Allstate Corporation (The)

Thank you for standing by and welcome to the Allstate Second Quarter 2025 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 this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, please simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Alistair Gammond, Head of Investor Relations. Please go ahead, Sarah.

Good morning, everyone. Welcome to Allstate Second Quarter 2025 Earnings Call. Yesterday, following close with the market, we issued our news release and investor supplement, filed our 10-queue, and posted related material on our website at allstateinvestors.com. Today, our management team will share a perspective on our strategy and 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-GAP measures for which there are reconciliations are provided in the news release and investor supplement. We will also make forward-looking statements about Allstate's operations. Actual results may differ materially from those statements, so please refer to our 2024 10-K and other public filings for more information on potential risk. And now I'll turn it over to Tom.

Good morning. Thank you for investing time in Allstate. We'll start with Second Quarter results and Allstate's strategy to create shareholder value. Then we'll have time to address your questions. So let's start with slide two. So Allstate's strategy has two components that's shown on the left, increased personal property liability market share and expand protection provided to customers. On the top right is an overview of Second Quarter results. Revenues were $16.6 billion in the Second Quarter, that's a .8% increase compared to the Second Quarter of 2024. Total policies in force increased $208 million, that's .2% over the prior year, and it's being led by Allstate protection plans. Personal property liability policies in force increased by 0.8%. Net income was $2.1 billion, and adjusted net income was $1.6 billion, or $5.94 per diluted share. Adjusted net income return on equity was .6% over the trail in 12 months. And we create shareholder value by delivering excellent operating results, as you see up top, growing the personal property liability business through the Transform and Grow strategy. Expanding protection services and proactively investing our $77 billion portfolio. So let's go through those three points, starting on slide three. Transform and Grow has five phases, and we're now solidly in phase four, with progress in each of the five subcomponents. New Allstate branded auto insurance products, which are more affordable, simple, and connected are being implemented. The new auto insurance product is available in 40 states, and we're rolling out the same type of product for homeowners, and we're in 16 states now. New products are also available in the independent agent channel in 34 states, expanding our risk appetite from the National General's strong non-standard auto risk position. Underwriting expenses have been reduced, supporting more competitive pricing while maintaining margins. Increased sophistication of pricing plans and marketing programs have helped increase new business through expanded distribution. Claims processes have been enhanced following the pandemic-related inflation, which is helping us control claim severity. And then our new technology systems have been deployed, which position us to leverage advanced computing and large language models. Customer access has also been significantly expanded, as you can see in the middle of the slide. New business is almost double five years ago, reaching 10.8 million policies over the last 12 months. This is the broadest distribution platform in the industry, with new business spread almost evenly between all state agents, independent agents, and directly through call centers or over the web, as you can see from that first set of pie charts on the left. Total policies have increased to 37.7 million, providing a highly successful acquisition of National General and rapid growth of direct sales. The property liability business is a terrific business, with $56 billion annually earned premiums and excellent underwriting results. Turning to slide four, protection services, while smaller, is still a really significant business with 170 million policies in force, $3.2 billion of revenue, and a quarter of a billion dollars of income over the last 12 months. It's comprised of five businesses, protection plans, auto dealer protection offerings, roadside assistance, arity, and identity protection. Revenues were $867 million in the quarter, which generated $60 million of income, most of which is from protection plans, which is described in the bottom section of the slide. Protection plans sells protection for consumer electronics, mobile devices, appliances, and furniture. This protection is basically embedded in the sales processes of a broad group of exceptional distribution partners. Revenues increased by .6% over the prior year quarter, reflecting rapid growth in compliance protection over the last several years, and success in expanding internationally. Adjusted net income was $51 million due to higher revenue, moderating claims and support costs, and operational efficiencies. Each of the protection services business has their own success story. Arity, for example, has 2 trillion miles of driving data, is now expanding its services to insurance companies and making inroads into mobility intelligence. Turning to slide 5, shareholder values, also created by proactively managing the $77 billion investment portfolio, is really an integrated component of our enterprise risk and return decision making. Investment income was $754 million in the quarter, representing a total return of .4% for the quarter and .4% for the last 12 months. This diversified portfolio of fixed income and growth assets leverages top investment talent to deliver top quartile performance, as shown in the table on the right. The largest part of the portfolio is in fixed income securities, which provides consistent cash flow and high liquidity, are strong credit skills and active management, generated first and second quartile performance. We reduced the public equity holdings in the second quarter, given the increased risk of due to the new trade policies. As the impact of this becomes clear, we'll adjust that position. We also have strong results in the performance-based portfolio of private equity real estate investments, which is a combination of fund participation, co-investments, and direct transactions. The higher returns on these investments is more than attractive, despite the greater variability in reported income. Now I'll pass it over to Mario. Thanks, Tom.