Allstate Corp Q3 2025 Earnings Call Transcript

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

Question: Rob Cox - Goldman Sachs - Analyst : Hey, thanks. Good morning. So just the first question on capital. Obviously, a significant amount of capital generated this quarter, and you all stated in the presentation, you're in a favorable capital position. Can you just talk us through how you're thinking about holding company liquidity and how quickly we could see you guys normalize that level of deployable assets at the holdco?

Question: Rob Cox - Goldman Sachs - Analyst : Okay. Awesome. Thanks for the comprehensive answer. And then just on pricing. I appreciate that you guys back out the New York, New Jersey growth from your new PIF growth, which is very helpful. But just wondering if you could talk about where pricing was excluding New York and New Jersey? And maybe just more broadly, where you think pricing is headed into 2026?

Question: Rob Cox - Goldman Sachs - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 2:00PM, ALL.N - Q3 2025 Allstate Corp Earnings Call

Question: Greg Peters - Raymond James - Analyst : Well, good morning, everyone. So I'm going to start. First of all, in the slide deck on page 4, you provided an interesting slide regarding our approach to artificial intelligence. I feel like there's probably a lot of information behind that slide. So when we've asked other companies, they've given us some ideas about what the tech budget looks like, how much is going to maintenance systems versus new initiatives. But when I look at the slide here, I guess what I'm particularly interested in is where are you in this life cycle? You introduced ALLIE. I'm just curious what that looks like when you get to a more complete phase and just additional color on what's going on and what your end goal is with the technology. Let me start at the end, Greg, [otherwise] you're now Gregory. It's like a fancy. Let me start with the end and then come back into some of your questions. Not all of which we have answers to at this point. So be open and transparent by that. First, I think this technology has the opportunity to help us really reimagine the whole way we go to market and do a terrific job for our customers at a lower price with better service. And in fact, I believe it can help us add things that we don't currently do because they're too expensive. So not only will it help us reduce cost, I think it will help us improve the value proposition. Now that's easy to say and hard to do. So what we're doing is working with generative AI, today, to do mostly get more effective and more efficient than what we currently do. So I'll give you an example of that on the list. But when somebody sues our customers, there's a bunch of work they have to do to keep our customers safe and not lose a bunch of money and includes things like reading a 900-page medical file that used to be done by doctors today that is done by a computer. So it's helping us be better and more effective and both reduce our just administrative costs for doing that, but also then presumably make us smarter and give us better decisions with humans in the loop. The Agentic AI really is a chance to do it completely differently. So for example, how we communicate to you what mode of communication we use, what we communicate to you is dependent on who you are. and what your relationship with us has been and it's hard to put all their knowledge in the brain of one individual who's on a phone at that point in time. It's not that hard to put it in the hands of an agent which can process up with advanced computing power very quickly. So we believe there is -- throughout the whole business chain, there's ways in which we can do it. So we've come up with a plan to try to build ALLIE. It's got just like we did transformative growth. It's got components in its phases. We're not ready to roll that out to everybody because we're in the -- what I would call, design and build space. But it's our belief that the opportunity is so large that we should move quickly on this as opposed to wait to see if somebody else can develop it first. As it relates to cost, it's going to cost more, and we're just going to manage our way through it. Well, thank you for that answer. I guess related to that, you talked about on retention on slide 9, personalizing experiences. You also mentioned how your business mix is changing a little bit. How is technology going to help you improve your retention? And when I read this bullet point is personalizing experiences, to me, that sounds more labor intensive, not less labor-intensive?

Question: Greg Peters - Raymond James - Analyst : Makes sense. Thanks for the detail.

Question: Andrew Kligerman - TD Cowen - Analyst : Hey, good morning. My first question is around the exclusive agent channel within Allstate brands. And I'm wondering how that has progressed in terms of agent count and retention year-to-date. How has that played out? And how do you see that playing out over the next couple of years?

Question: Andrew Kligerman - TD Cowen - Analyst : Got it. Thank you for that. And my follow-up goes back to slide 4. And it's certainly the transformative growth seems pretty awesome and Tom's comment that ALLIE is an opportunity so large that you don't want to wait to see if someone else can do it. And so my question is around if you could share this because I haven't seen slides like this with a number of your competitors. Where are you versus the competition? Is there any way that you can share a benchmark with us that kind of puts all state in one place and the large bulk of the competition elsewhere?

Question: Andrew Kligerman - TD Cowen - Analyst : Awesome. Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 2:00PM, ALL.N - Q3 2025 Allstate Corp Earnings Call

Question: Paul Newsome - Piper Sandler - Analyst : Good morning. Thanks for the call. A couple of big picture questions I was hoping you could address. So the biggest pushback I get for Allstate is concerns from investors that competition is going to lower prices quickly in response to recent profitability and an Allstate is lowering prices and those will squeeze margins such that you're sort of at peak rings. So two-part question, I'll leave it at that. Could you just talk a bit about how you see the market dynamic evolving over time? Some guys have been through a number of years and seen a lot of history. And then relatedly, can you talk about how you sort of really think about the trade-off that you're talking about between pricing and PIF growth and mechanically, how you do it and why we can be confident that it's a good trade-off?

Question: Paul Newsome - Piper Sandler - Analyst : Fantastic. Appreciate the help and the patience.

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Hi, thanks. Good morning. My first question is on auto retention. I was hoping to get some more color on how it's trended for just active brands. And we should think about retention inflecting up both for your active brands and just also on an overall basis?

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Thanks. And then my second question is just on capital. You guys -- I think it's building upon one of the earlier questions, right? There is excess parent you guys, given the strong results this year, right, did start to take dividends out of AIC in the quarter. I guess, given that, I mean, I was a little bit surprised on the buyback perhaps was it higher given that there's more capital at parent. So if you could just help me think about just balancing the buyback versus, I guess, now having more excess at parent. And are you guys holding on to capital there for M&A? And if that's part of the answer, where would potential M&A transactions be concentrated?

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Thank you.

Question: Vikram Gandhi - HSBC Securities (USA) Inc - Analyst : Hi, good morning and thank you for the opportunity. My first question is around the auto PIF, where it appears that the growth was, to a large extent, driven by non-standard customers. Just wondered if you had any updated thoughts on how we should be thinking about the longevity and more importantly, the profitability of this expense ratio and loss ratio impact from this cohort? Thank you.

Question: Vikram Gandhi - HSBC Securities (USA) Inc - Analyst : Okay. That's really helpful. Thank you. And the second question I had was really a simple one on commercial lines. It's something that we don't talk about quite often. But are we at a definitive inflection point? And can we comfortably say that the adverse prior year development is highly unlikely going forward? In short, have resorted most of the backlog issues?

Question: Vikram Gandhi - HSBC Securities (USA) Inc - Analyst : Thank you.

Question: Bob Jian Huang - Morgan Stanley - Analyst : Yeah, hi, good morning. First question is revolving around slide 11 where you provided some outlook in terms of various key metrics. But curious, is your view on inflation going forward. I think if we had this conversation six months ago, inflation and tariffs potentially would have been a larger topic. But just curious how you think about inflation as we go forward? Is it much more under control your view today? Do you think that will become -- evolving to a bigger problem? Just curious your thoughts on that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 2:00PM, ALL.N - Q3 2025 Allstate Corp Earnings Call

Question: Bob Jian Huang - Morgan Stanley - Analyst : Great. Thank you. I really appreciate that detailed answer. Staying on slide 11, which by the way is a wonderful slide. If we think about just interest rate and the duration of your fixed income portfolio, right? It feels like kind of like in your prior remarks, you made a strategic move to increase that duration. As set fund potentially comes down more -- is there a need to move further to the higher duration part of your fixed income portfolio? Or do you feel that your current duration is pretty good? And then regardless of what the interest rate environment goes five year duration feels appropriate.

Question: Bob Jian Huang - Morgan Stanley - Analyst : Got it. Really appreciate the color. Thank you very much, and again loved the slide. So thank you.

Question: David Motemaden - Evercore ISI - Analyst : Hi, thanks. Good morning. I just had a question just how you guys are thinking about advertising spend. When I look at the efficiency of ad spend in the third quarter, it looks like it went down quite a bit, if I just am looking at new auto apps versus just dollars spent on advertising. So clearly, you guys are gaining your fair share of the shoppers out there, but just wondering how you're thinking about continuing to ramp that, especially as efficiency looks like it's declining a bit.

Question: David Motemaden - Evercore ISI - Analyst : Got it. Okay. Understood. Thanks for that context. And then just my follow-up. Where are we just in New York and New Jersey on the new product filing and maybe opening that up to new business. I think it's obviously -- you guys are putting through rate increases there implemented in the third quarter. So that's going to continue to work through the book. And I think you guys put through another increase in New Jersey. So you guys are obviously getting hit on that, but -- and I guess you guys are still not in the market for new business. So I'm wondering, is there a point where you just say, hey, like we're just not going to wait for this new ASC product to get approved and just continue with our existing product and try to open up to new business?