. Marketing sophistication makes us better able to compete in this environment and then you know the broad platform that we have the broadest platform in the industry, exclusive agents, independent, agents and Direct business allows us to compete differently. In all the different product lines, that Tom went through. So I feel good about the investment and I think when you go through the lines, the results show that. So as Tom said, on slide 11,
Speaker #3: We have I think Mario mentioned 30 states in ASC, the renters line is growing faster than auto and home. So we're picking up share in growing the renters line and we're doing it all at profitable levels.
Speaker #3: So it continues to run below target profitability. So as I look across those lines, and there's other specialty lines we could talk about, but I think we're seeing the results of investing in transformative growth.
We showed we have 6 states growing greater than 10%, 14 from 4% to 10%. So that's 20 states that are picking up share. We have 38 states growing in total, and they make up about 70% of our premiums. So, in the auto line, we're showing proof that transformative growth works. If I flip to home, homeowners insurance is growing in 36 states. We've got ASC in 31 of those states, and we have some significant launches in the back half of the year.
Speaker #3: We're seeing the results of the system working to help position us competitively to your question. To continue to win. So that's kind of my view of the property liability business.
Speaker #3: We're seeing the results of the system working to help position us competitively to your question. To continue to win. So that's kind of my view of the property liability business.
Jesse Merten: We're seeing the results of the system working to help position us competitively, to your question, to continue to win. So that's kind of my view of the property liability business.
Jesse Merten: We're seeing the results of the system working to help position us competitively, to your question, to continue to win. So that's kind of my view of the property liability business.
Speaker #2: Yeah. And Greg, the only thing I'd add on protection plans. We've grown that to be a 2.3 billion business. And we've done it in a variety of ways.
Thomas Wilson: Yeah, and Greg, the only thing I'd add on protection plans, you know, we've grown that to be a $2.3 billion business, and we've done it in a variety of ways. First, as Tom mentioned, it is a highly competitive business, both in terms of incumbents and new entrants into the market. But we've been able to leverage the capabilities at Allstate Protection Plans to add new partners, like Tom mentioned, with Home Depot and Walmart, and a number of those logos that you saw on the slide that I covered. We've expanded into new categories, into appliances and furniture, and so we've seen growth there. And then we've been able to expand geographically.
Mario Rizzo: Yeah, and Greg, the only thing I'd add on protection plans, you know, we've grown that to be a $2.3 billion business, and we've done it in a variety of ways. First, as Tom mentioned, it is a highly competitive business, both in terms of incumbents and new entrants into the market. But we've been able to leverage the capabilities at Allstate Protection Plans to add new partners, like Tom mentioned, with Home Depot and Walmart, and a number of those logos that you saw on the slide that I covered. We've expanded into new categories, into appliances and furniture, and so we've seen growth there. And then we've been able to expand geographically.
The reason that's important is we can better compete on a direct basis in homeowners. When we have the ASD product, we see great traction, and I think we've proven that that's a product that can be sold on a direct basis. When we get ASC into the market, we're seeing very good trends and elevated production levels, particularly on the web in the homeowners line.
Speaker #2: First, as Tom mentioned, it is a highly competitive business both in terms of incumbents and new entrants into the market. But we've been able to leverage the capabilities at Allstate Protection Plans to add new partners like Tom mentioned with Home Depot and Walmart and a number of those logos that you saw on the slide that I covered.
Speaker #2: We've expanded into new categories, into appliances, and furniture, and so we've seen growth there. And then we've been able to expand geographically. Our business in Europe is expanding rapidly with some very large mobile carriers and consumer electronic carriers as well within Europe.
Thomas Wilson: Our business in Europe is expanding rapidly with some very large mobile carriers and consumer electronics carriers as well within Europe. And there's opportunity for us in Asia Pacific as well. So the playbook has been to continue to leverage capabilities, enhance our capabilities, and use that to expand in a number of different ways in what is a very competitive market, and we've been really successful at doing that.
Mario Rizzo: Our business in Europe is expanding rapidly with some very large mobile carriers and consumer electronics carriers as well within Europe. And there's opportunity for us in Asia Pacific as well. So the playbook has been to continue to leverage capabilities, enhance our capabilities, and use that to expand in a number of different ways in what is a very competitive market, and we've been really successful at doing that.
Speaker #2: And there's opportunity for us in Asia Pacific as well. So the playbook has been to continue to leverage capabilities, enhance our capabilities, and use that to expand in a number of different ways in what is a very competitive market.
And then the Tom said, it's good to give 1 of our specialty lines renters some attention. We have, I think Mario mentioned, 30 States in ASC. The rent design is growing faster than auto and home. So we're picking up share in growing the renters line and we're doing it all at profitable levels. So it continues to run below Target profitability. So as I look across those lines and there's other specialty lines we can talk about, but I think we're seeing the results of investing and transformative growth. We're seeing the results of the system working to help position us competitively to your question, uh, to continue to win. So that's kind of my view of the, the property liability business. Yeah. And, and Greg did the only thing I'd add on, uh, protection plans. Um, you know, we've grown that to be a 2.3 billion dollar, uh, business and we've done it in a variety of ways. First, as Tom mentioned, it, it is a highly competitive, uh, business both in terms of incumbents, uh, and new entrance into the market. But we've been able to leverage the capabilities, uh, at Allstate protection. Plans to
Speaker #2: And we've been really successful at doing
Speaker #2: that. Got it.
Gregory Peters: Got it. Thanks for the additional detail.
Gregory Peters: Got it. Thanks for the additional detail.
Speaker #1: Thanks for the additional
Speaker #1: detail. Thank you.
Operator: Thank you, and our next question comes from the line of Yaron Kinar from Jefferies. Your question, please.
Operator: Thank you, and our next question comes from the line of Yaron Kinar from Jefferies. Your question, please.
Speaker #4: And our next question comes from the line of your own Connor. Connor from Mizzou. Your question, please.
Speaker #5: Thank you, good morning. Maybe to stick on to remain on the subject of PIF, for auto PIF, does slide 11 include the decreases in the legacy insurance and Encompass policies?
Yaron Kinar: Thank you. Good morning. Just to stick on, to remain on the subject of PIF. For auto PIF, does slide 11 include the decreases in the legacy Esurance and Encompass policies? And when do you expect that drag to end?
Yaron Kinar: Thank you. Good morning. Just to stick on, to remain on the subject of PIF. For auto PIF, does slide 11 include the decreases in the legacy Esurance and Encompass policies? And when do you expect that drag to end?
Speaker #5: And when do you expect that drag to end?
Speaker #1: So make sure I get the question. Are you talking about the overall numbers or the after-brand numbers that we
Speaker #1: So make sure I get the question. Are you talking about the overall numbers or the after-brand numbers that we put? Yeah, I guess my
Jesse Merten: So make sure I get the question. Are you talking about the overall numbers or the active brands numbers that we put?
Thomas Wilson: So make sure I get the question. Are you talking about the overall numbers or the active brands numbers that we put?
Yaron Kinar: Yeah, I guess my question is, is slide 11 just for active brands, or does it also include the drag from the other, the Esurance and Encompass policies?
Yaron Kinar: Yeah, I guess my question is, is slide 11 just for active brands, or does it also include the drag from the other, the Esurance and Encompass policies?
Leverage capabilities, enhance our capabilities uh and use that to expand in a number of different ways in what is a very competitive market and we've been really successful at doing that.
Speaker #5: question is slide 11 just for active brands or does it also include the drag from the other insurance and Encompass
Got it. Thanks for the additional detail.
Speaker #5: policies?
Jesse Merten: Yeah, Yaron, this is Jeff. It includes the inactive brands as well. So to the extent we're losing policies, that's reflected in this chart.
Jesse Merten: Yeah, Yaron, this is Jeff. It includes the inactive brands as well. So to the extent we're losing policies, that's reflected in this chart.
Thank you. And our next question comes from the line. If you're on Conair Kenard from mizo your question, please?
Speaker #1: includes the inactive brands Yeah, you're wrong. This is Justin. It
Speaker #1: as well. So to the extent we're losing policies, that's reflected in this chart. Yeah, we hold ourselves accountable for total growth. We're not into I mean, we do show the active brands because people found that interesting.
Thomas Wilson: Yeah, we hold ourselves accountable for total growth. We're not into, I mean, we do show the active brands because people found that interesting. Active brands are up 3.3%. But, you know, we should be accountable for our overall growth.
Thomas Wilson: Yeah, we hold ourselves accountable for total growth. We're not into, I mean, we do show the active brands because people found that interesting. Active brands are up 3.3%. But, you know, we should be accountable for our overall growth.
Speaker #1: I think active brands are 3.3%. But we should be accountable for overall growth.
Thank you. Uh, good morning. Um, need to stick to the, remain on the subject of, uh, PIFs. Um, for auto PIFs, does slide 11 include the decreases in the legacy insurance and Encompass policies? And, and when do you expect that drag to end?
Speaker #5: Okay. And when do you expect that drag from the non-active brands to end?
Yaron Kinar: Okay. And when do you expect that drag from the non-active brands to end?
Yaron Kinar: Okay. And when do you expect that drag from the non-active brands to end?
Thomas Wilson: That's not... I would look at the chart Jeff showed, that showed it by state. Another question is, how do we get some of those red states into the blue states? And we're working on all those. We've had some good movement in one state, recently, but we still have a couple of other states that we need to make some changes in. So it's less about the brands, though shutting down those old brands is really part of TG and cutting costs. Like, we just don't need all the technology, the separate advertising, how we cut all that stuff out. That's how we're getting expenses down. So, and we try to roll some of that business into the Allstate brand.
So make sure I get the question. Are you talking about the overall number or the answer Brands numbers that would, please
Speaker #1: That's not I would look at the chart just showed that showed by state. And another question is how do we get some of those red states into the blue states?
Thomas Wilson: That's not... I would look at the chart Jeff showed, that showed it by state. Another question is, how do we get some of those red states into the blue states? And we're working on all those. We've had some good movement in one state, recently, but we still have a couple of other states that we need to make some changes in. So it's less about the brands, though shutting down those old brands is really part of TG and cutting costs. Like, we just don't need all the technology, the separate advertising, how we cut all that stuff out. That's how we're getting expenses down. So, and we try to roll some of that business into the Allstate brand.
Yeah, I guess my question is, is slide 11 just for active brands, or does it also include the drag from the other—the insurance and, uh, Encompass policies?
Speaker #1: And we're working on all those. We've had some good movement in one state recently. But we still have a couple of other states that we need to make some change at.
Speaker #1: So it's less down those old brands. It's really part of TG and cutting costs. If we just don't need all the technology, the separate advertising, I would cut all that stuff out.
Yeah, you're well this is just, it includes the enact, the inactive Brands as well. So to the extent we're losing policies. That's reflected in this chart. Yeah, we hold ourselves accountable for total growth because we're not into I mean, we do show the active Brands because people found that interest having active branch of 3.3%. It's but uh, you know, we should be accountable for overall growth.
Speaker #1: That's how we're getting expensive now. business into the Allstate brand. So I would really focus on it, Your Honor, from a state standpoint and say how do we have those reds all become blue and shift the blue even farther to the right.
Okay. And when do you expect that drag from the non-active brands to attend
Thomas Wilson: So, I would really focus on it, Yaron, from a state standpoint and say, "How do we have those reds all become blue, and shift the blue even farther to the right, so we're picking up share everywhere?
Thomas Wilson: So, I would really focus on it, Yaron, from a state standpoint and say, "How do we have those reds all become blue, and shift the blue even farther to the right, so we're picking up share everywhere?
Speaker #1: So we're picking up share
Speaker #1: everywhere. The other thing that you can watch,
Jesse Merten: The other thing that you can watch, Yaron, is the rollout of Custom 360. Right? So when we roll out and Custom 360 is in 36 states at the end of the year. And so as you watch us continue to roll that out, that is, effectively, that's what replaces the Encompass brand. So that, that's something you can keep an eye on as well.
Jesse Merten: The other thing that you can watch, Yaron, is the rollout of Custom 360. Right? So when we roll out and Custom 360 is in 36 states at the end of the year. And so as you watch us continue to roll that out, that is, effectively, that's what replaces the Encompass brand. So that, that's something you can keep an eye on as well.
Speaker #2: Your Honor, is the rollout of custom 360. So when we roll and custom 360 is in 36 states. At the end of the year.
Speaker #2: And so as you watch us continue to roll that out, that is brand. So that's something you can keep an eye on as well.
It shows by state, uh, and the other question is, how do we get some of those red states into the blue states? And we're working on all those. Uh, we have—we've had some good movement in one state recently. Uh, but we still have a couple of other states that we need to make some change at. So it's less about the brands or shutting down those old brands. It's really probably the teaching and cutting costs.
Speaker #5: Thank you. And then shifting gears to the regulatory and legislative changes, I guess one question I have and I don't know if it's something you've discussed with the relevant parties is a two or even three-year look back to determine excess profitability too short of a time period?
Yaron Kinar: Thank you. And then shifting gears a bit to the regulatory and legislative changes, I guess one question I have, and I don't know if it's something you've discussed with the relevant parties, is a 2- or even 3-year look back to determine excess profitability too short of a time period?
Yaron Kinar: Thank you. And then shifting gears a bit to the regulatory and legislative changes, I guess one question I have, and I don't know if it's something you've discussed with the relevant parties, is a 2- or even 3-year look back to determine excess profitability too short of a time period?
If we just don't need all the technology, the separate advertising, I would cut all that stuff out. That's how we're getting expenses now. So, uh, and we try to roll some of that business into the Allstate brand. So I would really focus on it. You're on from a, a state standpoint and say how do we have those Reds all become blue uh and shift the blue even further to the right. So we're picking up share everywhere.
Thomas Wilson: ... I think it would by line, right? So homeowners would be a longer period of time because you have big catastrophes that go. I guess, though, my general reaction is, I don't know what excess profits mean, right? Like, so in the homeowners business, the industry loses money. And so if the if legislators or regulators want customers to pay less, having the insurance industry, in total, lose money, is not the right way to go. That's the message we're trying to say. Like, you can't ask, you know, companies to give up more of their capital to support lower prices, because that's not sustainable, because they only have so much capital. And then you look at us and you say, well, we do better than the industry in profitability in the homeowners.
Thomas Wilson: ... I think it would by line, right? So homeowners would be a longer period of time because you have big catastrophes that go. I guess, though, my general reaction is, I don't know what excess profits mean, right? Like, so in the homeowners business, the industry loses money. And so if the if legislators or regulators want customers to pay less, having the insurance industry, in total, lose money, is not the right way to go. That's the message we're trying to say. Like, you can't ask, you know, companies to give up more of their capital to support lower prices, because that's not sustainable, because they only have so much capital. And then you look at us and you say, well, we do better than the industry in profitability in the homeowners.
Speaker #1: think it would depend by line, right? So homeowners would be a longer period of time because you have to catastrophes that go. I guess, though, my general reaction is I don't know what excess profits mean.
Speaker #1: Right? So in the homeowners business, the industry loses money. And so I if legislators or regulators want customers the insurance industry as a total lose money is not the right way to go.
Thank you. Um, and then shifting gears about to to the Regulatory and legislative changes. Guess 1, 1 question. I I have and and I don't know if it's something you've discussed with uh the the relevant uh parties. Um is
Speaker #1: to say. You can't ask That's the message we're trying companies to give up more of their capital to support lower prices because that's not sustainable because they only have so much capital.
Is a 2 or even 3 year? Look, back to determine assess profitability too. Short of a time period.
Speaker #1: you say, "Well, we do better than And then you look at us and the industry in profitability in homeowners." I don't think there's excess.
Thomas Wilson: I don't think that it's excess, I just think we're better. And so, you know, we have better products, better costs, better this. And so I'm sort of not in the camp of people should be thinking about excess profits. I'm like, let's get costs down. Totally agree with that. And the way to get costs down are to address costs, because we're a cost-plus industry, not to go after what some people might perceive to be excess rents. It's a highly competitive market. We earn every dollar legitimately we make in homeowners because we're good at it, and our customers still get great value.
Thomas Wilson: I don't think that it's excess, I just think we're better. And so, you know, we have better products, better costs, better this. And so I'm sort of not in the camp of people should be thinking about excess profits. I'm like, let's get costs down. Totally agree with that. And the way to get costs down are to address costs, because we're a cost-plus industry, not to go after what some people might perceive to be excess rents. It's a highly competitive market. We earn every dollar legitimately we make in homeowners because we're good at it, and our customers still get great value.
Um, I, I think it was reflected by line, right? So homeowners would be a longer period of time because you have catastrophes that go
Speaker #1: I just think we're better. And so we have better products, better costs, better than. And so I'm sort of not in the camp of people should be thinking about excess profits.
Speaker #1: I'm like, "Let's get costs down." Totally agree with that. And the way to get costs down are to address costs because we're a cost-plus industry, not to go after what some people might perceive to be excess rents.
Speaker #1: It's a highly competitive market. We earn every dollar legitimately we make in homeowners because we're good at it. And our
Speaker #5: Thank
Speaker #5: you.
Jesse Merten: Thank you.
Jesse Merten: Thank you.
Speaker #4: Thank you. And our next question comes from the line of Rob Cox from Goldman Sachs. Your question, value. please.
Operator: Thank you. Our next question comes from the line of Robert Cox from Goldman Sachs. Your question, please.
Operator: Thank you. Our next question comes from the line of Robert Cox from Goldman Sachs. Your question, please.
Speaker #5: Hey, thanks. Good morning. So my first question is just business penalty I think Allstate's mix of growth here is coming more from new business than on curious how the new business average historically.
Robert Cox: Hey, thanks. Good morning. So first question is just on, you know, new business penalty. I think Allstate's mix of growth here is coming more from new business than on average historically. So I'm curious how the new business penalty has trended relative to your expectations, and if we should expect margins to potentially normalize quicker than in past cycles because of all the new apps growth.
Robert Cox: Hey, thanks. Good morning. So first question is just on, you know, new business penalty. I think Allstate's mix of growth here is coming more from new business than on average historically. So I'm curious how the new business penalty has trended relative to your expectations, and if we should expect margins to potentially normalize quicker than in past cycles because of all the new apps growth.
I guess though, my general reaction is I don't know what excess profits mean, right? Like so in the homeowners business, the industry loses money. Uh, and so, if the if if legislators are Regulators, want customers to pay less, uh, having the insurance industry is total lose money. Uh, is not the right way to go, that's the message, you're trying to say, like you can't ask, you know, companies to give up more of their Capital to support lower prices because that's not sustainable because they only have so much Capital. Uh, and then you look at us and you say, well, we do better than the industry in, uh, in profitability in the home owners. I don't think there's excess. I just think we're better. Uh, and so, you know, we have better products, better costs better that and so,
I'm sorry, not in the camp of people should be thinking about excess profits. I'm like, let's get costs down. Totally agree with that. Uh, and the way to get costs down are to address costs.
Because we're a Cost Plus.
Speaker #5: penalty has trended relative to your So I'm expectations and if we should expect margins to potentially on new normalize quicker than in past cycles because of all the new apps growth.
Thomas Wilson: I'll make a couple of overall comments and then, Jess can jump in here. First, with the increasing pricing sophistication, you have, I would just say in general, less new business penalty because you can be much more precise about what you charge people. So we're much more sophisticated in pricing. That said, you do sometimes, when you have acquisition costs, you've got to spend money in advertising to get people, and it does cost more money to get a new customer than to keep a customer. And so it does. There is some penalty there. It depends by the type of business you bring. So, a lot of our growth in the last couple of years has been driven by expanding in the higher risk drivers, or what's traditionally called non-standard business.
Speaker #1: I'll make a couple of overall comments and then Justin can jump in here. First, with the increasing pricing sophistication you have I would just say in general less new business penalty because you can be much more precise about what you charge people.
Thomas Wilson: I'll make a couple of overall comments and then, Jess can jump in here. First, with the increasing pricing sophistication, you have, I would just say in general, less new business penalty because you can be much more precise about what you charge people. So we're much more sophisticated in pricing. That said, you do sometimes, when you have acquisition costs, you've got to spend money in advertising to get people, and it does cost more money to get a new customer than to keep a customer. And so it does. There is some penalty there. It depends by the type of business you bring. So, a lot of our growth in the last couple of years has been driven by expanding in the higher risk drivers, or what's traditionally called non-standard business.
History, not, uh, to go after what some people might perceive to be excess rents. We it's a highly competitive market. We earn every dollar legitimately we make in homeowners, because we're good at it and our customers, still get great value.
Thank you.
Thank you. And our next question comes from the line of Rob Cox from Goldman Sachs. Your question, please.
Speaker #1: So we're much more sophisticated in pricing. That said, you do sometimes when you have acquisition costs, you got to spend money. And advertising to get people in, it does cost more money to get a new customer than to keep a customer.
Speaker #1: And so it does there is some penalty there. It depends by the type of business you bring. So a lot of our growth in the last couple of years has been driven by expanding in the higher risk drivers or what's traditionally called non-standard.
Morning. Uh, so first question is just on, um, you know, new business penalty. I think all states mix of growth here is coming more from new business uh, than on average historically. So I'm curious how the new business penalty has trended relatives to your expectations. And if we should expect margins to potentially normalize quicker than in past Cycles because of all the new apps growth,
Speaker #1: Business. And that has a smaller new business penalty because it's going to hang around less. So you're looking at it in terms of lifetime value of your cost.
Thomas Wilson: That has a smaller new business penalty because it's gonna hang around less. So you, you're looking at it in terms of lifetime value of your cost. That said, we feel very comfortable we can grow with Transformative Growth, increase market share, and still earn our attractive target margins. The system works, like, the math works to grow and handle whatever the new business penalty is, whether that's non-standard or standard auto. Jess, anything you want to add to that?
Thomas Wilson: That has a smaller new business penalty because it's gonna hang around less. So you, you're looking at it in terms of lifetime value of your cost. That said, we feel very comfortable we can grow with Transformative Growth, increase market share, and still earn our attractive target margins. The system works, like, the math works to grow and handle whatever the new business penalty is, whether that's non-standard or standard auto. Jess, anything you want to add to that?
Speaker #1: That said, we feel very comfortable we can grow with transformative growth, increase market share, and still earn our attractive target margins in the system works like the math works to grow and handle whatever the new business penalty is, whether that's non-standard or standard.
Jesse Merten: No, I would just say that, you know, it's a state-by-state evaluation that we do. We're aware of both mix of business. As Tom said, the non-standard or the high-risk business is priced to make money right away. So we can focus on mix of businesses as we look at potential new business penalty. You also have seen we've lowered ASC rates in 32 states, right? So we're managing overall profitability on a state-by-state basis, considering both target margins and what potential new business penalty we project out. But overall, I would say it's something that we're very focused on, again, at a granular state level.
Jesse Merten: No, I would just say that, you know, it's a state-by-state evaluation that we do. We're aware of both mix of business. As Tom said, the non-standard or the high-risk business is priced to make money right away. So we can focus on mix of businesses as we look at potential new business penalty. You also have seen we've lowered ASC rates in 32 states, right? So we're managing overall profitability on a state-by-state basis, considering both target margins and what potential new business penalty we project out. But overall, I would say it's something that we're very focused on, again, at a granular state level.
Speaker #2: that it's a state-by-state evaluation that we do or where both mix of business, as Tom said, the non-standard or the high-risk business is priced to make money right away.
Speaker #2: So we can focus on mix of businesses we penalty you also have seen we've lowered look at potential new business ASC rates in 32 states, right?
Speaker #2: So we're managing overall profitability on a state-by-state basis considering both business penalty we project out. But overall, I would say it's something that we're very granular state level.
Um, I'll make a couple of overall comments, and then, uh, just can jump in here, um, first, uh, with the increasing pricing sophistication. Uh, you have, uh, I would just say in general, less new business penalty because you're going to be much more precise about what you charge people. So we're much more sophisticated pricing, that said, uh, you do sometimes we get acquisition cards, you got to spend money, uh, and advertise them to give people. And it does cost more money to get a new customer than, uh, to keep a customer. And so it does, there is some penalty there. Um, it depends by the type of business you bring. So, uh, a lot of our growth in the last couple of years has been driven by expanding in the higher risk drivers or what's traditionally called, non-standard, uh, business and then has a smaller new business penalty because it's going to hang around less. So you you're looking at it in terms of lifetime, value of your cost.
Robert Cox: Thank you. That makes sense. And then just to follow up on, you know, specifically independent agents, channel. I think. So the growth in the IA channel, new apps accelerated quarter-over-quarter, which is somewhat of a step change from historical seasonality, from what we can tell. And you've got a number of factors improving growth, but I was hoping you could just walk through the primary drivers of the improvement in new apps, specifically within the IA channel.
Robert Cox: Thank you. That makes sense. And then just to follow up on, you know, specifically independent agents, channel. I think. So the growth in the IA channel, new apps accelerated quarter-over-quarter, which is somewhat of a step change from historical seasonality, from what we can tell. And you've got a number of factors improving growth, but I was hoping you could just walk through the primary drivers of the improvement in new apps, specifically within the IA channel.
Speaker #5: That makes sense. And then just to follow up on specifically independent agents channel, I think so the growth in the IA quarter over quarter, which is somewhat of a step change from historical seasonality from what we can tell in you've got a number of factors improving growth, but I was hoping you could just walk through the primary drivers of the improvement in new apps specifically within the IA
Thomas Wilson: I'll, I'll provide some overview and then Jess can jump in. First, I would say, I wouldn't really look at the new apps by quarter by channel. I'm gonna take you up a minute, and then Jess can talk about what's going on in the future. So, Transformative Growth was maintain the productivity of the Allstate agents, and we've done that. We're writing more new business through our Allstate agents with fewer of them. So productivity is actually up. We have dramatic growth in both direct and independent agents. Mario and I were talking about, I think we're writing, like, 5 times in direct what we used to write before we got started. So it's a 500% increase in direct. And, and those are big numbers. It's not off, like, writing one policy.
Thomas Wilson: I'll, I'll provide some overview and then Jess can jump in. First, I would say, I wouldn't really look at the new apps by quarter by channel. I'm gonna take you up a minute, and then Jess can talk about what's going on in the future. So, Transformative Growth was maintain the productivity of the Allstate agents, and we've done that. We're writing more new business through our Allstate agents with fewer of them. So productivity is actually up. We have dramatic growth in both direct and independent agents. Mario and I were talking about, I think we're writing, like, 5 times in direct what we used to write before we got started. So it's a 500% increase in direct. And, and those are big numbers. It's not off, like, writing one policy.
Speaker #1: I'll provide some overview and then Justin can jump in. First, I would say I wouldn't really look at the new apps by quarter by channel.
Um, that said, uh, we we feel very comfortable. We can grow, uh, with transformative growth increased market share, uh, and still earn uh, our attractive Target margins. Uh, the the system works like the math Works to grow and handle whatever the new business penalty is whether that's non-standard or standard just anything you want to add to that. No I would just say that you know it's a state-by-state evaluation that we do are aware of both mix of business and Tom said that the non-standard or the high-risk business is priced to make money right away. So we can focus on mix of businesses. We look at potential new business penalties. You also have seen we've lowered ASC rates in 32 states, right. So we're managing overall profitability on a state-by-state basis considering uh both Target margins. And what potential new business penalty would project out. But overall, I would say it's something that we're very focused on again in a in a granular state level.
Speaker #1: So I'm going to take you up a minute and then Justin can talk about what's going on in the future.
Thank you, that makes sense.
Speaker #1: growth was maintain the productivity, the Allstate agents, and we've done that. We're writing more new business through Allstate agents with fewer of them. So productivity is channel.
Speaker #1: actually up. We have dramatic and independent agent Mara and I were talking about. I think we're writing like five times in direct what we used to write when we get before we got started.
And then just to follow up on, you know, specifically independent agents uh Channel. Um, I think so the growth in the IH Channel and the new apps accelerated quarter over quarter which is somewhat of a step change from historical seasonality from what we can tell and
you've got a number of factors improving growth, but
Speaker #1: So that's a 500% increase in direct. And those are big numbers. It's not off like writing one policy. And you showed. The independent agent business, we also expanded quite rapidly.
I was hoping you could just walk through the primary drivers of the improvement in new apps, specifically within the IIA channel.
Thomas Wilson: And you can see that in the chart that Mario showed. The independent agent business, we also expanded quite rapidly. In part, that was, of course, because we bought National General, because we were in the independent agent business, and we just weren't that good at it. So we bought them, they made us a lot better. We then expanded the non-standard business by a number of states, so that drove some growth. And there's lots of room to grow in the independent agent channel, as Jess has mentioned, with 360. So that's the overview. What would you— Is there something specific that you think you want to talk about relative to the quarter or maybe the prospects for IA?
Thomas Wilson: And you can see that in the chart that Mario showed. The independent agent business, we also expanded quite rapidly. In part, that was, of course, because we bought National General, because we were in the independent agent business, and we just weren't that good at it. So we bought them, they made us a lot better. We then expanded the non-standard business by a number of states, so that drove some growth. And there's lots of room to grow in the independent agent channel, as Jess has mentioned, with 360. So that's the overview. What would you— Is there something specific that you think you want to talk about relative to the quarter or maybe the prospects for IA?
Speaker #1: In part, can see that in the chart that Mario that was of course because we bought National General because we were in the independent agent business and we just weren't that good at it.
Um, I'll provide some overview and then Jesse can jump in first. I would say I wouldn't really look at the UFs by quarter, by channel. Um, I'll take a minute and then Jesse can talk about what's going on in the future. So, um,
Speaker #1: So we bought them. They made us a lot better. We then expanded the non-standard business by a number of states. So that drove some growth.
Speaker #1: And there's lots of room to grow in the independent agent channel as Justin has mentioned with 360. So that's the overview. What would you do?
Speaker #1: Is there something specific to quarter or maybe the you think you want to talk about relative
Speaker #1: prospects for IA? I would focus on the
Jesse Merten: I would focus on the progress prospects. I think specific to the quarter, we continue to see really good balance across all distribution channels. So to your point, Tom, I don't think focusing on one quarterly trend is as important as overall production and the balance that we get EA, IA, and direct. A lot of the growth in the independent agent channel has been the higher risk drivers and, you know, or non-standard. And we're continuing to focus as we look into 2026, at both rolling out the new Custom 360 product, but we're doing other things to make sure that we engage independent agents in the middle market, standard, and preferred segment, where we still believe there's a huge opportunity where we can compete with best-in-class products and engage them differently beyond just the high-risk drivers.
Jesse Merten: I would focus on the progress prospects. I think specific to the quarter, we continue to see really good balance across all distribution channels. So to your point, Tom, I don't think focusing on one quarterly trend is as important as overall production and the balance that we get EA, IA, and direct. A lot of the growth in the independent agent channel has been the higher risk drivers and, you know, or non-standard. And we're continuing to focus as we look into 2026, at both rolling out the new Custom 360 product, but we're doing other things to make sure that we engage independent agents in the middle market, standard, and preferred segment, where we still believe there's a huge opportunity where we can compete with best-in-class products and engage them differently beyond just the high-risk drivers.
Speaker #2: prospects. I think specific to the quarter, we continue to see really good balance across all distribution channels. So to your point, Tom, I don't think focusing on one quarterly trend is as important as overall production and the balance that we get EA IA and direct.
Speaker #2: A lot of the growth in the independent agent channel has been the higher risk drivers or non-standard and we're continuing to focus as we look into 2026 that both rolling out the new custom we engage independent agents in the middle market, standard, and preferred segment where we still believe there's a huge opportunity where we can compete high-risk drivers.
transformative growth was maintained, the productivity of the Allstate agents and we've done that. We're writing more new business through our city agents with fewer of them. So I have productivity is actually up. We have dramatic growth, uh, in both direct and independent Asia power. And I were talking about, I think we're right in like 5 times, uh, in uh, direct what we used to write when we get before we got started. So it's a 500% increase in direct and and those are big numbers. It's not off like writing 1 policy. Uh and uh and you can see that in the chart that Mario showed the independent agent business. Uh we also expanded quite rapidly in part that was of course because we bought National General because we were in the independent agent business. So we just weren't that good at it.
Uh, so we bought them, they made us a lot better. We then expanded the non-standard business by a number of states. So that drove some growth and there's lots of room to grow in the independent agent Channel as Justice mentioned with 360. So, that's the overview. What would you do is there something specific? Do you think when I talk,
Speaker #2: And so I look at 360 product that we're doing other things to make sure that both the strength in production in Q4 And engage them differently beyond just the as a positive, but I look forward to what we're doing in 2026 to continue to see growth in IA beyond the higher risk driver segment.
Jesse Merten: So, you know, I look at both the strength in production in Q4 as a positive, but I look forward to what we're doing in 2026 to continue to see growth in IA beyond the higher-risk driver segment.
to the quarter, or maybe the prospect for a
Jesse Merten: So, you know, I look at both the strength in production in Q4 as a positive, but I look forward to what we're doing in 2026 to continue to see growth in IA beyond the higher-risk driver segment.
Speaker #1: Maybe in this, I think we'll tie together with price comment and what Justin just said. And which is competition. But let's go down to a state level.
Thomas Wilson: Maybe, and this, I think, will tie together with Greg's comment, and what Jess just said, and which is competition. But let's go down to a state level. Let's take state A, and Jess has got a team working on that state A. And let's say that there's nobody that the exclusive agent competition doesn't really have much of a presence there. So we have—we can hit hard on our exclusive agent presence, expand it, and off we go. Let's say that we want to then compete with GEICO in that market, and we can ramp up our direct stuff.
Thomas Wilson: Maybe, and this, I think, will tie together with Greg's comment, and what Jess just said, and which is competition. But let's go down to a state level. Let's take state A, and Jess has got a team working on that state A. And let's say that there's nobody that the exclusive agent competition doesn't really have much of a presence there. So we have—we can hit hard on our exclusive agent presence, expand it, and off we go. Let's say that we want to then compete with GEICO in that market, and we can ramp up our direct stuff.
Speaker #1: Let's take state A and Justin has got a team working on that state
Speaker #1: there's nobody that the exclusive agent competition doesn't really have much of a presence there. So we can hit hard on our exclusive agent presence, expand it, and off we go.
Speaker #1: Let's say that we want to then compete with GEICO in that market and we can ramp up with best-in-class products. our direct stuff. So we have and the same thing is true with independent agents.
Thomas Wilson: So we have and the same thing is true with independent agents, and once we broaden that portfolio to independent agents, besides just being non-standard, and having, you know, what are more traditional mainstream Custom 360 products. So we have many ways to compete at an individual level with all the different carriers, and nobody has all those levers. That doesn't mean we're going to win in every state, doesn't mean everybody should go home, but it does mean we feel very comfortable about the balance of ways we have to compete from distribution, sophisticated pricing, really good advertising, low expenses. We have plenty of ways we can grow.
Thomas Wilson: So we have and the same thing is true with independent agents, and once we broaden that portfolio to independent agents, besides just being non-standard, and having, you know, what are more traditional mainstream Custom 360 products. So we have many ways to compete at an individual level with all the different carriers, and nobody has all those levers. That doesn't mean we're going to win in every state, doesn't mean everybody should go home, but it does mean we feel very comfortable about the balance of ways we have to compete from distribution, sophisticated pricing, really good advertising, low expenses. We have plenty of ways we can grow.
Speaker #1: And once we broaden that portfolio to independent agents besides just being having what are more traditional mainstream custom 360 products, so non-standard, and we have many ways to compete at an individual level with all the different carriers.
Um, and which is competition.
Speaker #1: those levers. That doesn't mean we're going to win in And nobody has all every state. It doesn't mean everybody should go home. But it does mean we feel very comfortable about the balance of ways we have to compete from distribution, sophisticated pricing, really good advertising, low expenses.
Speaker #1: We have plenty of ways we can
Speaker #1: grow. Thank
Bob Huang: Thank you.
Robert Cox: Thank you.
Speaker #6: Thank you. And our next question comes you. from the line of Bob Huang from Morgan Stanley. Your question,
Operator: Thank you. Our next question comes from the line of Bob Huang from Morgan Stanley. Your question, please.
Operator: Thank you. Our next question comes from the line of Bob Huang from Morgan Stanley. Your question, please.
Speaker #6: please. Hi.
Bob Huang: Hi, good morning. I want to throw a little bit of a curveball here. Autonomous driving, it's been an increasingly more topical discussion. Just curious on your thinking, like, your view on the pace of the technological development there, and then how that could potentially impact personal auto, just from a... Like, is it more of a threat? Is it more of an opportunity? How you're thinking about it, how you're positioning it? That's the first question.
Bob Huang: Hi, good morning. I want to throw a little bit of a curveball here. Autonomous driving, it's been an increasingly more topical discussion. Just curious on your thinking, like, your view on the pace of the technological development there, and then how that could potentially impact personal auto, just from a... Like, is it more of a threat? Is it more of an opportunity? How you're thinking about it, how you're positioning it? That's the first question.
Speaker #7: Good morning. I want to throw a little bit of a curveball here. Autonomous driving, it's been an increasingly more topical discussion. Just curious on your view on the pace of the technological development there and then how that could potentially impact personal auto just from a is it more of a threat?
Uh, but let's go down to a state level. Let's take State a, uh, and just has got a team working on that state. A, uh, and let's say that uh there's nobody that uh, the uh, the exclusive agent competition, doesn't really have much of a presence here. So we have we can hit hard on our exclusive, agent, presence, expanded. And off we go, let's say that uh we want to then compete with uh Geico in that market. And uh we can ramp up our direct stuff. So we have in the same thing is true with independent agents and once we've broadened that portfolio to Independent agents, besides just being non-standard. Uh, and having, you know, what are more traditional mainstream customers 360 products. So, we have many ways to compete, and an individual level with all the different carriers and nobody has all those levers. That doesn't mean we're going to win in, every state doesn't mean everybody should go home. Uh, but it does mean we feel very comfortable about the balance of
Speaker #7: Is it more of an opportunity? How you're thinking about it? How you're positioning it? That's the first
Speaker #7: question. So on
Ways we have to compete from distribution, sophisticated pricing, really good advertising, low expenses. We have plenty of ways we can grow.
Thomas Wilson: So on autonomous driving, I would say it's a curveball we've been watching for about 15 years. And that's a good thing, because we've been at it for 15 years. So we've been in telematics. We now have over 2 trillion miles of data. You need that kind of data to be able to adjust to what autonomous driving can do and what different cars can do. So, the autonomous driving is, think of it, it's almost like safer driving. And so you have fully autonomous might be the safest because we take people completely out of it, but there are steps along the way. So you're seeing that in declines in frequency.
Thomas Wilson: So on autonomous driving, I would say it's a curveball we've been watching for about 15 years. And that's a good thing, because we've been at it for 15 years. So we've been in telematics. We now have over 2 trillion miles of data. You need that kind of data to be able to adjust to what autonomous driving can do and what different cars can do. So, the autonomous driving is, think of it, it's almost like safer driving. And so you have fully autonomous might be the safest because we take people completely out of it, but there are steps along the way. So you're seeing that in declines in frequency.
Speaker #1: autonomous driving, I would say it's a curveball we've been watching for about 15 years. And that's a good thing because we've been asked it for 15 years.
Thank you.
Speaker #1: So we've been in telematics. We now have over 2 trillion miles of data. You need that kind of data to be able to adjust to what autonomous driving can do and what different cars can do.
Speaker #1: So autonomous driving is think of it as almost like safer driving. And so you have fully autonomous, might be the safest because we take people completely out of it.
Speaker #1: But there are steps along the way. So you're seeing that in declines in frequency. And so whether that's the little light on the side of your rear or your side view mirror or that's the beep beep thing when you're backing up or the camera, there's lots of things that have impacted frequency.
Thomas Wilson: So, whether that's the little light on the side of your rear or your side view mirror, or that's the beep beep thing when you're backing up, or the camera, there's lots of things that have impacted frequency. Now, what that has also done, though, is increase severity, because replacing all the equipment is not cheap. So as we've been modeling that out for 15 years, we've been watching it. We think there is potential that it will continue to get safer, frequency go down. We'll see what happens with severity. I think eventually we'll figure out how to engineer these cars to not be as expensive as they are today.
Thank you. And our next question comes from the line of Bob. Huang from Morgan. Stanley. Your question, please. Hi. Uh good morning. I I want to throw a little bit of a curveball here. Um I taught us driving is it's been an increasingly, more topical discussion. Uh just curious on your think like your view on the pace of the technological development there and then how that could potentially impact personal Auto uh just from a like, is it more of a threat? Is it more of an opportunity, how you're thinking about it, how you're positioning it? That's the first question.
Thomas Wilson: So, whether that's the little light on the side of your rear or your side view mirror, or that's the beep beep thing when you're backing up, or the camera, there's lots of things that have impacted frequency. Now, what that has also done, though, is increase severity, because replacing all the equipment is not cheap. So as we've been modeling that out for 15 years, we've been watching it. We think there is potential that it will continue to get safer, frequency go down. We'll see what happens with severity. I think eventually we'll figure out how to engineer these cars to not be as expensive as they are today.
Speaker #1: Now, what that has also done, though, is increase severity because replacing all that equipment is not cheap. So as we've been modeling that out for 15 years, we've been watching it.
Speaker #1: We think there is potential that it will continue to get safer. Frequency would go down. We'll see what happens with severity. I think eventually we'll figure out how to engineer these cars to not be as expensive as they are feel like there's as long as we're today.
Thomas Wilson: But in all that case, we feel like there's, as long as we're ahead in pricing, we're very sophisticated, we're involved in telematics, we're watching the data, and then we'll be fine. In terms of the pace of change, one of the things that's different about this technology change than some other technology changes, so if you go to, like, the software and AI and stuff like that, you know, that can happen very rapidly. Here, you got $4 trillion in hardware, and you got to turn over that hardware. It doesn't mean the hardware can't be turned over, it just takes $4 trillion to do it, as opposed to, I'm gonna unplug this piece of software because I can use AI to program.
Thomas Wilson: But in all that case, we feel like there's, as long as we're ahead in pricing, we're very sophisticated, we're involved in telematics, we're watching the data, and then we'll be fine. In terms of the pace of change, one of the things that's different about this technology change than some other technology changes, so if you go to, like, the software and AI and stuff like that, you know, that can happen very rapidly. Here, you got $4 trillion in hardware, and you got to turn over that hardware. It doesn't mean the hardware can't be turned over, it just takes $4 trillion to do it, as opposed to, I'm gonna unplug this piece of software because I can use AI to program.
Speaker #1: ahead in pricing, we're very sophisticated, we're involved in telematics, we're watching the data, and then we'll But in all that case, we be fine.
So on autonomous driving—uh, I would say it's a curveball we've been watching for about 15 years. Uh, and that's a good thing because we've been answering for 15 years. So we've been in telematics. We now have over 2 trillion miles of data. You need that kind of data to be able to adjust the dynamics driving can do and what different—regards to the autonomous driving is, think of it, it's almost like safer driving. Uh, and so you have fully autonomous, might be the safest because we take people completely out of it. Uh, but there are steps along the way. So you're seeing that in declines in frequency, uh, and—
Speaker #1: In terms of the pace of change, one of the things that's different about this technology change than some other technology changes, so if you go to like the software and AI and stuff like that, that can happen very rapidly.
Speaker #1: Here you got $4 trillion in hardware, and you got a turnover that hardware. It doesn't mean the hardware can't be turned over. It just takes $4 trillion to do it as opposed to, "I'm unplugged this piece of software," because I can use AI to program.
Speaker #1: So the pace of change will come, but it's at a curveball pace where you can watch it so you can hit
Thomas Wilson: So the pace of change will come, but it's at a curveball pace where you can watch it, so you can hit it.
Thomas Wilson: So the pace of change will come, but it's at a curveball pace where you can watch it, so you can hit it.
Speaker #1: it. Got it.
Bob Huang: Got it. Really appreciate that. So as long as the curveball you're seeing, hopefully it's a home run. Maybe a follow-up on that severity point. Yeah.
Bob Huang: Got it. Really appreciate that. So as long as the curveball you're seeing, hopefully it's a home run. Maybe a follow-up on that severity point. Yeah.
Speaker #7: Really appreciate that. So as long as the curveball you're seeing, hopefully it's a home run. Maybe a follow-up on that severity point. Yeah, for
Speaker #1: Yeah.
Thomas Wilson: You're about to share.
Thomas Wilson: You're about to share.
Bob Huang: Yeah, for sure. So, but maybe on that severity point, right? Like, if I look at your slide, on essentially, like, the cost split between Physical Damage, injury, and expenses, obviously, Bodily Injury is about 1/3 of that. If we're believers that autonomous is going to reduce frequency, on the point of severity, shouldn't theoretically we see an improvement in severity, so, like, pretty immediately? Like, how do you think about the parts cost versus the Bodily Injury component of that?
Bob Huang: Yeah, for sure. So, but maybe on that severity point, right? Like, if I look at your slide, on essentially, like, the cost split between Physical Damage, injury, and expenses, obviously, Bodily Injury is about 1/3 of that. If we're believers that autonomous is going to reduce frequency, on the point of severity, shouldn't theoretically we see an improvement in severity, so, like, pretty immediately? Like, how do you think about the parts cost versus the Bodily Injury component of that?
Speaker #7: sure. So maybe on that severity point, right, if I look at your slide, on essentially the cost split between physical damage, injury, and expenses, obviously bodily injury is about a third of that.
So, uh, whether that's the little light on the side of your rear, or your side view mirror or that's the beep, beep thing. When you're backing up or the camera, there's lots of things that have impacted frequency. Now what that has also done, though is increased the vary because replacing all the equipment is not cheap. Uh so as we we've been modeling that out for 15 years we've been watching it. We think there is potential that that it will continue to get safer, frequency we go down. We'll see what happens to very I think. Eventually we'll figure out how to engineer these cars to not be as expensive as they are today. Um but uh in all that case we feel like there's as long as we're ahead in pricing, we're very sophisticated, we're involved in telematics, we're watching the data uh and then we'll be fine in terms of the pace of change. Um 1 of the things that's different about this technology change than some other technology changes. So if you go to like the software and Ai and stuff like that,
Speaker #7: If we're believers that autonomous is going to reduce frequency, on the point of severity, shouldn't theoretically we see an improvement in severity? So pretty immediately, how do you think about the parts cost versus the bodily injury component of that?
Um, you know, that can happen, very rapidly here. You got 4 trillion dollars in Hardware, uh, and you got to turn over that Hardware. It doesn't mean the hardware can't be turned over. It just takes 4 trillion dollars, dude. As opposed to, I'm going to unplug this piece of software because I can use AI to program. So the pace of change will come, but it's at a curveball Pace where you can watch it, so you can hit it.
Speaker #1: Autonomous
Thomas Wilson: Autonomous cars?
Thomas Wilson: Autonomous cars?
Speaker #1: cars? Yes,
Bob Huang: Yes, sir.
Bob Huang: Yes, sir.
Got it, really appreciate that. So as long as the curveball you're seeing, hopefully as a home run—um, maybe a follow-up on that severity point. Yeah,
Speaker #1: Okay. Yeah. I sir. just want to make sure I got the question right. Actually, the severity goes up. Because you have fewer small fender benders so you don't back into the pole when you're at the grocery store.
Thomas Wilson: Yeah, okay. Yeah, I just want to make sure I got the question right. Actually, the severity goes up, because you have fewer small fender benders. So you don't back into the pole when you're at the grocery store, and so you don't have $1,000. So that said, if you're going, you know, 75 miles an hour, the autonomous safe driving stuff doesn't really help much. So we've actually seen the Bodily Injury severity go up. It's a little hard to parse into, to do. In fact, it's impossible to do attribution as to whether that's because people were driving faster. We know that from our Telematics data that people are driving faster, and so there's more severe accidents.
Thomas Wilson: Yeah, okay. Yeah, I just want to make sure I got the question right. Actually, the severity goes up, because you have fewer small fender benders. So you don't back into the pole when you're at the grocery store, and so you don't have $1,000. So that said, if you're going, you know, 75 miles an hour, the autonomous safe driving stuff doesn't really help much. So we've actually seen the Bodily Injury severity go up. It's a little hard to parse into, to do. In fact, it's impossible to do attribution as to whether that's because people were driving faster. We know that from our Telematics data that people are driving faster, and so there's more severe accidents.
Speaker #1: And so you don't have a $1,000. So that said, if you're going 75 miles an hour, the autonomous safe driving stuff doesn't really help much.
Yeah, for sure. Um so but maybe on that severity points, right? Like um, if I look at your slide uh on on essentially like the the cost split between physical damage injury and expenses,
Speaker #1: So we've actually seen the bodily injury severity go up. It's a little hard to parse and to do, in fact, it's impossible to do attribution as to whether that's because people were driving faster.
Speaker #1: We know that from our telematics data, that people are driving faster. And so there's more severe accidents. But we can't say how much of the 50-some percent was due to that versus how much is just due to the fact that attorneys are very aggressive in getting to anybody who's been in an accident for anything and saying, "I can represent you and give you some money.
Autonomous cars.
Thomas Wilson: But we can't say how much of the 50-some percent was due to that versus how much is just due to the fact that attorneys are very aggressive in getting to anybody who's been in an accident for anything and saying, "I can represent you and give you some money, it doesn't cost you anything." So most people buy that. We have to figure out how we control that cost, but I can't give you an attribution of how much was because of runaway tort costs and how much is just people going faster and driving into more severe accidents.
Thomas Wilson: But we can't say how much of the 50-some percent was due to that versus how much is just due to the fact that attorneys are very aggressive in getting to anybody who's been in an accident for anything and saying, "I can represent you and give you some money, it doesn't cost you anything." So most people buy that. We have to figure out how we control that cost, but I can't give you an attribution of how much was because of runaway tort costs and how much is just people going faster and driving into more severe accidents.
Yes, sir.
Yeah, okay. Yeah, I just want to make sure I got the question, right. Uh, actually the severity goes up.
Speaker #1: It doesn't cost you anything." So most people buy that. We have to figure out how we control that cost. But I can't give you an attribution of how much was because of runaway tort costs and how much is just people going faster and driving into more severe accidents.
Uh because you have fewer smaller vendors, uh so you don't back into the pole when you're at the grocery store. Uh and so you don't have a thousand dollars. So that said, if you're going uh you know 75 miles an hour uh the autonomous safe driving stuff doesn't really help much. So we've actually seen the bodily injury severity, go up.
Speaker #7: Okay. Thank you very much. Really appreciate
Joshua Shanker: Okay, thank you very much. Really appreciate that.
Bob Huang: Okay, thank you very much. Really appreciate that.
Speaker #7: that. Thank
Speaker #6: you. And our next question comes from the line of Elise Greenspan from Wells Fargo. Your question,
Operator: Thank you. And our next question comes from the line of Elise Greenspan from Wells Fargo. Your question, please.
Operator: Thank you. And our next question comes from the line of Elise Greenspan from Wells Fargo. Your question, please.
Speaker #6: please. Hi.
Elyse Greenspan: Hi, thanks. My first question, I just wanted to start with, you know, capital. You guys announced a new buyback program that's higher than the last authorization. So just trying to get a sense of, you know, is the priority now just to take, you know, excess capital and use it for share repurchase? Or, you know, is M&A, I guess, further down the list in terms of capital priorities right now? Just looking to get an update there.
Elyse Greenspan: Hi, thanks. My first question, I just wanted to start with, you know, capital. You guys announced a new buyback program that's higher than the last authorization. So just trying to get a sense of, you know, is the priority now just to take, you know, excess capital and use it for share repurchase? Or, you know, is M&A, I guess, further down the list in terms of capital priorities right now? Just looking to get an update there.
Speaker #8: Thanks. My first question on I just wanted to start with capital. You guys announced a new buyback program. That's higher than the last authorization.
Speaker #8: So just trying to get a sense of is the priority now just to take excess capital and use it for share repurchase or are you is M&A, I guess, further down the list in terms of capital priorities right now?
It's a little hard to parse into to do infected. It's impossible to do attribution as to, whether that's because people were driving faster. We know that from our telematics data that people are driving faster and so there's more severe accidents but we can't say how much of the 50 some percent was due to that versus. How much is just due to the fact that attorneys are are very aggressive uh, in getting to anybody who's been in an accident for anything and saying I can represent you and give you some money, it doesn't cost you anything. So most people buy that uh, we have to figure out how we can control that cost, but I can't give you an attribution of how much was would was because of runaway toward
Speaker #8: Just looking to get an update there.
Cost and how much is just people going faster and driving into more severe accidents?
Thomas Wilson: The priority, Elise... Sorry, I'm hearing an echo. The priority, Elise, would be to maximize the amount of money we create for shareholders from that capital. And, first is just organic growth. So we look at capital and like, first thing, just start grow auto, home, get the multiple rerate, that should drive the stock, up just on the multiple rerate, forget the fact that you're earning more money on capital, and we're getting exceptionally high returns, in our businesses you can see this year. Will it always be, you know, have a 3 on it? No, but, is that still way higher than the S&P 500? 100%. So we feel very good about, the organic growth in that driving business. Second, then we say, well, what other things?
Okay, thank you very much. Really appreciate that.
Speaker #1: The priority at least sorry, I'm hearing an echo. The priority at least would be to maximize the amount of money we create for shareholders from that capital.
Thomas Wilson: The priority, Elise... Sorry, I'm hearing an echo. The priority, Elise, would be to maximize the amount of money we create for shareholders from that capital. And, first is just organic growth. So we look at capital and like, first thing, just start grow auto, home, get the multiple rerate, that should drive the stock, up just on the multiple rerate, forget the fact that you're earning more money on capital, and we're getting exceptionally high returns, in our businesses you can see this year. Will it always be, you know, have a 3 on it? No, but, is that still way higher than the S&P 500? 100%. So we feel very good about, the organic growth in that driving business. Second, then we say, well, what other things?
Thank you. And our next question comes from the line of Elise Greenspan from Wells Fargo. Your question, please?
Speaker #1: And first is just organic growth. So we look at capital like first and just start to grow auto, home, get the multiple re-rate that should drive the stock up just on the multiple re-rate forget the fact that you're earning more money on capital and we're getting exceptionally high returns in our business as you can see this year.
Speaker #1: We'll always be have a 3 on it? No. But is that still way higher than the S&P 500? 100%. So we feel very good about the organic growth in that driving business.
Hi thanks. Um my first question, um on, I just wanted to start with um you know Capital you guys announced um, a new buyback program, um, that's higher than the last authorization. So just trying to get a sense of, you know, is is the priority now just to take um you know, excess capital and use it um for share repurchase or you know, are you, you know, is m&a I guess further down the list in terms of capital priorities right now just looking to get an update there.
Um, the priority.
Speaker #1: Second, then we say, "Well, what other things? Where are we a better owner of a business?" So when we bought Square Trade, we were a better owner and they were better for us.
Thomas Wilson: Where are we a better owner of a business? So when we bought SquareTrade, we were a better owner, and they were better for us. When we bought National General, we were a better owner. So and that's where we're leveraging our skills, our capabilities. And then we say, okay, well, where are we in capital? We are long capital now. We think with a $4 billion share repurchase, we're still long capital. We have plenty of capital. We've always had a lot of capital. So, and we feel like this is a way to give that cash back to shareholders, so they can deploy it in a way that gives them the kind of returns we're able to get with somebody else. If we think we can get higher than that, we will.
Thomas Wilson: Where are we a better owner of a business? So when we bought SquareTrade, we were a better owner, and they were better for us. When we bought National General, we were a better owner. So and that's where we're leveraging our skills, our capabilities. And then we say, okay, well, where are we in capital? We are long capital now. We think with a $4 billion share repurchase, we're still long capital. We have plenty of capital. We've always had a lot of capital. So, and we feel like this is a way to give that cash back to shareholders, so they can deploy it in a way that gives them the kind of returns we're able to get with somebody else. If we think we can get higher than that, we will.
Speaker #1: When we bought National General, we were a better owner. So and that's where we're leveraging our skills, our capabilities. And then we say, "Okay, well, where are we in capital?" We are long capital now.
Speaker #1: We think with a $4 billion share repurchase, we're still long capital. We have plenty of capital. We've always had a lot of capital. So and we feel like this is a way to give that cash back to shareholders so they can deploy it in a way that gives them the kind of returns we're able to get with somebody else.
I'm hearing in Echo, the priority. At least would be to maximize the amount of money we create for shareholders from that Capital. Um, and, uh, first is just organic growth. So we look at Capital like first and just start to grow Auto home, get multiple rewrites that should drive the stock, uh, up just on the multiple review, rate, forget that to your earning more money on Capitol, and we're getting exceptionally High returns, uh, in our business, as you can see this year. Well, it always be, you know, uh, have a 3M know, uh, but uh, is that still way higher than the S&P 500 100%. Uh, so we feel very good
Speaker #1: If we think we can get higher than that, we will. But we also think the stock is so cheap that it's a really good deal for those shareholders who want to hang with us.
Thomas Wilson: But we also think the stock is so cheap that it's like a really good deal for those shareholders who want to hang with us. And, you know, you can increase your ownership. And as John pointed out, we've helped people, those people who stay with us, to increase their ownership dramatically. Since I've been here, I think we've bought back over 80% of the share. So we're happy that, those, you know, people want to sell, then that's fine. Those who believe in the story, we think there's huge shareholder returns coming here.
Thomas Wilson: But we also think the stock is so cheap that it's like a really good deal for those shareholders who want to hang with us. And, you know, you can increase your ownership. And as John pointed out, we've helped people, those people who stay with us, to increase their ownership dramatically. Since I've been here, I think we've bought back over 80% of the share. So we're happy that, those, you know, people want to sell, then that's fine. Those who believe in the story, we think there's huge shareholder returns coming here.
Speaker #1: And you can increase your ownership in this job pointed out. We've helped people. Those people who stayed with us increase their ownership dramatically. Since I've been here, I think we've bought back over 80% of the shares.
Speaker #1: So we're happy that those people want to sell, then that's fine. Those who believe in the story we think there's huge shareholder returns coming here.
Speaker #8: Thanks. And then my follow-up question in auto, right? The average gross premiums written per policy turned negative in the fourth quarter. I know you guys have been taking less price, right?
Elyse Greenspan: Thanks. And then my follow-up question, in auto, right? The average gross premiums written per policy turned negative in Q4. I know you guys have been taking less price, right? But there's still been positive price running through the book, right, if I look at the disclosure in the supplement. So I'm just trying to tie those two figures and then, you know, just more color on why that, you know, premiums written, you know, inflected negatively in the quarter.
Elyse Greenspan: Thanks. And then my follow-up question, in auto, right? The average gross premiums written per policy turned negative in Q4. I know you guys have been taking less price, right? But there's still been positive price running through the book, right, if I look at the disclosure in the supplement. So I'm just trying to tie those two figures and then, you know, just more color on why that, you know, premiums written, you know, inflected negatively in the quarter.
Speaker #8: But there's still been positive price running through the book, right? If I look at the disclosure in the supplement. So I'm just trying to tie those two figures and then just more color on why that premiums written inflected negatively in the
Speaker #8: But there's still been positive price running through the book, right? If I look at the disclosure in the supplement. So I'm just trying to tie those two figures and then just more color on why that premiums written inflected negatively in the quarter.
About uh, the organic growth in that drive business, second that we say, well what other things, where are we a better owner of a business? Uh, so when we bought square trade, we were a better owner uh and they were better for us when we bought National General. We were a better owner. So and that's where we're leveraging our skills, our capabilities. Uh, and then we say, okay, well uh, where are we in Kappa? We are long Capital. Now, we think with a $0 billion dollar share, we purchase. We're still logged Capital, we have plenty of capital. We've always had like Capital, so, um, and we feel like this is a way to give that cash back to shareholders, so they can deploy it in a way that gives them the kind of returns. We're able to get with somebody else, uh, if we think we can get higher than that, we will. Uh, but we also think the stock is so cheap that it's like, a really good deal for those shareholders who want to hang with us. Uh, and, uh, you know, if you can increase your ownership,
Thomas Wilson: It's a complicated piece of analysis to do, because you have both the rates you talked about. You also have the mix, the coverages, the state levels, and so, you know, if you look at what a non-standard policy generates versus standard. So it's complicated, but I think where you're going is, what should you be thinking about in terms of profitability, if the average premium is going down? And I would say, I would go back to the slide that Jess showed, where we've reduced prices this year, by over $800 million in this year. We still earn great returns. So we're focused on giving customers the most affordable price we can and still getting our target margins. We obviously had a Combined Ratio that was better than our target margin this year.
Thomas Wilson: It's a complicated piece of analysis to do, because you have both the rates you talked about. You also have the mix, the coverages, the state levels, and so, you know, if you look at what a non-standard policy generates versus standard. So it's complicated, but I think where you're going is, what should you be thinking about in terms of profitability, if the average premium is going down? And I would say, I would go back to the slide that Jess showed, where we've reduced prices this year, by over $800 million in this year. We still earn great returns. So we're focused on giving customers the most affordable price we can and still getting our target margins. We obviously had a Combined Ratio that was better than our target margin this year.
Speaker #1: It's a complicated piece of analysis to do. Because you have both the rates you talked about. You also have the mix, the coverages, the state levels, and so if you look at what a non-standard policy generates versus standard.
This job pointed out. Uh We've helped people those people who stay with us, increase your ownership dramatically. Now since I've been here, I think we bought back over 80% of this year so we're happy that those you know people want to sell then that's fine. Uh those who believe in the story. Uh, we think there's 2 shareholder returns coming up.
Speaker #1: So it's complicated. But I think where you're going is what should you be thinking about in terms of profitability. We have to average premiums going down.
Speaker #1: And I would say I would go back to the slide that Jess showed where we've reduced prices this year by over 800 million dollars in this year.
Speaker #1: We still earn great returns. So we're focused on giving customers the most affordable price we can and still getting our target margins. We obviously had a combined ratio that was better than our target margin this year.
Thanks Tom. And then my follow-up question. Um, in Auto write the um, average um, gross premiums written per policy. Um, turn negative in the fourth quarter. Um, I know you guys have been taking less price, right? But there's still been positive price running through the book, right? If I look at the disclosure, um, in the supplement. So I'm just trying to tie those 2 figures and then, you know, just more color on on why that you know, premiums written, um, you know, inflected negatively in the quarter.
It's a complicated piece of analysis to do.
Because you have both.
The rates you talked about.
Speaker #1: So do I think that the combined ratio will drift up over time? Yes. And that's because we're going to grow faster.
Thomas Wilson: So do I think that the Combined Ratio will drift up over time? Yes, and that's because we're going to grow faster.
Thomas Wilson: So do I think that the Combined Ratio will drift up over time? Yes, and that's because we're going to grow faster.
You also have the mix, the coverage is the state levels. Uh, and so, you know,
Speaker #8: Thank
Speaker #8: you. Thank you.
Elyse Greenspan: Thank you.
Elyse Greenspan: Thank you.
Operator: Thank you. And our next question comes from the line of Joshua Shanker from Bank of America. Your question, please.
Operator: Thank you. And our next question comes from the line of Joshua Shanker from Bank of America. Your question, please.
Speaker #6: And our next question comes from the line of Joshua Shanker from Bank of America. Your question,
Speaker #6: And our next question comes from the line of Joshua Shanker from Bank of America. Your question, please. Yeah.
Joshua Shanker: Yeah, thank you. Elise, who is super smart, asked the first part of my question, but I wanted to go into the second part. One thought that I had is maybe premium per policy is coming down because of Allstate's flexibility, and maybe people are buying down coverage. I want to know if that's true, and if that's true, does that help retention, which has been weak, and it doesn't seem to be necessarily getting better so far? I guess it's a bit complicated. Is there something to that effect going on?
Joshua Shanker: Yeah, thank you. Elise, who is super smart, asked the first part of my question, but I wanted to go into the second part. One thought that I had is maybe premium per policy is coming down because of Allstate's flexibility, and maybe people are buying down coverage. I want to know if that's true, and if that's true, does that help retention, which has been weak, and it doesn't seem to be necessarily getting better so far? I guess it's a bit complicated. Is there something to that effect going on?
Speaker #9: Thank you. Elise, who is super smart, asked the first part of my question, but I wanted to go into the second part. One thought that I had is maybe premium per policy is coming down because of Allstate's flexibility and maybe people are buying down coverage.
Speaker #9: I want to know if that's true and if that's true, does that help retention, which has been weak and it doesn't seem to be necessarily getting better so far?
Speaker #9: I guess it's a bit complicated, but is there something to that effect going on?
If if you look at what a non-standard policy generates versus standard. So it's complicated. But I, I think where you're going, is, what should you be thinking about in terms of profitability? Uh, with the average premium is going down and I would say, I would go back to the slide that just shows where we've reduced prices this year, uh, by over 800 million dollars in this year and we still earn great returns. So we're focused on giving customers the most affordable price we can and still getting our Target margins. We obviously had a combined ratio that was better than our Target margin this year. So do I think that the combined ratio will drift up over time? Yes. Uh and that's because we're going to grow faster.
Thomas Wilson: Let me address a couple points, and maybe Jess or Mario want to jump in here. First, I would just, and maybe this is defensive, but I wouldn't call our retention weak. I would say, you know, compared to some of the other companies, and it's better. Other places, it's not as good. It's like I'd like to have, you know, some other company's retention as well, but we are working on retention. You are correct in that price does impact retention, which is why we went back and did the SAVE program. And we'll do the same program again this year. Like, we're very happy with these results.
Speaker #1: I mean, address for a couple of points and maybe Jess or Mario want to jump in here. First, I would just and maybe this is defensive, but I wouldn't call our retention weak.
Thomas Wilson: Let me address a couple points, and maybe Jess or Mario want to jump in here. First, I would just, and maybe this is defensive, but I wouldn't call our retention weak. I would say, you know, compared to some of the other companies, and it's better. Other places, it's not as good. It's like I'd like to have, you know, some other company's retention as well, but we are working on retention. You are correct in that price does impact retention, which is why we went back and did the SAVE program. And we'll do the same program again this year. Like, we're very happy with these results.
Thank you.
Thank you. And our next question comes from the line of Joshua Chancre from Bank of America. Your question, please.
Speaker #1: I would say compared to some of the other companies and it's better, other places it's not as good. I'd like to have some other companies' retention as well.
Speaker #1: But we are working on retention. You are correct in that price does impact retention. Which is why we went back and did the SAFE program.
Yeah, thank you. At least who is super smart as the first part of my question, but I wanted to go into the second part, uh, 1. I thought that I had is maybe, uh, premium for policies coming down because of all takes flexibility and maybe people are buying down coverage. I want to know if that's true. And if that's true, does that help
Speaker #1: And we'll do the SAFE program again this year. We're very happy with its results. We also have an effort coming up, which is to move people from what we would call our classic Allstate brand products, those pre-affordable simple connected, and move them into affordable simple connected, which we think will also help us from a lifetime value retention.
Help, uh, retention which has been weak. And it doesn't seem to be necessarily getting better so far. I guess it's a bit complicated because there's something to that effect going on.
Thomas Wilson: We also have an effort coming up, which is to move people from what we would call our classic Allstate brand products, those pre-Affordable, Simple, and Connected, and move them into Affordable, Simple, and Connected, which we think will also help us from a lifetime value retention. It might mess up the numbers a little bit because somebody shows up at a different step, but we are focused on trying to improve retention to that point. Coverage does matter. We want our customers to have the right amount of coverage, not too little, not too much. The SAVE program helps us go back to them and say, "Hey, what's different in your life? Is your teenager no longer at home? Do you have a different car? You know, do you want to have a higher deductible?
Thomas Wilson: We also have an effort coming up, which is to move people from what we would call our classic Allstate brand products, those pre-Affordable, Simple, and Connected, and move them into Affordable, Simple, and Connected, which we think will also help us from a lifetime value retention. It might mess up the numbers a little bit because somebody shows up at a different step, but we are focused on trying to improve retention to that point. Coverage does matter. We want our customers to have the right amount of coverage, not too little, not too much. The SAVE program helps us go back to them and say, "Hey, what's different in your life? Is your teenager no longer at home? Do you have a different car? You know, do you want to have a higher deductible?
I mean address for a couple places maybe just from I don't want to jump in here. Um,
Speaker #1: It might mess up the numbers a little bit because somebody shows up at a different sub, but we are focused on trying to improve retention to that point.
Speaker #1: Coverage does matter. We want our customers to have the right amount of coverage, not too little, not too much. The SAFE program helps us go back to them and say, "Hey, what's different in your life?
Speaker #1: Is your teenager no longer at home? Do you have a different car? Do you want to have a higher deductible? Do you need lower limits because of where you're at now?" In terms of financial position.
Thomas Wilson: Do you, do you need lower limits because of where you're at now, in terms of financial position?" So, it does make a difference. So, for example, we have found in the direct channel in one particular state, that high net worth people are still buying lower coverage because that's what they want. Like, they can choose. And we've had good growth as a result of that. So coverage is a good tool, but you want to make sure you're serving your customers well. Anything you guys would add?
Thomas Wilson: Do you, do you need lower limits because of where you're at now, in terms of financial position?" So, it does make a difference. So, for example, we have found in the direct channel in one particular state, that high net worth people are still buying lower coverage because that's what they want. Like, they can choose. And we've had good growth as a result of that. So coverage is a good tool, but you want to make sure you're serving your customers well. Anything you guys would add?
Speaker #1: So it does make a difference. But we still, for example, we have found in the direct channel in one particular state that high net worth people are still buying lower coverage because that's what they want.
First, I would just, uh, and maybe this is defensive, but I wouldn't call our retention week. Uh, I would say, you know, compare it to some of the other companies, and it's better other places. It's not as good. Like, I'd like to have, you know, some other companies retention as well. But, uh, we are working our retention, uh, if you are correct in that price does impact retention, which is why we went back and, uh, did the, um, a save program. Uh, and we'll do the same program again this year, like, we're very happy with this results. Uh, we also have, uh, an effort, uh, coming up, which is to move people from what we would call our classic Allstate Brand Products. Those pre affordable, symbol and connected, and move them into affordable, simple connected, which we think will also help us from a lifetime value. Retention. It might mess up the numbers a little bit because somebody shows up as but we're we are focused.
Speaker #1: They can choose. So and we've had good growth as a result of that. So coverage is a good tool but you want to make sure you're serving your customers well.
Speaker #1: Anything you guys would add to that?
Speaker #3: I mean, I would double down. The essence of SAFE was to do exactly what you described, right? So it's to look at coverages, look at available discounts.
Jesse Merten: I mean, I would double down. That's the essence of SAVE was to do exactly what you described, right? So it's to look at coverages, look at available discounts. That's going to drive down average premium, but we're adjusting the risk, and we're putting the policy terms, what, you know, where it makes sense for our customers. And so the 7.8 million customers save more than 5%. They saved on average of 17, and that's through exactly what you're getting at. I think it's really, again, getting at the essence of what that program was meant to do.
Jesse Merten: I mean, I would double down. That's the essence of SAVE was to do exactly what you described, right? So it's to look at coverages, look at available discounts. That's going to drive down average premium, but we're adjusting the risk, and we're putting the policy terms, what, you know, where it makes sense for our customers. And so the 7.8 million customers save more than 5%. They saved on average of 17, and that's through exactly what you're getting at. I think it's really, again, getting at the essence of what that program was meant to do.
Speaker #3: That's going to drive down average premium, but we're adjusting the risk and we're putting the policy terms, where it makes sense for our customers.
I'm trying to uh, improve retention to that point coverage. Uh does matter. Um, we want our customers to have the right amount of coverage. Not too little, not too much, the save program. Helps us. Go back to and say, hey, what's different in your life, is your teenager, no longer at home. Uh, do you have a different car, you know? Do you want to have a higher deductible? Uh, do you, do you need lower limits because of where you're at now? Uh, and
Speaker #3: And so I mean, 7.8 million customers save more than 5%. They save on average of 17, and that's through exactly what you're getting at.
Speaker #3: And I think it's really again, getting at the essence of what that program was meant to do.
Speaker #1: If we go back to where we were reporting, so we just showed this slide of 800 million dollars of reduction in premium. And I know you all know this, but keep in mind that that's different than what we were doing rate increases.
Thomas Wilson: If we go back to where we were reporting, so we just showed this slide of $800 million of reduction in premium. And I know you all know this, but keep in mind that that's different than when we were doing rate increases, and we showed you the rate increases coming through. In this case, your loss costs go down some, too. So it's not dollar for dollar that you lose that in the bottom line.
Mario Rizzo: If we go back to where we were reporting, so we just showed this slide of $800 million of reduction in premium. And I know you all know this, but keep in mind that that's different than when we were doing rate increases, and we showed you the rate increases coming through. In this case, your loss costs go down some, too. So it's not dollar for dollar that you lose that in the bottom line.
Speaker #1: And we showed you the rate increases coming through. In this case, your loss costs go down some too. So it's not dollar for dollar that you lose that in the
Speaker #1: bottom line. So
Joshua Shanker: You said that retention is good, and maybe it is, but I have a theory that I want to play out here, that we're not going back to the retentions of the pre-pandemic era. That shopping behaviors have permanently changed because affordable and connected works so well, that people can constantly change their prices and change their coverages, and that means going to different auto insurers. Are we in a new future where retentions are naturally going to be lower than they've been in the past?
Speaker #9: I want to you said that retention is good. And maybe it is, but I have a theory that I want to play out here.
Joshua Shanker: You said that retention is good, and maybe it is, but I have a theory that I want to play out here, that we're not going back to the retentions of the pre-pandemic era. That shopping behaviors have permanently changed because affordable and connected works so well, that people can constantly change their prices and change their coverages, and that means going to different auto insurers. Are we in a new future where retentions are naturally going to be lower than they've been in the past?
Speaker #9: That we're not going back to the retentions of the pre-pandemic era. That shopping behaviors have permanently changed because affordable and connected works so well that people can constantly change their price and change their coverages.
Speaker #9: And that means going to different auto insurers. Are we in a new future where retentions are naturally going to be lower than they've been in the past?
In terms of financial position. So uh, it does make a difference we. So for example, we have found in the direct channel in 1 particular state that high net worth, people are still buying lower coverage, because that's what they want, like, they can choose. So and we've had good growth. It was up there. So coverage is a, a good tool, but you want to make sure you're serving your customers. Well, uh, anything you guys would like it. I mean, I would double down. That's the essence of save was to do exactly what you described, right? So it's to look at coverages, look at available discounts that's going to drive down, average premium, but we're adjusting the risk and we're putting the policy terms, what, you know, where it makes sense for our customers. And so, I mean, 7.8 million customers save more than 5%. They saved on averages 17, and that's through exactly what you're getting at. I think it's really again, getting at the essence of what that program was meant to do, and if we go back to where we were before you, so we just showed this slide of 800 million.
Speaker #1: Shopping is up. And not everybody who shops switches, but shopping is up. So I would say yes, you would expect to see retention. so I think that's true.
Thomas Wilson: Shopping is up, and not everybody who shops switches, but shopping is up. So I would say, yes, you would expect to see retention. So I think that's true. The question is, how many of them do you keep? And that's what happens in the industry. So building an ongoing connection, so the connected part should not be underlooked. SAVE is part of being connected. So if you feel like you have a relationship, you're much less likely to shop. I would point out a couple of other things. One, while shopping is up, our new business is up much bigger than that, which shows that our advertising and broad distribution are working in this competitive environment. So even though people are shopping more, we got more places they can go, and we're more sophisticated about buying it.
Thomas Wilson: Shopping is up, and not everybody who shops switches, but shopping is up. So I would say, yes, you would expect to see retention. So I think that's true. The question is, how many of them do you keep? And that's what happens in the industry. So building an ongoing connection, so the connected part should not be underlooked. SAVE is part of being connected. So if you feel like you have a relationship, you're much less likely to shop. I would point out a couple of other things. One, while shopping is up, our new business is up much bigger than that, which shows that our advertising and broad distribution are working in this competitive environment. So even though people are shopping more, we got more places they can go, and we're more sophisticated about buying it.
Of reduction of Premium uh and I I know you all know this but uh keep in mind that that's different than what we were doing rate increases and we showed you the rate increases coming through. In this case, your loss costs go down some too so it's not dollar for dollar that you lose that in the bottom line.
Speaker #1: The and The question is how many of them do you keep? And that's what happens in the industry. So building an ongoing connection, so the connected part should not be underlooked.
so, so I want to
Speaker #1: SAFE is part of being connected. So if you feel like you have a relationship, you're much less likely to shop. I would point out a couple of other things.
Speaker #1: One, while shopping is up, our new business is up much bigger than that. Which shows that our advertising and broad distribution are working in this competitive environment.
That people can constantly change their price and change their coverages, and that means going to different auto insurance. Are we in a new future where retentions are naturally going to be lower than they've been in the past?
Tapping is up.
Speaker #1: So even though people are shopping more, we got more places they can go. And we're more sophisticated about buying it. And I would just come back to one thing.
Thomas Wilson: I would just come back to one thing. I said our retention wasn't weak. It's not as good as I want it to be. That's a message for our team, less than you.
Thomas Wilson: I would just come back to one thing. I said our retention wasn't weak. It's not as good as I want it to be. That's a message for our team, less than you.
Speaker #1: I said our retention wasn't weak. It's not as good as I want it to be. And that's a message for our team. Less than
Uh, and but not everybody who shops switches, but shopping is up. So I would say yes, you would expect to see retention. Um uh the um and uh,
Speaker #1: you. Thank
Speaker #1: you. Thank
Speaker #9: you. Thank you.
Joshua Shanker: Thank you.
Joshua Shanker: Thank you.
Operator: Thank you. Our next question comes from the line of Michael Zaremski from BMO. Your question, please.
Operator: Thank you. Our next question comes from the line of Michael Zaremski from BMO. Your question, please.
Speaker #6: And our next question comes from the line of Michael Zaremsky from BMO. Your question, please.
So I I'm I think that's true. The question is, how many of them do you keep? And that's what happens in the industry and so building an ongoing connection. So the connected part should not be underlooked to save as part of being connected.
Michael Zaremski: It's great. Good morning. I wanted to maybe focus on slide 10, auto claims process improvements, which have, you know, clearly been supporting profitability in a big way. Maybe high level, you know, you've been working on auto claim process improvements for many years now. Just trying to understand, you know, what baseball inning are we in? You know, AI, I'm sure, is helping it. Is it-- Will the benefits, are they, are-- is also more of a first mover, or this is proprietary to you all, or, you know, are you using third parties and the industry will eventually catch up over time? Just trying to understand, where we are on the journey.
Speaker #10: It's Greg, good morning. I slide 10, auto wanted to maybe focus on claims process improvements, which have clearly been supporting profitability in a big way.
Michael Zaremski: It's great. Good morning. I wanted to maybe focus on slide 10, auto claims process improvements, which have, you know, clearly been supporting profitability in a big way. Maybe high level, you know, you've been working on auto claim process improvements for many years now. Just trying to understand, you know, what baseball inning are we in? You know, AI, I'm sure, is helping it. Is it-- Will the benefits, are they, are-- is also more of a first mover, or this is proprietary to you all, or, you know, are you using third parties and the industry will eventually catch up over time? Just trying to understand, where we are on the journey.
Speaker #10: Maybe high level, you've been working on auto claim process improvements for many years now. Just trying to understand what baseball inning are we in?
Speaker #10: AI, I'm sure, is helping it. Will the benefits, are they is Allstate more of a first mover or this is proprietary to you all?
Uh, so if you feel like you have a relationship, you're M, much less likely to shop. I would point out a couple of other things 1. Um, while shopping is up, our new business is up much bigger than that, which shows that our advertising and Broad distribution are working in this competitive environment. So even though people are shocked more, we got more places, they can go, uh, and we're more sophisticated about buying it and I would just come back to 1 thing. I said our retention wasn't weak. Uh, it's not as good as I want it to be and that's a message for our team less than you.
Thank you.
Speaker #10: Or are you using third parties and the industry will eventually catch up over time? Just trying to understand where we are on the journey.
Thank you. And our next question comes from the line of Michael zimski from BMO your question, please.
Thomas Wilson: So this is Jess. I would, I would like the baseball innings analogy. You have to pause on that one and figure out exactly where. I would put us middle innings in the journey. Certainly not early innings, but not done. I think there's a lot that... We have a, I argue, a best-in-class claims organization that's really focused on the right things, as you could see on the page in the slide deck. That doesn't mean we fully implemented all of the AI-enabled technologies. It doesn't mean that we're not continuing to focus on quality. We have great leadership that is going to continue to sort of push along the journey of getting even better and lowering those costs. It, you know, if I look competitively, you mentioned, is it largely outsourced? Is this something that others will catch up on?
Speaker #1: So this is Jess. I would like the baseball innings analogy. You have to pause on that one and figure out exactly where I would put us middle innings in the journey.
Thomas Wilson: So this is Jess. I would, I would like the baseball innings analogy. You have to pause on that one and figure out exactly where. I would put us middle innings in the journey. Certainly not early innings, but not done. I think there's a lot that... We have a, I argue, a best-in-class claims organization that's really focused on the right things, as you could see on the page in the slide deck. That doesn't mean we fully implemented all of the AI-enabled technologies. It doesn't mean that we're not continuing to focus on quality. We have great leadership that is going to continue to sort of push along the journey of getting even better and lowering those costs. It, you know, if I look competitively, you mentioned, is it largely outsourced? Is this something that others will catch up on?
Speaker #1: Certainly not early innings, but not done. I think there's a lot that we have a I would argue a best in class claims organization that's really focused on the right things.
Speaker #1: As you could see, on the page in the slide deck, that doesn't mean we fully implemented all of the AI-enabled technologies. It doesn't mean that we're not going to continue to focus on quality.
Speaker #1: We have great leadership that is going to continue to sort of push along the journey of getting even better and lowering those costs. If I look competitively, you mentioned is it largely outsourced?
It's uh, Greg good morning. Um, um, I wanted to maybe focus on on slide 10, uh, Auto claims process improvements, uh, which have, you know, clearly been supporting, uh, profitability in a big way, um, maybe high level, you know, uh, you've been working on auto claim process improvements for many years. Now, just trying to understand, you know, what baseball need are we in? Um, you know AI, I'm sure is helping it is is it will the benefits are they are is also more of a first mover or this is proprietary to you all or, you know, are using third parties and the industry will eventually catch up over time. Just trying to to understand where we are on the journey.
Speaker #1: Is it something that others will catch up on? I don't believe it is. This is proprietary to Allstate. We're not leveraging third party insights or technology.
Thomas Wilson: I don't believe it is. This is proprietary to Allstate. We're not leveraging third-party insights or technology. We obviously bring the outside in, and we look at third-party trends to make decisions, but it's not like this is something someone else can pick up and buy from another vendor. This is our organization pushing, you know, for operational excellence, for claims quality, and continuing to sort of focus on how we can be better each and every year. So I would put it middle innings, with the later innings probably being where you really see the benefit of artificial intelligence and the insights and tools that we can use to improve in the claims organization. Is that helpful?
Thomas Wilson: I don't believe it is. This is proprietary to Allstate. We're not leveraging third-party insights or technology. We obviously bring the outside in, and we look at third-party trends to make decisions, but it's not like this is something someone else can pick up and buy from another vendor. This is our organization pushing, you know, for operational excellence, for claims quality, and continuing to sort of focus on how we can be better each and every year. So I would put it middle innings, with the later innings probably being where you really see the benefit of artificial intelligence and the insights and tools that we can use to improve in the claims organization. Is that helpful?
Speaker #1: We obviously bring the outside in and we look at third party trends to make decisions. But it's not like this is something someone else can pick up and buy from another vendor.
Speaker #1: This is our organization pushing for operational excellence, for claims quality, and continuing to sort of focus on how we can be better each and every year.
Um, so this is Jess. I would, I would like the baseball Innings and Allergy. You have to pause on that 1 and figure out exactly, where I would put us middle innings in the journey, uh, certainly not early Innings, but not done. I think there's a lot that we have a, I would argue a Best in Class claims organization, that's really focused on the right things that you could see on the page in the slide deck.
Speaker #1: So I would put it middle innings with the later innings probably be where you really see the benefit of artificial intelligence and the insights and tools that we can use to improve in the claims organizations.
Speaker #1: That
Speaker #1: helpful? Yes.
Michael Zaremski: ... Yes, you know, I guess, yeah, I'm just, I guess I ask, not trying to spoon feed because of the underlying loss ratio true up. I guess, some investors are, you know, saying it's too good to be true, but, you know, clearly, you know, some of it's just you guys are doing a better job than others. So.
Michael Zaremski: ... Yes, you know, I guess, yeah, I'm just, I guess I ask, not trying to spoon feed because of the underlying loss ratio true up. I guess, some investors are, you know, saying it's too good to be true, but, you know, clearly, you know, some of it's just you guys are doing a better job than others. So.
Speaker #10: I guess, yeah, I'm just I guess I asked, not trying to spoon-feed because the underlying loss ratio true up. I guess some investors are saying it's too good to be true.
Speaker #10: But clearly, some of it's just you guys are doing a better job than others, so.
Speaker #1: I would think about. I think about
Thomas Wilson: I would think about-
Thomas Wilson: I would think about-
Speaker #10: Switching.
Michael Zaremski: Switching.
Michael Zaremski: Switching.
Thomas Wilson: I think about claims as, I think of claims kind of as a river of money. At the top, you have us, and at the bottom, you have customers, and we have to get them the money. So as it goes down that river, lots of people dip into the river and, like, take money out. So it's constantly changing, like, the banks are changing, so, you know, where the banks are and the rocks it goes over, and so, you know, you get attorneys who are doing something new. You've got car companies who decide they want to give away the razor and sell the blade and sell their parts a lot higher. So you just, you're constantly adapting. So I think Jess is right here. This is like, this is like the never-ending game, right?
Thomas Wilson: I think about claims as, I think of claims kind of as a river of money. At the top, you have us, and at the bottom, you have customers, and we have to get them the money. So as it goes down that river, lots of people dip into the river and, like, take money out. So it's constantly changing, like, the banks are changing, so, you know, where the banks are and the rocks it goes over, and so, you know, you get attorneys who are doing something new. You've got car companies who decide they want to give away the razor and sell the blade and sell their parts a lot higher. So you just, you're constantly adapting. So I think Jess is right here. This is like, this is like the never-ending game, right?
Speaker #1: claims think of claims kind of as a river of money. And at the top, you have us, and at the bottom, you have customers.
Speaker #1: And we have to get them the money. So if it goes down that river, lots of people dip into the river and take money out.
Speaker #1: So in its constantly changing, like the banks are changing. So where the banks are and the rocks it goes over. And so you get attorneys who are doing something new.
That doesn't mean we fully implemented all of the AI enabled Technologies. It doesn't mean that we're not going to continue to focus on quality, we have great leadership. That is going to continue to sort of push along the Journey of getting even better and uh lowering those costs. It, you know, if I look competitively you mentioned is it, largely Outsourcing something that others will catch up on? I, I don't believe it is. This is proprietary to All State. We're not leveraging third-party, uh, insights or technology. We obviously bring the outside in and we look at third-party Trends to make decisions, but it's not like this is something. Someone else can pick up and buy from another vendor. This is our organization pushing, you know, for operational excellence for claims quality and continuing to sort of focus on how we can be better each and every year. So, I would put it middle Innings with, with the later Innings probably be being where you really see the benefit of artificial intelligence in the insights in in tools that we can use to improve in the claims organizations that help.
Speaker #1: You've got car companies who decide they want to give away the razor and sell the blade and sell their parts a lot higher. So you're constantly adapting.
Speaker #1: So I think Jess is right. This is like the never-ending game, right? You're just and the question is, is your team good? Do they have the processes?
Yes. Uh, you know, I guess, yeah, I'm just, I guess I asked not trying to spoon feeds because the, uh, the underlying loss ratio true up. Um, I guess, um, some some investors are, you know, saying it's too good to be true but, you know, clearly, you know, some of it's just you guys are doing a better job than than, than others. So, um,
David Motemaden: You're doing it.
David Motemaden: You're doing it.
Thomas Wilson: And the question is, is your team good? Do they have the processes? Do they have the data? Do they have, you know, the measurement, and the discipline to do what you need to do? And we're good at it. Did we have to get better at it because of what happened in the pandemic? Yeah. Because when prices go up that rapidly, it, the old way in which you control the river, it has to be different. So I think it's just, it's an ongoing thing, and so you're buying capabilities at claims as opposed to a specific set of processes.
Thomas Wilson: And the question is, is your team good? Do they have the processes? Do they have the data? Do they have, you know, the measurement, and the discipline to do what you need to do? And we're good at it. Did we have to get better at it because of what happened in the pandemic? Yeah. Because when prices go up that rapidly, it, the old way in which you control the river, it has to be different. So I think it's just, it's an ongoing thing, and so you're buying capabilities at claims as opposed to a specific set of processes.
Speaker #1: Do they have the data? Do they have the measurement and the discipline to do what you need to do? And we're good at it.
Speaker #1: Did we have to get better at it because of what happened in the pandemic? Yeah. Because when prices go up that rapidly, the old way in which you control the river has to be different.
Speaker #1: So I think it's just it's an ongoing thing. And so you're buying capabilities at claims as opposed to a specific set of processes.
Um, I would think about switching, I think about claims think of claims, kind of as a river of money, uh, and uh, as as the top you have us and at the bottom of the customers and we have to get them the money. So if it goes down that River, lots of people dip into the river and like, take money out. So it's like the banks are changing. So, you know where the where the banks are and the rocks that goes over and so, you know, you get attorneys, who are doing something new? Uh, you've got, uh,
Speaker #10: That's helpful. And my follow-up, I think as slide four of the deck, talking about kind of what really could bend the needle on affordability, I think as insurance specialists, we get it.
Michael Zaremski: That, that's helpful. My follow-up, you know, I think as slide four of the deck, talking about kind of, you know, what really could bend the needle on affordability, I think as an insurance specialist, we get it. But I'm just, you know, the powers that be don't always see the forest for the trees in the short run. So just curious, are there potential legislative changes in certain states that if things were enacted, and I'm sure you all in the APCIAR, you know, in discussions with those folks, but if they were enacted, that could, you know, would change the course of your strategy in a...
Michael Zaremski: That, that's helpful. My follow-up, you know, I think as slide four of the deck, talking about kind of, you know, what really could bend the needle on affordability, I think as an insurance specialist, we get it. But I'm just, you know, the powers that be don't always see the forest for the trees in the short run. So just curious, are there potential legislative changes in certain states that if things were enacted, and I'm sure you all in the APCIAR, you know, in discussions with those folks, but if they were enacted, that could, you know, would change the course of your strategy in a...
Car companies, who decide, they want to, uh, give away the razor and sell the blade and sell their parts, a lot higher. Um, so you just, you're constantly adapting. So, I think Jeff is right here. This is like, this is like, the never-ending game, right? You're doing it. And the question is, is your team good? Do they have the processes? Do they?
Speaker #10: But I'm just the powers that be don't always see the force for the trees in the short run. So just curious, are there potential legislative changes in certain states that if things were enacted, and I'm sure you all in the APCIA are in discussions with those folks, but if they were enacted that could would change the course of your strategy or not just you all, but the industry in a material way?
And we're good at it. Uh, did we have to get better at it because of what happened in the pandemic? Yeah. Because when prices go up that rapidly, uh, is the old way in which you control the river—it, it has to be different. So I, I think it's just, it's an ongoing thing, and so you're buying capabilities at claims as opposed to a specific set of processes.
Michael Zaremski: or, you know, not just you all, but the industry in a material way, or is this more kind of noise that ebbs and flows as, you know, now we're in a softer market, and things should, you know, ebb as affordability gets better?
Michael Zaremski: or, you know, not just you all, but the industry in a material way, or is this more kind of noise that ebbs and flows as, you know, now we're in a softer market, and things should, you know, ebb as affordability gets better?
Speaker #10: Or is this more kind of noise that's ebbs and flows as now we're in a softer market and things should ebb as affordability gets better?
Speaker #1: Well, affordability is a real issue for every politician these days. Whether they're talking about food or insurance. We tend not to be on the about in terms of affordability.
Thomas Wilson: Well, affordability is a real issue for every politician these days, whether they're talking about food, or insurance. We tend not to be on the highest order of what people think about in terms of affordability there, but it is important to them, and it has become more important as costs have gone up. I think the blow for freedom for consumers is total reform. Like, it's just about time that... And you're starting to see some states taking on, states that I would have said, you know, 10 years ago, were more controlled by the plaintiff bar than they appear to be today. And I gave the example of Florida, great moves. I like what they're doing in Louisiana. Georgia is doing some things.
Thomas Wilson: Well, affordability is a real issue for every politician these days, whether they're talking about food, or insurance. We tend not to be on the highest order of what people think about in terms of affordability there, but it is important to them, and it has become more important as costs have gone up. I think the blow for freedom for consumers is total reform. Like, it's just about time that... And you're starting to see some states taking on, states that I would have said, you know, 10 years ago, were more controlled by the plaintiff bar than they appear to be today. And I gave the example of Florida, great moves. I like what they're doing in Louisiana. Georgia is doing some things.
Speaker #1: highest order of what people think They're but it is important to them. And it's become more important as costs have gone up. I think the blow for freedom for consumers is tort reform.
Speaker #1: It's just about time that and you're starting to see some states taking on states that I would have said 10 years ago were more controlled by the plaintiff bar today.
That that's helpful. And my, my my, my follow-up. Um, you know, I I think as a slide 4 of the deck, talking about, kind of, you know what, what really could spend the needle on affordability? I think as its Insurance Specialists, we, we get it. Um, but, um, I'm, I'm just, you know, uh, the the the the powers that be don't, don't always, uh, see the, the force for the trees in the short run. So just curious are there are there potential legislative changes in certain states that if, if things were enacted. Um, and I'm sure you all in the APC. Are, you know, in discussions with with those, uh, folks. But if they were enacted that could, you know, would change the the course of uh, your strategy and or, you know, not just you all but the industry and the material way or or is this more kind of noise that's es and flows. As you know, now we're in a softer market and things should you know, should should add as as affordability gets gets gets better.
Speaker #1: And I gave the example of Florida. Great moves. I like what they're doing in Louisiana, Georgia is doing some things. Politicians are smart. They know how to do it.
Thomas Wilson: You know, politicians are smart, like, they know how to do it, and so if they're looking at this same chart, they're going to say, okay, my voters want cheaper insurance. How am I going to get it for them? And they might not think about a 10-year cycle, but they're certainly going to think about a four or five-year cycle. And this is one where it can make a difference really fast.
Thomas Wilson: You know, politicians are smart, like, they know how to do it, and so if they're looking at this same chart, they're going to say, okay, my voters want cheaper insurance. How am I going to get it for them? And they might not think about a 10-year cycle, but they're certainly going to think about a four or five-year cycle. And this is one where it can make a difference really fast.
Speaker #1: And so if they're looking at this same chart, they're going to say, "Okay, my voters want cheaper insurance. How am I going to get it for them?" And they might not think about tenure cycle, but they're certainly going to think about a four or five-year cycle.
Affordability is a real issue for every politician. These days, whether they're talking about food, uh, or Insurance. Uh, we tend not to be on the highest order of what people think about, in terms of affordability. They're, but it is important to them and it, it's and it's become more important as costs have gone up.
I think the blow for freedom for consumers is torture.
Speaker #1: And this is one where it can make a difference really fast.
Speaker #10: Thank you.
Michael Zaremski: Thank you.
Michael Zaremski: Thank you.
Speaker #2: Thank you. And our next question comes from the line of David McMahon from Evercore ISI. Your question, please.
Operator: Thank you, and our next question comes from the line of David Motemaden from Evercore ISI. Your question, please.
Operator: Thank you, and our next question comes from the line of David Motemaden from Evercore ISI. Your question, please.
Like, it's just about time that and you're starting to see some States taken on states that I would have said, uh, you know, 10 years ago. Um, but we're more control by the plaintiff bar. Then, uh,
Speaker #11: Hey, thanks for fitting me in here. Just a question on slide 11. Start on just New York and New Jersey. Where that fits into these different buckets here in terms of how much I think those were a drag.
David Motemaden: Hey, thanks for fitting me in here. Just a question on slide 11, sort of on just New York and New Jersey, where that fits into these, you know, these different buckets here in terms of how much, you know, I think those were a drag. I'm assuming those are still a drag. I'm wondering how much. And then also, I think last quarter you had mentioned considering opening up underwriting guidelines there further, even without getting the new product approved. I'm wondering where you guys are at there.
David Motemaden: Hey, thanks for fitting me in here. Just a question on slide 11, sort of on just New York and New Jersey, where that fits into these, you know, these different buckets here in terms of how much, you know, I think those were a drag. I'm assuming those are still a drag. I'm wondering how much. And then also, I think last quarter you had mentioned considering opening up underwriting guidelines there further, even without getting the new product approved. I'm wondering where you guys are at there.
Speaker #11: I'm assuming those are still a drag. I'm wondering how much. And then also I think last quarter you had mentioned considering opening up underwriting guidelines there further, even without getting the new product approved.
Speaker #11: I'm wondering where you guys are at there.
Thomas Wilson: I'll make an overall comment. Jess can talk about what's going on in New Jersey and New York. First, we don't identify our problem children, nor do we do performance evaluations in public, so we're not going to call out, like, which states are in which category. And we also don't necessarily want to let our competitors know where we're not growing as well. But that said, those are two states which we talked about before, you're correct, that we need to move to more growth. Did you want to talk about what's going on in New Jersey and New York?
Speaker #1: I'll make an overall comment, Jess, can talk about what's going on in New Jersey and New York. First, we don't identify our problem with children nor do we do performance review evaluations in public.
Thomas Wilson: I'll make an overall comment. Jess can talk about what's going on in New Jersey and New York. First, we don't identify our problem children, nor do we do performance evaluations in public, so we're not going to call out, like, which states are in which category. And we also don't necessarily want to let our competitors know where we're not growing as well. But that said, those are two states which we talked about before, you're correct, that we need to move to more growth. Did you want to talk about what's going on in New Jersey and New York?
Speaker #1: So we're not going to call out which states are in which category. And we also don't necessarily want to let our competitors know where we're not growing as well.
Speaker #1: But that said, those are two states which we've talked about before. You're correct. That we need to move to more growth. Did you want to talk about what's going on in New Jersey and New York?
Speaker #1: But that said, those are two states which we've talked about before. You're correct. That we need to move to more growth. Did you want to talk about what's going on in New
Speaker #3: Yeah, I think the headline in both states is we're making money in those states, which is a good thing. Not growing, but we're making money.
Michael Zaremski: Yeah, I think, you know, the headline in both states is we're making money in those states, which is a good thing. Not growing, but we're making money. That is step one. We have, as you mentioned, loosened up some of our underwriting restrictions, but the key to getting back to growth in both New York and New Jersey is new product approvals, specifically our Affordable, Simple, and Connected product, which will allow us to really open up with the best product in market and get back to growth. And on the plus side, New Jersey, we recently got approval for implementation of the ASC product, ASC auto product, in February. So we're going to be with the new product in market. Now, that takes some time, obviously, to get momentum, but that's a very positive sign in the state of New Jersey.
Jesse Merten: Yeah, I think, you know, the headline in both states is we're making money in those states, which is a good thing. Not growing, but we're making money. That is step one. We have, as you mentioned, loosened up some of our underwriting restrictions, but the key to getting back to growth in both New York and New Jersey is new product approvals, specifically our Affordable, Simple, and Connected product, which will allow us to really open up with the best product in market and get back to growth. And on the plus side, New Jersey, we recently got approval for implementation of the ASC product, ASC auto product, in February. So we're going to be with the new product in market. Now, that takes some time, obviously, to get momentum, but that's a very positive sign in the state of New Jersey.
Speaker #3: That is step one. We have, as you mentioned, loosened up some of our underwriting restrictions, but the key to getting back to growth in both New York and New Jersey is new product approvals, specifically our affordable, simple, and connected product, which will allow us to really open up with the best product in market and get back to growth.
Speaker #3: And on the plus side, New Jersey, we recently got approval for implementation of the ASC product. ASC Auto product. In February. So we're going to be with the new product in market.
Speaker #3: Now that takes some time, obviously, to get momentum, but that's a very positive sign in the state of New Jersey. New York, we're waiting for approval for the ASC product.
Michael Zaremski: New York, we're waiting for approval for the ASC product, so we'll be a little bit slower. We're hopeful that we see that relatively soon. We're actively engaged with the department on answering questions, but that's going to be critical to us getting back to a growth trajectory in the state of New York. So we're working hard with the regulators to get our products approved so we can get the best solutions to customers, and in the meantime, we're back to making profit in those states. So that's kind of where we're at.
Jesse Merten: New York, we're waiting for approval for the ASC product, so we'll be a little bit slower. We're hopeful that we see that relatively soon. We're actively engaged with the department on answering questions, but that's going to be critical to us getting back to a growth trajectory in the state of New York. So we're working hard with the regulators to get our products approved so we can get the best solutions to customers, and in the meantime, we're back to making profit in those states. So that's kind of where we're at.
Speaker #3: So we'll be a little bit slower. We're hopeful. We see that relatively soon. We're actively engaged with the department and answering questions, but that's going to be critical to us getting back to a growth trajectory in the state of New York.
Speaker #3: So we're working hard with the regulators to get our products approved so we can get the best solutions to customers. And in the meantime, we're back to making profit in those states.
Speaker #3: So that's kind of
Speaker #3: where we're at. So
Thomas Wilson: ...So, first, thank you for spending time with us. We're gonna keep creating value for both our customers and our shareholders. It's a combination of an aggressive growth strategy and great operational execution. So we'll talk to you next quarter.
Thomas Wilson: ...So, first, thank you for spending time with us. We're gonna keep creating value for both our customers and our shareholders. It's a combination of an aggressive growth strategy and great operational execution. So we'll talk to you next quarter.
Speaker #1: first, thank you for spending time with us. We're going to keep creating value for both our customers and our shareholders. That's a combination of an aggressive growth strategy and great operational execution.
Tom Wilson: $34.34 per share. The lower table provides a reconciliation of net income for the fourth quarter to the prior year quarter. In 2024, we earned $1.9 billion. The three primary drivers of increased income were better underwriting losses, lower catastrophes, and the benefit of reserve releases from prior years and adjustments within 2025. Net income for the quarter was $3.8 billion. Now, let's discuss our success in improving affordability while maintaining margins before going through the details of this performance with Mario, Jess, and John. Slide four discusses the levers to improve insurance, auto insurance affordability at the industry level, and then we'll go through Allstate's actions. In summary, improving affordability will require a focus on costs, not profits. Let's go through the math.
Tom Wilson: $34.34 per share. The lower table provides a reconciliation of net income for the fourth quarter to the prior year quarter. In 2024, we earned $1.9 billion. The three primary drivers of increased income were better underwriting losses, lower catastrophes, and the benefit of reserve releases from prior years and adjustments within 2025. Net income for the quarter was $3.8 billion. Now, let's discuss our success in improving affordability while maintaining margins before going through the details of this performance with Mario, Jess, and John. Slide four discusses the levers to improve insurance, auto insurance affordability at the industry level, and then we'll go through Allstate's actions. In summary, improving affordability will require a focus on costs, not profits. Let's go through the math.
Speaker #1: So we'll talk to you next quarter.
David Motemaden: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Tom Wilson: The pie chart on the left shows a composition of auto insurance industry costs from 2020 to 2025. Physical damage costs out of repair and replace vehicles and represent the largest share of costs at 43%. Injury costs are 34% of premiums, and expenses are 23%. Over the last 5 years, industry underwriting income was close to zero. To improve affordability, then costs must be lowered. Some costs move with inflation. Other cost reductions will require legislation or regulatory changes. So physical damage costs have increased 47% over the past 5 years. Now, a portion of this was because used car prices rose 43% during the pandemic, which has drove up the cost to replace and repair vehicles. That inflation has started to reverse, which will improve affordability since insurance is a cost-plus product.
Tom Wilson: The pie chart on the left shows a composition of auto insurance industry costs from 2020 to 2025. Physical damage costs out of repair and replace vehicles and represent the largest share of costs at 43%. Injury costs are 34% of premiums, and expenses are 23%. Over the last 5 years, industry underwriting income was close to zero. To improve affordability, then costs must be lowered. Some costs move with inflation. Other cost reductions will require legislation or regulatory changes. So physical damage costs have increased 47% over the past 5 years. Now, a portion of this was because used car prices rose 43% during the pandemic, which has drove up the cost to replace and repair vehicles. That inflation has started to reverse, which will improve affordability since insurance is a cost-plus product.
Tom Wilson: The second largest driver of cost is bodily injury claims, which are when our customers get sued by people that are injured in an auto accident. These costs have increased 52% over the last five years due to more attorney involvement and higher settlements. Tort reform has reduced litigation in Florida, which has enabled the top five insurance companies in the state to request rate reductions of 5.9% in 2025. Consumers will benefit if states like New York and others work to reduce what I would call fender bender litigation, so you barely touch somebody and they sue you, and then also work to control exorbitant damage costs. For example, in New York, the average bodily injury settlement is twice that of Florida and the countrywide average.
Tom Wilson: The second largest driver of cost is bodily injury claims, which are when our customers get sued by people that are injured in an auto accident. These costs have increased 52% over the last five years due to more attorney involvement and higher settlements. Tort reform has reduced litigation in Florida, which has enabled the top five insurance companies in the state to request rate reductions of 5.9% in 2025. Consumers will benefit if states like New York and others work to reduce what I would call fender bender litigation, so you barely touch somebody and they sue you, and then also work to control exorbitant damage costs. For example, in New York, the average bodily injury settlement is twice that of Florida and the countrywide average.
Tom Wilson: Louisiana and Georgia have recently addressed litigation, which we are hopeful will reduce the costs of suits against our customers. Uninsured and underinsured motorist costs have increased 72%, which means responsible drivers are now carrying more of the load. This can be mitigated by enforcement of laws requiring insurance coverage and raising mandatory coverage limits. Changing laws or regulations so that insurance companies lose money at the underwriting level will not create a stable and affordable set of choices for consumers. Now, Allstate is successfully addressing the issue of insurance affordability with customers, as shown on slide 5. Customer value has been improved by using renewal processes for auto and homeowners insurance to optimize coverages and discounts. That Show Allstate Customers Value Every day, or SAVE program, reduced 7.8 million customers' premiums by 17% on average by adjusting coverage and other changes in 2025.
Tom Wilson: Louisiana and Georgia have recently addressed litigation, which we are hopeful will reduce the costs of suits against our customers. Uninsured and underinsured motorist costs have increased 72%, which means responsible drivers are now carrying more of the load. This can be mitigated by enforcement of laws requiring insurance coverage and raising mandatory coverage limits. Changing laws or regulations so that insurance companies lose money at the underwriting level will not create a stable and affordable set of choices for consumers. Now, Allstate is successfully addressing the issue of insurance affordability with customers, as shown on slide 5. Customer value has been improved by using renewal processes for auto and homeowners insurance to optimize coverages and discounts. That Show Allstate Customers Value Every day, or SAVE program, reduced 7.8 million customers' premiums by 17% on average by adjusting coverage and other changes in 2025.
Tom Wilson: We continue to roll out the new Auto and Homeowners, Affordable, Simple, and Connected insurance products. Auto insurance rates for the ASC products were reduced in 32 states with an average reduction of 9%. We also expanded direct purchase options, which have lower prices. Jess is going to go through the impact of this on this year's earnings, which was substantial in terms of the top line, but we managed margins well. Operational excellence also supports affordability while maintaining margins. The Transformative Growth initiative has lowered expenses. Improving claims processes also enable us to offer lower prices. So Allstate's strategy is to deliver strong results while successfully adapting to a changing external environment. Mario will now provide an update on the Transformative Growth initiative to increase Property-Liability market share.
Tom Wilson: We continue to roll out the new Auto and Homeowners, Affordable, Simple, and Connected insurance products. Auto insurance rates for the ASC products were reduced in 32 states with an average reduction of 9%. We also expanded direct purchase options, which have lower prices. Jess is going to go through the impact of this on this year's earnings, which was substantial in terms of the top line, but we managed margins well. Operational excellence also supports affordability while maintaining margins. The Transformative Growth initiative has lowered expenses. Improving claims processes also enable us to offer lower prices. So Allstate's strategy is to deliver strong results while successfully adapting to a changing external environment. Mario will now provide an update on the Transformative Growth initiative to increase Property-Liability market share.
Mario Rizzo: Thanks, Tom. Let's move to slide 6, which shows how Allstate has benefited from Transformative Growth. In the top left, you can see the progress made on competitive prices. We've reduced the adjusted expense ratio by 6.6 points since 2018, which allows us to offer lower auto and homeowners insurance prices while maintaining margins. We also increased the sophistication and precision of pricing models, enabling more accurate pricing. Allstate now has the broadest distribution in the industry. Customers can shop for Allstate coverage through Allstate agents, independent agents, and directly by phone or via the web. We acquired National General in 2021 to strengthen independent agent channel capabilities and expand non-standard auto insurance offerings. We increased direct sales using the Allstate brand and improved Allstate agent productivity.
Mario Rizzo: Thanks, Tom. Let's move to slide 6, which shows how Allstate has benefited from Transformative Growth. In the top left, you can see the progress made on competitive prices. We've reduced the adjusted expense ratio by 6.6 points since 2018, which allows us to offer lower auto and homeowners insurance prices while maintaining margins. We also increased the sophistication and precision of pricing models, enabling more accurate pricing. Allstate now has the broadest distribution in the industry. Customers can shop for Allstate coverage through Allstate agents, independent agents, and directly by phone or via the web. We acquired National General in 2021 to strengthen independent agent channel capabilities and expand non-standard auto insurance offerings. We increased direct sales using the Allstate brand and improved Allstate agent productivity.
Mario Rizzo: We enhanced the product portfolio by introducing the Affordable, Simple, and Connected auto insurance product in 43 states and the new homeowners insurance product in 31 states. We also have ASC renters available in 30 states. In the independent agent channel, Custom 360 Auto and Homeowners insurance products are available in 36 states. These new products create value for customers by improving affordability, broadening our risk appetite, and expanding availability for consumers. Sophisticated marketing has enhanced acquisition capabilities and economics. Marketing investment increased to $2.1 billion in 2025, up from $900 million in 2019, enabling us to effectively reach more consumers with a more competitive price and better customer experience. At the bottom of the slide, you can see the results.
Mario Rizzo: We enhanced the product portfolio by introducing the Affordable, Simple, and Connected auto insurance product in 43 states and the new homeowners insurance product in 31 states. We also have ASC renters available in 30 states. In the independent agent channel, Custom 360 Auto and Homeowners insurance products are available in 36 states. These new products create value for customers by improving affordability, broadening our risk appetite, and expanding availability for consumers. Sophisticated marketing has enhanced acquisition capabilities and economics. Marketing investment increased to $2.1 billion in 2025, up from $900 million in 2019, enabling us to effectively reach more consumers with a more competitive price and better customer experience. At the bottom of the slide, you can see the results.
Mario Rizzo: Personal lines new business increased from 5.5 million in 2019 to 11.6 million in 2025, more than doubling. New business is now also balanced between Allstate agents, independent agents, and the direct channel. Total personal lines policies in force increased from 33.5 million to 38.1 million, with a more balanced distribution across channels. These proof points demonstrate that transformative growth is working. Turning to slide 7, we are now into phases 4 and 5 of transformative growth, focusing on rolling out new platforms and decommissioning the existing ones. In these phases, we continue to broadly focus on the five components of transformative growth, shown in the gray boxes in the middle of the page, as we scale the new model and retire legacy technology and processes. Now let's turn to slide 8 to discuss protection services.
Mario Rizzo: Personal lines new business increased from 5.5 million in 2019 to 11.6 million in 2025, more than doubling. New business is now also balanced between Allstate agents, independent agents, and the direct channel. Total personal lines policies in force increased from 33.5 million to 38.1 million, with a more balanced distribution across channels. These proof points demonstrate that transformative growth is working. Turning to slide 7, we are now into phases 4 and 5 of transformative growth, focusing on rolling out new platforms and decommissioning the existing ones. In these phases, we continue to broadly focus on the five components of transformative growth, shown in the gray boxes in the middle of the page, as we scale the new model and retire legacy technology and processes. Now let's turn to slide 8 to discuss protection services.
Mario Rizzo: The protection services segment is comprised of five businesses: protection plans, dealer services, roadside assistance, Arity, and identity protection, where protection is embedded in other offerings. In 2025, the protection services segment grew policies in force by 3.3% to 172 million, while revenue increased 11.7% to $3.3 billion for the year. Adjusted net income was $218 million in 2025 or for the year. Policy growth in this segment was led by protection plans, which continues to expand both domestically and internationally, as you can see on the lower right. Domestic revenue increased 8.1% over the prior year quarter, while international revenue increased 39.7%.
Mario Rizzo: The protection services segment is comprised of five businesses: protection plans, dealer services, roadside assistance, Arity, and identity protection, where protection is embedded in other offerings. In 2025, the protection services segment grew policies in force by 3.3% to 172 million, while revenue increased 11.7% to $3.3 billion for the year. Adjusted net income was $218 million in 2025 or for the year. Policy growth in this segment was led by protection plans, which continues to expand both domestically and internationally, as you can see on the lower right. Domestic revenue increased 8.1% over the prior year quarter, while international revenue increased 39.7%.
Mario Rizzo: The business generated $49 million in adjusted net income in this quarter, up 32.4% from the prior year quarter. Now I'll turn it over to Jess to discuss the Property-Liability business.
Mario Rizzo: The business generated $49 million in adjusted net income in this quarter, up 32.4% from the prior year quarter. Now I'll turn it over to Jess to discuss the Property-Liability business.
Jesse Merten: All right. Thank you, Mario. Starting with slide 9, the property liability business generated strong results in 2025. The table on the left shows full year 2025 results. Premiums earned increased 4.4% in auto insurance and 15% in homeowners insurance, with auto policy growth of 2.3% and homeowners growth, policy growth of 2.5%. At the bottom of the table, you can see that the auto combined ratio improved by 10 points compared to the prior year. This is due to strong underlying performance, as well as lower catastrophes and favorable prior year reserve releases. Excluding the benefit of reserve changes and lower catastrophes, the auto insurance combined ratio was about 90. The homeowners insurance combined ratio of 84.4 reflects continued strong underlying performance and lower catastrophe losses when compared to last year.
Jess Merten: All right. Thank you, Mario. Starting with slide 9, the property liability business generated strong results in 2025. The table on the left shows full year 2025 results. Premiums earned increased 4.4% in auto insurance and 15% in homeowners insurance, with auto policy growth of 2.3% and homeowners growth, policy growth of 2.5%. At the bottom of the table, you can see that the auto combined ratio improved by 10 points compared to the prior year. This is due to strong underlying performance, as well as lower catastrophes and favorable prior year reserve releases. Excluding the benefit of reserve changes and lower catastrophes, the auto insurance combined ratio was about 90. The homeowners insurance combined ratio of 84.4 reflects continued strong underlying performance and lower catastrophe losses when compared to last year.
Jesse Merten: For the full year 2025, auto insurance generated $5.7 billion of underwriting income, and the home and homeowners insurance generated $2.4 billion. The right side of this slide shows earned premium impacts of actions taken to improve affordability, which are included in our financial results. The chart shows the cumulative auto insurance earned premium impact from rate decreases and save actions taken through 2025. By the end of the year, the total impact was $810 million, or approximately 2% of 2025 auto earned premiums. Improved affordability supports growth. Turning now to slide 10. Auto claims process improvements are helping to offset increasing loss costs, support increased affordability, and contributed to favorable reserve adjustments. On the left side is an overview of improvements that we've made to physical damage claim processes.
Jess Merten: For the full year 2025, auto insurance generated $5.7 billion of underwriting income, and the home and homeowners insurance generated $2.4 billion. The right side of this slide shows earned premium impacts of actions taken to improve affordability, which are included in our financial results. The chart shows the cumulative auto insurance earned premium impact from rate decreases and save actions taken through 2025. By the end of the year, the total impact was $810 million, or approximately 2% of 2025 auto earned premiums. Improved affordability supports growth. Turning now to slide 10. Auto claims process improvements are helping to offset increasing loss costs, support increased affordability, and contributed to favorable reserve adjustments. On the left side is an overview of improvements that we've made to physical damage claim processes.
Jesse Merten: These processes are being enhanced by optimizing the method of inspection, focusing on adjuster training, and using advanced computing capabilities. On the right, you can see what we're doing to manage injury costs. We redesigned our operating model to accelerate payments to injured parties where appropriate, utilizing new tools and quality assurance processes to enhance claim handling. Predictive models are also being used to identify potentially injured parties earlier, earlier in the process to resolve claims promptly and control liability. On slide 11, you can see that auto insurance growth accelerated and broadened geographically in 2025. These graphs show the distribution of policy growth by state and percentage of premiums written. For example, on the right-hand chart, you can see that at the end of 2025, less than 30% of premiums were in states that were not growing.
Jess Merten: These processes are being enhanced by optimizing the method of inspection, focusing on adjuster training, and using advanced computing capabilities. On the right, you can see what we're doing to manage injury costs. We redesigned our operating model to accelerate payments to injured parties where appropriate, utilizing new tools and quality assurance processes to enhance claim handling. Predictive models are also being used to identify potentially injured parties earlier, earlier in the process to resolve claims promptly and control liability. On slide 11, you can see that auto insurance growth accelerated and broadened geographically in 2025. These graphs show the distribution of policy growth by state and percentage of premiums written. For example, on the right-hand chart, you can see that at the end of 2025, less than 30% of premiums were in states that were not growing.
Jesse Merten: Staying on that chart and moving to the second blue bar from the right, 14 states were growing policies in force by 4 to 10% and represented more than 30% of premiums. Comparing the left graph to 2024—for 2024 to the right graph for 2025, shows a reduction in red bars, higher blue growth bars, and a shift towards the right, which is higher growth. We now have 20 states growing policies by at least 4% and are growing in 38 states that represent more than 70% of countrywide written premium. Turning to slide 12, the homeowners insurance business continues to grow and generate industry-leading returns. Premiums earned have increased each year since 2021. Policies in force have also grown steadily, supported by expanded distribution and new products.
Jess Merten: Staying on that chart and moving to the second blue bar from the right, 14 states were growing policies in force by 4 to 10% and represented more than 30% of premiums. Comparing the left graph to 2024—for 2024 to the right graph for 2025, shows a reduction in red bars, higher blue growth bars, and a shift towards the right, which is higher growth. We now have 20 states growing policies by at least 4% and are growing in 38 states that represent more than 70% of countrywide written premium. Turning to slide 12, the homeowners insurance business continues to grow and generate industry-leading returns. Premiums earned have increased each year since 2021. Policies in force have also grown steadily, supported by expanded distribution and new products.
Tom Wilson: ... We target a low 90s recorded combined ratio for homeowners and an underlying combined ratio in the low to mid-60s. The underlying combined ratio for 2025 was 57.9, which demonstrates the effectiveness of our differentiated model with advanced risk selection, new products, pricing sophistication, and efficient claims handling. The recorded combined ratio was 84.4, which is well below the industry average. Allstate's average combined ratio over the last 10 years was 92.0. This business remains a competitive advantage and growth opportunity for Allstate. With that, I'll turn it over to John.
Jess Merten: ... We target a low 90s recorded combined ratio for homeowners and an underlying combined ratio in the low to mid-60s. The underlying combined ratio for 2025 was 57.9, which demonstrates the effectiveness of our differentiated model with advanced risk selection, new products, pricing sophistication, and efficient claims handling. The recorded combined ratio was 84.4, which is well below the industry average. Allstate's average combined ratio over the last 10 years was 92.0. This business remains a competitive advantage and growth opportunity for Allstate. With that, I'll turn it over to John.
John Dugenske: Thanks, Jess. Good morning, everyone. Let's turn to slide 13 to discuss the investment portfolio. The portfolio continued to perform well, with net investment income rising to $3.4 billion in 2025, more than $350 million higher year-over-year, while maintaining strong risk discipline. Over the past 12 months, total portfolio carrying value increased from approximately $73 billion to $83 billion due to operating and investment cash flows. That growth, combined with higher fixed income yields, led to a meaningful increase in investment income. From a return perspective, market-based assets generated a 6.1% total return, materially higher than last year, due to increased bond prices from lower interest rates and higher equity returns. Performance-based investments delivered a 5.8% return, down slightly year-over-year, consistent with broader performance in private markets.
John Dugenske: Thanks, Jess. Good morning, everyone. Let's turn to slide 13 to discuss the investment portfolio. The portfolio continued to perform well, with net investment income rising to $3.4 billion in 2025, more than $350 million higher year-over-year, while maintaining strong risk discipline. Over the past 12 months, total portfolio carrying value increased from approximately $73 billion to $83 billion due to operating and investment cash flows. That growth, combined with higher fixed income yields, led to a meaningful increase in investment income. From a return perspective, market-based assets generated a 6.1% total return, materially higher than last year, due to increased bond prices from lower interest rates and higher equity returns. Performance-based investments delivered a 5.8% return, down slightly year-over-year, consistent with broader performance in private markets.
John Dugenske: During the year, we took several deliberate actions as private markets adjusted to a tighter capital and liquidity backdrop in 2025. This included selling approximately $270 million of fund net interest in the secondary market, accelerating and deepening expectations for financial reporting, and moderating new commitments in response to lower industry-wide distributions. Let's turn to slide 14 for an overview of Allstate's significant cash returns to shareholders. In 2025, Allstate paid over $2.2 billion in common shareholder dividends and share repurchases. The quarterly stock dividend will increase by 8% to $1.08 per share, payable in cash on 1 April 2026, to stockholders of record at the close of business on 2 March 2026.
John Dugenske: During the year, we took several deliberate actions as private markets adjusted to a tighter capital and liquidity backdrop in 2025. This included selling approximately $270 million of fund net interest in the secondary market, accelerating and deepening expectations for financial reporting, and moderating new commitments in response to lower industry-wide distributions. Let's turn to slide 14 for an overview of Allstate's significant cash returns to shareholders. In 2025, Allstate paid over $2.2 billion in common shareholder dividends and share repurchases. The quarterly stock dividend will increase by 8% to $1.08 per share, payable in cash on 1 April 2026, to stockholders of record at the close of business on 2 March 2026.
John Dugenske: Additionally, a $4 billion share repurchase program has been authorized, and execution will begin upon completion of the existing $1.5 billion share repurchase program, which will be completed in Q1 2026. In the last 5 years, Allstate has purchased 18% of common shares outstanding, and in the last 10 years, Allstate has purchased 39% of shares outstanding. Now, let's move to questions.
John Dugenske: Additionally, a $4 billion share repurchase program has been authorized, and execution will begin upon completion of the existing $1.5 billion share repurchase program, which will be completed in Q1 2026. In the last 5 years, Allstate has purchased 18% of common shares outstanding, and in the last 10 years, Allstate has purchased 39% of shares outstanding. Now, let's move to questions.
Operator: Certainly. Our first question comes from the line of Gregory Peters from Raymond James. Your question, please.
Operator: Certainly. Our first question comes from the line of Gregory Peters from Raymond James. Your question, please.
Gregory Peters: Good morning, everyone. So, I'd like to, for the first question, focus on the regulatory and legislative changes slide. And I know, there's been some attention in the marketplace to certain states announcing a more proactive approach towards rate relief for their consumers. I also recognize that this is very much state-by-state process for you guys. So I was wondering if you could provide us some color on how the regulatory environment, how you think it might change for you guys in terms of what regulators might ask you to do over the next 24 months or so, in terms of rate relief?
Gregory Peters: Good morning, everyone. So, I'd like to, for the first question, focus on the regulatory and legislative changes slide. And I know, there's been some attention in the marketplace to certain states announcing a more proactive approach towards rate relief for their consumers. I also recognize that this is very much state-by-state process for you guys. So I was wondering if you could provide us some color on how the regulatory environment, how you think it might change for you guys in terms of what regulators might ask you to do over the next 24 months or so, in terms of rate relief?
Tom Wilson: Thank you for the question, Greg. Of course, predicting politics is, you know, probably should get on Polymarket to do that. But, but I-- So first, I would say the numbers we showed are countrywide numbers. So this issue of affordability for consumers is an issue everywhere. So our SAVE program, we were everywhere. Every state, we go after every customer. They all care about the amount of money, and the costs have increased a lot recently. Obviously accelerated by the pandemic on physical damage, but then, underneath that, for a long time, it's been the bodily injury costs, where, you know, if you make a mistake and you run into somebody and bash them in the side of the car, you don't feel like you should be sued for, you know, $100,000.
Tom Wilson: Thank you for the question, Greg. Of course, predicting politics is, you know, probably should get on Polymarket to do that. But, but I-- So first, I would say the numbers we showed are countrywide numbers. So this issue of affordability for consumers is an issue everywhere. So our SAVE program, we were everywhere. Every state, we go after every customer. They all care about the amount of money, and the costs have increased a lot recently. Obviously accelerated by the pandemic on physical damage, but then, underneath that, for a long time, it's been the bodily injury costs, where, you know, if you make a mistake and you run into somebody and bash them in the side of the car, you don't feel like you should be sued for, you know, $100,000.
Tom Wilson: I'm hopeful that what this will do is put the attention on that needs to change. Like, people don't need to be paying for lawyers, and for fender bender lawsuits. And so this is really an issue everywhere in the country. As I mentioned, Florida's done some really good work, and it's turned into benefits for customers. So, you know, Florida should be acknowledged that. Other states are starting to get this. You know, there's been a long-standing discussion between us regulators and the trial attorney as to what's fair and right, and we obviously think that our customers should pay less for litigation against them, and we'd like to see everybody take a side.
Tom Wilson: I'm hopeful that what this will do is put the attention on that needs to change. Like, people don't need to be paying for lawyers, and for fender bender lawsuits. And so this is really an issue everywhere in the country. As I mentioned, Florida's done some really good work, and it's turned into benefits for customers. So, you know, Florida should be acknowledged that. Other states are starting to get this. You know, there's been a long-standing discussion between us regulators and the trial attorney as to what's fair and right, and we obviously think that our customers should pay less for litigation against them, and we'd like to see everybody take a side.
Gregory Peters: Okay. I guess, as related to this, I thought the slide, that on slide 11, where you talked about your in-force growth as you're dealing with, I think you said you lowered prices for 7.8 million customers in 2025, and you highlighted where you're growing.
Gregory Peters: Okay. I guess, as related to this, I thought the slide, that on slide 11, where you talked about your in-force growth as you're dealing with, I think you said you lowered prices for 7.8 million customers in 2025, and you highlighted where you're growing.
Mario Rizzo: ... you know, we're hearing in the marketplace that certain mutuals and other companies might be getting more aggressive in the marketplace around auto and home. So maybe you could step back and give us some perspective on sort of the competitive landscape as you see it today, both in auto and home across the country.
Mario Rizzo: ... you know, we're hearing in the marketplace that certain mutuals and other companies might be getting more aggressive in the marketplace around auto and home. So maybe you could step back and give us some perspective on sort of the competitive landscape as you see it today, both in auto and home across the country.
Tom Wilson: It does seem to be people looking for, you know, what's lurking around the corner. So let me talk about competition. We've always been in a highly competitive market in all of our products, so this is nothing new. Sometimes it changes, as you point out, by state, sometimes it changes by company. But, you know, the way in which you compete is, you know, very broad. You understand this. First, you have to have a product that's differentiated. You gotta have an attractive price, you gotta have a great brand, you gotta have broad access, and you gotta—advertising is a game of precision and scale these days. And Transformative Growth that Mario went through addresses all of those, right? So we've been at this for a while.
Tom Wilson: It does seem to be people looking for, you know, what's lurking around the corner. So let me talk about competition. We've always been in a highly competitive market in all of our products, so this is nothing new. Sometimes it changes, as you point out, by state, sometimes it changes by company. But, you know, the way in which you compete is, you know, very broad. You understand this. First, you have to have a product that's differentiated. You gotta have an attractive price, you gotta have a great brand, you gotta have broad access, and you gotta—advertising is a game of precision and scale these days. And Transformative Growth that Mario went through addresses all of those, right? So we've been at this for a while.
Tom Wilson: If you look by product then and you say, okay, in auto insurance, you know, we have three really aggressive competitors. They've been the same three competitors for a while, Progressive, GEICO, and State Farm. Progressive, as you know well, has been growing rapidly. GEICO's lost a couple of points in market share, and State Farm picked up, but not quite that amount of market share gain. So, volume tends to go. They just pointed out there's a bunch of states where we think we're picking up share. So if you're over 4 points, there's not 4% more cars in the United States in total or in any of the states. So if you're over 4 points, you're picking up market share. So, our Transformative Growth plan has helped us pick up market share.
Tom Wilson: If you look by product then and you say, okay, in auto insurance, you know, we have three really aggressive competitors. They've been the same three competitors for a while, Progressive, GEICO, and State Farm. Progressive, as you know well, has been growing rapidly. GEICO's lost a couple of points in market share, and State Farm picked up, but not quite that amount of market share gain. So, volume tends to go. They just pointed out there's a bunch of states where we think we're picking up share. So if you're over 4 points, there's not 4% more cars in the United States in total or in any of the states. So if you're over 4 points, you're picking up market share. So, our Transformative Growth plan has helped us pick up market share.
Tom Wilson: Homeowners is kind of the same, but a little different because about half of the business is done by mutuals, so as you point out, they have different profit requirements. That said, we've been able to grow that business. It's what we think is higher than market share, with a fair amount of constraints on catastrophe losses, and earn economic rents better than the industry by a large margin. So we feel really good about continuing to compete in auto insurance, continuing to compete in home insurance. In fact, we think home insurance has more growth potential. We think we can dial up growth, and so Justin, Mario may wanna comment on these two.
Tom Wilson: Homeowners is kind of the same, but a little different because about half of the business is done by mutuals, so as you point out, they have different profit requirements. That said, we've been able to grow that business. It's what we think is higher than market share, with a fair amount of constraints on catastrophe losses, and earn economic rents better than the industry by a large margin. So we feel really good about continuing to compete in auto insurance, continuing to compete in home insurance. In fact, we think home insurance has more growth potential. We think we can dial up growth, and so Justin, Mario may wanna comment on these two.
Tom Wilson: So specialty lines, we also, we don't talk much about it, and, you know, there are some specialty lines insurers which have valuations which seem, relatively large compared to us. Yet, when I look at our growth, our size, our scale, like we're everybody's good, in, in many ways better. And then in our protection plans business, that's also a highly competitive business. So, we didn't get Walmart and Home Depot because we're no good. We got it because we compete on the things I was talking about, and Mario already talked about international. But, maybe you guys wanna comment on what you're seeing at the ground level in auto and home, and then in protection plans.
Tom Wilson: So specialty lines, we also, we don't talk much about it, and, you know, there are some specialty lines insurers which have valuations which seem, relatively large compared to us. Yet, when I look at our growth, our size, our scale, like we're everybody's good, in, in many ways better. And then in our protection plans business, that's also a highly competitive business. So, we didn't get Walmart and Home Depot because we're no good. We got it because we compete on the things I was talking about, and Mario already talked about international. But, maybe you guys wanna comment on what you're seeing at the ground level in auto and home, and then in protection plans.
Jesse Merten: Yeah, sure. So, you know, I think, Greg, where I would start is Mario covered Transformative Growth, and when I think about the competitive environment, I, I really go back to all of the efforts and investments we've made in Transformative Growth. So think, focusing on affordability, right? This isn't the first quarter we've been focused on affordability. It's in ASC, Affordable, Simple, and Connected, and we've rolled out significant number of states with that new product. We continue to drive down expenses and focus on claims, again, to lower costs. Marketing sophistication makes us better able to compete in this environment. And then, you know, the broad platform that we have, the broadest platform in the industry, exclusive agents, independent agents, and direct business, allows us to compete differently in all the different product lines that Tom went through.
Jess Merten: Yeah, sure. So, you know, I think, Greg, where I would start is Mario covered Transformative Growth, and when I think about the competitive environment, I, I really go back to all of the efforts and investments we've made in Transformative Growth. So think, focusing on affordability, right? This isn't the first quarter we've been focused on affordability. It's in ASC, Affordable, Simple, and Connected, and we've rolled out significant number of states with that new product. We continue to drive down expenses and focus on claims, again, to lower costs. Marketing sophistication makes us better able to compete in this environment. And then, you know, the broad platform that we have, the broadest platform in the industry, exclusive agents, independent agents, and direct business, allows us to compete differently in all the different product lines that Tom went through.
Jesse Merten: So I feel good about the investment, and I think when you go through the lines, the results show that. So as Tom said, on slide eleven, we showed we have 6 states growing greater than 10%, 14 from 4% to 10%. So that's 20%, or sorry, 20 states that are picking up share. We have 38 states growing in total, and they make up about 70% of our premiums. So in the auto line, we're showing proof that Transformative Growth works. If I flip to home, homeowners insurance is growing in 36 states. We've got ASC in 31 of those states, and we have some significant launches in the back half of the year. The reason that's important is we can better compete on a direct basis in homeowners when we have the ASC product.
Jess Merten: So I feel good about the investment, and I think when you go through the lines, the results show that. So as Tom said, on slide eleven, we showed we have 6 states growing greater than 10%, 14 from 4% to 10%. So that's 20%, or sorry, 20 states that are picking up share. We have 38 states growing in total, and they make up about 70% of our premiums. So in the auto line, we're showing proof that Transformative Growth works. If I flip to home, homeowners insurance is growing in 36 states. We've got ASC in 31 of those states, and we have some significant launches in the back half of the year. The reason that's important is we can better compete on a direct basis in homeowners when we have the ASC product.
Jesse Merten: We see great traction, and I think we've proven that that's a product that can be sold on a direct basis when we get ASC into the market. So we're seeing very good trends, and elevated production levels, particularly on the web, in the homeowners line. And then, as Tom said, it's good to give one of our specialty lines, renters, some attention. We have, I think Mario mentioned 30 states in ASC. The renters line is growing faster than auto and home, so we're picking up share, in growing the renters line, and we're doing it all at profitable levels, so it continues to run below target profitability. So as I look across those lines, and there's other specialty lines we could talk about, but, I think we're seeing the results of investing in Transformative Growth.
Jess Merten: We see great traction, and I think we've proven that that's a product that can be sold on a direct basis when we get ASC into the market. So we're seeing very good trends, and elevated production levels, particularly on the web, in the homeowners line. And then, as Tom said, it's good to give one of our specialty lines, renters, some attention. We have, I think Mario mentioned 30 states in ASC. The renters line is growing faster than auto and home, so we're picking up share, in growing the renters line, and we're doing it all at profitable levels, so it continues to run below target profitability. So as I look across those lines, and there's other specialty lines we could talk about, but, I think we're seeing the results of investing in Transformative Growth.
Jesse Merten: We're seeing the results of the system working to help position us competitively, to your question, to continue to win. So that's kind of my view of the Property-Liability business.
Jess Merten: We're seeing the results of the system working to help position us competitively, to your question, to continue to win. So that's kind of my view of the Property-Liability business.
Mario Rizzo: Yeah, and Greg, the only thing I'd add on protection plans, you know, we've grown that to be a $2.3 billion business, and we've done it in a variety of ways. First, as Tom mentioned, it is a highly competitive business, both in terms of incumbents and new entrants into the market, but we've been able to leverage the capabilities at Allstate Protection Plans to add new partners, like Tom mentioned, with Home Depot and Walmart, and a number of those logos that you saw on the slide that I covered. We've expanded into new categories, into appliances and furniture, and so we've seen growth there. And then we've been able to expand geographically.
Mario Rizzo: Yeah, and Greg, the only thing I'd add on protection plans, you know, we've grown that to be a $2.3 billion business, and we've done it in a variety of ways. First, as Tom mentioned, it is a highly competitive business, both in terms of incumbents and new entrants into the market, but we've been able to leverage the capabilities at Allstate Protection Plans to add new partners, like Tom mentioned, with Home Depot and Walmart, and a number of those logos that you saw on the slide that I covered. We've expanded into new categories, into appliances and furniture, and so we've seen growth there. And then we've been able to expand geographically.
Mario Rizzo: Our business in Europe is expanding rapidly with some very large mobile carriers and consumer electronic carriers as well within Europe, and there's opportunity for us in Asia Pacific as well. So the playbook has been to continue to leverage capabilities, enhance our capabilities, and use that to expand in a number of different ways in what is a very competitive market, and we've been really successful at doing that.
Mario Rizzo: Our business in Europe is expanding rapidly with some very large mobile carriers and consumer electronic carriers as well within Europe, and there's opportunity for us in Asia Pacific as well. So the playbook has been to continue to leverage capabilities, enhance our capabilities, and use that to expand in a number of different ways in what is a very competitive market, and we've been really successful at doing that.
Rob Cox: Got it. Thanks for the additional detail.
Gregory Peters: Got it. Thanks for the additional detail.
Operator: Thank you. And our next question comes from the line of Yaron Kinar from Mizuho. Your question, please.
Operator: Thank you. And our next question comes from the line of Yaron Kinar from Mizuho. Your question, please.
Yaron Kinar: Thank you. Good morning. Maybe just stick on to remain on the subject of PIF. For auto PIF, does slide 11 include the decreases in the legacy insurance and Encompass policies? And when do you expect that drag to end?
Yaron Kinar: Thank you. Good morning. Maybe just stick on to remain on the subject of PIF. For auto PIF, does slide 11 include the decreases in the legacy insurance and Encompass policies? And when do you expect that drag to end?
Tom Wilson: Make sure I get the question. Are you talking about the overall numbers or the active brands numbers that we put?
Tom Wilson: Make sure I get the question. Are you talking about the overall numbers or the active brands numbers that we put?
Yaron Kinar: Yeah, I guess my question is, is slide 11 just for active brands, or does it also include the drag from the other insurance and Encompass policies?
Yaron Kinar: Yeah, I guess my question is, is slide 11 just for active brands, or does it also include the drag from the other insurance and Encompass policies?
Mario Rizzo: Yeah, Yaron, this is Jess. It includes the inactive brands as well. So to the extent we're losing policies, that's reflected in this chart.
Jess Merten: Yeah, Yaron, this is Jess. It includes the inactive brands as well. So to the extent we're losing policies, that's reflected in this chart.
Tom Wilson: Yeah, we hold ourselves accountable for total growth. We're, we're not into... I mean, we do show the active brands because people found that interesting. I think active brands are up 3.3%. But, you know, we should be accountable for overall growth.
Tom Wilson: Yeah, we hold ourselves accountable for total growth. We're, we're not into... I mean, we do show the active brands because people found that interesting. I think active brands are up 3.3%. But, you know, we should be accountable for overall growth.
Yaron Kinar: Okay. And when do you expect that drag from the non-active brands to end?
Yaron Kinar: Okay. And when do you expect that drag from the non-active brands to end?
Tom Wilson: That's not, I would look at the chart Jess showed, that showed it by state. And the another question is, how do we get some of those red states into the blue states? And we're working on all those. We have- we've had some good movement in one state recently, but we still have a couple of other states that we need to make some changes out. So it's less about the brands, though shutting down those old brands is really part of TG and cutting costs. Like, we just don't need all the technology, the separate advertising, how we cut all that stuff out, that's how we're getting expenses down. So, and we try to roll some of that business into the Allstate brand.
Tom Wilson: That's not, I would look at the chart Jess showed, that showed it by state. And the another question is, how do we get some of those red states into the blue states? And we're working on all those. We have- we've had some good movement in one state recently, but we still have a couple of other states that we need to make some changes out. So it's less about the brands, though shutting down those old brands is really part of TG and cutting costs. Like, we just don't need all the technology, the separate advertising, how we cut all that stuff out, that's how we're getting expenses down. So, and we try to roll some of that business into the Allstate brand.
Tom Wilson: So, I would really focus on it, Yaron, from a state standpoint and say, "How do we have those reds all become blue, and shift the blue even farther to the right, so we're picking up share everywhere?
Tom Wilson: So, I would really focus on it, Yaron, from a state standpoint and say, "How do we have those reds all become blue, and shift the blue even farther to the right, so we're picking up share everywhere?
Mario Rizzo: The other thing that you can watch, Yaron, is the rollout of Custom 360. Right, so in Custom 360, it is in 36 states at the end of the year. And so as you watch us continue to roll that out, that is, you know, effectively, that's what replaces the Encompass brand. So that, that's something you can keep an eye on as well.
Mario Rizzo: The other thing that you can watch, Yaron, is the rollout of Custom 360. Right, so in Custom 360, it is in 36 states at the end of the year. And so as you watch us continue to roll that out, that is, you know, effectively, that's what replaces the Encompass brand. So that, that's something you can keep an eye on as well.
Yaron Kinar: Thank you. And then shifting gears a bit to the regulatory and legislative changes, I guess one question I have, and I don't know if it's something you've discussed with the relevant parties, is a 2- or even 3-year look-back to determine excess profitability too short of a time period?
Yaron Kinar: Thank you. And then shifting gears a bit to the regulatory and legislative changes, I guess one question I have, and I don't know if it's something you've discussed with the relevant parties, is a 2- or even 3-year look-back to determine excess profitability too short of a time period?
Tom Wilson: I think it would by line, right? So homeowners would be a longer period of time because you have big catastrophes that go. I guess, though, my general reaction is, I don't know what excess profits mean, right? Like, so in the homeowners business, the industry loses money. And so if legislators or regulators want customers to pay less, having the insurance industry, as total, lose money, is not the right way to go. That's the message we're trying to say. Like, you can't ask, you know, companies to give up more of their capital to support lower prices, because that's not sustainable, because they only have so much capital.
Tom Wilson: I think it would by line, right? So homeowners would be a longer period of time because you have big catastrophes that go. I guess, though, my general reaction is, I don't know what excess profits mean, right? Like, so in the homeowners business, the industry loses money. And so if legislators or regulators want customers to pay less, having the insurance industry, as total, lose money, is not the right way to go. That's the message we're trying to say. Like, you can't ask, you know, companies to give up more of their capital to support lower prices, because that's not sustainable, because they only have so much capital.
Tom Wilson: And then you look at us and you say, "Well, we do better than the industry in profitability in homeowners." I don't think that it's excess; I just think we're better. And so, you know, we have better products, better costs, better this. And so I'm sort of not in the camp of people should be thinking about excess profits. I'm like, let's get costs down. Totally agree with that. And the way to get costs down are to address costs, because we're a cost-plus industry, not to go after what some people might perceive to be excess profits. We. It's a highly competitive market. We earn every dollar legitimately we make in homeowners because we're good at it, and our customers still get great value.
Tom Wilson: And then you look at us and you say, "Well, we do better than the industry in profitability in homeowners." I don't think that it's excess; I just think we're better. And so, you know, we have better products, better costs, better this. And so I'm sort of not in the camp of people should be thinking about excess profits. I'm like, let's get costs down. Totally agree with that. And the way to get costs down are to address costs, because we're a cost-plus industry, not to go after what some people might perceive to be excess profits. We. It's a highly competitive market. We earn every dollar legitimately we make in homeowners because we're good at it, and our customers still get great value.
Yaron Kinar: Thank you.
Yaron Kinar: Thank you.
Operator: Thank you. Our next question comes from the line of Rob Cox from Goldman Sachs. Your question, please.
Operator: Thank you. Our next question comes from the line of Rob Cox from Goldman Sachs. Your question, please.
Rob Cox: Hey, thanks. Good morning. So first question is just on, you know, new business penalty. I think Allstate's mix of growth here is coming more from new business than on average historically. So I'm curious how the new business penalty has trended relative to your expectations, and if we should expect margins to potentially normalize quicker than in past cycles because of all the new apps growth.
Rob Cox: Hey, thanks. Good morning. So first question is just on, you know, new business penalty. I think Allstate's mix of growth here is coming more from new business than on average historically. So I'm curious how the new business penalty has trended relative to your expectations, and if we should expect margins to potentially normalize quicker than in past cycles because of all the new apps growth.
Tom Wilson: I'll make a couple of overall comments, and then, Jess can jump in here. First, with the increasing pricing sophistication, you have, I would just say in general, less new business penalty because you can be much more precise about what you charge people. So we're much more sophisticated in pricing. That said, you do sometimes, when you have acquisition costs, you got to spend money in advertising to get people, and it does cost more money to get a new customer than to keep a customer. And so there is some penalty there. It depends by the type of business you bring. So, a lot of our growth in the last couple of years has been driven by expanding in the higher-risk drivers or what's traditionally called non-standard business.
Tom Wilson: I'll make a couple of overall comments, and then, Jess can jump in here. First, with the increasing pricing sophistication, you have, I would just say in general, less new business penalty because you can be much more precise about what you charge people. So we're much more sophisticated in pricing. That said, you do sometimes, when you have acquisition costs, you got to spend money in advertising to get people, and it does cost more money to get a new customer than to keep a customer. And so there is some penalty there. It depends by the type of business you bring. So, a lot of our growth in the last couple of years has been driven by expanding in the higher-risk drivers or what's traditionally called non-standard business.
Tom Wilson: And that has a smaller new business penalty because it's gonna hang around less. So you, you're looking at it in terms of lifetime value of your cost. That said, we feel very comfortable we can grow with Transformative Growth, increase market share, and still earn our attractive and target margins. The system works, like, the math works to grow and handle whatever the new business penalty is, whether that's non-standard or standard. Jess, anything you want to add to that?
Tom Wilson: And that has a smaller new business penalty because it's gonna hang around less. So you, you're looking at it in terms of lifetime value of your cost. That said, we feel very comfortable we can grow with Transformative Growth, increase market share, and still earn our attractive and target margins. The system works, like, the math works to grow and handle whatever the new business penalty is, whether that's non-standard or standard. Jess, anything you want to add to that?
Jesse Merten: No, I would just say that, you know, it's a state-by-state evaluation that we do. We're aware of both mix of business. As Tom said, the non-standard or the high-risk business is priced to make money right away, so we can focus on mix of business as we look at potential new business penalty. You also have seen we've lowered ASC rates in 32 states, right? So we're managing overall profitability on a state-by-state basis, considering both target margins and what potential new business penalty we project out. But overall, I would say it's something that we're very focused on, again, at a granular state level.
Jess Merten: No, I would just say that, you know, it's a state-by-state evaluation that we do. We're aware of both mix of business. As Tom said, the non-standard or the high-risk business is priced to make money right away, so we can focus on mix of business as we look at potential new business penalty. You also have seen we've lowered ASC rates in 32 states, right? So we're managing overall profitability on a state-by-state basis, considering both target margins and what potential new business penalty we project out. But overall, I would say it's something that we're very focused on, again, at a granular state level.
Rob Cox: Thank you. That makes sense. And then just to follow up on, you know, specifically independent agents channel. I think. So the growth in the IA channel, new apps accelerated quarter-over-quarter, which is somewhat of a step change from historical seasonality, from what we can tell. And you've got a number of factors improving growth, but I was hoping you could just walk through the primary drivers of the improvement in new apps, specifically within the IA channel.
Rob Cox: Thank you. That makes sense. And then just to follow up on, you know, specifically independent agents channel. I think. So the growth in the IA channel, new apps accelerated quarter-over-quarter, which is somewhat of a step change from historical seasonality, from what we can tell. And you've got a number of factors improving growth, but I was hoping you could just walk through the primary drivers of the improvement in new apps, specifically within the IA channel.
Tom Wilson: I'll provide some overview, and then Jess can jump in. First, I would say, I wouldn't really look at the new apps by quarter by channel. I'm going to take you up a minute, and then Jess can talk about what's going on in the future. So, Transformative Growth was maintain the productivity of the Allstate agents, and we've done that. We're writing more new business through Allstate agents with fewer of them, so productivity is actually up. We have dramatic growth in both direct and independent agents. Mario and I were talking about, I think we're writing, like, five times in direct what we used to write before we got started. So it's a 500% increase in direct. And those are big numbers. It's not off, like, writing one policy.
Tom Wilson: I'll provide some overview, and then Jess can jump in. First, I would say, I wouldn't really look at the new apps by quarter by channel. I'm going to take you up a minute, and then Jess can talk about what's going on in the future. So, Transformative Growth was maintain the productivity of the Allstate agents, and we've done that. We're writing more new business through Allstate agents with fewer of them, so productivity is actually up. We have dramatic growth in both direct and independent agents. Mario and I were talking about, I think we're writing, like, five times in direct what we used to write before we got started. So it's a 500% increase in direct. And those are big numbers. It's not off, like, writing one policy.
Tom Wilson: And you can see that in the chart that Mario showed. The independent agent business, we also expanded quite rapidly. In part, that was, of course, because we bought National General, because we were in the independent agent business, and we just weren't that good at it. So we bought them. They made us a lot better. We then expanded the non-standard business by a number of states, so that drove some growth. And there's lots of room to grow in the independent agent channel, as Jess has mentioned, with 360. So that's the overview. What would you— Is there something specific that you think you want to talk about relative to the quarter or maybe the prospects for IA?
Tom Wilson: And you can see that in the chart that Mario showed. The independent agent business, we also expanded quite rapidly. In part, that was, of course, because we bought National General, because we were in the independent agent business, and we just weren't that good at it. So we bought them. They made us a lot better. We then expanded the non-standard business by a number of states, so that drove some growth. And there's lots of room to grow in the independent agent channel, as Jess has mentioned, with 360. So that's the overview. What would you— Is there something specific that you think you want to talk about relative to the quarter or maybe the prospects for IA?
Jesse Merten: I would focus on the progress prospects. I think specific to the quarter, we continue to see really good balance across all distribution channels. So to your point, Tom, I don't think focusing on one quarterly trend is as important as overall production and the balance that we get EA, IA, and direct. A lot of the growth in the independent agent channel has been the higher risk drivers and, you know, or non-standard. We're continuing to focus as we look into 2026 at both rolling out the new Custom 360 product, but we're doing other things to make sure that we engage independent agents in the middle market, standard, and preferred segment, where we still believe there's a huge opportunity where we can compete with best-in-class products and engage them differently beyond just the high-risk drivers.
Jess Merten: I would focus on the progress prospects. I think specific to the quarter, we continue to see really good balance across all distribution channels. So to your point, Tom, I don't think focusing on one quarterly trend is as important as overall production and the balance that we get EA, IA, and direct. A lot of the growth in the independent agent channel has been the higher risk drivers and, you know, or non-standard. We're continuing to focus as we look into 2026 at both rolling out the new Custom 360 product, but we're doing other things to make sure that we engage independent agents in the middle market, standard, and preferred segment, where we still believe there's a huge opportunity where we can compete with best-in-class products and engage them differently beyond just the high-risk drivers.
Jesse Merten: And so, you know, I look at both the strength in production in Q4 as a positive, but I look forward to what we're doing in 2026 to continue to see growth in IA beyond the higher-risk driver segment.
Jess Merten: And so, you know, I look at both the strength in production in Q4 as a positive, but I look forward to what we're doing in 2026 to continue to see growth in IA beyond the higher-risk driver segment.
Tom Wilson: Maybe, and this, I think, will tie together with Grace's comment, and what Jess just said, and which is competition. But let's go down to a state level. Let's take state A, and Jess has got a team working on that state A. And let's say that there's nobody that the exclusive agent competition doesn't really have much of a presence there. So we can hit hard on our exclusive agent presence, expand it, and off we go. Let's say that we want to then compete with GEICO in that market, and we can ramp up our direct stuff. So we have...
Tom Wilson: Maybe, and this, I think, will tie together with Grace's comment, and what Jess just said, and which is competition. But let's go down to a state level. Let's take state A, and Jess has got a team working on that state A. And let's say that there's nobody that the exclusive agent competition doesn't really have much of a presence there. So we can hit hard on our exclusive agent presence, expand it, and off we go. Let's say that we want to then compete with GEICO in that market, and we can ramp up our direct stuff. So we have...
Tom Wilson: The same thing is true with independent agents, and once we broaden that portfolio to independent agents, besides just being non-standard, and having, you know, what are more traditional mainstream Custom 360 products. So we have many ways to compete at an individual level with all the different carriers, and nobody has all those levers. That doesn't mean we're going to win in every state, doesn't mean everybody should go home, but it does mean we feel very comfortable about the balance of ways we have to compete, from distribution, sophisticated pricing, really good advertising, lower expenses. We have plenty of ways we can grow.
Tom Wilson: The same thing is true with independent agents, and once we broaden that portfolio to independent agents, besides just being non-standard, and having, you know, what are more traditional mainstream Custom 360 products. So we have many ways to compete at an individual level with all the different carriers, and nobody has all those levers. That doesn't mean we're going to win in every state, doesn't mean everybody should go home, but it does mean we feel very comfortable about the balance of ways we have to compete, from distribution, sophisticated pricing, really good advertising, lower expenses. We have plenty of ways we can grow.
Rob Cox: Thank you.
Rob Cox: Thank you.
Operator: Thank you. And our next question comes from the line of Bob Huang from Morgan Stanley. Your question, please.
Operator: Thank you. And our next question comes from the line of Bob Huang from Morgan Stanley. Your question, please.
Bob Huang: Hi, good morning. I want to throw a little bit of a curveball here. Autonomous driving. It's been an increasingly more topical discussion. Just curious on your thinking, like, your view on the pace of the technological development there, and then how that could potentially impact personal auto, just from a like, is it more of a threat? Is it more of an opportunity, how you're thinking about it, how you're positioning it? That's the first question.
Bob Huang: Hi, good morning. I want to throw a little bit of a curveball here. Autonomous driving. It's been an increasingly more topical discussion. Just curious on your thinking, like, your view on the pace of the technological development there, and then how that could potentially impact personal auto, just from a like, is it more of a threat? Is it more of an opportunity, how you're thinking about it, how you're positioning it? That's the first question.
Tom Wilson: So on autonomous driving, I would say it's a curveball we've been watching for about 15 years. And that's a good thing, because we've been at it for 15 years. So we've been in telematics. We now have over 2 trillion miles of data. You need that kind of data to be able to adjust to what autonomous driving can do and what different cars can do. So, on the autonomous driving is, think of it, it's almost like safer driving. And so you have fully autonomous might be the safest because we take people completely out of it, but there's steps along the way. So you're seeing that in declines in frequency.
Tom Wilson: So on autonomous driving, I would say it's a curveball we've been watching for about 15 years. And that's a good thing, because we've been at it for 15 years. So we've been in telematics. We now have over 2 trillion miles of data. You need that kind of data to be able to adjust to what autonomous driving can do and what different cars can do. So, on the autonomous driving is, think of it, it's almost like safer driving. And so you have fully autonomous might be the safest because we take people completely out of it, but there's steps along the way. So you're seeing that in declines in frequency.
Tom Wilson: And so, whether that's the little light on the side of your rearview or your side view mirror, or that's the beep beep thing when you're backing up, or the camera, there's lots of things that have impacted frequency. Now, what that has also done, though, is increase severity, because replacing all the equipment is not cheap. So as we've been modeling that out for 15 years, we've been watching it. We think there is potential that it will continue to get safer, frequency go down. We'll see what happens with severity. I think eventually we'll figure out how to engineer these cars to not be as expensive as they are today.
Tom Wilson: And so, whether that's the little light on the side of your rearview or your side view mirror, or that's the beep beep thing when you're backing up, or the camera, there's lots of things that have impacted frequency. Now, what that has also done, though, is increase severity, because replacing all the equipment is not cheap. So as we've been modeling that out for 15 years, we've been watching it. We think there is potential that it will continue to get safer, frequency go down. We'll see what happens with severity. I think eventually we'll figure out how to engineer these cars to not be as expensive as they are today.
Tom Wilson: But in all that case, we feel like there's, as long as we're ahead in pricing, we're very sophisticated, we're involved in telematics, we're watching the data, and then we'll be fine. In terms of the pace of change, one of the things that's different about this technology change than some other technology changes, so if you go to, like, the software and AI and stuff like that, you know, that can happen very rapidly. Here you got $4 trillion in hardware, and you got to turn over that hardware.
Tom Wilson: But in all that case, we feel like there's, as long as we're ahead in pricing, we're very sophisticated, we're involved in telematics, we're watching the data, and then we'll be fine. In terms of the pace of change, one of the things that's different about this technology change than some other technology changes, so if you go to, like, the software and AI and stuff like that, you know, that can happen very rapidly. Here you got $4 trillion in hardware, and you got to turn over that hardware.
Tom Wilson: It doesn't mean the hardware can't be turned over; it just takes $4 trillion to do it, as opposed to, "I'm unplug this piece of software because I can use AI to program." So the pace of change will come, but it's at a curveball pace where you can watch it so you can hit it.
Tom Wilson: It doesn't mean the hardware can't be turned over; it just takes $4 trillion to do it, as opposed to, "I'm unplug this piece of software because I can use AI to program." So the pace of change will come, but it's at a curveball pace where you can watch it so you can hit it.
Bob Huang: Got it. Really appreciate that. So as long as the curveball you're seeing, hopefully it's a home run. Maybe a follow-up on that severity point. Yeah.
Bob Huang: Got it. Really appreciate that. So as long as the curveball you're seeing, hopefully it's a home run. Maybe a follow-up on that severity point. Yeah.
Tom Wilson: You're about to share.
Tom Wilson: You're about to share.
Bob Huang: Yeah, for sure. So, but maybe on that severity point, right? Like, if I look at your slide, on essentially, like, the cost split between physical damage, injury, and expenses, obviously, bodily injury is about 1/3 of that. If we're believers that autonomous is gonna reduce frequency, on the point of severity, shouldn't theoretically we see an improvement in severity, so, like, pretty immediately? Like, how do you think about the parts cost versus the bodily injury component of that?
Bob Huang: Yeah, for sure. So, but maybe on that severity point, right? Like, if I look at your slide, on essentially, like, the cost split between physical damage, injury, and expenses, obviously, bodily injury is about 1/3 of that. If we're believers that autonomous is gonna reduce frequency, on the point of severity, shouldn't theoretically we see an improvement in severity, so, like, pretty immediately? Like, how do you think about the parts cost versus the bodily injury component of that?
Tom Wilson: Autonomous cars?
Tom Wilson: Autonomous cars?
Bob Huang: Yes, sir.
Bob Huang: Yes, sir.
Tom Wilson: Yeah, okay. Yeah, I just wanna make sure I got the question right. Actually, the severity goes up, because you have fewer small fender benders, so you don't back into the pole when you're at the grocery store, and so you don't have a $1,000. So that said, if you're going, you know, 75 miles an hour, the autonomous safe driving stuff doesn't really help much. So we've actually seen the bodily injury severity go up. It's a little hard to parse out to do... In fact, it's impossible to do attribution as to whether that's because people are driving faster. We know that from our telematics data, that people are driving faster, and so there's more severe accidents.
Tom Wilson: Yeah, okay. Yeah, I just wanna make sure I got the question right. Actually, the severity goes up, because you have fewer small fender benders, so you don't back into the pole when you're at the grocery store, and so you don't have a $1,000. So that said, if you're going, you know, 75 miles an hour, the autonomous safe driving stuff doesn't really help much. So we've actually seen the bodily injury severity go up. It's a little hard to parse out to do... In fact, it's impossible to do attribution as to whether that's because people are driving faster. We know that from our telematics data, that people are driving faster, and so there's more severe accidents.
Tom Wilson: But we can't say how much of the 50-some percent was due to that, versus how much is just due to the fact that attorneys are very aggressive in getting to anybody who's been in an accident for anything and saying, "I can represent you and give you some money, it doesn't cost you anything." So most people buy that. We have to figure out how we control that cost, but I can't give you an attribution of how much was because of runaway tort costs, and how much is just people going faster and driving into more severe accidents.
Tom Wilson: But we can't say how much of the 50-some percent was due to that, versus how much is just due to the fact that attorneys are very aggressive in getting to anybody who's been in an accident for anything and saying, "I can represent you and give you some money, it doesn't cost you anything." So most people buy that. We have to figure out how we control that cost, but I can't give you an attribution of how much was because of runaway tort costs, and how much is just people going faster and driving into more severe accidents.
Bob Huang: Okay. Thank you very much. Really appreciate that.
Bob Huang: Okay. Thank you very much. Really appreciate that.
Operator: Thank you, and our next question comes from the line of Elise Greenspan from Wells Fargo. Your question, please.
Operator: Thank you, and our next question comes from the line of Elise Greenspan from Wells Fargo. Your question, please.
Elyse Greenspan: Hi, thanks. My first question, I just wanted to start with, you know, capital. You guys announced a new buyback program that's higher than the last authorization. So just trying to get a sense of, you know, is, is the priority now just to take, you know, excess capital and use it for share repurchase? Or, you know, are you, you know, is M&A, I guess, further down the list in terms of capital priorities right now? Just looking to get an update there.
Elyse Greenspan: Hi, thanks. My first question, I just wanted to start with, you know, capital. You guys announced a new buyback program that's higher than the last authorization. So just trying to get a sense of, you know, is, is the priority now just to take, you know, excess capital and use it for share repurchase? Or, you know, are you, you know, is M&A, I guess, further down the list in terms of capital priorities right now? Just looking to get an update there.
Tom Wilson: The priority, Elise... Sorry, I'm hearing an echo. The priority, Elise, would be to maximize the amount of money we create for shareholders from that capital. First is just organic growth. So we look at capital, like, first thing, just start to grow auto home, get the multiple rerate, that should drive the stock up just on the multiple rerate, forget the fact that you're earning more money on capital, and we're getting exceptionally high returns in our businesses you see this year. Will it always be, you know, at a three on it? No. But is that still way higher than the S&P 500? 100 percent. So we feel very good about organic growth in that driving business.
Tom Wilson: The priority, Elise... Sorry, I'm hearing an echo. The priority, Elise, would be to maximize the amount of money we create for shareholders from that capital. First is just organic growth. So we look at capital, like, first thing, just start to grow auto home, get the multiple rerate, that should drive the stock up just on the multiple rerate, forget the fact that you're earning more money on capital, and we're getting exceptionally high returns in our businesses you see this year. Will it always be, you know, at a three on it? No. But is that still way higher than the S&P 500? 100 percent. So we feel very good about organic growth in that driving business.
Tom Wilson: Second, then we say, well, what other things, where are we a better owner of a business? So when we bought SquareTrade, we were a better owner, and they were better for us. When we bought National General, we were a better owner. So, and that's where we're leveraging our skills, our capabilities. And then we say, okay, well, where are we in capital? We are long capital now. We think with a $4 billion share repurchase, we're still long capital. We have plenty of capital. We've always had a lot of capital. So, and we feel like this is a way to give that cash back to shareholders so they can deploy it in a way that gives them the kind of returns we're able to get with somebody else.
Tom Wilson: Second, then we say, well, what other things, where are we a better owner of a business? So when we bought SquareTrade, we were a better owner, and they were better for us. When we bought National General, we were a better owner. So, and that's where we're leveraging our skills, our capabilities. And then we say, okay, well, where are we in capital? We are long capital now. We think with a $4 billion share repurchase, we're still long capital. We have plenty of capital. We've always had a lot of capital. So, and we feel like this is a way to give that cash back to shareholders so they can deploy it in a way that gives them the kind of returns we're able to get with somebody else.
Tom Wilson: If we think we can get higher than that, we will. But we also think the stock is so cheap that it's like a really good deal for those shareholders who want to hang with us. And, you know, you can increase your ownership, and as John pointed out, we've helped people, those people who stayed with us, increase their ownership dramatically. And since I've been here, I think we've bought back over 80% this year, so we're happy that, you know, people want to sell, then that's fine. Those who believe in the story, we think there's huge shareholder returns coming here.
Tom Wilson: If we think we can get higher than that, we will. But we also think the stock is so cheap that it's like a really good deal for those shareholders who want to hang with us. And, you know, you can increase your ownership, and as John pointed out, we've helped people, those people who stayed with us, increase their ownership dramatically. And since I've been here, I think we've bought back over 80% this year, so we're happy that, you know, people want to sell, then that's fine. Those who believe in the story, we think there's huge shareholder returns coming here.
Elyse Greenspan: Thanks, Tom. And then my follow-up question, in auto, right, the average growth premiums written per policy turned negative in Q4. I know you guys have been taking less price, right? But there's still been positive price running through the book, right, if I look at the disclosure in the supplement. So I'm just trying to tie those two figures and then, you know, just more color on why that, you know, premiums written, you know, inflected negatively in the quarter.
Elyse Greenspan: Thanks, Tom. And then my follow-up question, in auto, right, the average growth premiums written per policy turned negative in Q4. I know you guys have been taking less price, right? But there's still been positive price running through the book, right, if I look at the disclosure in the supplement. So I'm just trying to tie those two figures and then, you know, just more color on why that, you know, premiums written, you know, inflected negatively in the quarter.
Tom Wilson: It's a complicated piece of analysis to do, because you have both the rates you talked about. You also have the mix, the coverages, the state levels, and so, you know, if you look at what a non-standard policy generates versus standard. So it's complicated. But I think where you're going is, what should you be thinking about in terms of profitability, if the average premium is going down? And I would say, I would go back to the slide that Jess showed, where we've reduced prices this year by over $800 million in this year. We still earn great returns. So we're focused on giving customers the most affordable price we can and still getting our target margins. We obviously had a combined ratio that was better than our target margin this year.
Tom Wilson: It's a complicated piece of analysis to do, because you have both the rates you talked about. You also have the mix, the coverages, the state levels, and so, you know, if you look at what a non-standard policy generates versus standard. So it's complicated. But I think where you're going is, what should you be thinking about in terms of profitability, if the average premium is going down? And I would say, I would go back to the slide that Jess showed, where we've reduced prices this year by over $800 million in this year. We still earn great returns. So we're focused on giving customers the most affordable price we can and still getting our target margins. We obviously had a combined ratio that was better than our target margin this year.
Tom Wilson: So do I think that the combined ratio will drift up over time? Yes. And that's because we're going to grow faster.
Tom Wilson: So do I think that the combined ratio will drift up over time? Yes. And that's because we're going to grow faster.
Elyse Greenspan: Thank you.
Elyse Greenspan: Thank you.
Operator: Thank you. And our next question comes from the line of Joshua Shanker from Bank of America. Your question, please.
Operator: Thank you. And our next question comes from the line of Joshua Shanker from Bank of America. Your question, please.
Joshua Shanker: Yeah, thank you. Elise, who is super smart, asked the first part of my question, but I wanted to go into the second part. One thought that I had is maybe premium per policy is coming down because of Allstate's flexibility, and maybe people are buying down coverage. I want to know if that's true, and if that's true, does that help retention, which has been weak, and it doesn't seem to be necessarily getting better so far? I guess it's a bit complicated. Is there something to that effect going on?
Joshua Shanker: Yeah, thank you. Elise, who is super smart, asked the first part of my question, but I wanted to go into the second part. One thought that I had is maybe premium per policy is coming down because of Allstate's flexibility, and maybe people are buying down coverage. I want to know if that's true, and if that's true, does that help retention, which has been weak, and it doesn't seem to be necessarily getting better so far? I guess it's a bit complicated. Is there something to that effect going on?
Tom Wilson: Let me address for a couple points, and maybe Jess or Mario want to jump in here. First, I would just, and maybe this is defensive, but I wouldn't call our retention weak. I would say, you know, compared to some of the other companies, and it's better. Other places, it's not as good. It's like, I'd like to have, you know, some other companies' retention as well, but, we are working on retention. You are correct in that price does impact retention, which is why we went back and did the save program, and we'll do the save program again this year. Like, we're very happy with its results.
Tom Wilson: Let me address for a couple points, and maybe Jess or Mario want to jump in here. First, I would just, and maybe this is defensive, but I wouldn't call our retention weak. I would say, you know, compared to some of the other companies, and it's better. Other places, it's not as good. It's like, I'd like to have, you know, some other companies' retention as well, but, we are working on retention. You are correct in that price does impact retention, which is why we went back and did the save program, and we'll do the save program again this year. Like, we're very happy with its results.
Tom Wilson: We also have an effort coming up, which is to move people from what we would call our classic Allstate brand products, those pre-Affordable, Simple, and Connected, and move them into Affordable, Simple, and Connected, which we think will also help us from a lifetime value retention. It might mess up the numbers a little bit because somebody shows up at a different stuff, but we are focused on trying to improve retention to that point. Coverage does matter. We want our customers to have the right amount of coverage, not too little, not too much. The SAVE program helps us go back to them and say, "Hey, what's different in your life? Do you-- Is your teenager no longer at home? Do you have a different car? You know, do you want to have a higher deductible?
Tom Wilson: We also have an effort coming up, which is to move people from what we would call our classic Allstate brand products, those pre-Affordable, Simple, and Connected, and move them into Affordable, Simple, and Connected, which we think will also help us from a lifetime value retention. It might mess up the numbers a little bit because somebody shows up at a different stuff, but we are focused on trying to improve retention to that point. Coverage does matter. We want our customers to have the right amount of coverage, not too little, not too much. The SAVE program helps us go back to them and say, "Hey, what's different in your life? Do you-- Is your teenager no longer at home? Do you have a different car? You know, do you want to have a higher deductible?
Tom Wilson: Do you need lower limits because of where you're at now, in terms of financial position?" So, it does make a difference. So, for example, we have found in the direct channel in one particular state, that high net worth people are still buying lower coverage because that's what they want. Like, they can choose. So, and we've had good growth as a result of that. So coverage is a, a good tool, but you want to make sure you're serving your customers well. Anything you guys would add?
Tom Wilson: Do you need lower limits because of where you're at now, in terms of financial position?" So, it does make a difference. So, for example, we have found in the direct channel in one particular state, that high net worth people are still buying lower coverage because that's what they want. Like, they can choose. So, and we've had good growth as a result of that. So coverage is a, a good tool, but you want to make sure you're serving your customers well. Anything you guys would add?
Jesse Merten: I mean, I would double down. That's the essence of SAVE was to do exactly what you described, right? So it's to look at coverages, look at available discounts. That's going to drive down average premium, but we're adjusting the risk, and we're putting the policy terms, what, you know, where it makes sense for our customers. And so the 7.8 million customers saved more than 5%. They saved on average of 17%, and that's through exactly what you're getting at. I think it's really, again, getting at the essence of what that program was meant to do.
Jess Merten: I mean, I would double down. That's the essence of SAVE was to do exactly what you described, right? So it's to look at coverages, look at available discounts. That's going to drive down average premium, but we're adjusting the risk, and we're putting the policy terms, what, you know, where it makes sense for our customers. And so the 7.8 million customers saved more than 5%. They saved on average of 17%, and that's through exactly what you're getting at. I think it's really, again, getting at the essence of what that program was meant to do.
Tom Wilson: ... If, if we go back to where we were reporting, so we just showed this slide of $800 million of reduction of premium. And I know you all know this, but keep in mind that that's different than when we were doing rate increases, and we showed you the rate increases coming through. In this case, your loss costs go down some, too. So it's not dollar for dollar that you lose that in the bottom line.
Tom Wilson: ... If, if we go back to where we were reporting, so we just showed this slide of $800 million of reduction of premium. And I know you all know this, but keep in mind that that's different than when we were doing rate increases, and we showed you the rate increases coming through. In this case, your loss costs go down some, too. So it's not dollar for dollar that you lose that in the bottom line.
Joshua Shanker: You said that retention is good, and maybe it is, but I have a theory that I wanna play out here, that we're not going back to the retentions of the pre-pandemic era. That the shopping behaviors have permanently changed because affordable and connected works so well, that people can constantly change their prices and change their coverages, and that means going to different auto insurers. Are we in a new future where retentions are naturally going to be lower than they've been in the past?
Joshua Shanker: You said that retention is good, and maybe it is, but I have a theory that I wanna play out here, that we're not going back to the retentions of the pre-pandemic era. That the shopping behaviors have permanently changed because affordable and connected works so well, that people can constantly change their prices and change their coverages, and that means going to different auto insurers. Are we in a new future where retentions are naturally going to be lower than they've been in the past?
Tom Wilson: Shopping is up, and not everybody who shops switches, but shopping is up, so I would say yes, you would expect to see retention. So I think that's true. The question is, how many of them do you keep? And that's what happens in the industry. So building an ongoing connection, so the connected part should not be overlooked. To save is part of being connected. So if you feel like you have a relationship, you're much less likely to shop. I would point out a couple of other things. One, while shopping is up, our new business is up much bigger than that, which shows that our advertising and broad distribution are working in this competitive environment. So even though people are shopping more, we got more places they can go, and we're more sophisticated about buying it.
Tom Wilson: Shopping is up, and not everybody who shops switches, but shopping is up, so I would say yes, you would expect to see retention. So I think that's true. The question is, how many of them do you keep? And that's what happens in the industry. So building an ongoing connection, so the connected part should not be overlooked. To save is part of being connected. So if you feel like you have a relationship, you're much less likely to shop. I would point out a couple of other things. One, while shopping is up, our new business is up much bigger than that, which shows that our advertising and broad distribution are working in this competitive environment. So even though people are shopping more, we got more places they can go, and we're more sophisticated about buying it.
Tom Wilson: I would just come back to one thing. I said our retention wasn't weak. It's not as good as I want it to be. That's a message for our team, less than you.
Tom Wilson: I would just come back to one thing. I said our retention wasn't weak. It's not as good as I want it to be. That's a message for our team, less than you.
Joshua Shanker: Thank you.
Joshua Shanker: Thank you.
Operator: Thank you. Our next question comes from the line of Michael Zaremski from BMO. Your question, please.
Operator: Thank you. Our next question comes from the line of Michael Zaremski from BMO. Your question, please.
Michael Zaremski: Hey, Greg, good morning. I wanted to maybe focus on slide 10, auto claims process improvements, which have, you know, clearly been supporting profitability in a big way. Maybe high level, you know, you've been working on auto claim process improvements for many years now. Just trying to understand, you know, what base bonding are we in? You know, AI, I'm sure, is helping it. Is it... Will the benefits, are they, is also more of a first mover, or this is proprietary to you all, or, you know, are using third parties, and the industry will eventually catch up over time? Just trying to understand where we are on the journey.
Michael Zaremski: Hey, Greg, good morning. I wanted to maybe focus on slide 10, auto claims process improvements, which have, you know, clearly been supporting profitability in a big way. Maybe high level, you know, you've been working on auto claim process improvements for many years now. Just trying to understand, you know, what base bonding are we in? You know, AI, I'm sure, is helping it. Is it... Will the benefits, are they, is also more of a first mover, or this is proprietary to you all, or, you know, are using third parties, and the industry will eventually catch up over time? Just trying to understand where we are on the journey.
Tom Wilson: So this is Jess. I would like the baseball innings analogy. You have to pause on that one and figure out exactly where. I would put us middle innings in the journey. Certainly not early innings, but not done. I think there's a lot that... We have a, I argue, a best-in-class claims organization that's really focused on the right things, as you could see on the page in the slide deck. That doesn't mean we fully implemented all of the AI-enabled technologies. It doesn't mean that we're not continuing to focus on quality. We have great leadership that is gonna continue to sort of push along the journey of getting even better and lowering those costs. It, you know, if I look competitively, you mentioned, is it largely outsourced? Is this something that others will catch up on?
Jess Merten: So this is Jess. I would like the baseball innings analogy. You have to pause on that one and figure out exactly where. I would put us middle innings in the journey. Certainly not early innings, but not done. I think there's a lot that... We have a, I argue, a best-in-class claims organization that's really focused on the right things, as you could see on the page in the slide deck. That doesn't mean we fully implemented all of the AI-enabled technologies. It doesn't mean that we're not continuing to focus on quality. We have great leadership that is gonna continue to sort of push along the journey of getting even better and lowering those costs. It, you know, if I look competitively, you mentioned, is it largely outsourced? Is this something that others will catch up on?
Tom Wilson: I, I don't believe it is. This is proprietary to Allstate. We're not leveraging third-party insights or technology. We obviously bring the outside in, and we look at third-party trends to make decisions, but it's not like this is something someone else can pick up and buy from another vendor. This is our organization pushing, you know, for operational excellence, for claims quality, and continuing to sort of focus on how we can be better each and every year. So I would put it middle innings, with the later innings probably being where you really see the benefit of artificial intelligence and the insights and tools that we can use to improve in the claims organization. Is that helpful?
Jess Merten: I, I don't believe it is. This is proprietary to Allstate. We're not leveraging third-party insights or technology. We obviously bring the outside in, and we look at third-party trends to make decisions, but it's not like this is something someone else can pick up and buy from another vendor. This is our organization pushing, you know, for operational excellence, for claims quality, and continuing to sort of focus on how we can be better each and every year. So I would put it middle innings, with the later innings probably being where you really see the benefit of artificial intelligence and the insights and tools that we can use to improve in the claims organization. Is that helpful?
Michael Zaremski: Yes, you know, I guess, yeah, just, I guess I asked, not trying to spoon feed because, the underlying loss ratio true up, I guess, some investors are, you know, saying it's too good to be true, but, you know, clearly, you know, some of it's just you guys are doing a better job than others. So,
Michael Zaremski: Yes, you know, I guess, yeah, just, I guess I asked, not trying to spoon feed because, the underlying loss ratio true up, I guess, some investors are, you know, saying it's too good to be true, but, you know, clearly, you know, some of it's just you guys are doing a better job than others. So,
Tom Wilson: I would think about-
Tom Wilson: I would think about-
Michael Zaremski: Switching.
Michael Zaremski: Switching.
Tom Wilson: I think about claims as, I think of claims kind of as a river of money. At the top, you have us, and at the bottom, you have the customers, and we have to get them the money. So as it goes down that river, lots of people dip into the river and, like, take money out. So it's constantly changing. Like, the banks are changing, so you know where the banks are and the rocks it goes over, and so you know you get attorneys who are doing something new. You've got car companies who decide they want to give away the razor and sell the blade and sell their parts a lot higher. So you just, you're constantly adapting. So I think Jess is right. Here, this is like, this is like the never-ending game, right?
Tom Wilson: I think about claims as, I think of claims kind of as a river of money. At the top, you have us, and at the bottom, you have the customers, and we have to get them the money. So as it goes down that river, lots of people dip into the river and, like, take money out. So it's constantly changing. Like, the banks are changing, so you know where the banks are and the rocks it goes over, and so you know you get attorneys who are doing something new. You've got car companies who decide they want to give away the razor and sell the blade and sell their parts a lot higher. So you just, you're constantly adapting. So I think Jess is right. Here, this is like, this is like the never-ending game, right?
Joshua Shanker: You're doing it.
Michael Zaremski: You're doing it.
Tom Wilson: And the question is: Is your team good? Do they have the processes? Do they have the data? Do they have, you know, the measurement, and the discipline to do what you need to do? And we're good at it. Did we have to get better at it because of what happened in the pandemic? Yeah, because when prices go up that rapidly, the old way in which you control the river, it has to be different. So I think it's just an ongoing thing, and so you're buying capabilities at claims as opposed to a specific set of processes.
Tom Wilson: And the question is: Is your team good? Do they have the processes? Do they have the data? Do they have, you know, the measurement, and the discipline to do what you need to do? And we're good at it. Did we have to get better at it because of what happened in the pandemic? Yeah, because when prices go up that rapidly, the old way in which you control the river, it has to be different. So I think it's just an ongoing thing, and so you're buying capabilities at claims as opposed to a specific set of processes.
Michael Zaremski: That's helpful. My follow-up, you know, I think as slide four of the deck, talking about kind of, you know, what really could bend the needle on affordability, I think as an insurance specialist, we get it. But, I'm just, you know, the powers that be don't always see the forest for the trees in the short run. So just curious, are there potential legislative changes in certain states that if things were enacted, and I'm sure you all in the APCIA, you know, in discussions with those folks, but if they were enacted, that could, you know, would change the course of your strategy in a...
Michael Zaremski: That's helpful. My follow-up, you know, I think as slide four of the deck, talking about kind of, you know, what really could bend the needle on affordability, I think as an insurance specialist, we get it. But, I'm just, you know, the powers that be don't always see the forest for the trees in the short run. So just curious, are there potential legislative changes in certain states that if things were enacted, and I'm sure you all in the APCIA, you know, in discussions with those folks, but if they were enacted, that could, you know, would change the course of your strategy in a...
Michael Zaremski: or, you know, not just you all, but the industry in a material way, or is this more kind of noise that ebbs and flows as, you know, now we're in a softer market, and things should, you know, ebb as, affordability gets better?
Michael Zaremski: or, you know, not just you all, but the industry in a material way, or is this more kind of noise that ebbs and flows as, you know, now we're in a softer market, and things should, you know, ebb as, affordability gets better?
Tom Wilson: Well, affordability is a real issue for every politician these days, whether they're talking about food, or insurance. We tend not to be on the highest order of what people think about in terms of affordability there, but it is important to them, and it's become more important as costs have gone up. I think the blow for freedom for consumers is total reform. Like, it's just about time that... And you're starting to see some states take it on. States that I would have said, you know, 10 years ago, were more controlled by the plaintiff bar than...
Tom Wilson: Well, affordability is a real issue for every politician these days, whether they're talking about food, or insurance. We tend not to be on the highest order of what people think about in terms of affordability there, but it is important to them, and it's become more important as costs have gone up. I think the blow for freedom for consumers is total reform. Like, it's just about time that... And you're starting to see some states take it on. States that I would have said, you know, 10 years ago, were more controlled by the plaintiff bar than...
