Allstate's Q3 2025: Contradictions Emerge on Inactive Brands, Auto Retention, Capital Management, and Advertising Efficiency

Date of Call: November 6, 2025

Financials Results

• Revenue: $17.3B for Q3; YTD $50.3B, up 5.8% YOY
• EPS: $11.17 per diluted share (adjusted net income for Q3); no YOY EPS comparison provided

Business Commentary:

• Revenue and Policy Growth:
• Allstate Corporation reported revenue of $17.3 billion for Q3 2025, increasing from $16.3 billion in Q3 2024, with a 6.1% increase in Property-Liability premiums.
• Policies in force grew to 209.5 million, a 3.8% increase year-over-year.
• 

• This growth was driven by strong performance across the enterprise, including increased average premiums and expanded distribution.

• Profitability and Investment Income:

• Net income for Q3 was $3.7 billion, with adjusted net income of $3 billion, and an adjusted net income return on equity of 34.7% over the last 12 months.
• Net investment income increased by 21.2% over the prior year quarter to $949 million.

• The rise in profitability was due to strong Property-Liability performance, higher investment income, and favorable insurance reserve releases.

• Transformative Growth and AI Initiatives:

• Allstate's transformative growth initiative, begun in 2017, has increased personal Property-Liability market share and expanded protection provided to customers.
• The company is leveraging AI, particularly generative AI, to improve operational efficiency, reduce costs, and enhance customer service.

• The implementation of AI is expected to help Allstate reimagine its business model and expand market share.

• Capital Management and Deployment:

• The holding company has a strong capital position, with shareholders' equity increasing to $27.5 billion at the end of Q3 2025.
• Allstate returned $1.6 billion to shareholders in the form of dividends and share repurchases on a GAAP basis.
• The company is considering various strategic options for capital deployment, including further investment in the Property-Liability business, M&A, and shareholder returns.

Sentiment Analysis:

Overall Tone: Positive

• Management described “strong operating results” with “revenues increased to $17.3 billion,” “net income was $3.7 billion,” “adjusted net income $3 billion or $11.17 per share,” and a 12‑month adjusted net income ROE of 34.7%, repeatedly framing results as profitable growth and capital generation.

Q&A:

• Question from Robert Cox (Goldman Sachs Group, Inc., Research Division): Can you talk through holding company liquidity and how quickly deployable assets at the holding company could normalize?
  Response: Allstate has ample capital, prefers holding funds at the parent for flexibility, and will allocate excess to organic PL growth (priority), investments, M&A or shareholder returns as appropriate.

• Question from Robert Cox (Goldman Sachs Group, Inc., Research Division): Where was pricing excluding New York and New Jersey and how do you see pricing heading into 2026?
  Response: Book is broadly rate‑adequate outside NY/NJ; implemented small NY/NJ rate actions (~0.6 points); will take rates only if loss trends worsen to maintain a mid‑90s combined ratio.

• Question from Charles Peters (Raymond James & Associates, Inc., Research Division): Where are you in the ALLIE lifecycle, what does a more complete phase look like, and what's the end goal for the technology?
  Response: ALLIE is in design/build; currently using generative AI to improve efficiency (billing, claims, actuarial), with Agentic AI planned to reimagine customer interactions and business processes; moving quickly despite higher near‑term cost.

• Question from Charles Peters (Raymond James & Associates, Inc., Research Division): How will technology/personalization improve retention without increasing labor intensity?
  Response: AI enables more efficient, targeted personalization and outreach (e.g., SAVE program, tailored discounts/telemetrics) to lower customer costs and improve retention while reducing manual effort.

• Question from Andrew Kligerman (TD Cowen, Research Division): How has the exclusive agent channel progressed re: agent count and retention year‑to‑date and outlook over next couple years?
  Response: Agent headcount fell from ~10k to ~6k but productivity and bundling are materially higher; the Allstate exclusive agency network remains a core, growing, and strategically important channel.

• Question from Andrew Kligerman (TD Cowen, Research Division): Can you benchmark Allstate versus competitors on AI/ALLIE?
  Response: Competitors likely use generative AI, but Allstate believes its prior TG architecture uniquely positions it to scale Agentic AI via ALLIE; won’t provide competitor roadmaps.

• Question from Jon Paul Newsome (Piper Sandler & Co., Research Division): How do you view market dynamics around competitors lowering prices and the trade‑off between pricing and PIF growth?
  Response: Market is highly competitive, but Allstate pursues only profitable PIF growth; they will balance pricing and growth to preserve returns and rely on multiple growth levers (homeowners, specialty, protection plans).

• Question from Elyse Greenspan (Wells Fargo Securities, LLC, Research Division): How has auto retention trended for active brands and when should retention inflect up?
  Response: Retention is being addressed by migrating customers into ASC (affordable/simple/connected) products and SAVE outreach; rollouts and agent/call center outreach should improve retention over the coming quarters.

• Question from Elyse Greenspan (Wells Fargo Securities, LLC, Research Division): Given excess parent capital and dividends from AIC, why wasn’t buyback larger and is capital being held for M&A?
  Response: The $1.5B buyback was a preapproved program executed to schedule; capital is managed flexibly—priority is organic PL growth for highest shareholder return; M&A is opportunistic.

• Question from Vikram Gandhi (HSBC Global Investment Research): Auto PIF growth driven by nonstandard customers — thoughts on longevity and profitability of that cohort and impact on expense/loss ratios?
  Response: While tenure is shorter, the nonstandard cohort is economically attractive and profitable for the period they remain customers; the business is evaluated on economics, not tenure.

• Question from Vikram Gandhi (HSBC Global Investment Research): On commercial lines, have prior‑year adverse developments been sorted and is further adverse development unlikely?
  Response: They believe commercial reserves are adequate for the quarter; commercial had negative surprises historically but none this quarter and they continue to monitor reserves closely.

• Question from Jian Huang (Morgan Stanley, Research Division): How do you view inflation going forward and its impact across the business?
  Response: Inflation remains multi‑faceted (repair costs, bodily injury, operating expenses, investment effects); tail risks have moderated, markets have calmed, Fed posture eased, and they’re monitoring while adjusting portfolio posture.

• Question from Jian Huang (Morgan Stanley, Research Division): Given rate moves, is current fixed‑income duration adequate or will you extend further?
  Response: Duration and portfolio positioning are decided as part of an enterprise view to maximize economic return; they’ve modestly extended duration but will weigh multiple factors rather than chase yield.

• Question from David Motemaden (Evercore ISI Institutional Equities, Research Division): How are you thinking about advertising spend given apparent decline in third‑quarter ad efficiency?
  Response: Efficiency metrics differ by funnel; lower‑funnel efficiency improved year‑over‑year, upper‑funnel (brand) spend raised consideration; overall ad ROI is strong and they continue to optimize.

• Question from David Motemaden (Evercore ISI Institutional Equities, Research Division): Status in NY and NJ on new product filing and opening to new business?
  Response: They are generating underwriting profits and writing some new business in NY/NJ (not fully shut); ASC approval would enable more expansion, and they are working with regulators while assessing risk appetite.

Contradiction Point 1

Impact of Inactive Brands on Growth

It reflects differing views on the impact of inactive brands on overall growth and the timeline for their diminishing influence.

How has Allstate's exclusive agent channel's agent count and retention progressed year-to-date? - Andrew Kligerman(TD Cowen)

2025Q3: We've reduced our agent count by over 3,000. So we're now down to 6,000 from the 10,000 we started with. And the productivity of the agent force has improved. And we're seeing that more and more as we look at retention and persistency. And having 6,000 productive agents is just as good as having 10,000 not so productive ones. - Thomas Wilson(CEO)

When did the pause on new business in inactive brands begin, and when will the headwinds be lapped? - David Motemaden(Evercore ISI)

2025Q2: The process stopped over two years ago. In Esurance, new business has declined, and we proactively offer customers different policies. With Encompass, we're rolling out Custom360, which will become the renewal book. The impact of inactive brands will diminish over time. - Mario Rizzo(COO)

Contradiction Point 2

Auto Retention Trends and Strategic Focus

It reflects differing views on the strategic direction and retention trends within the auto insurance segment, which impacts business strategy and customer engagement.

How should we assess auto retention trends for active brands and overall? - Elyse Greenspan(Wells Fargo Securities)

2025Q3: Inactive brands' retention decline intentional for move to active brands. Focus on moving customers to new products. - Thomas Wilson(CEO)

Will persistency improve or remain stable with sustained new business? What drives this? - Jimmy Bhullar(JP Morgan)

2025Q1: Retention is stabilizing but lags due to previous price increases. The S.A.V.E. program aims to improve affordability and customer experience, which should favorably impact retention. - Tom Wilson(CEO)

Contradiction Point 3

Capital Management and Shareholder Returns

It involves changes in the company's approach to capital management and shareholder returns, which are crucial for investor expectations and financial strategy.

Why was the buyback amount lower than expected given strong results and excess capital? Are you reserving capital for potential M&A activity? - Elyse Greenspan(Wells Fargo Securities)

2025Q3: Buyback program based on capital availability and future plans. Regardless of excess capital, the focus remains on core business growth, strategic acquisitions, and shareholder returns. - Thomas Wilson(CEO)

How do you assess pricing competition in personal auto insurance? Is the market operating rationally? - Jimmy Bhullar(JP Morgan)

2025Q1: We continue to invest in growing our agency force. So we are, on a net basis, staying with our plans for buybacks and continue to increase the agency force. - Tom Wilson(CEO)

Contradiction Point 4

Market Share Growth Strategy in New York and New Jersey

It highlights differing strategies and expectations for market share growth in key states.

Are you considering expanding into New York and New Jersey with existing products? - David Motemaden(Evercore ISI)

2025Q3: We are quickly approaching the 2,000 agents milestone. We are leveraging our exclusive agent network to help grow the business and that really gives us the opportunity to get into new markets. - Mario Rizzo(COO)

How will inactive brands impact auto PIF growth in New York and New Jersey? - Hristian Getsov(Wells Fargo Securities)

2025Q2: We're focused on market share growth in total. Transformative growth has been successful, and we expect continued growth, especially in homeowners, which is already showing positive trends. - Thomas Wilson(CEO)

Contradiction Point 5

Advertising Spend Efficiency

It highlights differing perspectives on advertising efficiency metrics and strategies, which directly impact marketing investments and customer acquisition cost effectiveness.

How are you evaluating advertising spend efficiency? - David Motemaden (Evercore ISI Institutional Equities)

2025Q3: Efficiency measures vary; upper funnel brand building is strong, while lower funnel efficiency is up. Continual improvements in advertising strategy. - Thomas Wilson(CEO)

What drove the Q4 advertising spending increase, and how is ad spend efficiency measured? - Robert Cox (Goldman Sachs)

2024Q4: We use state-of-the-art analytics to ensure we're efficient. Allowable acquisition costs are used to measure ad spending effectiveness. Our analytics are contemporary, and we have outside validation to support this. - Mario Rizzo(COO)