Allstate Corp Q4 2024 Earnings Call Transcript

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

Question: Rob Cox - Goldman Sachs - Analyst : So first question for you, I had on advertising. I think you all had previously said that you were pretty comfortable with the 3Q '24 level of advertising spend. I was hoping you could talk about the decision to ramp it up here in the fourth quarter. And I'm curious what your measures of ad spend efficiency are telling you in the current environment? And how does that compare to history?

Question: Rob Cox - Goldman Sachs - Analyst : Got it. Secondly, I wanted to ask a question on the comment in the press release about expecting growth in total Property-Liability PIF in 2025. We've been thinking that you could certainly grow PIF in both home and auto in 2025. Is there any reason why you would be hesitant to commit to growing in both of the segments? Or am I looking too deeply into that statement?

Question: Gregory Peters - Raymond James - Analyst : So for my first question, piggyback on the last answer there, Mario. And you said on slide 9 here, for the auto policies, you said that you're proactively contacting the existing customers, you mentioned that in your answer. Can you give us an updated perspective on how you think your pricing is on a competitive positioning basis versus your peer group? And as you shift gears and proactively contact existing customers. Does that mean that there's going to be some sort of corresponding adjustment in agent compensation that's going to give more weighting to retention versus just flat-out new sales?

Question: Gregory Peters - Raymond James - Analyst : Tom, and as my follow-up question, Tom, in your opening comments, when you were going through the information on slide 2, you emphasize the ROE of 26.8%, which I believe is one of the best results I've seen from your company in recent history. Can you provide some view of how you are thinking about the ROE going forward? And maybe what the board -- how the board is viewing it? I guess the reason why I'm asking is you've disposed of some underperforming assets over the last decade. And it feels like there's just a natural migration that the ROE objectives for the organization can be moving up, certainly this result for last year sort of puts an explanation point on that.

Question: Michael Zaremski - BMO Capital Markets - Analyst : My first question is on the expense ratio and kudos to the kind of lowering it over time and meeting your goal. Curious, I think in the past, Tom, recent past, you've said that you have plans to improve it even further. And maybe that's the expense ratio ex ad expense. If that's the case, are you able to kind of elaborate on what the building blocks are going forward to continue the improvement.

Question: Michael Zaremski - BMO Capital Markets - Analyst : Great. And my final follow-up is just more high level on the devastating tragedy in California. I know it's kind of still a fluid situation, but I think a few of your competitors have expressed that they might need to retrench even more in California given the payback -- the potential payback on the losses are going to be many, many, many years. Curious, do you think this could cause Allstate to also rethink its ambitions of growing or just overall growth in California might turn a different direction.

Question: Hristian Getsov - Wells Fargo Securities, LLC - Analyst : My first question is on retention. I didn't see any retention numbers in the press release or supplements. I was wondering if you could provide that. And then would you say the majority of the headwinds on retention just from like I know you guys called out insurance migration and then the New York, California, New Jersey rate hikes. Are those -- is the majority of that headwind dissipated by now? Or do you expect some further headwinds kind of in the first half?

Question: Hristian Getsov - Wells Fargo Securities, LLC - Analyst : Got you. And going back to the California wild losses, I know you provided a $2 billion gross estimate, you provided some sensitivity. But what are you assuming in terms of the industry losses so we could like flex that sensitivity up or down depending on how the losses developed?

Question: Jimmy Bhullar - JPMorgan - Analyst : I had a question first on just the auto business. You mentioned PIF turning positive in 31 states, I think, -- and I'm assuming what's unique about those states is just the fact that you're not raising prices as much and advertising more. So if that is true, then could you talk about the remaining straits that you're not growing in should that begin happen throughout the year gradually? Or is there more of a cliff event at some point later in REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 2:00PM, ALL.N - Q4 2024 Allstate Corp Earnings Call the year when you will lap those comps and you're not going to be raising prices just to sort of be able to assess when those stock states will begin to show better growth?

Question: Jimmy Bhullar - JPMorgan - Analyst : And then maybe just following up on capital. Like the business is obviously profitable now. I think you'll make money even with the California fires in 1Q, and then you've got the money coming in through the sales of the Benefits and Health business. So how should we think -- and I'm assuming capital is not a constraint for growth given how much money you're going to get from the sales. But how should we think about capital deployment between growth, M&A and share buybacks? And is it unreasonable to assume that you wouldn't be in the market buying back stock at some point, assuming results come in as expected over the course of this year?

Question: Jimmy Bhullar - JPMorgan - Analyst : It's still better to get those questions and questions about adequacy of capital, I guess. So we'll see.