The Allstate Corporation

Transcription

1 The Allstate Corporation Goldman Sachs Financial Services Conference Thomas J. Wilson: Chairman, President, and Chief Executive Officer December 9, 2014

2 Safe Harbor This presentation contains forward-looking statements and information. Additional information on factors that could cause results to differ materially from those projected in this presentation is available in the 2013 Form 10-K, our form 10-Q for the quarter ended September 30, 2014, in our most recent earnings release, and at the end of these slides. These materials are available on our website, allstateinvestors.com. This presentation also contains some non-gaap measures. You can find the reconciliation of those measures to GAAP measures on our website, allstateinvestors.com, under the Quarterly Investor Info link. 1

3 Allstate is an Attractive Investment Opportunity Competitively differentiated strategy based on: Customer segmentation Analytics-based decision making Advanced technology driving strategy Nation s largest publicly held personal lines insurer Broad portfolio of growth opportunities Three strong Property-Liability brands: Allstate, Esurance, Encompass Business to Business platform: Allstate Benefits, Allstate Dealer Services, Allstate Business Insurance, Allstate Roadside Services, Ivantage Broad-based investment capabilities Serve 16 million households Over 32,000 Allstate exclusive agents, financial specialists and licensed sales producers Policy growth through focused customer value propositions, completion of homeowners repositioning and expansion of product and geographic footprint Attractive returns generated from low volatility auto insurance and repositioned homeowners business Proactive risk and capital management Long history of cash returns to shareholders 2

4 Our Strategy is to Provide Unique Customer Value Propositions to Each Consumer Segment Strategy Based On: Segmentation, Analytics and Advanced Technology Segmentation Allstate Agencies as Trusted Advisors Broad product portfolio across segments Best value through lowest possible cost Analytics Sophisticated pricing expertise Effective and efficient claims settlements Expanded capabilities and talent throughout company Enterprise risk management Advanced Technology Simplification of infrastructure Telematics - connected car Integrated Digital Enterprise Brand Neutral Local Advice and Assistance Self- Serve Brand Sensitive 3

5 Growth Through Focused Customer Value Propositions and Expansion of Product Lines and Geographic Footprint Each brand contributing to policy growth: Allstate brand auto and homeowners policies growing over prior year Esurance, Encompass growth rates expected to slow given profit improvement actions Esurance expanding into new markets with broader product suite The Allstate Brand is driving profitable growth: Allstate Brand is 92% of policies in force, and accounted for 27% and 73% of growth in 2013 and 2014, respectively (% var PY) 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -0.2% 0.8% 0.3% 4.0% -1.1% 2.5% -0.7% 4.2% 0.0% 5.3% 0.8% 4.7% 1.5% 5.2% 5.5% 4.9% 2.0% 2.2% 2.4% -2.4% Net Written Premium Policies in Force Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Allstate Brand Auto & Homeowners Policy in Force Trends (% var PY) 6% 4% Allstate Protection Written Premium and Policy in Force Growth Q # Var. to Q Auto +504K Homeowners +5K 2.6% 2% 0% 0.1% -2% -4% -6% -8% Auto Homeowners Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 4

6 Attractive Returns Generated From Low Volatility Auto Insurance and Repositioned Homeowners Business Auto profitability managed by microsegmentation and broad-based analytics Organization structure, business capabilities and performance accountability react to cost trends Frequency: miles driven, weather, risk profiles Severity: inflation, vehicle mix, weather Allstate Brand Auto Combined Ratio 1 Return on Required Capital (2) 5-year average: ~18.5% YTD '14 Homeowners range of performance has materially shifted Rate increases Underwriting sophistication Reduced size of business by 24.5% (2 million policies) since its peak in 2006 House & Home policy Allstate Brand Homeowners Combined Ratio YTD '14 (1) Allstate Brand Auto results prior to 2011 and Allstate Brand Homeowners results prior to 2008 are not adjusted for DAC accounting change adopted in (2) Assumes after tax margin and investment yield at 3:1 premium / surplus ratio. 5

7 Building Connected Customer Relationships Allstate Focus Areas Pricing Improved, personalized pricing based on customer characteristics, behaviors, external information Customer Experience Improved customer experience through increased touch points and interactivity Data Utilization Utilization of data to improve the customer experience, enhance efficiency, or generate additional revenue Competitive Position Traditional and Non-Traditional Competitors Advantages Size and breadth of customer base Ability to lower customer costs through connectivity Analytical expertise Challenges Rapidly developing market with many competitors Building relationships and alliances to source new capabilities 6

8 Proactive Risk and Capital Management History of proactive approach to maximizing return per unit of risk: Catastrophe risk management and improving homeowner returns Property-Liability investment portfolio positioning in a low interest rate environment Exiting variable (2006) and fixed annuities ( ) Divestiture of Lincoln Benefit Life Balance sheet restructuring and capital management Catastrophe Risk Management Investment Portfolio Positioning Balance Sheet Restructuring (Index) PML Index (1) 2005 Q % 40% 35% 30% 25% 20% P-L Fixed Income by Scheduled Maturity Date ($B) $26.6 $ % % 5% Q % Due in 3 years or less Due after 3 through 5 years Due after 5 through 7 years Due after 7 through 10 years YE 2011 Q Due after 10 years 0 12/31/2012 9/30/2014 Common Stock & Equity Preferred Stock Hybrid Debt Senior Debt / Other (1) Probable maximum loss for hurricanes and earthquakes as calculated by external risk models and after reinsurance recoveries, indexed to

9 Long History of Cash Returns to Shareholders Strong total shareholder return relative to the broad market and industry peers Average of 9+% cash return per common share since the beginning of 2011 Over $35B in capital returned to shareholders since 1995 spin-off; $4.6B in the past 24 months As of September 30, $587M remains on current $2.5B repurchase authorization ALL S&P P&C S&P 500 Total Shareholder 12/05/ % 15.3% 14.5% 167.1% 91.5% 75.7% 157.9% 1 Year 3 Year 5 Year Total Cash Return per Common Share Common Dividends Common Share Repurchases 108.1% 106.4% 9.2% 8.3% 9.4% 9.5% 6.3% 5.2% 7.9% 8.1% 2.9% 3.1% 1.5% 1.4% (1) YTD (1) There were five dividend payments in

10 Allstate is an Attractive Investment Opportunity with Significant Growth Potential Competitively differentiated strategy based on: Customer segmentation Analytics-based decision making Advanced technology driving strategy Policy growth through focused customer value propositions, completion of homeowners repositioning and expansion of product and geographic footprint Attractive returns generated from low volatility auto insurance and repositioned homeowners business Proactive risk and capital management Long history of cash returns to shareholders 9

11 Forward-Looking Statements and Risk Factors This presentation may contain forward-looking statements about our outlook for the Property-Liability combined ratio excluding the effect of catastrophes, prior year reserve reestimates and amortization of purchased intangible assets for These statements are subject to the Private Securities Litigation Reform Act of 1995 and are based on management s estimates, assumptions and projections. Actual results may differ materially from those projected based on the risk factors described below. Premiums written and premiums earned, the denominator of the underlying combined ratio, may be materially less than projected. Policyholder attrition may be greater than anticipated resulting in a lower amount of insurance in force. Unanticipated increases in the severity or frequency of standard auto insurance claims may adversely affect our underwriting results. Changes in the severity or frequency of claims may affect the profitability of our Allstate Protection segment. Changes in bodily injury claim severity are driven primarily by inflation in the medical sector of the economy and litigation. Changes in auto physical damage claim severity are driven primarily by inflation in auto repair costs, auto parts prices and used car prices. The short-term level of claim frequency we experience may vary from period to period and may not be sustainable over the longer term. A decline in gas prices, increase in miles driven, and higher unemployment are examples of factors leading to a short-term frequency change. A significant long-term increase in claim frequency could have an adverse effect on our underwriting results. We undertake no obligation to publicly correct or update any forward-looking statements. 10

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