Allstate Corporation (The)

Good day and thank you for standing by. Welcome to Allstate's third quarter earnings investor call. At this time, all participants are in a listen-only mode. After prepared remarks, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your phone. If your question has been answered and you wish to remove yourself from the queue, simply press star 1-1 again. Please limit your inquiry to one question and one follow-up. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Alistair Gobin, Head of Investor Relations. Please go ahead, Sarah.

Thank you, Jonathan. Good morning. Welcome to Allstate's fourth quarter 2024 earnings conference call. Yesterday, following the close of the market, we issued our news release and investor supplement and posted related material on our website at allstatesinvestors.com. Our management team will provide perspective on our strategy and an update on results. After prepared remarks, we will have a question and answer session. 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 supplements 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 2023 and other public documents with information on potential risks. Our 10-K for 2024 will be published later this month. And now, I'll turn it over to Tom.

Good morning. We appreciate you investing time in Allstate. I'll start with an overview, and then Mario and Jess will go through the operating results. let's begin on slide two so as you know allstate strategy has two components increased personal property liability market share and then expand protection provided customers which is shown in two ovals on the left hand side on the right hand you can see allstate's strong performance in 2024 and the topics we're going to cover this morning total revenues were 16 and a half billion dollars in the fourth quarter up 11.3 percent compared to the prior year quarter All state generated net income of $1.9 billion in the fourth quarter and $4.6 billion for the fourth year. Adjusted net income return on equity was 26.8%. Let me just repeat that, 26.8% over the last 12 months. Successful risk and return management resulted in excellent underwriting and investment results. Transformative growth has strengthened our competitive position. We'll spend a few minutes on that today. The sale of our group health and employee voluntary benefits to companies with greater strategic alignment will generate $3.25 billion of expected proceeds representing attractive valuation multiples. Let's move on to slide three that shows the operational execution produced excellent financial results in the quarter and for the full year. Revenues increased to $64.1 billion in 2024. Property liability earned premiums were up 10.6% in the quarter and 11.2% for the full year. Net investment income was up 37.9% above the prior year and up almost 25% for the full year. Net income was $1.9 billion in the quarter and $4.6 billion for the full year. Adjusted net income, which you know we make a few changes on amortization of intangibles and things, which Jess can walk you through, was $7.67 per share for the fourth quarter. On the lower right, you can see the adjusted net income return and equity was 26.8%. So 2024 was an excellent year for Allstate both financially and strategically. Let's move on to talk strategically about transformative growth on slide four. We launched this project in December of 2019. So five years have gone by, so we thought it would be a good time to give you a five-year look as to where we are. And as you know, there's five components of the plan to increase market share and property liability, two of which we'll cover today. Improving customer value requires us to lower our costs and provide differentiated products. As you can see on the right-hand side, the adjusted expense ratio, which excludes advertising costs, has improved almost five points since 2019. by eliminating work, outsourcing, and digitizing activity, using less real estate, and lowering distribution expenses. Lower costs enable us to offer more competitive prices without impacting margins. Substantial progress has also been made in introducing products, new products. So affordable, simple, connected auto insurance is now in 31 states, and the new homeowner's product is in four states. Differentiated custom 360 middle market standard and preferred auto and homeowner's parks have also been introduced to the independent agent channel in 30 states. One of the most significant changes is the expansion of customer access to improve growth. So this effort has three components, improve all-state agent productivity, expand direct sales, and increase independent agent distribution, all of which have been successful. All-state agency productivity has increased. Enhancement to direct capabilities, lower pricing, and increased advertising is attracting more self-directed customers. The national general acquisition significantly expanded our presence and capabilities in the independent agent channel. As you can see on the right, in 2019, more than three out of four new business policies came from the Allstate agents. Last year, new business was 9.7 million items, 76% higher than 2019, with significant contributions from each channel. Policies and force have increased to $37.3 million, despite the negative impact of post-pandemic price increases. Transformative growth has positioned us for personal property liability market share growth, which you'll hear more about from Mario. So now let me move on to Mario on property liability. Thanks, Tom.