the allstate corporation€¦ · raymond james 2015 institutional investor conference: march 3,...

The Allstate Corporation

Raymond James 2015 Institutional Investor Conference Steven Shebik: Chief Financial Officer March 3, 2015

®

1 Raymond James 2015 Institutional Investor Conference: March 3, 2015

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 2014 Form 10-K,

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 within our most recent earnings release and investor supplement. These documents are located

on our website, allstateinvestors.com, under the “Quarterly Investor Info” link.

Forward-Looking Statements and Non-GAAP Financial Information

Allstate is an Attractive Investment Opportunity

Competitively differentiated strategy based on:

• Customer segmentation

• Analytics-based decision making

• Advanced technology

Attractive returns generated from low volatility auto insurance, repositioned homeowners business, other personal lines, life insurance, workplace benefits and investments

Policy growth through focused customer value propositions and expansion of product and geographic footprint

Proactive risk and capital management

Long history of cash returns to shareholders

Nation’s largest publicly held personal lines insurer

Broad portfolio of growth opportunities

• Three strong Property-Liability brands

• Business to Business platform

• Broad-based investment capabilities

Serve 16 million households

Over 35,000 Allstate exclusive agents, financial specialists and licensed sales producers

Raymond James 2015 Institutional Investor Conference: March 3, 2015 2

Brand

Neutral

Self-

Serve

Local Advice

and Assistance

Brand

Sensitive

Comprehensive Strategy to Provide Differentiated Customer Value Propositions to Unique Consumer Segments


Allstate Agencies as Trusted Advisors

Broad product portfolio across segments

Best value

Strategy Based On: Segmentation, Analytics and Advanced Technology

Segmentation

Sophisticated pricing expertise

Effective and efficient claims settlements

Enterprise risk management

Analytics

Infrastructure simplification

Telematics - connected car

Enterprise digitization

Advanced Technology

Market size: $81B Encompass share: 2%

Market size: < $1B Answer Financial share: ~50%

Market size: $55B Esurance share: 2%

Market size: $121B Allstate share: 19%

Note: Market share statistics based on Allstate internal analysis, which is based on multiple sources including AM Best and public filings.

(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 2012.

Personal Lines Unit Growth With Attractive Returns

The Allstate Brand is driving profitable growth:

Allstate brand auto and homeowners policies growing over prior year

Allstate Brand is 92% of policies in force, and accounted for 27% and 78% of growth in 2013 and 2014, respectively

Profitability managed by micro-segmentation, broad-based analytics and local execution

Homeowners returns have significantly improved, as reflected by the underlying loss ratio in the low 60s

Organizational structure, business capabilities and accountability to react to cost trends

Allstate Brand Auto and Homeowners Combined Ratio1

Bank of America Merrill Lynch Insurance Conference: February 12, 2015 4

94.7

82.5

61.1

50

60

70

80

90

100

110

120

130

140

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Auto Homeowners Homeowners x-cat

Allstate Brand Auto & Homeowners Policy in Force Trends (Auto #M)

19.9

6.1

5

6

7

8

9

18.0

19.0

20.0

21.0

2005 2006 2007 2008 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Auto Homeowners

2012 2013 2014

(Home #M)

(CR)

Raymond James 2015 Institutional Investor Conference: March 3, 2015

Esurance Expanding Product Suite and Geographic Footprint

5 (1) Esurance acquired Q4 2011

($ in Millions, except ratios) 2012 2013 2014

Net Written Premium $1,024 $1,310 $1,513

Growth rate NA(1) 27.9% 15.5%

Policies in Force 1,031 1,306 1,470

Growth rate NA(1) 26.7% 12.6%

Recorded Combined Ratio 119.9 117.5 117.7

Expense Ratio 42.7 39.0 40.9

Underlying Loss Ratio 75.6 77.6 76.6

Esurance(1) Results

Auto Product Launches Market Coverage 2014: 97.8% (added Alberta Canada in 2015)

WA

OR

MT

CO

AZ NM

WY

ND

SD

OK

KS

NE

TX

AR

LA

MS AL GA

FL

SC

NC

IL

MO

IA

WI MI

IN OH

KY

VA CA

ID

UT

NV

MN

TN

WV

MA

PA

NY

ME

RI

NJ

DE

VT

NH

CT

MD

DC

Footprint prior to acquisition

Additions since acquisition

No current presence

Homeowners Product Launches Market Coverage 2014: 29.0%

WA

OR

MT

CO

AZ NM

WY

ND

SD

OK

KS

NE

TX

AR

LA

MS AL GA

FL

SC

NC

IL

MO

IA

WI MI

IN OH

KY

VA CA

ID

UT

NV

MN

TN

WV

MA

PA

NY

ME

RI

NJ

DE

VT

NH

CT

MD

DC

Allstate Financial Becoming A More Strategically Integrated Part of the Allstate Brand

(1) Includes reserves for life-contingent contract benefits and contractholder funds classified as held for sale in 2013


Integration to Allstate Brand’s customer value proposition requires a comprehensive, multi-year effort

Balance sheet diminishing in size on smaller annuity business

Expense levels lower

Investment income very strong past four quarters, reflecting higher limited partnership income

Substantial capital distributed to parent

6

12.2 14.5 10.5

1.2 2.1 0.8

47.6 32.8

23.5

14.2

0.1

0.1

75.2

49.5

34.9

0

10

20

30

40

50

60

70

80

2007 2013 2014Life insurance Accident & health insuranceAnnuities Institutional products

($ B)

Reserves and Contractholder Funds as of Year-end 2014

(1) 7.1%

8.3% 8.0%

9.0% 9.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014

Operating Income Operating Income Return on Equity

($M)

Allstate Financial Operating Income and Return on Equity

(ROE)

Responding to External Change Through Proactive Risk and Capital Management

(1) Probable maximum loss for hurricanes and earthquakes as calculated by external risk models and after reinsurance recoveries, indexed to 2005 7

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Due in 3years or less

Due after 3through 5

years


years


years

Due after 10years

2011 2014

Investment Portfolio Positioning

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Catastrophe Risk Management

20.5 20.6

1.7 1.0 2.1 5.1 3.1

$26.6 $27.5

0

5

10

15

20

25

30

2012 2014Common Stock & Equity Preferred Stock

Hybrid Debt Senior Debt / Other

($B)

Balance Sheet Restructuring

PML Index(1) 2005 – 2014 P-L Fixed Income by Scheduled Maturity Date (Index)


2002 2012 2004 2010 2008 2006

Selected Dramatic External Shocks

2013

Significant Hurricane

Losses Financial Crisis /

Economic Recession

Significant Catastrophe and Severe Weather Losses

Historically Low Interest Rate Environment

Allstate businesses that should not be solely valued on current earnings

Leveraging synergies across businesses to serve the small business market

• Provide innovative, broad solutions to protect the business, the business owner and the employees

• Equip agencies to support small businesses

Successful history of selectively pursuing adjacent acquisitions

• Allstate Benefits

• Partnership Marketing Group

• Esurance

Leveraging connected consumer relationships

• Improved, personalized pricing based on customer characteristics, behaviors, external information

• Improved customer experience through increased touch points and interactivity

• Utilization of data to improve the customer experience, enhance efficiency, or generate additional revenue

Considerations Beyond Current Earnings


Allstate is an Attractive Investment Opportunity with Significant Growth Potential

9

Competitively differentiated strategy based on:

• Customer segmentation

• Analytics-based decision making

• Advanced technology driving strategy

Attractive returns

Policy growth

Proactive risk and capital management

Long history of excellent returns to shareholders

33.8%

178.5% 168.9%

16.7%

93.9%

110.7%

17.0%

79.6%

111.0%

1/1/14 - 2/26/15 1/1/12 - 2/26/15 1/1/10 - 2/26/15

ALL

S&P P&C

S&P 500

Total Shareholder Return @ 2/26/15

(1) There were five dividend payments in 2012

(1)

2.9% 3.1% 1.5% 1.8%

6.3% 5.2% 7.9% 8.9%

9.2% 8.3%

9.4%

10.7%

2011 2012 2013 2014

Common DividendsCommon Share Repurchases

Total Cash Return per Common Share


11

Forward-Looking Statements

This presentation contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. We believe these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to: (1) adverse changes in the nature and level of catastrophes and severe weather events; (2) impacts of catastrophe management strategy on premium growth; (3) regulatory changes, including limitations on rate increases and requirements to underwrite business and participate in loss sharing arrangements; (4) market convergence and regulatory changes on our risk segmentation and pricing; (5) the cyclical nature of the property and casualty business; (6) unexpected increases in the severity or frequency of claims; (7) reestimates of reserves for claims; (8) adverse legal determinations regarding discontinued product lines and other legal and regulatory actions; (9) changes in underwriting and actual experience; (10) the influence of changes in market interest rates on spread-based products; (11) changes in estimates of profitability on interest-sensitive life products; (12) reducing our concentration in spread-based business and exiting certain distribution channels; (13) changes in tax laws; (14) our ability to mitigate the capital impact associated with statutory reserving requirements; (15) compliance and operational issues relating to dispositions and acquisitions of businesses; (16) market risk and declines in credit quality relating to our investment portfolio; (17) our subjective determination of the fair value of our fixed income and equity securities and the amount of realized capital losses recorded for impairments of our investments; (18) competition in the insurance industry; (19) conditions in the global economy and capital markets; (20) losses from legal and regulatory actions; (21) restrictive regulation and regulatory reforms; (22) the availability of reinsurance at current levels and prices; (23) credit risk of our reinsurers; (24) a downgrade in our financial strength ratings; (25) the effect of adverse capital and credit market conditions; (26) failure in cyber or other information security systems; (27) the impact of a large scale pandemic, the threat of terrorism or military action; (28) possible impairments in the value of good-will; (29) changes in accounting standards; (30) the realization of deferred tax assets; (31) restrictions on our subsidiaries’ ability to pay dividends; (32) restrictions under the terms of certain of our securities on our ability to pay dividends or repurchase our stock; (33) changing climate conditions; (34) loss of key vendor relationships or failure of a vendor to protect confidential information; and (35) failure to protect intellectual property. Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” in our most recent Annual Report on Form 10-K. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.


the allstate corporation€¦ · raymond james 2015 institutional investor conference: march 3,...

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