Allstate Q3 Net Income Falls 45% as Policies Grow

Allstate Corp. (ALL) reported lower third-quarter 2026 earnings as higher catastrophe losses reduced Property-Liability underwriting income and the prior-year period benefited from business divestitures. Policy growth, higher homeowners premiums and increased investment income provided support, while the insurer maintained profitable auto and homeowners underwriting margins.

Net income applicable to common shareholders fell 44.8% from a year earlier to $2.05 billion, or $8.03 per diluted share. Adjusted net income declined 16.2% to $2.49 billion, or $9.76 per diluted share. Total revenue increased 0.5% to $17.35 billion.

Allstate said the year-over-year net income comparison reflected gains from the sales of its Employer Voluntary Benefits and Group Health businesses in the second and third quarters of 2025, respectively. Return on common shareholders’ equity was 41.3%, while adjusted return on equity was 39.7%.

Policy growth supports Property-Liability premiums

Property-Liability net premiums written rose 2.5% to $16.02 billion, as policies in force increased 3.3% to 39.3 million. The company said policy growth resulted in market-share gains in a majority of states. Total policies in force, including Protection Services, increased 3.9% to 217.6 million.

The Property-Liability combined ratio was 86.6, 6.5 points higher than a year earlier, primarily reflecting higher catastrophe losses and reserve reestimates. The underlying combined ratio increased 1.8 points to 80.5. Underwriting income remained positive at $2.02 billion but declined 30.1%.

Auto insurance policies in force grew 3.4% to 26.2 million. Written premiums were nearly unchanged at $9.88 billion as average premiums decreased modestly. The auto combined ratio was 83.2, up 1.2 points, while the underlying combined ratio was 89.8. On an adjusted basis using Allstate’s latest loss estimates as of Sept. 30, the underlying combined ratio was 91.4. The quarter benefited by 1.6 points from favorable development related to claims reported during the first half of 2026. Auto underwriting income declined 6% to $1.62 billion.

Homeowners insurance written premiums increased 7.4% to $4.95 billion, supported by a 3.3% rise in policies and higher average premiums. The homeowners combined ratio rose 18 points to 89.5 as catastrophe losses increased. Its adjusted underlying combined ratio was 61.9. Underwriting income fell 59.2% to $452 million.

Allstate continued to increase customer-acquisition spending under its Transformative Growth program. Advertising expenditure reached $2.22 billion on a last-12-month basis, compared with $638 million in 2023. The company said improvements to its acquisition operations have supported higher spending and better returns on advertising. Personal-lines new business was 125% above its 2019 level.

Investment income and Protection Services grow

Third-quarter net investment income increased 24% to $1.18 billion, reflecting higher yields and premiums. Allstate’s investment portfolio totaled $87.4 billion at the end of the quarter. On a last-12-month basis, net investment income was $4.02 billion, contributing $12.19 per diluted share to adjusted net income after applying the presentation’s assumed tax rate.

Protection Services also continued to expand. On a last-12-month basis, policies in force increased 4% to 178 million, while premiums earned and other revenue rose 7.5% to $3.5 billion. Adjusted net income increased 4.7% to $221 million. The segment includes consumer protection plans, vehicle service contracts, roadside assistance, mobility intelligence and identity-protection services.

Allstate expects its acquisition of mobility-data company Replica to close before the end of 2026, subject to customary closing conditions. The business is intended to enhance the company’s telematics-enabled mobility insights and services.

AI deployment remains an operating priority

Management plans to continue investing in technology, including its Allstate Large Language Intelligent Ecosystem, or ALLIE, cybersecurity, software and computing capacity. At the same time, the company is seeking to lower costs by digitizing or outsourcing work, reducing its real-estate footprint and retiring legacy technology.

Allstate said artificial intelligence wrote or modified 12 million lines of code during the third quarter, 3.6 times the first-quarter level. Its Ask Allstate AI agent handled 15% of service-chat volume through September, with 88% of surveyed customers saying the service met their needs. The insurer plans to expand AI-enabled voice, billing, claims and roadside-assistance functions.

The company also plans to launch an AI-enabled personal protection assistant in early 2027. The platform is intended to connect consumers with Allstate, National General and other insurance carriers while supporting pricing and straight-through processing.

Allstate returned $1.5 billion to shareholders during the quarter through dividends and share repurchases.

The company cautioned that future results remain exposed to catastrophe and severe-weather losses, claim frequency and severity, reserve uncertainty, pricing competition and regulatory restrictions. Other identified risks include investment-market volatility, the cost and availability of reinsurance, cybersecurity failures, vendor dependence and the ability to deploy advanced technologies, including large language models, in a cost-effective and compliant manner.