Allstate Corporation (NYSE:ALL) Q3 2024 Earnings Report

Allstate Corporation (NYSE:ALL), a leading insurance provider, reported robust financial results for the third quarter of 2024, with total revenues climbing to $16.6 billion, marking a 14.7% increase from the previous year. The company announced a net income of $1.2 billion and an adjusted net income of $3.91 per share, achieving an impressive return on equity of 26.1%. Allstate's Property-Liability sector showed particularly strong performance, with the company now boasting over 200 million active policies.

Key Takeaways

• Allstate's total revenues rose to $16.6 billion, a 14.7% year-over-year increase.
• Net income reached $1.2 billion, with an adjusted net income of $3.91 per share.
• The company reported a return on equity of 26.1%.
• Property-Liability premiums increased by 11.6% to $13.7 billion.
• Auto insurance combined ratio improved to 94.8; homeowners insurance combined ratio was 98.2.
• New business applications grew by 26%, with direct channel business up by 56%.
• Allstate is focusing on market share expansion in personal Property-Liability and customer protection enhancements.

Company Outlook

• Allstate aims to enhance customer retention and leverage growth initiatives to strengthen market position.
• The company anticipates lower rate increases moving forward, which should aid in improving retention rates.
• Allstate is investing in advertising and a multichannel distribution strategy to drive growth.

Bearish Highlights

• Retention rates have declined by 2.7 points over the last 10 quarters, now at around 87%.
• Adjusted net income in the health and benefits segment was down due to increased benefit utilization.

Bullish Highlights

• The Property-Liability business is expected to grow with attractive margins and reduced rate increases.
• Net investment income increased to $783 million, driven by higher fixed income yields.
• Protection Plans business revenue grew by 23.1% year-over-year to $512 million.

Misses

• Despite overall positive financial results, Allstate noted challenges in retention rates and adjusted net income in certain segments.

Q&A Highlights

• Executives discussed the impact of the National General acquisition on customer retention and growth.
• Allstate is prioritizing organic growth and has reduced share repurchases.
• The company is optimistic about growth opportunities in all distribution channels, especially in the independent agent space.

Allstate's strategic initiatives have led to a significant increase in new business applications, with a 26% rise in the third quarter. The company's investment in a digital insurer model and acquisitions in mobile device protection have been pivotal in this growth. The operational execution has resulted in a 26% increase in new business applications, with the direct channel experiencing a 56% surge compared to the previous year.

The company's forward-looking strategy includes improving customer retention rates, which have seen a decline, attributed to cumulative rate increases. Allstate is countering this trend by anticipating lower rate increases in the future. These efforts, along with the company's multichannel distribution strategy, are expected to contribute to the property-liability business's growth, supported by attractive margins and reduced rate increases.

Allstate's investment performance remained strong, with net investment income rising to $783 million, up from the previous year, driven by higher fixed income yields. The Protection Plans business also saw significant growth in revenues.

In terms of divestitures, Allstate announced the sale of its Employer Voluntary Benefits business for $2 billion, expected to close in the first half of 2025 and projected to generate approximately $1.6 billion in capital.

The company's executives expressed optimism about growth across all distribution channels, particularly in the homeowners market, where competition is decreasing. They highlighted the successful integration of the National General acquisition, which has enhanced Allstate's presence in the non-standard auto market and independent agent space.

Allstate continues to focus on maintaining strong returns while strategically managing growth across its insurance offerings, leveraging data and technology to enhance market competitiveness. Despite challenges in certain markets, the company remains confident in its ability to improve retention through better customer service and operational excellence.

InvestingPro Insights

InvestingPro data shows that Allstate Corporation's (ALL) strong financial performance in Q3 2024 is supported by a market capitalization of $50.16 billion, reflecting its significant presence in the insurance industry. Allstate's revenue growth of 11.67% over the last twelve months aligns with the reported 14.7% increase in total revenues for the quarter, demonstrating consistent top-line expansion.

• Allstate has raised its dividend for 13 consecutive years.
• Net income is expected to grow this year, supporting the positive outlook presented in the earnings report and the company's focus on profitability across its business segments.

These insights complement Allstate's reported return on equity of 26.1% and its strategic initiatives aimed at market share expansion and customer retention improvement.