Allstate Corporation (ALL) Q4 2022 Earnings Call Transcript

For the period ending December 31, 2022

February 2, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day and thank you for standing by. Welcome to Allstate’s Fourth Quarter Investor Call. At this time, all participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. As a reminder, please be aware that this call is being recorded.

And now I’d like to introduce your host for today’s program, Mr. Mark Nogal, Head of Investor Relations. Please go ahead, sir.

Mark Nogal – Head of Investor Relations

Thank you, Jonathan. Good morning. Welcome to Allstate’s fourth quarter 2022 earnings conference call. After prepared remarks, we’ll have a question-and-answer session. Yesterday following the close of the market, we issued our news release and investor supplement and posted related material on our website at allstateinvestors.com.

Our management team is here to provide perspective on these results. As noted on the first slide of the presentation, our discussion will contain non-GAAP measures for which there are reconciliations in the news release and investor supplement and forward-looking statements about Allstate’s operations. Allstate’s results may differ materially from these statements, so please refer to our 10-K for 2021 and other public documents for information on potential risks.

And now I’ll turn it over to Tom.

Tom Wilson – Chairman, President and CEO

Well, good morning. Thank you for investing your time in Allstate today. I’ll start by setting context and then Mario and Jess would provide additional perspective on operating results and the actions being taken to improve auto profitability and increase shareholder value. So let’s begin on Slide 2. So as you know, Allstate strategy has two components: increase personal Property-Liability market share and expand Protection Services, which is shown in the two ovals on the left. On the right hand side, you can see our results for the year. Earnings were disappointing with a net loss of $1.4 billion, largely reflecting an underwriting loss on auto insurance and mark-to-market losses on the equity portfolio. Strong results from homeowners insurance, protection services and fixed income investments were not enough to offset the losses on auto and commercial insurance.

The most important driver of near-term shareholder value will be successfully executing our comprehensive plan to improve auto profitability. That includes broadly raising auto insurance rates, reducing expenses including temporary moves such as less advertising and permanent reductions including digitizing and outsourcing work and lowering distribution costs. Underwriting restrictions have been implemented to reduce new business volume until profitability is acceptable. Claims operating processes are also being modified to manage our loss costs. This plan is being implemented, but earned premiums from auto insurance rates have not increased enough to offset higher loss costs.