Allstate Corp Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jimmy Bhullar - JP Morgan - Analyst : Hey, good morning. I had a couple of questions. First, just on PIF growth. Can you talk about the potential tailwinds and headwinds for growth? I would assume that the inactive brands are going to continue to decline, although the impact of that on your overall results should diminish over the next few quarters? And then it seems like at some point, you'll be in a growth mode in New York, New Jersey. Overall, you're not raising prices as much as you were. But just talk about what the headwinds, tailwinds are to growth in personal auto pits so that one gets a better idea on where it's headed from the level in the last couple of months.

Question: Jimmy Bhullar - JP Morgan - Analyst : Okay. Thank you. And then how do you think about the lifetime profitability of the business that you're putting on in independent agency and direct versus the captive business, which obviously wasn't growing in the past but was highly profitable. So I think last year, there are concerns that you weren't growing. Now, there are concerns you're making too much money and maybe the profitability of the newer growth is in a trade. But just talk about like the margin profile of independent agency and direct that you're writing versus captive reasons.

Question: Greg Peters - Raymond James - Analyst : Good morning, everyone. So I guess the first question, I'll focus on frequency and technology. Can you talk a little bit about the frequency trends. And one of the things that seems to be popping up more and more is embedded technology and accident-avoidance technology that's specifically going into cars, and the longer-term consequences of autonomous driving? And just curious for your updated views on that.

Question: Greg Peters - Raymond James - Analyst : I'm going to pivot for my follow-up question to the reinsurance program. You put up some details on how the reinsurance structure has challenged this year. And you didn't really talk about it during your prepared remarks, but probably we're covering -- it looks like you have more limit this year versus last year. Maybe you can just walk us through some of the decisions and how the program looks this year versus last year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 1:00PM, ALL.N - Q2 2025 Allstate Corp Earnings Call

Question: David Motemaden - Evercore ISI - Analyst : Hey, thanks. Good morning. The pace of monthly auto PIF growth, if I just look at a number of units added that slowed a bit over the course of the second quarter, still positive, but it slowed a bit. I was wondering if you could just discuss some of the moving pieces there. Seasonality, anything else that's impacting that? And how we should think about the cadence as we get into the back half of the year?

Question: David Motemaden - Evercore ISI - Analyst : Got it no helpful. I appreciate that. And then just maybe for my follow-up, just on the inactive brands within the auto business, could you just remind me when that process started of not writing new business and that drag, I think inactive brands are a little under 5% of the PIF count now in auto. I guess how's longer until we really start lapping those headwinds just level setting that?

Question: Bob Jian Huang - Morgan Stanley - Analyst : Hey, good morning. So maybe the first one on competitive environment. And this is something we kind of anecdotally addressed, but as you grow in this environment, it feels like more and more competitors are in that call it, 80s and 90s combined ratio for personal auto and then everyone is talking about pivoting to growth. Just curious how you think about just new business, retention, ad spending efficiency as we head into this environment where more and more folks are ready to fight with you.

Question: Bob Jian Huang - Morgan Stanley - Analyst : Okay. My second question, it's a little bit more hypothetical. Earlier in the year, there were about seven states that are considering increasing speed limit and then New York is one of those states. Obviously, you've talked about achieving profitability in New York State. Just curious about as we think about increasing speed limiting interstate highways from 65 to 70, will that have an impact on your frequency or severity especially given that you just recently achieved profitability in New York. Like how should we think about that? Does that matter at all? Just kind of curious.

Question: Mike Zaremski - BMO - Analyst : A question specifically on the direct-to-consumer strategy in personal lines. Do you expect that engine to be very different or much larger over time? I'm kind of thinking kind of macro level? And if yes, would that lead to a higher advertising expense or meaningfully higher advertising REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 1:00PM, ALL.N - Q2 2025 Allstate Corp Earnings Call expense? Or just kind of -- I know you guys had explained like there's different funnels and terminology, I don't know as much, but it would be more of a shift in terms of the type of advertising spend.

Question: Mike Zaremski - BMO - Analyst : That's helpful. My follow-up is on more home insurance specifically. Based on kind of data we continue to see, it looks like competitors, mostly independent agency competitors are trying to play catch up to your results and tweaking their terms and conditions, et cetera. I'm curious, do you agree that there's just kind of the wins that you're back because of the competitive environment more so than it has been historically as the industry has been pivoting? Or has that state been kind of not true? And the healthy growth that you've seen over the last year, acceleration has just kind of been due to other items? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 1:00PM, ALL.N - Q2 2025 Allstate Corp Earnings Call

Question: Alex Scott - Barclays - Analyst : I had a follow-up on retention. I just wanted to see if you could shed a little more light on what you're seeing across the channels? Just trying to understand, is it the exclusive agent network and retention associated with maybe more people going online or something? Or is it maybe some churn in the direct-to-consumer and some of the policies you've grown into more recently, maybe just have a quicker duration to them. I just want to better understand retention and just in light of it being a critical driver of PIF right now. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 1:00PM, ALL.N - Q2 2025 Allstate Corp Earnings Call

Question: Alex Scott - Barclays - Analyst : Got it. That's helpful. Second question I had is on California and the homeowners market there. Would just be interested if you could give us an update on how you're thinking about that market and maybe additionally, if there's any action that you feel will be necessary as some of these moratoriums sunset and you're able to take action if you need to?

Question: Joshua Shanker - Bank of America - Analyst : (inaudible) there's a huge surge in the number of policies in Allstate Roadside Assistance. I'm wondering, is that a solution for persistency if you could cross-sell them with the roadside assistance are the captive agents selling that more persistently around what's happening there and why is it happening?

Question: Joshua Shanker - Bank of America - Analyst : Can you talk about your success rate on bundling right now broadly with maybe how the business is running five years ago? Is more successful as a strategy right now? Or is it hard to get people to buy multiple items?.

Question: Hristian Getsov - Wells Fargo - Analyst : Hi, good morning. How do you expect the drag on auto PIF growth from New York and New Jersey to be in the balance of the year? Because even if you reopen for new business in the second half, assuming you get the rate increases you currently have filed, I'm guessing you might see some retention headwinds to kind of offset that? Or are most of the retention issues in the past just given the large rate hikes over the last couple of quarters, and these are a little bit more muted?

Question: Hristian Getsov - Wells Fargo - Analyst : And then for my follow-up, in respect to tariffs, you've talked about a mid single-digit impact to loss cost trends previously. Can you provide an update on your expectations given a few more changes in recent weeks? And can you potentially quantify what percent of your premium would be outside of your target profitability if we assume those increased costs materialize today? Because I'm just trying to get a sense of like what percent of your premiums you may receive a little bit more regulatory scrutiny for getting rate hikes just given, you're potentially running at a much better profitability versus the mid-90s for auto?

Question: Jing Li - KBW - Analyst : I have a follow-up question on retention. So as they implemented the S.A.V.E. retention program. Can you add more details on maybe the impact of these initiate patients versus the natural improvement from smaller rate cuts?

Question: Jing Li - KBW - Analyst : Got it. My follow-up is on the affordable Simple Connected auto products. So now that you're available in 40 states and representing a significant expansion for the rollouts. Can you provide some more details on the new business conversion rate or retention of these products versus the traditional products?