Allstate Corporation (The)

Good day and thank you for standing by. Welcome to Allstate's second quarter earnings investor call. At this time, all participants are in listening mode. After the prepared remarks, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 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, Alistair Govan, Head of Investor Relations. Please go ahead, sir.

Good morning, everyone. Welcome to Allstate's second quarter 2026 earnings call. Yesterday, following the close of the market, we issued our news release and investor subterfuge. and posted 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 reconciliations are provided in the news release and the investor supplement. We will make forward-looking statements about Allstate's operations. Actual results may differ materially from these statements, so please refer to our 2025 10-K and other public filings for more information on potential risks. And now, I'll turn it over to Todd.

Good morning. Thanks for investing time at Allstate. Before we begin, I'd like to welcome Chris Lone, who joined Allstate this week as Chief Financial Officer. He's an excellent addition to the Allstate team. You can look forward to hearing from him on the next call. for choosing not to put in the middle of the heat with like two days' work. I'd also like to thank John for doing triple duty, leading investments, strategy, and being interim chief financial officer. Let's begin on slide two. Allstate's strategy is to increase profitability market share and expand the protection we provide to customers by offering affordable, simple, and connected products through an extensive distribution network. Sharehold of value, is created through operational excellence, which generates attractive returns on capital, sustainable growth through the Profitability Transformative Growth Initiative and expanded protection, capital generation, which funds organic growth, enables us to optimize risk-adjusted investment returns, pursue acquisitions, and provide significant cash to shareholders. Let's review second quarter results on slide three. Overall, increased profitability growth and generated exceptional earnings. Starting with growth, total revenues grew to $18.6 billion, up 11.8% from the second quarter of 2025. Debt premiums written increased 2.6%, which was supported by continued growth in auto and homeless insurance and a 9.9% increase in issued applications. Total policies and force increased 3.8% to $215.9 million. That reflects 2.6% growth in property liability and 4.1% growth in protection services. Net investment income increased 33.8% to $1 billion, reflects lengthening of the duration last year, a larger portfolio, and increased performance-based income. The increase in public equity investments last year also generated significant capital gains, which raised net income. The property liability combined ratio was 4.5 points improved and went to 86.6, while the underlying combined ratio was 79.4, in line with the prior year quarter. Net income was $3.2 billion, and adjusted net income was $2.3 billion, or $8.99 a share. For the first half of the year, adjusted net income was $5.1 billion, or $19.65 per share. Adjusted net income return on equity is 44.2% over the last 12 months. Slide 4 provides the construct for our detailed discussion results. This year's growth in earnings are the result of operational excellence. Auto and homeowners insurance combined ratios are significantly better than the industry, which reflects precise pricing, expense control, and claims expertise. These capabilities also enables to rapidly adapt to changes in external environment and competition. Our investment expertise generates first and second quartile results.