Allstate Corporation (The)

Ladies and gentlemen, thank you for standing by, and welcome to the Allstate Third Quarter 2020 Earnings Conference Call. At this time, all participants are in 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. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Mr. Mark Nogle.

Please go ahead, sir. Thank you, Jonathan. Good morning, everyone, and welcome to Allstate's third quarter 2020 earnings conference call. After prepared remarks, we'll have a question and answer session. Yesterday, following the close of the market, we issued our news release and investor supplement, filed our 10-Q, and posted today's presentation on our website at allstateinvestors.com. Our management team is here to provide perspective on these results and further context on our transformative growth plan to accelerate growth in the personal property liability business. 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 the investor supplement and forward-looking statements about Allstate's operations. 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, everybody. As usual, we appreciate you joining us and investing your time to learn more about Allstate. This was just an exceptional quarter. I mean, we're adapting, we're executing, we're investing for the future. We adapted to the pandemic, the wildfires, the hurricanes, record low interest rates. And despite all of that, our execution enabled us to make $1.1 billion. At the same time, our transformative growth is coming to light. The stock is a great value on any measure. So we executed a $750 million ASR. So our team has performed exceptionally well this year, serving customers, creating economic value, and building a stronger foundation for growth. So let's start on slide two, which has all state strategy, which is shown by the two ovals on the left. We're going to increase market share and personal and property liability with our transformative growth plan, which has three components. You'll remember that. Expand customer access, improve customer value, which includes improving our price position, and launching new products, and then investing in marketing technology. You'll hear more about that from Glenn, and then Mario will go through the numbers, and then we'll get to your questions. We're also expanding our protection businesses, which is increasing the total addressable market we serve. We have an edge in this expansion by leveraging the Allstate brand, our customer base, and our operating capabilities, which you can see in between those two ovals. For a company that empowers customers, we provide affordable, simple, connected products. There's been plenty to protect them from this year. As I mentioned, we get all kinds of severe weather and catastrophes, and we've moved with speed and efficiency, and you can see that from our third quarter results. and those are shown on the right. Profitability was excellent. Adjusted net income was 294 share and return on equity 17.7%. Underwriting results also remained really strong. We had favorable auto insurance results, which offset the elevated home insurance losses from increased capacities. Implementation of Transformative Growth Plan is accelerating with the initiation of a cost reduction plan and the new Allstate advertising campaign. Investment income was off slightly due to lower interest rates, but the performance-based income returned to prior year levels. We did have an annual review of our actuarial assumptions for Allstate life benefits and annuity businesses, which assumes that the continued low interest rate environment carries forward and reduces future investment income over the next 20-plus years. And that resulted in several charges for the reducing that income. And Mario will go through a specific slide to show you how that works. All state protection plans has continued to grow policies, revenue and income while expanding its total addressable market or total addressable market. So despite a tumultuous operating environment, we delivered great customer experiences, growth, excellent returns and progress on the transformative growth plan. If you go to slide three, let's do the numbers. Total revenues of $11.5 billion increased 3.9% to the prior year quarter, and that reflects both higher net realized capital gains and growth in property liability premiums earned. Net income of $1.1 billion increased by 26.7% to the prior year quarter, as you can see that in the table, as higher revenues more than offset all state life and annuity income. which was down because in connection with those actuarial assumptions. Adjusted net income of $923 million was $294 per share. That was $23 million lower than the prior year quarter. Its higher auto insurance underwriting income was more than offset by the elevated catastrophe losses, the restructuring charges related to transformative growth, and the lower all-state life and annuities income. Our returns remained excellent, and as I said, the return on equity is well above the range that we've discussed. So let me turn it over to Glenn, who will talk about third quarter results for personal property liability.