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

Thank you, Jonathan. Good morning, and welcome to Allstate's First Quarter 2021 Earnings Conference Call. Yesterday, following the close of the market, we issued our news release and investor supplement, filed our 10-Q and posted today's presentation, along with our reinsurance update on our website at allstateinvestors.com. Our management team is here to provide perspective on these results and our strategy. After prepared remarks, we will have a question-and-answer session. As noted on the first slide of the presentation, our discussion will contain non-GAAP measures for which there are reconciliations in the news release and investor supplement and forward-looking statements about Allstate's operations. Allstate's results may differ materially from these statements, so please refer to our 10-K for 2023 and other public documents for information on potential risks. Before I turn the call over to Tom, I would also like to provide an update on our monthly financial disclosures since early 2022, and implemented rate actions from the prior month have been included in our monthly release and disclosed on our Investor Relations website to provide additional transparency on our proactive response to the rapid rise in loss costs. Going forward, our implemented rate disclosures for auto and homeowners insurance will be disclosed on a quarterly basis instead of monthly within our investor supplement. And now I'll turn the call over to Tom.

Good morning. Thank you for investing your time and interest in explaining why Allstate's such an attractive investment. Mario and Jesse are going to walk through the operating performance. As Brent mentioned, there will be time for Q&A. Let's begin on Slide 2. Allstate strategy has two components, which is shown on the left there, increased personal property-liability market share and expand protection provided to customers. On the right-hand side, you can see the highlights for the quarter. We generated net income of $1.2 billion in the first quarter. The profit improvement was broad-based. It reflects successful execution of the auto insurance profit improvement plan, attractive homeowners' insurance margins, and we also benefited from lower catastrophe losses in this quarter. Net investment income was up almost 33%, reflecting the 2022 and 2023 repositioning into longer duration, higher fixed income yields, and we had good performance-based valuations this quarter as well. Protection Services also had a good quarter, led by Protection Plans and Roadside Services. From here, we have a broad approach to further increase shareholder value by improving auto profitability in underperforming states and focusing on increasing policies in force under the Allstate brand while continuing to expand National General. Mario is going to talk about that in a few minutes. Allstate's integrated approach to investing has and will continue to create value for shareholders. Expanding protection services will benefit both our customers and shareholders. The sale of the Health and Benefits business to a buyer that can further leverage our success will create more shareholder value, although it will have a short-term negative impact on return on equity.

Thanks, Tom. Let's start on Slide 4. Property-Liability earned premium increased 10.9% in the first quarter, driven by higher average premiums. Underwriting income was $89 million, the combined ratio of 93%, which improved by 15.6 points compared to the prior year, driven by higher premiums earned, improved underlying loss cost trends, lower catastrophe losses, and operating efficiencies. The underlying combined ratio of 86.9% improved by 6.4 points compared to the prior year quarter. The improvement was driven by higher average premium and moderating loss cost increases. Expense reduction programs also benefited results more than offsetting higher advertising spend. Favorable development in personal auto and homeowners insurance largely offset increases in personal umbrella liabilities and commercial auto reserves for the transportation network contracts we began exiting in late 2022. Now let's take a closer look at auto insurance profitability on Slide 5. The first quarter recorded auto insurance combined ratio of 96 improved by 8.4 points compared to the prior year quarter, showing that our profit improvement plan is working. The left chart shows quarterly underlying combined ratios. We will see the underlying combined ratio improved sequentially in each of the last 5 quarters to 95.1% in the first quarter of 2024. The chart on the right shows that in the first half of 2023, premium increases were being offset by higher underlying losses and expenses. Profits began to improve in the third quarter of 2023 as premiums outpaced loss and expense increases, continuing into this year's first quarter. The slight first quarter drop in underlying loss and expense reflects lower claim frequency that benefited from milder weather and improved operating efficiencies, partially offset by higher severity. Average underlying loss and expense in the first quarter of 2024 was 6.7% higher, reflecting higher current year incurred severity estimates, primarily driven by bodily injury coverage, partially offset by lower accident frequency. Given the impact that good weather had on frequency in the quarter, favorable frequency may not persist as the year progresses. While auto margins have improved due to our price improvement actions, we remain focused on ensuring that rate levels continue to keep pace with underlying cost trends driving improved profitability in states not yet achieving target margins. Slide 6 shows how auto profit improvement supports pursuing policy growth. Allstate brand implemented rate increases exceeding 16% in both 2022 and 2023. In the first quarter of 2024, we implemented rate increases of 2.4% to keep up with the cost trends and improve margins in states not achieving target margins. The chart depicts the Allstate brand auto proportion of premium in states with an underlying combined ratio below 96%. As more states have achieved target returns, we have started to increase marketing investment, both nationally and in those states. While Allstate brand policies in force decreased compared to the prior year, the decline was at a slower rate than last quarter, and over half that decline was offset by growth at National General. Moving to Slide 8, homeowners insurance profitability generated strong returns in the quarter. Homeowners insurance provides a differentiated customer experience and represents an additional growth opportunity across channels. The first quarter combined ratio of 82.1 translated to $564 million of underwriting income and improved 36.9 points compared to the prior year, primarily driven by lower catastrophe losses. The underlying combined ratio of 65.5 also improved by 2.1 points due to higher average premium and lower noncatastrophe claim frequency.

Thank you, Mario. Moving to Slide 10, let's discuss the increase in investment income. Before we dig into specifics, let me reiterate that our active portfolio management includes comprehensive monitoring of economic conditions, market opportunities, interest rates, and credit spreads by rating, sector, and individual names. We seek to optimize return per unit of risk across the enterprise. This approach to portfolio management continued to benefit results in the quarter. Net investment income totaled $764 million, which is $189 million above the first quarter of last year. Market-based income was $626 million, which was $119 million above the prior year quarter, as the fixed income portfolio continues to benefit from repositioning into longer duration and higher yielding assets. Total portfolio return of 0.5% for the quarter signifies that a balanced approach to risk and return creates shareholder value. On Slide 11, we break down the growth and profit performance of the Protection Service businesses. Revenues increased 12.2% to $753 million in the first quarter compared to the prior year quarter, mainly driven by growth in Allstate Protection Plans, which increased 20.5%. In the table, you will see adjusted net income of $54 million in the first quarter increased $20 million compared to the prior year quarter. Profitable growth in Allstate Protection Plans resulted in adjusted net income of $40 million.

With that context, let's open up the line for your questions.

So my first question was just on your views on PIF growth. I realize it will be challenging in the near term, given price increases, but with price cuts coming through and once you're done with repricing, do you think it's reasonable to assume you'll have positive growth beginning sometime later this year or early next year in the auto business?

Jimmy, we do believe that it’s time to pivot to growth. We’ve had to restrict growth to get profitability up in the auto insurance business. We're not done with it yet, but we feel that the trajectory is good and we have a path forward on that. Mario went through various ways we can do it. First, of course, keep more of your existing customers. We have a bunch of other ways we think we can grow new business. When that will actually turn will be dependent on what happens in the marketplace. We believe this pivot to growth will drive more shareholder value.

No, I think that covers it. The only thing I'd say is the Allstate brand continues to see impacts from the profit improvement plan that we've implemented over the last couple of years. We're starting to see some positive signs on retention and an uptick in production. We need to see sequential growth before we get to annual year-over-year growth. I want to point out we continue to see strong growth and profitability at National General.

Things are progressing as expected on the pursuit of the divestiture. We announced the intention to pursue the sale about 6 months ago. There was robust interest from a large group of quality potential buyers. Diligence on a large complex business takes time. At this point, we are pleased with how the process is progressing, and we are confident that we'll select a buyer that sees the same potential in the business.

We think the divestiture will free up additional capital. We're doing it because it is the right way to harvest value. We believe it's a great business. When you look at capital utilization, we are always looking at what the impact is economically and on shareholder value. We have a wide range of alternatives we look at, from organic growth to share repurchases and increasing equity allocation to the investment portfolio.

Yes, it seems like your PIF growth is right around the corner of pivoting, down only 1.4% year-over-year. So I'm wondering on the Allstate brand, your expense ratio on advertising was 2.2%. Is there much left to go in terms of your ad campaigns? Or do you feel like you're at a level where you need to be?

I'll let Mario talk about reorganizing the business to drive growth. As it relates to advertising, we don't like to disclose those numbers for competitive reasons. However, one of the key components of transformative growth was improving customer acquisition. No matter the percentage, we want it to be more effective. Mario, maybe you should talk about that.

First, the good news is in the presentation; more states are achieving rate adequacy, and we've begun to unwind underwriting restrictions in 75% of the states we operate in. We’re organizing ourselves into local market-focused teams to drive opportunity identification and capture at the local market level. We believe this, with our expanded investment in growth, will create significant opportunities going forward.

We know it works because we've used it for a long time. We dismantled some of it about 2 or 3 years ago when we were cutting expenses. Now we're back into growth mode.

National General is a well-run business for us. We've grown that business aggressively and profitably, expanding geographically and across channels. We've taken on a lot of rate over the last couple of years, and we feel good about the opportunities going forward, even with competition.

Could you comment on both frequency and severity trends in the first quarter and how you're thinking about severity for 2024?

In the protection business, the loss trend is in the mid-5s, made up of both favorable frequency and higher severity. Frequency has been favorable recently due to milder weather. However, the ongoing severity pressure in bodily injury continues to run at higher than historical levels, driven by medical treatment costs and increased attorney representation.

When you have severities going up, you will be increasing rates above the general inflation rate. We are always moving rate up to ensure our competitiveness. We believe we have the technology and agents to enable us to grow, and we are focused on making sure we keep pace with loss trends.

Are there any other large states where you still need rate at this point in time?

The majority of our combined ratio issues lie with California, New York, and New Jersey. We feel good about where we're positioned for growth. We will continue to push incremental rates in those states where we have not yet achieved target margins.

My first question is on the auto loss ratio. Is there a cadence you expect on the underlying loss ratio within auto to improve as we go through the year?

We feel good about the trend in auto insurance profitability. The first quarter is usually better than the summer months. We have good control over expenses. We will continue to monitor both frequency and severity effectively.

Is your plan still to expect to announce and close the Health and Benefits transaction this year?

We still think we'll sell it this year. A lot of people are interested in the business, and we are confident we made the right choice.

Can you help us think through the growth potential combined with competitive pressures in nonstandard auto?

We feel good about our capabilities to grow the National General nonstandard auto business. We've taken advantage of competitive dislocation and will continue to pursue both the standard preferred and homeowners business for growth.

Can we talk about the agent productivity and how it looked this quarter?

Overall, Allstate brand new business production is up about 6.5%. Despite the fact that we have fewer agents, productivity is increasing which is a positive sign going forward.

We'll take one more question.

Are there any different strategies as you grow the direct-to-consumer channel?

Yes. The direct customer has different needs, and we price direct insurance cheaper. With our new technology stack, our goal is to improve the customer experience and increase our direct volume over time.

This concludes the investor call. You can now disconnect. Good day.