10-QPeriod: Q3 FY2024

ALLSTATE CORP Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 30, 2024For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

The Allstate Corporation (ALL) reported a significant turnaround in its third quarter and year-to-date 2024 financial performance compared to the same periods in 2023. Net income attributable to common shareholders surged to $1.16 billion in Q3 2024 and $2.65 billion for the first nine months of 2024, a substantial improvement from a net loss of $41 million and $1.78 billion, respectively, in the prior year. This turnaround was driven by improved underwriting results, particularly in the Allstate Protection segment, which swung from a significant loss in 2023 to a substantial profit in 2024, aided by increased earned premiums and lower non-catastrophe losses, despite higher catastrophe losses. Total revenues also saw a healthy increase, reflecting premium rate hikes and gains on investments. The company's financial position strengthened, with shareholders' equity rising to $20.88 billion and book value per diluted common share increasing to $70.35 as of September 30, 2024.

Financial Highlights

35 data points
Beta

Revenue

$16.63B

Net Income

$1.19B

7.2% Net Margin

EPS (Diluted)

$4.33

Total Assets

$113.74B

Cash & Equivalents

$816.00M

Free Cash Flow

$3.14B

Financial Statements
Beta
Revenue$16.63B
Net Income$1.19B
EPS (Basic)$4.39
EPS (Diluted)$4.33
Shares Outstanding (Basic)264.60M
Shares Outstanding (Diluted)268.00M

Key Highlights

  • 1Strong Profitability Recovery: Net income applicable to common shareholders was $1.16 billion in Q3 2024 and $2.65 billion for the first nine months of 2024, a significant improvement from losses in the prior year.
  • 2Allstate Protection Segment Turnaround: The core property-liability business (Allstate Protection) moved from a substantial underwriting loss in 2023 to a robust underwriting income of $555 million in Q3 2024 and $1.32 billion year-to-date.
  • 3Increased Premiums Written: Premiums written grew by 10.5% in Q3 and 11.8% year-to-date, driven by rate increases across auto and homeowners insurance.
  • 4Improved Investment Income: Net investment income increased by $94 million in Q3 and $385 million year-to-date, benefiting from higher market-based investment results due to portfolio repositioning and increased balances.
  • 5Strengthened Balance Sheet: Allstate shareholders' equity increased to $20.88 billion, and book value per diluted common share rose to $70.35.
  • 6Divestiture Activity: Allstate is proceeding with the sale of its employer voluntary benefits business (part of Allstate Health and Benefits) for approximately $2.0 billion, expected to close in H1 2025.
  • 7Reduced Debt-to-Equity Ratio: The ratio of debt to Allstate shareholders' equity decreased to 38.7% from 44.7% at year-end 2023.

Frequently Asked Questions

The significant improvement in net income was primarily driven by better underwriting results in the Allstate Protection segment, which swung from a loss in 2023 to a profit in 2024. This was supported by increased earned premiums due to rate increases and lower non-catastrophe losses, despite higher catastrophe losses. Additionally, improved investment income and gains on investments contributed to the positive financial performance.

Allstate is managing its aggregate insurance exposure to catastrophe losses through a combination of strategies including managing policies in force, utilizing reinsurance, and participating in state facilities. Their catastrophe reinsurance program supports their risk and return framework, and as of September 30, 2024, the modeled 1-in-100 probable maximum loss for hurricane, wildfire, and earthquake perils was approximately $2.9 billion, net of reinsurance. While catastrophe losses were higher in Q3 2024 compared to Q3 2023, they were lower year-to-date due to fewer wind/hail events.

Allstate entered into an agreement to sell its employer voluntary benefits business, part of the Allstate Health and Benefits segment, for approximately $2.0 billion in cash. The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other closing conditions. As of September 30, 2024, the assets and liabilities of this business are classified as held for sale.

Allstate's $5.00 billion share repurchase authorization expired on March 31, 2024. As of September 30, 2024, a new common share repurchase program has not been authorized. However, the company did purchase a small number of shares in the open market during July, August, and September 2024 related to equity compensation plans.