Overview of Allstate’s Financial Performance

The Allstate Corporation, a leading insurance provider, has reported its financial results for the third quarter and first nine months of 2024. The company’s performance has shown significant improvement compared to the previous year, with a strong focus on growth, profitability, and strategic initiatives.

Consolidated Financial Highlights

Allstate’s consolidated net income applicable to common shareholders was $1.16 billion in the third quarter of 2024, compared to a loss of $41 million in the same period of 2023. For the first nine months of 2024, net income was $2.65 billion, compared to a loss of $1.78 billion in the same period of 2023. This improvement was primarily driven by better underwriting results, with increased earned premiums and improved loss trends.

Total revenues increased by 14.7% to $16.63 billion in the third quarter and 12.6% to $47.60 billion in the first nine months of 2024, compared to the same periods in 2023. This growth was attributed to premium rate increases and higher realized capital gains on investments.

Net investment income also increased, rising by $94 million to $783 million in the third quarter and $385 million to $2.26 billion in the first nine months of 2024, primarily due to higher market-based investment results.

Segment Performance

Allstate Protection Segment The Allstate Protection segment, which includes the company’s personal property-liability business, reported strong underwriting results. Underwriting income was $555 million in the third quarter of 2024, compared to an underwriting loss of $331 million in the same period of 2023. For the first nine months of 2024, underwriting income was $1.32 billion, compared to a loss of $3.42 billion in the same period of 2023.

This improvement was driven by increased premiums earned and lower non-catastrophe losses, partially offset by higher catastrophe losses and advertising costs. As auto profitability improves, Allstate is increasing advertising, expanding customer access, and delivering personalized, affordable, and connected consumer offerings to support growth.

Premiums written increased by 10.5% to $14.71 billion in the third quarter and 11.8% to $42.17 billion in the first nine months of 2024, compared to the same periods in 2023, reflecting higher premiums in both the Allstate and National General brands.

Protection Services Segment The Protection Services segment, which includes businesses such as Allstate Protection Plans, Allstate Roadside, and Arity, reported an increase in adjusted net income. Adjusted net income was $58 million in the third quarter of 2024, compared to $27 million in the same period of 2023, and $167 million in the first nine months of 2024, compared to $102 million in the same period of 2023.

This growth was primarily due to revenue expansion and improved claim frequency at Allstate Protection Plans, as well as improved claim severity at Allstate Roadside. Premiums and other revenue increased by 16.3% to $749 million in the third quarter and 13.6% to $2.16 billion in the first nine months of 2024, compared to the same periods in 2023.

Allstate Health and Benefits Segment The Allstate Health and Benefits segment, which includes the company’s employer voluntary benefits, group health, and individual health businesses, reported a decline in adjusted net income. Adjusted net income was $37 million in the third quarter of 2024, compared to $69 million in the same period of 2023, and $151 million in the first nine months of 2024, compared to $182 million in the same period of 2023.

The decline was primarily due to increased benefit utilization across all lines of business. Premiums and contract charges increased by 5.2% to $487 million in the third quarter and 4.4% to $1.44 billion in the first nine months of 2024, compared to the same periods in 2023, driven by growth in individual health and group health, partially offset by a decline in employer voluntary benefits.

Investments and Capital Allstate’s investments totaled $73.60 billion as of September 30, 2024, up from $66.68 billion as of December 31, 2023, primarily due to positive operating cash flows and higher fixed income valuations.

The company’s shareholders’ equity was $20.88 billion as of September 30, 2024, up from $17.77 billion as of December 31, 2023, mainly due to net income and unrealized net capital gains, partially offset by dividends to shareholders.

Book value per diluted common share increased by 18.5% to $70.35 as of September 30, 2024, compared to $59.39 as of December 31, 2023. The return on average Allstate common shareholders’ equity for the twelve months ended September 30, 2024, was 26.1%, a significant improvement from the (14.7)% recorded for the twelve months ended September 30, 2023.

Strengths and Weaknesses

Strengths:

• Improved underwriting performance in the Allstate Protection segment, driven by increased premiums and lower losses
• Continued growth in the Protection Services segment, particularly in Allstate Protection Plans
• Diversified investment portfolio with a focus on both market-based and performance-based strategies
• Strong capital position and growing shareholders’ equity

Weaknesses:

• Declining adjusted net income in the Allstate Health and Benefits segment due to increased benefit utilization
• Potential challenges in certain states and lines of business due to regulatory or legislative factors

Outlook and Future Prospects

Allstate’s management remains focused on its two-pronged corporate strategy: increasing personal property-liability market share and expanding protection offerings by leveraging the Allstate brand, customer base, and capabilities.

In the personal property-liability businesses, the company is pursuing initiatives to improve customer value, expand customer access, increase sophistication in customer acquisition, deploy new technology ecosystems, and drive organizational transformation. These efforts are expected to support continued growth and profitability in the Allstate Protection segment.

The company is also actively pursuing the sale of its employer voluntary benefits business, which is reported in the Allstate Health and Benefits segment. Once this transaction is completed, the entire Health and Benefits segment will be reported as discontinued operations.

Overall, Allstate’s strong performance in the third quarter and first nine months of 2024, coupled with its strategic initiatives and focus on growth and profitability, suggest a positive outlook for the company’s future prospects. However, the company will need to navigate any potential challenges in certain states and lines of business, as well as monitor the impact of macroeconomic factors on its operations.