Allstate Corporation (The)

Ladies and gentlemen, thank you for standing by, and welcome to the Allstate First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. And now I'd like to introduce your host for today's program, Mark Nogle, Head of Investor Relations. Please go ahead, sir.

Thank you, Jonathan. Good morning and welcome everyone to Allstate's first quarter 2020 earnings conference call. After prepared remarks, we will have a question and answer session. Yesterday, following the close of the market, we issued our news release and investor supplement, filed our 10Q, and posted today's presentation along with our reinsurance update on our website at allstateinvestors.com. Our management team is here to provide perspective on these results and further context on our response to the coronavirus pandemic. As noted on the first slide of the presentation, Our discussion will contain non-GAAP measures for which there are reconciliations in the news release and investor supplement and forward-looking statements about Allstate's operation. Allstate's results may differ materially from these statements, so please refer to our 10-K for 2019 and other public documents for information on potential risks. And now I'll turn it over to Tom.

Good morning. Thank you for joining us from wherever you are sheltered in place. Let's jump right in with Allstate's response to the coronavirus pandemic on slide two. Allstate's been helping customers overcome catastrophes for 89 years, and we've learned to act decisively, quickly, and put customers first. As a result, we've led the industry in helping customers. We created a shelter-in-place payback program of more than $600 million. Special payment plans are being used for customers experiencing financial challenges. Auto insurance coverage was expanded to cover the use of personal vehicles to deliver food, medicine, and other goods for commercial purposes. All-site identity protection is being offered for free for the rest of the year to all U.S. residents, given the increased exposure to cybercrime. Business continuity plans were executed. Virtual sales and support capabilities were expanded. And we leveraged our digital innovations, such as Quick Photo Claim and Virtual Assist, to better protect our customers, employees, and agents. Employees and Allstate agents moved to more than 95% working remotely, and we altered a number of business practices to support our agents and employees. At the same time, Allstate is financially strong with significant capital and liquidity. In February, we reduced our public equity holdings by $4 billion to reduce the amount of economic capital back in the investment portfolio. This turned out to be good timing. because it enabled us to reduce the impact of the market downturn in March. And as Mario will cover later, we will maintain our share repurchase program given this strong capital position. For our communities, the Allstate Foundation announced an additional $5 million. That's on top of the money we normally grant every year, which is substantial, to help deal with the pandemic and double the match for Allstate employees and agents. Move to slide three, let's touch base with Allstate's strategy. As you know, our strategy has two components, increased personal property liability market share and expanded to other protection businesses. This two-part strategy leads to our five annual operating priorities, which are shown on the right side of the page, and we made good progress around all five. If you move to slide four, Allstate had strong operating and financial results in the first quarter. Total revenues of $10.1 billion declined 8.3% to the prior year quarter, due to capital losses instead of capital gains in the prior year. To exclude the impact of the realized capital losses, revenues increased 2%, driven by a 4.4% increase in property liability insurance premiums, which you can see from the table. Net income of $513 million declined to the prior year quarter's increased underwriting income is more than offset by capital losses and charges for pension and post-retirement benefits. Adjusted net income, shown in the middle of the table, was $1.1 billion in the quarter, but $3.54 per diluted share, which was significantly above the prior year, reflecting lower capacity losses. Returns were excellent, with adjusted net income return on equity improving to 18.2%. Mario will now discuss the first quarter results in more detail.