オールステート（ALL）2026年第3四半期決算説明会：調整後純利益25億ドルとAI拡大

要点

• オールステートが発表した2026年第3四半期決算は、売上高が173億ドル、調整後純利益が約25億ドル（普通株1株当たり9.76ドル）となった。調整後自己資本利益率（ROE）は39.7%だった。
• 損害保険（Property-Liability）の正味収入保険料は2.5%増の160億ドルとなった。有効契約件数は3.3%増となり、そのうち自動車保険が3.4%増、住宅所有者保険が3.3%増となった。
• 損害保険のコンバインド・レシオは86.6%となった。自動車保険の調整後基礎的コンバインド・レシオは91.4%と、経営陣が目標とする90%台半ばを下回り、住宅所有者保険の基礎的コンバインド・レシオは60.1%を記録した。
• 当四半期の純投資収益は24%増加した。直近12カ月ベースでは40億ドルに達し、2022年比で67%増となった。
• プロテクション・サービス事業の有効契約件数は4%増の1億7,800万件となった。直近12カ月の既経過保険料は7.5%増の35億ドル、調整後純利益は4.7%増の2億2,100万ドルとなった。
• オールステートは2027年初頭に営業関連のAI機能および補償重視のパーソナル・エージェンティック・アシスタントを立ち上げる計画である。経営陣は普及のペースについては依然として不透明だとしている。

主要財務データ

事業および業績の動向

オールステートの契約件数の伸びは加速し続けた。自動車保険の有効契約件数は前年同期の1.3%増に対して3.4%増となり、住宅所有者保険の契約件数は3.3%増となった。経営陣はこの拡大について、販売チャネルの拡大、広告投資の増額、新商品の投入によるものとしている。

広告費は2023年の6億3,800万ドルから、直近12カ月間では20億ドル超に増加した。自動車保険の新規契約申込数は3年間で59%増の940万件に達し、住宅所有者保険の新規契約は39%増の150万件超となった。新規契約は、専属代理店、独立系代理店、ダイレクト販売の各チャネルにおおむね均等に配分された。

自動車保険の1契約当たり年換算平均保険料は1,474ドル、1契約当たり調整後基礎的損害額・経費は1,347ドルだった。オールステートがより手頃なASC商品を拡充し、免責金額や補償限度額を調整したことで、自動車保険の平均保険料は過去1年間で2.7%低下した。同社は39地域で保険料率の改定を実施し、これが自動車保険の収入保険料に0.4ポイントの影響をもたらした。

経営陣によると、損害動向には物損および対人賠償のインフレや事業構成の変化が反映されている。成長と90%台半ばのコンバインド・レシオ目標とのバランスを取るため、保険料率の決定は州および地域レベルで行われている。

プロテクション・サービス事業は収益性を伴う拡大を維持した。同セグメントの有効契約件数は1億7,800万件で、プロテクション・プラン、ロードサイド・サービス、ディーラー・サービス、アイデンティティ・プロテクション、Arityが支えた。オールステートは、INRIXおよびReplicaの買収により、3兆マイル超の走行データを活用するArityのモビリティ・インテリジェンス機能がさらに拡充されると述べた。

870億ドルの投資ポートフォリオでは、オールステートが高利回りでの再投資を行いデュレーションを長期化したことで、経常的なインカム収益が増加した。しかし、金利上昇に伴い債券の未実現評価額が目減りし、当四半期の投資リターンはマイナス2.1%となった。

経営陣の見通し

経営陣は引き続き自動車保険の調整後コンバインド・レシオについて90%台半ばを目標としている。同社は、現行の保険料設定、成長施策、引受対応について、全国一律の手法ではなく市場ごとに個別に管理していることを強調した。

オールステートは2027年初頭に営業関連のAIツールおよび補償重視のパーソナル・エージェンティック・アシスタントを導入する見込みである。このアシスタントは、複数の保険会社の商品を比較し、補償内容の解説を提供し、ストレート・スルー・プロセッシング（STP：完全自動化処理）を支援することを目的としている。経営陣はサードパーティのパーソナルアシスタントとも連携できる可能性があると述べたが、市場の開拓ペースは不透明だとしている。

専属代理店は2027年半ばに3つの新運営モデルから選択可能となり、2028年1月1日に同モデルが発効する。経営陣は、この枠組みが2027年後半から2028年にかけて代理店網の規模拡大を後押しするとみている。

同社は、ALLIEやサイバーセキュリティなどのテクノロジー投資に資金を投じつつ、全体的な経費削減に取り組む姿勢を維持している。経営陣は、新プラットフォームの導入により今後数年間でレガシーシステムを順次廃止できると見込んでいる。

リスク要因と注視すべき分野

• 第3四半期の自然災害損失は前年同期比で7.1ポイント上昇し、損害保険のコンバインド・レシオ悪化の大半を占める要因となった。
• 自動車保険の損害コストは物損および対人賠償のインフレに直面し続けており、新規契約の増加やリスクがやや高いドライバー層へのシフトが事故発生頻度に影響を与える可能性がある。
• 経営陣は投資家に対し、支払備金の継続的な戻し入れを前提とした業績予想モデルを組まないよう注意を促した。支払備金は各報告時点における同社の最善の見積もりを反映したものであると説明している。
• AIの導入には、規制、プライバシー、サイバーセキュリティへの配慮が伴う。一部の用途では、規制当局からの追加承認やプロセスのさらなる透明性が求められる可能性がある。
• ALLIEをはじめとするテクノロジー機能への投資に伴いソフトウェアやコンピューティングの費用が増加する見込みだが、経営陣は将来的なシステム廃止によってコスト削減メリットが生じると期待している。
• オールステートは、ニューヨーク市場で成長戦略を再開する前に、同州でのASC商品の認可取得を待っている状況にある。

アナリスト質疑応答の主なポイント

アナリストの関心は自動車保険のマージンと支払備金の推移に集中した。経営陣は、自動車保険の調整後基礎的コンバインド・レシオが91.4%となり、目標とする90%台半ばよりも良好な水準を維持していると述べた。マージンの変動要因としては、顧客の支払い負担に配慮した施策、損害コストの上昇、事業構成の変化を挙げ、価格調整は選別的に実施していると指摘した。

支払備金の好転について経営陣は、その利益の大半が対人賠償および関連する無保険車・保険不足車補償の請求からもたらされたと説明した。迅速な顧客対応、早期和解、請求分析、コスト管理の改善が想定支払額の抑制に寄与した。経営陣は、今後も同様の備金取り崩しが続くとは想定すべきではないと強調した。

資本に関して、クリスチャン・ロウン最高財務責任者（CFO）は、親会社が保有する約90億ドルは概ね配分可能な資本であり、子会社への資金注入の必要はないと述べた。オールステートは過去12カ月間で株主に44億ドルを還元し、発行済株式の5.7%の自社株買いを実施した。

AIに関する質問は、販売網へのディスラプション（破壊的影響）、規制、採算性に集中した。経営陣は、オールステートのパーソナル・エージェンティック・アシスタントが、30社以上の保険会社を取り扱うAnswer Financialと連携する機能を通じて、オールステートおよび競合保険会社の双方の見積もりを提示できるようになると説明した。同社は、AIが地域の代理店や既存チャネルを自動的に代替するのではなく、補完するものになると見込んでいる。

決算説明会トランスクリプト全文

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決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day, and thank you for standing by. Welcome to Allstate's Third Quarter Earnings Investor Call. [Operator Instructions] As a reminder, please be aware, this call is being recorded.

And now I'd like to introduce your host for today's program, Mr. Allister Gobin, Head of Investor Relations. Please go ahead, sir.

Allister Gobin

Good morning, everyone. Welcome to Allstate's Third Quarter 2026 Earnings Call. Yesterday, following close of the market, we issued our news release and investor supplement, and posted related materials on our website at allstateinvestors.com.

Today, our management team will discuss how Allstate is creating shareholder value. Then, we will open up the line for your questions. As noted in the first slide of the presentation, our discussion will include non-GAAP measures for which reconciliations are provided in the news release and investor supplement. We will also make forward-looking statements about Allstate's operations. Actual results may differ materially from those statements, so please refer to our 2025 10-K and other public filings for more information on potential risks.

And now I'll turn it over to Tom.

Thomas Wilson

Good morning. Thank you for investing time in Allstate. Let's begin on Slide 2. Allstate's strategic objectives on the left there are to increase market share in personal property-liability and expand Protection Services by leveraging the Allstate brand, customer base and capabilities.

This quarter, operating and financial results were excellent, as you can see on the right, Property-Liability policy growth continued to increase and was 3.3% above the prior year. At the same time, the adjusted underlying combined ratios were attractive at 91.4% for auto insurance and 61.9% for homeowners insurance. Higher investment income and good protection services results led to adjusted net income of $2.5 billion or $9.76 per common share. We'll go through these results in detail after updating you on the longer-term value creation through Transformative Growth in ALLIE.

We'll turn to Slide 3, so we can discuss the progress in executing the Transformative Growth plan. As you know, Transformative Growth was initiated in 2019, and it has 5 components, which are shown on the left. It begins with improving customer value through more competitive prices and new products.

Our progress is shown on the right. Reducing expenses enables us to offer more competitive prices while maintaining attractive margins. New Property-Liability products that are affordable, simple and connected, or in our world of acronyms, ASC, are being launched. So the Allstate branded ASC auto insurance products are available in 46 states and homeowners insurance products are in 42 states.

Similarly, in the independent agent channel, the Custom360 products are available in over 40 states, expanding customer access by broadening distribution and increasing the sophistication and investment in marketing has also been successful.

As you can see on the right, new business is up 125% to 12.4 million items and is now equally split between the 3 primary distribution channels for personal lines, exclusive agents, independent agents and directly from call centers or on the web. That's supported by over $2.2 billion in marketing with sophisticated analytics and an improving return on allowable acquisition costs.

All of this required a new technology ecosystem, which is being deployed, including an orchestration layer, which enables us to rapidly leverage artificial intelligence capabilities. So several years ago, we designed and began building Allstate's Large Language Intelligent Ecosystem, or ALLIE, and its rollout is accelerating. A few of the larger impacts are shown on Slide 4.

Like most companies, we're using AI to do an increasing amount of coding, which as you can see, was over 12 million lines of code in the third quarter, which is 3.6x higher than the first quarter. In July, we successfully launched Ask Allstate, which handles a variety of service-related inquiries for auto insurance customers with excellent outcomes. 15% of the ASC chat volume has been handled by Ask Allstate and customer satisfaction is high. Smart Concierge at Allstate Protection Plans has handled over 1 million calls. These capabilities are being extended to more products and services such as claims, as you can see on the right.

There's also a much broader adoption of AI capabilities really throughout the whole company just beyond these tools with 97% of employees are now certified as AI-enabled and adoption is happening in all areas of the company. So after the launch of Muse this summer, many of you asked how this impacts our go-to-market approach, which is laid out on Slide 5.

This summary is this creates opportunity for Allstate and we'll be launching sales-related AI capabilities in early 2027. To put this in perspective, though, let's start with customers or consumers what they want in buying and how they like to use protection. So the top of the slide shows how consumers choose to purchase protection. Starting at the left, some consumers are brand sensitive and purchase through exclusive agents or directly from companies.

So in the exclusive agents segment, State Farm and Allstate over-index in market share. For those customers that are brand sensitive and prefer to purchase directly, GEICO and Progressive over-index in market share there. Allstate has been increasing share in this segment since we replaced Esurance with the Allstate brand and began executing Transformative Growth.

Moving to the middle, there are customers who prefer a choice of carriers and want someone to provide advice and handle the transactions. They typically go through independent agents. Allstate serves this segment with the National General brand and through Answer Financial, which is a direct independent agency that writes over $500 million of premium annually with representing over 30 insurance companies.

The advent of personal agentic assistants, or PAAs, gives us the opportunity to serve consumers who prefer to have a machine to handle their transactions, such as Muse, Spark, [ Dot ], as you go down the list. The introduction of PAAs creates opportunity for Allstate given our capabilities and an upcoming launch of our own personal agentic assistant that's focused on protection.

So let's start with capabilities on the bottom left, and then we'll discuss PAA's value proposition. So to thrive in this world of highly sophisticated agents, you need sophisticated pricing since you're likely going to do more price comparisons. Secondly, some consumers may still have a brand preference or want a local agent, so we have a broad set of opportunities for them. When ALLIE is fully deployed and the PAAs have expanded their capabilities, this will give customers straight-through processing on servicing claims.

Our brand and marketing expertise are being utilized to engage with LLMs. So essentially, we're now marketing to machines and people, not just marketing to people. These capabilities also give us the opportunity to be offensive in leveraging capabilities by launching a PAA that's an expert in protection that still meets consumers' needs and their desires for fewer clicks. Its value proposition includes more accurate pricing given our insurance expertise than the general purpose PAAs will have. It will also provide consumers with context on the type of coverage that's right for them and straight-through processing.

In addition to serving customers, our PAA will serve other PAAs as shown on the top. In addition to the benefits of accuracy, context and ease, it may also require less compute time for them. For example, today, a lot of the PAAs go to a variety of websites to get quotes. By working with Answer Financial, we can review multiple companies at once, reducing compute requirements. Insurers also benefit from Allstate Financial's capabilities because they can target more customers and optimize their risk-adjusted returns.

Now while it's unclear how quickly this market will develop, this will enable Allstate to provide increased value for customers. We've been building this platform for over a year, the foundational technology is in place, the PAA is in development, the algorithms are being tested and our relationships with publishers and insurers continue to expand and strengthen. So look for this to come to market in early 2027.

Now Chris is going to cover third quarter results, but let me begin by welcoming Chris. We're thrilled he chose to join us in August. As you know, he was the Chief Financial Officer at CoStar Group before he joined us. He brings tremendous capital markets expertise from his time at Freddie Mac and Morgan Stanley, and his leadership is already making a difference for us. Chris?

Christian Lown

Thanks, Tom. It's a pleasure to participate in my first Allstate earnings call. We had a strong quarter, and we will cover results in a moment. Before we do that, I want to spend a minute on how we communicate and evaluate our performance. Since joining Allstate, our financial reporting cadence has been one area we have looked at closely.

The SEC has proposed giving companies the option to report semi-annually rather than quarterly. At Allstate, we are not going to report less frequently. We believe quarterly reporting provides important transparency, especially as an investor managing a nearly $90 billion investment portfolio. However, Allstate does not manage the business to deliver short-term quarterly results. So the concept of long-term value for shareholders aligns with our approach. That is why we are adding more emphasis in our presentations on longer-term trends.

We intend to continue reporting quarterly, but we also want investors to focus on longer-term trends that are more representative of how we manage the business, evaluate performance and deliver value to shareholders.

With that, let's review results on Slide 6. Allstate is delivering increased growth and attractive returns. Starting with the quarter in the 2 middle columns, revenues were $17.3 billion. Property-Liability net premiums written increased 2.5% to $16 billion. Total policies in force increased 3.9% with Property-Liability policies up 3.3% and Protection Services up 4%.

Investment income increased by 24%, reflecting higher yields and growth in premiums. The Property-Liability combined ratio is 86.6%, 6.5 points above the prior year, primarily due to 7.1 points of higher catastrophe losses, partially offset by 2.4 points of more favorable non-catastrophe prior year reserve releases. Adjusted net income was nearly $2.5 billion or $9.76 per share. This generated a 39.7% adjusted return on equity.

Let's move to the right-hand column to put this in perspective to the last 12 months. There are 2 important trends related to premium growth, average premiums and policies in force. There has been a 2.7% decrease in average auto insurance premiums over the last year as the percentage of new ASC products increases.

On the other hand, homeowners insurance average premiums continued to increase, reflecting increased loss costs and higher home values. As it relates to policies in force, the growth rate has increased in each of the last 4 quarters. And at 3.3%, we now believe it is higher than the underlying growth in the number of cars and homes.

Investment income has been steadily increasing with a larger portfolio and reinvestment at higher rates. We extended duration, locking in higher yields for longer.

Underlying margins are approaching target levels as Jesse will discuss. While catastrophe losses were higher this quarter, on a trailing 12-month basis, they were broadly consistent with the prior year. Prior year net income benefited from the sales of the employer voluntary benefits and group health businesses in Q2 and Q3 of last year.

Now I'll hand it over to Jesse to discuss the Property-Liability business.

Jesse Merten

Thank you, Chris. Let's look at the Property-Liability results on Slide 7. Property-Liability generated strong results in the quarter with continued policy growth, premium expansion and excellent underwriting performance. Policies in force increased 3.3% from the prior year with 3.4% growth in auto insurance and 3.3% growth in homeowners insurance. Premiums earned increased 3.8% to $15.1 billion in the third quarter compared to the prior year quarter, reflecting increased policies in force and higher average homeowners insurance premiums.

The Property-Liability combined ratio was 86.6% as both auto and homeowners insurance recorded profitability was better than our targeted levels. The auto insurance combined ratio was 83.2%, which benefited from 9.1 points of prior year reserve reestimates. The underlying combined ratio was 89.8% and benefited from reserve adjustments related to claims reported in the prior 2 quarters of this year, which I'll provide a little more detail on in a later slide.

Homeowners insurance margins were strong with an 89.5% combined ratio despite higher catastrophe losses because of an underlying combined ratio of 60.1%. Property-Liability underwriting income was $2 billion for the quarter.

Turning to Slide 8, let's dive deeper into the continued momentum in policies in force growth. Starting on the left, improvements in customer acquisition capabilities have enabled increased advertising while maintaining attractive returns on investment. Advertising spend has increased from $638 million in 2023 to over $2 billion for the latest 12 months. The center of this slide shows how advertising investment paired with broad distribution is translating into new business growth.

Auto insurance new business is shown on the top chart. New business issued applications increased 59% from 5.9 million in the third quarter of 2023 to 9.4 million in the most recent 12 months, with increases across all 3 distribution channels. There's also momentum in homeowners insurance. New business increased 39% from 1.1 million policies to more than 1.5 million over the same 3-year period.

Allstate agents continue to bundle at record levels. We're having success in the direct channel with affordable, simple, connected homeowners insurance products. The result is shown on the right of the slide. The growth rate of auto insurance policies in force increased from 1.3% last year to 3.4% over the latest 12 months. The longer-term trend reflects a decision made to reduce growth given post-pandemic margin pressure.

Homeowners insurance policies in force have been increasing over this period and increased 3.3% in the latest 12 months. Expanded customer access, increased marketing investment and new products are generating market share growth.

Slide 9 provides a deeper look into auto insurance margins. The chart shows auto insurance premium per policy compared to adjusted underlying loss and expense per policy. The dark blue line represents annualized average premium. The red line represents underlying loss and expense adjusted for prior year and prior quarter reserve reestimates. As you can see, Allstate has improved affordability while maintaining strong margins with the blue line of average premium being above the red cost line and the blue line being relatively flat. The spread between the 2 demonstrates the strong margins we're generating in auto insurance.

Annualized average premium per policy was $1,474 in the third quarter as actions to improve affordability for customers have slightly reduced average premiums. Adjusted underlying loss and expense per policy was $1,347. Shown at the bottom of the slide, the recorded combined ratio for the third quarter was 83.2%. The underlying combined ratio was 89.8%. But as I mentioned, this included favorable development on claims reported in the first half of 2026. Adjusting for this, the combined ratio was 91.4%, better than our mid-90s target.

Turning to Slide 10. To keep costs down, we're focused on improving productivity while investing in technology. We've lowered the cost structure by eliminating, outsourcing and digitizing work; reducing our real estate footprint; aligning distribution expenses with customer value; and improving operating efficiency. We're committed to reducing costs and have more to do, but good progress has been made. At the same time, more technology investments are required. This includes investments in ALLIE and cybersecurity as well as managing higher software and computing costs. These investments will enable us to retire legacy technologies and focus more resources on the new technology platform.

With that, I'll pass it to Mario.

Mario Rizzo

Thanks, Jesse. Turning to Slide 11. The Protection Services business continues to profitably grow while expanding Allstate's customer value proposition. Protection Services has 178 million policies in force, an increase of 4% from the prior year. Over the last 12 months, premiums earned increased 7.5% to $3.5 billion while adjusted net income increased 4.7% to $221 million.

The 5 Protection Services businesses support customers across a broad range of needs. Protection Plans offers coverage, both domestically and internationally, for products such as mobile phones, electronics, major appliances and furniture and is distributed through over 30 major retailers like Walmart, Costco and Home Depot.

Roadside Services provides towing, jump-start, lockout, fuel delivery and tire change services through nearly 1.8 million customer rescues per year. Roadside Assistance is offered as a bundled option with affordable, simple and connected auto insurance products and through third-party partner relationships.

Dealer Services provides vehicle service contracts and other protection products through more than 1,100 automotive dealers. These products protect vehicle value and reduce the cost of unexpected repairs.

Identity Protection extends our promise to customers into an area of growing need, namely their digital protection. This business helps customers protect and restore their identities and offers consumer cybersecurity and digital safety services.

Arity is a telematics-enabled mobility insights business. Its capabilities are being expanded through the acquisitions of INRIX and Replica. With over 3 trillion miles of driving data, mobility intelligence capabilities provide a better understanding of how people move, improve risk insights and generate third-party revenue. The chart on the right shows the growth of this segment.

Premiums earned and other revenue increased from $2.1 billion in 2021 to $3.5 billion over the trailing 12 months, reflecting annual average growth of 13%. Policies in force increased from $148 million to $178 million over that same period. Adjusted net income was $221 million over the last 12 months compared to $218 million in 2025. This segment is continuing to expand while maintaining profitability.

Protection Services expands our addressable market, broadens our distribution footprint, deepens customer relationships and creates additional opportunities for growth.

And now I'll turn it over to John to discuss the investment portfolio.

John Dugenske

Thank you, Mario. Let's move to Slide 12, where we see strong investment performance is delivering earnings growth. Starting on the left, the portfolio is anchored by interest-bearing assets, which represent 80% of the $87 billion portfolio and provide a durable base of recurring income. Equity securities and performance-based investments complement that foundation with growth-oriented exposure. Together, this balanced mix is designed to generate consistent income while delivering attractive risk-adjusted returns on capital.

On the right, since 2022, net investment income has increased 67% to $4 billion on a 12-month trailing basis, while the contribution to adjusted net income per diluted share increased from $7 to $12.20. Quarterly returns obviously vary across market cycles. Higher interest rates this quarter reduced fixed income unrealized valuations, resulting in a negative 2.1% return.

Looking across cycles, the portfolio has generated 4.9% annualized return over 3 years and 3.9% over 10 years. We view our investment expertise as a competitive advantage, which is integrated into enterprise risk and return decisions. We actively adjust risk and position the portfolio to create value for Allstate and its shareholders.

Now let's turn to Slide 13, which shows how our broad investment capabilities translate into attractive performance across market cycles. Our integrated investment platform combines enterprise-level risk and return decision-making with active portfolio management. This means opportunities are pursued in the context of the entire company, considering market conditions, relative value, capital and risk capacity.

Internal teams provide fundamental research and analytical depth across a broad range of asset classes. We also use external managers to access differentiated expertise and scale. Together, this has resulted in first and second quartile performance across key asset classes, as you can see on the right. As an example of active management was a reduction in investment risk in 2022, as negative underwriting income and prospects for additional inflation increased overall enterprise risk.

In 2025, as underwriting profitability improved and economic uncertainty was reduced, investment risk was increased by adding duration and $4 billion of public equity, as you can see from the charts on the bottom. These actions demonstrate our ability and willingness to adjust risk as market conditions and the company's risk profile changes.

Now I'll turn it back over to Chris.

Christian Lown

Let's move to Slide 14 to discuss how our capital allocation framework consistently creates value and generates attractive shareholder returns. Allstate deploys capital in multiple ways to create shareholder value, investing in existing capabilities, acquisitions and divestitures and returning cash to shareholders. Investing capital in existing capabilities leverages Allstate's market presence with well understood and attractive risk and return opportunities.

We also use acquisitions and divestitures to optimize shareholder returns. We have a successful track record of acquiring companies with complementary capabilities, generating returns well in excess of our cost of capital. For example, the acquisition of SquareTrade expanded protection offerings and brought strong retail distribution partnerships. National General strengthened our independent agent presence. The recently announced acquisitions of INRIX and Replica will expand mobility intelligence solutions at Arity, providing another source of long-term growth. We also divest businesses to redeploy capital.

Finally, the third component of our capital allocation framework is returning cash to shareholders. In the third quarter, we returned $1.5 billion to shareholders. Over the last 12 months, we returned $4.4 billion to shareholders and repurchased 5.7% of outstanding shares.

Wrapping up with Slide 15, we are delivering excellent operating results and increasing shareholder value while successfully executing Transformative Growth and deploying ALLIE.

And with that, I'd now like to open the line for Q&A.

Operator

[Operator Instructions] And our first question for today comes from the line of Josh Shanker from Bank of America.

質疑応答

Joshua Shanker

Some questions on margins. If we look at 3Q '25 and 3Q '26, the auto underlying loss ratio deteriorated by about 600 basis points. It looks like earned pricing is down about 3% year-over-year. Can we talk about some of the severity and frequency trends? It just seems like a pretty high degree of deterioration for such a short period of time.

Thomas Wilson

Josh, let me start and then Jesse will fill in. First, I'd point out 91.6% (sic) [ 91.4% ] is still well below our target of mid-95%. So we're in a really terrific return. When we decided to move that combined ratio up more towards the target, it was to drive growth and you can see we did that successfully. But that doesn't mean that, that's -- the rate of trajectory is going to be, you can like extrapolate from this a year ago to next year and get the same kind of deterioration. This is in our hands. We choose what we choose to do, and we're happy with where we're at.

Jesse can talk about frequency and severity.

Jesse Merten

Yes. Thanks, Tom. I mean first, I would start where Tom started, which is 91.4% on an adjusted basis is still better than our 95% target. And there's a few things that go into that. It's more than just the underlying loss trend. It's also what we've done from a top line perspective to help affordability for our customers, right?

So last year, we talked a lot about the SAVE program that included shifting customers to our most contemporary affordable, simple and connected products, which is better experience, more sophisticated rating plans and updated features. We've adjusted deductibles. We adjusted limits. So we did a lot to save our customers' money, and you're seeing that in the average earned premium trend, which sort of has flattened out and was down a bit this quarter.

So the underlying loss trend, we look at that at a very granular basis. A couple of quarters ago, I talked about a multifaceted system that we use to manage the business, which includes operational levers and an intelligence layer, which is advanced analytics that helps us decide what to do on a state and substate basis as well as an organizational structure.

We have a go-to-market structure in place that's watching those underlying trends, Josh, on a very granular basis. We disclosed pure premium in the investor supplement in the deck, you can see what the trend looks like. I think we all observed that there is inflation in the environment, whether it's physical damage, bodily injury trends. There's clearly inflation out there, and we're watching that to make sure that we approach those targeted margins, again, mid-90s.

The other thing I would highlight is we did take rate. It's disclosed in the investor supplement. In 39 locations, we made rate adjustments and had a 0.4 point impact overall on auto. So we're addressing margin in a very granular way and watching what those trends look like, not just on a national basis, but on a state-by-state, market-by-market basis.

Joshua Shanker

And then look, what you do is very difficult. I get it. I'm not -- I'm being a little picky here, but I'm just trying to understand how reserving works. The first half of the year has proven intra-year favorable by 160 basis points or at least -- 160 points to the third quarter. And I noticed that it's just 1 quarter, but 4Q '25, slightly unfavorable as it's developed. These things are hard to get exactly right. But maybe you can talk a little bit about how the loss picks are initially set and when information comes in and when you react to it?

Thomas Wilson

Let me start and then Chris can jump in. First, of course, we always try to make sure it's as good a number as we think we can give you at the end of a quarter. And we try to estimate, okay, what do we think we owe for the stuff that's out there. There's, of course, a whole bunch of different kinds of claims, Josh. So like a physical damage claim is settled within 90 days. And so you kind of get that one right away. Property damage a little bit longer, but still relatively short. And then the biggest swing, of course, you saw in the reserves are really bodily injury, where it takes about 4 years to get about 80% paid out on one cohort of claims as that develops. So you have that going on.

At the same time, you have -- we're looking at the historical math and what are the trends. We're looking at the external trends and what's going on there. And then we have claim practices that we're constantly getting better at. So we feel like we've done a really terrific job over the last couple of years under some new leadership in claims, managing our costs, and you see that coming through.

Chris, do you want to talk about the reserving process some and how you come up with a number?

Christian Lown

Yes. So thanks, Tom. I think a few things. Obviously, it's a highly governed process. Obviously, we've been doing it a very long time. I think that we've been making a lot of meaningful changes over the last couple of years. We brought machine learning in. So we're getting better, and we're getting faster. Tom mentioned, we have some new leadership in. I'd also point out that our trends aren't that dissimilar to the rest of the industry. There's a lot going on, but I think we feel very good about the reserve when we put up. It is our best estimate at the time we make it. And obviously, the trend has been beneficial to us.

Operator

And our next question comes from the line of Gregory Peters from Raymond James.

Charles Peters

So I'm going to focus principally on Slides 4 and 5, maybe a little bit on 10. But on Slide 5, you spent some time in your opening comments talking about the launch of the agentic assistants. I'm sure there's a considerable amount of effort put forth to get you to this place. Can you provide some perspective on how you're going to be measuring the success of the launch? And it's a loaded question. Talk about some of the regulatory considerations, the cybersecurity issues and maybe customer experiences that are rolled up into this launch.

Thomas Wilson

Well, they didn't tell us that it was one question, but less than an hour answer.

Charles Peters

Sorry about that, Tom.

Thomas Wilson

No, that's all right, Greg. I appreciate the comprehensive nature of it. Let me take a shot at some of it, trying to get to where you're headed with the underlying stuff. First, we think this will be really good for customers. Like we're -- I think consumers are going to like it. None of us like to do more clicks than we have to. Insurance is not a high-engagement product. So people are not waiting to get in and scroll our website. And so trying to find a way to increase our connectivity with them and do a -- make it easier and better and effective for them is really something we've been working on for a decade. And this is just another leg.

So for example, if we get to mobility intelligence, we do crash detection. We want to have -- we want to give customers more value every day in as many ways as we can, including leveraging technology, and having a PAA will enable more people to come to us. If they don't feel like calling an Allstate agent or feel like getting on our website and they just want to have a PAA do that, we're fine with that. And so we think it's going to be good.

I don't know how rapidly it will grow. But my sense is that the consumer demand is going to be strong enough. It will grow. We'll figure out stuff like what do we do with the regulators, what do we do with privacy, what do we do with cybersecurity as we go. We are actively working with regulators now on AI. So we've been out proactively, not just on PAAs, but on claims and everything else, saying, "Let us tell you what it can do. Let us tell you how it can make our customers happier, how it can reduce their costs?" And so we're working with it.

There's a bunch of things that AI can do inside existing regulations, like we don't need new stuff. There are some things that we will need to get additional regulatory approval to do. And there are some things we're going to have to do to make sure the regulators feel like they can look back at our processes and make sure we're actually doing what we said we did because it's being done at Lightspeed today. So there's work to be done, but the benefit to customers and the economic rationale is going to move this train down the path. This is going to happen. So we decided to get in on it, accelerate it, go as fast as we can, which is why we started leaning into the PAA.

We don't -- in terms of the economics of a PAA for us, we think it's going to be fine. Like we're making money at Answer Financial. We're making money in our other business. People are willing to pay you when you add good value. So we don't know exactly how it's going to shake out, who gets what part, all kind of stuff, but we're comfortable that we have a value proposition that works for our customers.

Second to that, we believe that this will actually help the existing PAAs out there. I mean if you're running one of these, like Muse, for example, and somebody asked you an insurance question, and you got to go to 8 different websites to get quotes and you get blocked at some, you don't get blocked at others. We're like, let's make it easy for them. And we think we can reduce their compute costs. We can make them do a better job for their customers. So we feel very positive about where this might head. But don't know what the pace will be, but we know we're not going to -- we're going to -- our intention is not to be behind.

Charles Peters

Yes. Just related to this, on Slide 10, you talked about increasing your investment in technology. You call it ALLIE. You call out higher software and computing costs. So how do we reconcile this rollout and what you're doing with agentic AI and the overall cost structure of Allstate?

Thomas Wilson

On the technology that we need to run our existing business, our commitment is to continue to reduce overall expenses while funding that. I'm not -- I mean, I might go back to Josh's saying that it's like reserving. It's not easy, like we get paid to do this. And we've made a lot of changes in the way we deploy technology. So today, we have 25% less people in technology than we did 4 years ago, and that's not just using AI. Like we just -- we -- most of that happened long before we started using AI to code. So we're constantly trying to come up with new ways to do it.

As it relates to what it costs to launch it and the PAA and what we're doing, maybe I'll ask Elizabeth to talk a little bit about where we're going with branding, and then I'll share some conversations Chris and I have been having about how to give you transparency.

Elizabeth Brady

Sure. So we're still evaluating names to determine what we should call our PAA. But we feel really confident that we have depth in this area given our track record of building brands that are both broad-reaching and recognized and also trusted, which is really important in this space.

What really matters most is that customers know that our personal assistant exists, they know they can trust it, and they see the value that they get from it. So our PAA will sit directly in the flow of commerce, which gives consumers a new way to shop for insurance and buying. And it has the benefit, as Tom had mentioned, of end-to-end processing, which means you don't need to leave the experience in order to get your insurance completed.

We're also interacting with other personal assistants. As you all know, there's many people who are starting to think about how they incorporate personal assistants into their day-to-day lives will be in that flow and connected to consumers' personal assistants as well. So when we launch, we think that we have a strong acquisition tool, and we have a strong customer connectivity tool that is trusted for shopping experiences in insurance. So it should be a net positive for us.

Thomas Wilson

And as it relates to the cost to do this, Chris and I are talking about how can we show that to you. So it might not show up in the existing expense ratio, maybe we'll break it out separately, maybe we'll footnote it. I don't know. But we'll make sure, Greg, that you can understand what we're doing in the left-hand side of Slide 5 and what we're doing on the right-hand side.

Christian Lown

Yes. The only thing I'd add is that all this investment will allow us to decommission a number of systems over the next few years. Again, we're -- as Tom mentioned, we're highly committed to reducing costs. I see a lot of significant unlocks over the next couple of years. So there will be benefits that will come through away from this as well, which we're excited about.

Operator

And our next question comes from the line of Michael Zaremski from BMO.

Michael Zaremski

On the capital discussion, just wanted to clarify the $9 billion of parent company holdco capital. Is all -- does any of that need to be or potentially need to be put down into any of the subs? Or is that mostly free and clear? Obviously, you're accelerating some of your policy growth. So just curious.

Christian Lown

Yes. It broadly equates to deployable capital. There isn't a requirement to push any capital into the subs.

Michael Zaremski

Okay. Perfect. And my follow-up is about the accelerating auto insurance policy growth. I think in some of your -- we can see where it's coming from exclusive agent versus independent versus direct. It seems like it's coming from all of the above. Is -- maybe you could provide some texture. Is it -- is the ASC product a big driver? Are you -- is advertising spend maybe getting a higher ROI? Any additional, maybe new states, right? New York might be a better state today versus a year ago? Just any texture would be helpful.

Thomas Wilson

Let me start, and then Jesse can jump in. So we did show it comes from all 3 areas. That said, as we look forward, the direct, we believe, will continue to grow, and we've made real progress in that segment, as I mentioned, and we're talking about 5. We think there's more room to grow there. Independent agents, we feel good about that.

Jesse should talk a little bit about the transition of Allstate agents to new business models. And then he can also talk about New York, which -- or maybe I can just answer. New York, we're still hoping to get our ASC product approved in New York so that we can go back into a growth mode because, as you know, we have a really significant share there, particularly down state, and we can turn on the growth engines there when we get our new product, not until then.

Jesse Merten

So to build on that, maybe a couple of things. One, I would start with kind of as evidenced by the nature of your question and all the things you were wondering if they're unique drivers. There isn't one single answer to the growth equation. There's a bunch of different answers based on line of business, distribution channel and really the go-to-market system that we have in place.

So a lot of this is organization that we have in place to make sure that we're optimizing across channels, products and within the system. So I just think it's important that was built. We put it fully in place in this version a year or so ago. I think some of what you're seeing through this growth in adaptation is the result of that go-to-market system that we have in place.

If you go a step below that, Tom mentioned is an example of what we're doing in the exclusive agent channel. So when you look at the numbers year-over-year, one of the things you have to sort of take note of is that we have about 5% fewer exclusive agents in the system this year versus last year. So they continue to be more productive. That's important. And we're doing this through a period where really we're investing in the exclusive agent system to transition them to the future.

So we're intentionally shifting the agency capacity away from transactional work and service work towards higher-value activities that we know customers value, whether that's new customer acquisition, protection reviews, claims advocacy, basically building deeper relationships, all supported by modern, digital and AI-enabled tools, right? So we're taking the agents who are -- have been a critical component of our success and we're bringing them into the future.

We recently announced 3 new operating models that they're going to have an opportunity to choose between, effective January 1, 2028. So middle of '27, our agents are going to be able to pick from 3 different -- 3 differentiated operating models. And we think all of them will set them up for the future. One is sort of one of the models that we're calling the personal protection agent, as an example, is a simple, stable, virtual first model where an agent does a lot of the work by themselves.

We have another model that's going to be more geared towards an agency that has a small team that's grounded in a local community. We're calling that the managing agent model. And then we have a separate model for agents that want to meet a broader range of customer needs, maybe have some dedicated specialized resources, maybe locations across several markets, and we're calling that market managing agent.

A key component, though, is the fact that we're providing choice. We're providing a system of support behind the agencies so that they have a very clear vision for the future. What I think that's going to allow us to do is to begin growing the agency footprint in late 2027 and into 2028, as we have clarity on models, we have a support structure for the future and our agents see, not just existing agents, but potentially new agents see the fantastic opportunity that there is for them to meet -- to create customer value and meet more customer needs.

So that's sort of an answer about what's going on in EA within the overall growth landscape. But again, to your question, outside of Tom's response on New York, I wouldn't pinpoint any one thing. I would pinpoint the way that the system is working to generate the trends that you see.

Thomas Wilson

So let me give you an example of maybe just from July conversation, Jesse and I were having. So there are 11 states, about 13% of the population, which are growing in the mid-teens. Then there's another 23 states that maybe make up another 40% that are a decent amount above our average. And then there's obviously ones that are below that. So Jesse is looking at the ones below. He's looking at the ones above. He looks at the ones above, and he says, "Hey, what's our combined ratio look like?"

So yesterday, we were talking about some higher -- a couple of states that have some higher risk stuff and they're growing and the combined ratio is currently projected to be something above the target. So he goes in and he changes prices in those states. So it's -- just to give you something tactical, like he's just managing this all the time to try to get to what we commit to you, which is that at 95% combined ratio, this business generates a return on economic capital that's really attractive and above what the industry generates. So that's the machine we're running.

Operator

And our next question comes from the line of Pablo Singzon from JPMorgan.

Pablo Singzon

There is more regulatory scrutiny these days in 2 areas. So one is the cost of insurance the consumers pay and claims practices. Can you talk about Allstate's approach to these 2 topics and sort of your confidence in your ability to respond to increased regulatory attention?

Thomas Wilson

Yes, Pablo, let me maybe make it even more contemporary and just talk about what just happened this week because that may be a follow-on from somebody. So the answer is we think we're well -- we're in good shape to manage all of it. We don't think we have any big problems. But the impact of the blue wave is most important at the state level where we're regulated. So changes in governors, legislators, attorney generals, all that makes a difference to us rather than a flip in D.C. So 5 governors changed, 7 legislators flipped.

That said, when you're regulated at the state level, you don't have any favorites. We don't -- like we're not -- we try to offer our political activity. We're pretty balanced between Ds and Rs. And we just want people that work with us on important issues. Let me give you an example. Same topic, different parties, different states. So in Florida, the Republicans pushed through tort reform, and we were able to lower our prices for customers by 6%. And we feel really good about that. They feel good about it. It goes to the issue you're talking about, affordability.

In New York, Governor Hochul just got reelected. She pushed through some stuff on tort reform. That's not yet manifested itself in day-to-day claims costs. So we got to work with her administration and the regulators in New York to make that a reality. So we kind of work both of them. The broader issue really is you got all new people, all with different agendas, different coalitions. And so that kind of means we got to just lean in.

Now we have people who work on every state with the state legislators. So we have -- under Chris DeBiase, we have a government relations group, and they work in all these states. And the issues are typically availability of homeowners insurance, affordability, both auto and home. And some focuses on specific activities like claims and privacy. And our goal is just to make sure we have affordable good products for customers. We work with people the way they want to work with them. And our big priority right now is trying to take on billboard lawyers who have decided that insurance is a stream of money they'd like to extract some wealth from. And so we're working aggressively to try to do that. But we're just trying to give the right product for our customers.

At the federal level, there's been some conversation about the issues you're talking about, but the solutions are typically at the state level. So we respond to those. We work with whatever Senator or Congress person has an issue. But the solution really comes by getting something done at the state level where we're regulated. We are hopeful that with this change in Washington, there's a couple of issues we can go back to. One is FEMA. We need to ensure it has the capacity to deal with events that are bigger than can be handled by any local or state government. And I'm not saying what was done was wrong. I'm just saying we just need to make sure looking forward, it's got what it needs.

And then NFIP reauthorization is still on the table, and we're a big servicer for NFIP, a bunch of our customers buy it. So obviously, we want it to be reauthorized. But we'd also like to see there's a potential to get some longer-term solutions here. One of the problems with flood is not enough people buy it. And so if we can come up with a way to work with whatever party wants to take on those issues at the federal level, we'll do that.

Pablo Singzon

That was helpful detail. And then my second question. Many other large insurers with captive channels are changing how they compensate their agents and what sort of work is expected of them today, right? So the question is, are you making similar changes currently? Or is most of that work and restructuring behind you at this point?

Thomas Wilson

Well, if you're referring to what our big competitor to the South did, we made many of those changes before. So we would say we're past those. But I think Jesse started to talk about what we're doing with the exclusive agents. Maybe you want to give a little color on that.

Jesse Merten

Yes. I mean, I would agree with Tom that a lot of the changes that have been made across the industry are things that we did a while back. We continue to work with agents, and we will modify the compensation program to adjust for the work that they do. I mentioned that we're taking a lot of the service-related work out of the agencies because that isn't what generates customer value. We want to free them up to do the value-creating activity for customers. And so we'll adapt our compensation programs to reflect the work that they're doing and to incentivize them to drive and deliver the value that customers are willing to pay for.

So I think rather than broad-based change like you've seen from some of the competitors, we're going to continue to refine our compensation program to align with what customers value because we think that's what's important. It affects affordability, and it's really a customer-focused approach to looking at compensation where agents can still make a great return on their investment in their agency, but we can align -- better align what our customers are paying for distribution costs with the value that's being delivered.

Operator

And our next question comes from the line of Andrew Kligerman from TD Cowen.

Andrew Kligerman

It looks like you've got a lot of outstanding initiatives at Allstate and lots to follow up on. As I look at this quarter specifically, a couple of things I wanted to follow up on that Josh was touching on earlier. With regard to the prior year reserve releases, 9.1 points this quarter plus another 1.6 Q-to-date. And then if I look at the second quarter, it was 6.6 points; first quarter, 8.8%; fourth quarter, 7.5%. The gist of it is I'd love to know more specifically what exactly is driving these releases? And maybe should I expect to see more of this in the coming quarters? It looks great. It's a great situation. So I'm wondering if I should model for it. But I'd like to know what actually is behind these releases specifically.

Thomas Wilson

Let me take a shot and Chris can jump in. First, I wouldn't model anything. We think the number is exactly what it should be. And if we've got it right, then you would have zero next quarter. And our intention is to put up what we think it will cost. Now what's happened, and you quoted some numbers there, which are a lot relative to the combined ratio. You can also look at it relative to the reserve balances, which are slightly higher than that or a lot higher than that. But nevertheless, it's a lot of money. The good news is that it's positive and we're settling claims for less.

So the net of all that is like we just think we're going to pay out less money on these claims than we did before. There's a bunch of work we do in claims to try to make sure we do that. So for example, we try to get to customers quickly after they have an accident because most of these reserves and the releases come from bodily injury claims, not from physical damage.

Remember, I was talking earlier, physical damage kind of happens right away, and you can adjust those relatively quickly, which I think a little bit of this quarter versus the prior 2 quarters of this year was a little bit of physical damage because we're doing better at controlling how much it costs to fix a car and making sure there's not extra cost loaded on to it. But that said, on the bigger trend, it's all bodily. It's not all, but it's mostly bodily injury or which is related to uninsured motorists and UIM as well. So the -- and that comes from trying to get there early, for example.

So what we find is the speed with which trial attorneys get to somebody who has an accident these days using their data and analytics capabilities is unbelievable. I'm not even sure how they get it done because I'm not sure how they even get the data because I'm not sure it's all legal. But that's -- I'm being defensive about it. But the big law firms have data and analytics people, and they're out there crawling around. And so they get to a customer right away, and they say, "Hey, buddy up with us, we'll get you more money." That stretches it out. So what we do is we try to get to them ahead of time, or we try to settle it faster because we say, "Let's just not have this one delay linger and wait because some lawyer wants to keep running up fees. Let's settle this thing faster."

So there's a variety of things we're doing to try to control costs, pay customers what they owe -- what they're owed. And remember, most of these bodily injury claims are people that our customers got into an accident with and hurt. And everything that we have to incur for them, our customers have to pay for it in the end. So we're trying to make sure we pay what our customers really owe and no more, no less. So it's really no more complicated than trying to manage it that way.

Chris talked about, there's lots of math. I don't know if you have questions about how the math is done. But -- and Chris has also got -- we've got Deloitte & Touche, KPMG. We've got enough eyes on this thing where we're always looking at to make sure that it is as accurate as it can be. But I would not forecast in your earnings estimate reserve releases in the future. It's not the way we run the place.

Andrew Kligerman

That was very helpful. And then just help me square frequency and severity. Could you give any detail on what you saw in the quarter with respect to frequency and severity? And then I want to square that with written premium impact. So you had 0.4% impact of rate on written premium this quarter. Last 2 quarters, it was flat. So I'd like to just kind of square frequency and severity versus what you're doing in rate.

Jesse Merten

Well, it all works together, right? I think that you're hitting on the right issues. And Tom mentioned earlier his example of looking at all the different states. So what you see in the 0.4 is 39 locations, which means we're taking rate across a number of states to address the underlying loss trend. We don't break out frequency and severity, as you know. But you do see, whether it was in the slide or in the supplement, what our average loss and expense ratio is doing. It has been ticking up. There's a frequency and severity component to that.

I mean you know overall, miles driven continue to trend down. We're seeing a little bit of frequency change in our book due to mix shift. Again, I won't put a number on that. But as you -- whether it's mix shift towards more new business, whether it's mix shift towards slightly higher risk drivers, that all is unique to the book that we're running. And again, not to be a broken record here, but that's state by state, market by market, where we're looking at what those trends are, how they develop alongside the severity trends, and we make adjustments. And those adjustments are what you're seeing in the rate take and in the 0.4 this quarter, which is we have some markets where we think we need to start to take some rate to offset the loss cost trend. So again, it's very granular. I know probably doesn't put a number on exactly what you're looking for, but that's the way the system works.

Andrew Kligerman

But you feel like you're pretty close to frequency and severity in terms of not needing to take much rate?

Jesse Merten

The forward trend. I mean we're taking rate we need by market to address frequency and severity trends knowing that we have a mid-90s combined ratio target that we want to get to. We have a rate trend that -- you've heard me say a million times, rates earn in over 12 to 18 months. So as we've made rate adjustments a year ago, some of that rate trend is earning in now. So we're looking at the future trend of earned rate along with an increasing underlying loss and expense trend, and we're taking rate by state, by market as needed to anticipate what those trends are going to do together, Andrew.

Allister Gobin

Why don't we do one more question?

Operator

Certainly, and our final question for today comes from the line of Tracy Benguigui from Wolfe Research.

Tracy Benguigui

Tom, you pointed to Slide 5, the upcoming ALLIE personal agentic assistant launch as your answer to the questions you're getting on Muse, and you sound positive about the opportunity. I'd assume, though, that customers may turn to Muse for price comparisons. I see on this chart, you are showing other carriers on the bottom right. It is not clear to me. Are you saying that your proprietary agentic assistant will quote both Allstate and your competitors?

Thomas Wilson

Yes. Yes, it does today. Answer Financial does today. We represent over 30. I can't tell you how much they sell for other companies because to respect their competitive position, I don't know. But yes, we write $500 million of business and not that much of it's Allstate, and they like it. I mean, it's good. It's another outlet for them to get business, and they can target what kind of customers they want. It helps them manage your portfolio. And most of them are excited about what we're -- in fact, all of them have been excited, and we're building straight-through processing with some of them.

Tracy Benguigui

Okay. So for my follow-up then is even though this tool exists, for those customers that want to shop on Muse, how would ALLIE interact with these third-party agents? You talked about some folks blocking websites. Will you be simply redirecting Muse inquiries into ALLIE? And is that also a way to kind of meet your underwriting control requirement?

Thomas Wilson

Well, first, we will be available to all personal agentic agents. We'd like to think we can have stronger relationships with some of them other than just MCP connections and linkage. So we think that -- but we think the answer is we can help them do a better job for their customers. So if you got to worry about credit cards and insurance and grocery shopping and everything else, you need some expertise. We have some really good expertise in protection. And so we can help them do a better job for their customers. It could be cheaper for them, and we can help do straight-through processing.

So we think it's a win-win for everybody, for the customer, for insurers, for us. It's just -- what it will do is, you're right, it will have increased price comparisons. But like people shop 3 to 4 companies today anyway. And so this just makes it a little easier. And our pricing sophistication, you can see from our growth is enough to enable us to compete aggressively in the market today, and we feel good about where we're going in the future.

Tracy Benguigui

So are you operating under the premise that Muse won't disintermediate your captive agency channel and that shopping demographics won't shift?

Thomas Wilson

I'm operating under the assumption that Muse will create additional value for customers that some of those customers may still want a local agent even though they have Muse because they had a problem with the claim once and an agent helped them or they get access or they may want to just do -- they want a branded product. So Muse might show them XYZ company, it might show them Allstate and they may say, "I'm more comfortable with Allstate."

So I think it's -- and then I would also say, I think people aren't really thinking as much about how much AI can help those local agents do a better job. So it's not one or another. This happened kind of with the Internet pretty soon, all retailers are going to go away. And they didn't. They adapted. They just -- customers adapted and adjusted. So we're just in the middle of it, and we're going to do whatever customers want, leverage as much technology in our brand. And we think it's good for us, and it will be good for our competitors.

We're happy to be serving more customers and in some ways, RPA will be -- not will, it will be indifferent as to who the business goes to. It's going to go to who the customer wants. This is not like trying to steer stuff to us. The RPA will serve those insurers as an independent PAA that helps customers do what they want to do. And then if people want to call an Allstate agent, they will call an Allstate agent or they'll go by their office or do whatever.

Okay. Thank you all for leaning in on Allstate. We will talk to you next quarter.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.