ALLSTATE CORP ALL

Allstate's 6-year-old Transformative Growth initiative is currently in Phase 4, focusing on rolling out a new system to enhance Property-Liability market share. This strategy has led to a 6.7-point reduction in the expense ratio, expanded distribution channels (auto new business is now evenly split across Allstate agents, independent agents, and direct channels), and improved customer service, with over 46 million customer interactions enhanced this year. The SAVE program has helped over 5 million customers reduce their premiums by more than 5%.

The company's new technology ecosystem is enabling advanced artificial intelligence applications. Generative AI is currently improving operational efficiency, such as simplifying billing explanations, generating/reviewing 15% of claims adjustor emails, and contributing to 15% of coding. Allstate is developing ALLIE (Large Language Intelligent Ecosystem) to leverage Agentic AI, aiming to reimagine the entire business model for lower costs and improved customer experience across offerings, service, communications, growth investments, and claims settlement.

Allstate actively manages its investment portfolio to generate shareholder value, with the portfolio's book value increasing by 39% or $23 billion since Q1 2021. Investment decisions are made considering enterprise factors and market conditions. For example, duration was reduced in 2022 when the Property-Liability combined ratio was elevated, and subsequently increased in 2023-2024 to capture higher yields. Equity holdings were also adjusted in response to inflation outlooks, demonstrating a flexible approach to risk and return.

GAAP shareholders' equity grew to $27.5 billion by Q3 2025, up from $21.4 billion at year-end 2024, driven by strong income, gains on asset sales, and unrealized capital gains. Allstate returned $1.6 billion to shareholders year-to-date (GAAP) and $1.8 billion over the last 12 months through dividends and share repurchases. The company prioritizes capital deployment towards growing its Property-Liability business, followed by investment portfolio returns, strategic M&A, and then direct capital returns to shareholders.

The auto insurance market remains highly competitive, with industry shopping activity increasing 9.3% year-to-date. Allstate's auto book is considered broadly rate adequate, requiring minimal rate increases outside of specific states like New York and New Jersey, where a 0.6-point impact was seen in Q3 from prior approvals. Management is committed to maintaining a mid-90s combined ratio target by proactively adjusting pricing based on loss trends and focusing on improving customer retention through programs like SAVE and the rollout of new ASC products.

Management commended Florida's political leadership for implementing tort reform aimed at reducing lawsuits related to fender bender accidents. This initiative is expected to save Florida consumers billions of dollars annually by lowering bodily injury costs. Allstate views this as a significant opportunity for other states to follow suit, with Georgia recently adopting similar reforms, to help consumers mitigate the impact of increased inflation.