Bank of America/Merrill Lynch Insurance Conference Wednesday, February 24, 2010

Transcription

1 Wednesday, Thomas J. Wilson Chairman, President and Chief Executive Officer The Allstate Corporation

2 Safe Harbor 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 2008 Form 10-K, Form 10-Q for the third quarter 2009, and in our most recent earnings release, available on our website, allstate.com. This presentation also contains some non-gaap measures. You can find the reconciliation of those measures to GAAP measures on the Investor Relations portion of our website, allstate.com, under the Quarterly Investor Information link. 2

3 Allstate Is An Attractive Investment Opportunity Leading franchise in consumer protection and retirement Competitively differentiated strategy Operational excellence 3

4 Leading Franchise in Consumer Protection and Retirement Market Rank: (2008) #2 Property-casualty #16 Life Extensive distribution capabilities Leading brand Strong organization 4

5 Competitively Differentiated Strategy Based on Our Shared Vision Strategic Vision To reinvent protection and retirement for the consumer. Our Principles Put the customer at the center of all of our work and provide the products and services they need in ways they want them. Our Operating Priorities Consumer Focus Operational excellence Enterprise risk and return Capital management 5

6 Allstate Delivered on our 2009 Objectives Keep Allstate financially strong Generated $1.9 billion of operating income and $854 million of net n income Built stronger capital and surplus Grew book value per share by 31% and statutory surplus by 15% Achieved underlying combined ratio guidance Made substantial progress on the Allstate Financial Focus to Win Focused our investment strategy in an evolving economic environment ent Pre-tax unrealized position improved by $6.5 billion from 2008 level Reduced realized capital losses from 2008 level Improve customer loyalty Improved customer loyalty and closed the gap to the industry 401(k) plan received the maximum company match Reinvent protection and retirement for the consumer Focused on value proposition for high lifetime value customers Enhancing sales and service capabilities Developing products to further differentiate us from the competition tion 6

7 2010 Priorities Improve customer loyalty Reinvent protection and retirement for the consumer Grow our businesses 7

8 Operational Initiatives to Increase Shareholder Value Growing auto insurance business Earning acceptable returns on homeowners insurance Positioning Allstate Financial for profitable growth Continuing to take a proactive approach to investing 8

9 Generating Profitable Growth in Standard Auto* Growth Profit Underwriting Income 20 (NWP - $ B) (PIF Mil) 2.5 ($B) Policies in Force Net Written Premium *Allstate Brand 9

10 Allstate Protection to Grow Auto Business Increased Customer Retention Aligning business around High- Value Customers Service standards with accountability and rewards Improved local agency performance Broadened Customer Relationships Increased auto sales to mono-line property customers Differentiated products Growth in Auto Market Share Improved Price Position in Auto Competitors increasing prices Industry leading pricing models Lower operating expenses Higher Investment in Growth Direct business growing rapidly Invest in broadening Allstate brand 10

11 Innovation in Distribution Capabilities Agency owners Independent Agencies 800-Allstate allstate.com Improving customer value proposition of local agencies Enhanced local presence Ideal Agency will be larger Generate operational consistency Robust direct business integrated with agencies Premiums in direct channel of $622 million in 2009 and growing at 25% Half of new customers start at allstate.com 11

12 Homeowners* Business Has Not Earned Acceptable Returns ($ in billions, except per share data) Premiums Written $6.0 $5.9 $5.7 $5.6 $5.6 Combined Ratio Underwriting (Loss) Income $(1.9) $1.4 $0.5 $(1.1) $(0.1) *Allstate Brand Prior Initiatives Extensive use of reinsurance Increased prices Reduction in coastal market share 12

13 Leveraging Expertise to Raise Returns from Homeowners ($) Average Gross Premium* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q ($ in millions) Annualized Premium Impact of Approved Rates* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q *Allstate brand homeowners Rate Increases 10.7% in 40 states, 8.4% countrywide during 2009 Enhanced underwriting processes Increased multi-line discount on auto insurance 13

14 Positioning Allstate Financial For Profitable Growth Focus to Win Reduce annual expenses Price products to produce higher returns Shift to variable cost structure Leverage Strengths Middle market customer base Proprietary distribution channel Allstate Workplace Division Reduce size of balance sheet 14

15 Investment Asset Allocation Reflects Proactive Management LP Other Equity Short Term Mortgage Loans Fixed Income ($ in billions) Corporate Municipal RMBS US Gov t. Foreign Gov t. ABS CMBS Total Fixed Income Carrying Value 12/08 12/09 $ $68.6 $ $78.8 % to Total 12/08 12/ % 33.2% % 78.9 % 12/31/2009 = $99.8 Billion Mortgage Loans Equities Short Term Ltd. Partnerships Other Total Investments $ $96.0 $ $ % % 7.9% % 15

16 Proactive Approach to Portfolio Management 2009 Actions (compared to 12/31/08) Commercial real estate exposure reduced by $5.4 billion of amortized cost Municipal bond concentrations reduced by $1.9 billion of amortized cost Maintained corporate credit exposure which contributed to a $6.5 billion valuation improvement Deployed $16.6 billion of short-term investments and cash receipts Duration reduced 5% to 4.0 years 16

17 Long Term Record of Shareholder Return and Capital Management 80% 60% 10 Year Total Shareholder Return 60.6% 57.7% Dividend Yield and Payout Ratio * % 27.8% % 0% -20% -9.1% % -31.1% % ALL S&P P/C S&P INS S&P LIFE S&P Payout Ratio Operating Income Payout Ratio Yield * Not Meaningful 17

18 Allstate is an Attractive Investment Opportunity Price/Book Multiple 3 Leading franchise in consumer protection and retirement Competitively differentiated strategy Operational Excellence Valuation has significant upside potential 2 1 C + 1 STD Dev = $65 Stock Mean = $53 C - 1 STD Dev = $41 0 Q Q Q Q

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