Good day, and thank you for standing by. Welcome to Allstate's Third Quarter Earnings Investor Call. As a reminder, please be aware that this call is being recorded. And now I'd like to introduce your host for today's program, Allister Gobin, Head of Investor Relations. Please go ahead, sir.

Good morning, everyone. Welcome to Allstate's Third Quarter 2025 Earnings Call. Yesterday, following the close of the market, we issued our news release and investor supplement, filed our 10-Q 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 the line for your questions. As noted on the first slide of the presentation, our discussion will include non-GAAP measures for which the 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 2024 10-K and other public filings for more information on potential risks. And now I'll turn it over to Tom.

Good morning. Thank you for investing time in Allstate today. Let's start with Slide 2. Allstate's strategy has two components, which are shown on the left: increased personal Property-Liability market share and expand protection provided to customers. Our strong operating results in the third quarter are shown on the right. So revenues increased to $17.3 billion. Policies in force increased to $209.5 million as we broadened our protection offerings and grew the Property-Liability business. Net income was $3.7 billion. Adjusted net income was $3 billion or $11.17 per share, resulting from a number of things: strong Property-Liability results, modest catastrophe losses, higher investment income, and favorable insurance reserve releases. The return on equity for the last 12 months was 34.7%. The drivers behind these outstanding results include operational excellence, which is really good at protection. The transformative growth initiative is increasing profitable growth. Enterprise risk and return management for investments creates additional value, and then all of that just generates substantial capital. So let's cover transformative growth and how that positions us for continued success. Turn to Slide 3. Transformative Growth is the initiative we started about six years ago, and it was designed to increase Property-Liability market share. It has five components in five phases, and we're now in Phase 4, which is rolling out the new system. The price protection is obviously critically important to customers, so we reduce costs so that we can provide more value without impacting margins. We've reduced the expense ratio by 6.7 points, but we're not done yet. To increase market share, we also need to expand customer access by broadening distribution beyond Allstate agents. This year, auto insurance new business is evenly split between Allstate agents, independent agents, and direct from the company, and all three channels have increased. We didn't get there by making one channel smaller. Increasing customer value with new affordable and simple connection products has also been a driver of growth. Significant progress has also been made in improving customer service. We've improved over 46 million customer interactions this year. A high priority for us is to further expand the SAVE program for auto and home insurance customers, which has helped over 5 million customers reduce their premiums by more than 5%. These four elements require increased sophistication and investment in customer acquisition, and we're really good at that and the new technology ecosystem. The new technology ecosystem is going to enable us to use applied artificial intelligence, which is shown on Slide 4. This begins with generative AI, which helps improve the efficiency and effectiveness of operations. I'd like to describe this as the Keds sneakers commercial. If you might remember, it’s run faster, jump higher, which is quite a good thing. As you can see, there are many examples where that's adding value today. It's being used to simplify billing explanations for customers and reducing the number of billing inquiries. In the claims operation, all adjuster emails are generated or reviewed by AI. Fifteen percent of our coding is done by AI, and it's also being implemented in actuarial and financial work to reduce costs and accelerate our go-to-market strategies. The next frontier is at the top of the slide, which is Agentic AI, and that holds even greater promise. It allows us to reimagine customer value across the entire business model from the offerings, service, and communications, to how we make growth investments and settle claims. Now to make that a reality, we're designing and building Allstate's Large Language Intelligent Ecosystem or ALLIE. We wanted to name it and personify because these agents are like employees. They're capable of reasoning and resolving tasks, lowering costs, and improving the customer experience. So ALLIE will position us for continued growth in market share and expansion of protection provided to customers. Now Mario will cover third quarter results in more detail.

Thanks, Tom. Let's turn to Slide 5 for an overview of third quarter results. Allstate's strong operating capabilities delivered profitable growth and excellent returns in the quarter and through the first nine months of 2025. Total year-to-date revenues increased by 5.8% from the prior year to $50.3 billion, driven by strong performance across the enterprise, including Property-Liability premiums that were up 6.1% in the third quarter and 7.4% for the first nine months of the year, reflecting higher average premiums and policy in force growth. Protection Services profitably grew, with premiums up 12.7% compared to the third quarter of 2024, driven by protection plans. Net investment income was $949 million in the third quarter, representing a 21.2% increase over the prior year quarter. Total policies in force grew to $209.5 million, an increase of 3.8% compared to the prior year quarter. In the third quarter, net income was $3.7 billion, and through the first nine months of 2025, net income applicable to common shareholders was $6.4 billion. Adjusted net income was $3 billion, or $11.17 per diluted share in the third quarter, reflecting strong Property-Liability underwriting profit and higher investment income. Adjusted net income return on equity was 34.7% over the last 12 months. Moving to Slide 6. Let's discuss our objective of consistently delivering attractive risk-adjusted returns for shareholders. As a reminder, we manage profitability by line and by market. In auto insurance, we target a mid-90s reported combined ratio. Over the last decade, outside of the unprecedented inflationary period, the industry experienced following the COVID-19 pandemic, Allstate has consistently achieved these targeted levels of profitability. We have responded quickly and decisively to periods of increased loss cost inflation, like higher auto accident frequency in 2015 and 2016 and higher post-COVID severity. As a result, the combined ratio has averaged 94.9% over the last ten years. The homeowners business is a competitive advantage for Allstate. In homeowners insurance, we target a low 90s reported combined ratio and an underlying combined ratio in the low to mid-60s. We have a differentiated model with advanced risk selection, new products, pricing sophistication, and efficient claims handling. While there can be short-term volatility associated with catastrophes, these capabilities have delivered sustained success, as you can see over the last ten years with a recorded combined ratio of 92.3%. Turning to Slide 7. Let's discuss Protection Services. The Protection Services business is comprised of five businesses: protection plans, auto dealer, roadside assistance, Arity, and identity protection. It has 171 million policies in force, generates $3.3 billion in revenue, and had $211 million of income over the last 12 months. Policy growth was 4.4% over the prior year quarter, led by protection plans. Protection plans continue to expand both domestically and internationally, as you can see on the lower right. Revenues increased by 15% over the prior year quarter, with a 10% increase in domestic revenue and a 32% increase in international revenue. The business generated $34 million in adjusted net income this quarter, a decrease of $5 million from the prior year quarter due to increased claims. Year-to-date, however, earnings increased by 8% from 2024. Now I'll turn it over to Jess.

Thank you, Mario. Moving to Slide 8, you can see the impact of transformative growth execution on Property-Liability growth. The map on the left side of the slide shows the 38 states where Allstate is growing policies in force in dark blue. Investments in expanded distribution, pricing sophistication, marketing, and technology are generating policy in force growth in the auto and homeowners insurance businesses. To the right, we provide more detail by brand. We underwrite auto and homeowners insurance business through Allstate agents and direct to consumers using the Allstate brand. For higher-risk direct channel customers, we also use the Direct Auto brand, which we acquired with National General. We provide those same products in the independent agent channel using the National General brand. Collectively, these represent what we call our active brands in market. Auto policies in force in active brands increased 2.8% compared to the prior year quarter. National General and Direct Auto continued to grow at 12% and 22.9%, respectively, reflecting our capabilities in the nonstandard auto insurance market in both the direct and independent agent channels. As part of transformative growth, we decided to sunset the Esurance brand and use the Allstate brand in both the exclusive agent and direct channels. In the independent agent channel, as the new National General Custom360 product is made available, we stopped offering the Encompass policies for new business. While some customers of the inactive brands end up in new business of active brands, growth in the active brand shows the strength of those customer value propositions. Homeowners policies in force in active brands increased 3% compared to the prior year quarter. We continue to see steady growth in policies in force in the Allstate brand as Allstate agents continue to bundle at historically high rates, and we've delivered strong new business growth in the direct channel. Transformative growth is delivering profitable policy growth. Turning to Slide 9. Customer retention remains a key focus. On the left, you can see auto insurance shopping is at historically high levels. Through the first nine months of the year, shopping activity across the industry has increased 9.3% compared to the same period in 2024, driven by higher advertising and industry-wide rate increases in 2022 and 2023. In this high shopping environment, Allstate is capturing a higher proportion of shoppers with new business increasing 26.2% for the same period in 2025 compared to 2024. Allstate's market share gains in nonstandard auto insurance, largely through the independent agent and direct channels, also have a negative impact on overall retention even though these policies are attractive economically. To improve retention, we're lowering prices while maintaining attractive margins and reaching out to customers through the SAVE program. In addition, customers are being transitioned to our new auto and home insurance products, which have higher retention levels. Finally, product bundling is increasing, particularly through Allstate agents, supporting deeper customer relationships. Increasing retention will be additive to growth created through higher increases in new business. Now I'll turn it over to John.

Thanks, Jess. Turning to Slide 10. Let's discuss how we proactively manage our investment portfolio to deliver meaningful shareholder value. This chart shows net investment income and portfolio growth over five years. Since Q1 2021, the portfolio's book value has increased by 39%, or $23 billion. Since 2021, asset growth has in part reflected a large increase in average auto and homeowners insurance. Growth in assets and higher yields have benefited net investment income. Net investment income for the last 12 months equates to $10 per share, up from less than $9 in 2021. Moving to Slide 11. Let's discuss how Allstate takes a proactive approach to managing its investment portfolio within the context of overall enterprise risk and return. The table on the left illustrates how investment decisions consider enterprise factors and market conditions. The blue boxes indicate favorable conditions and the orange boxes indicate unfavorable. For example, in 2022, the Property-Liability combined ratio was elevated and both macroeconomic and market dynamics were unfavorable. We had adequate capital to handle this, but decided to reduce the capital supporting investment risks. As you can see on the right-hand graph, this was implemented by lowering interest rate risk by reducing duration shown in the green line. This was a good decision because we then increased duration as rates increased in 2023 and 2024. The combination of these actions protected portfolio values as yields rose and then captured those higher yields to support higher income. We use the same approach to equity holdings, which were reduced in 2023 and 2024, primarily reflecting an outlook for higher inflation. By year-end 2024, when profitability was restored and economic and market dynamics were more favorable, we increased the economic capital allocation to investment risk and have selectively been adding growth exposure back to the portfolio. Moving to Slide 12. The chart on the left shows the change in GAAP shareholders' equity from year-end 2024 to the end of the third quarter. At the end of 2024, shareholders' equity was $21.4 billion. Strong income, gains on the sale of voluntary benefits and group health businesses, and an increase in unrealized net capital gains on investments further strengthened capital. This was partially offset by common share repurchases and dividends to shareholders. This year, Allstate has returned $1.6 billion to shareholders on a GAAP basis through common shareholder dividends and share repurchases. Overall, GAAP shareholders' equity increased to $27.5 billion as of the third quarter of 2025. Over the last 12 months, adjusted net income return on equity was 34.7%. Increasing Property-Liability market share at target levels will create additional shareholder value. In addition to growth initiatives, Allstate deploys capital through the investment portfolio, which generates attractive returns and provides a diversified source of income. Allstate has a long history of returning cash to shareholders through both dividends and share repurchases. Over the last 12 months, Allstate has returned $1.8 billion to shareholders, which is 3.5% of the average market value of common equity. Over the last five years, $11.5 billion has been returned to shareholders, representing approximately 22% of common outstanding shares. Now let's move to questions.

Our first question comes from Robert Cox from Goldman Sachs.

So just the first question on capital. Obviously, a significant amount of capital generated this quarter, and you all stated in the presentation that you're in a favorable capital position. Can you just talk us through how you're thinking about holding company liquidity and how quickly we could see you guys normalize that level of deployable assets at the holding company?

Sure. Let me start at the top. First, we have a very sophisticated way that we think about capital management. It’s not as simple as your premium to surplus ratio and it has served us well for a long time. We can keep doing that. Our assessment will be similar to yours, which is we have plenty of capital today. Let me list the options. They are pretty straightforward as to what we could do with it. But let me maybe address your specific question and come up to the more contemporary assessment of what the options are. As it relates to the holding company, we prefer to put as much money as we can into the holding company because it offers flexibility. We can put it back into the insurance company if we want, use it for share repurchases, or buy a company. We can use it for a variety of different things. We prefer the flexibility of having it in the holding company as opposed to in the insurance company. The movements from one to another tend to be really related to where we are with our regulatory approvals and the rules on moving it up, as opposed to, oh, we took money out of the insurance company because we thought we had enough down there. We've always had plenty down there. We have plenty of capital there, so we're not worried about that. As it relates to the uses of capital, it's the same options that you all know. But if you sort of asked, well, where are we today and what would be the best uses for it. Obviously, with the kind of returns we're getting in our business, just growing that business and continuing to invest in it is a great return and a good way to go. To the extent we can further grow the business, we get the dual benefit of not only higher income, but an earnings multiple rerate. So that's our key and primary focus. John talked about what we could do in investments and how to make extra returns. That's another option for us. We could buy other companies that leverage our skills and capabilities, like National General and SquareTrade, both of which were terrific transactions. We still have some work to do on identity protection, but I feel confident we will see more growth in that area. Then obviously, there are all kinds of things we can do with shareholders: dividends or share repurchases. John spoke about that, too. We've never held back on that, but we prioritize those options where there is the most return for shareholders.

Okay. Awesome. And then just on pricing, I appreciate that you guys back out the New York and New Jersey growth from your new PIF growth, which is very helpful. But just wondering if you could talk about where pricing was excluding New York and New Jersey and maybe just more broadly, where you think pricing is headed into 2026?

Yes. So Robert, in terms of overall pricing, you can see how strong the margins are in auto insurance. The rate need has certainly diminished, and I would say the book is broadly rate adequate at this point. In the quarter, we did implement some rates in New York and New Jersey that were approved earlier in the year, but implemented in the quarter. That shows up in what we show you in the supplement, which is not a meaningfully high number. I think it was 0.6 points. So you take those two out, and it gives you a real sense of how little rate is needed in the book. As we look at loss trends, the loss trends in pure premium look good. Our margins are strong. Frequency is a big contributor to that, and that's a bit of a wildcard. So as we think about 2026, I will tell you we will respond accordingly to whatever the trends are. That means if they continue to be benign and the book doesn't need rate, then we won't take rate. But to the extent we see loss costs pick up, we're going to stay out ahead of it and target that mid-90s combined ratio that we've been able to achieve over the last decade.

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

So I’m going to start. First of all, in the slide deck on Page 4, you provided an interesting slide regarding your approach to artificial intelligence. I feel like there's probably a lot of information behind that slide. So when we've asked other companies, they've given us some ideas about what their tech budget looks like, how much is going to maintenance versus new initiatives. But when I look at this slide here, I guess what I'm particularly interested in is where are you in this life cycle? You introduced ALLIE. I'm just curious what that looks like when you get to a more complete phase. And just additional color on what's going on and what your end goal is with the technology?

Let me start at the end, Greg. First, I think this technology has the opportunity to help us really reimagine the whole way we go to market and do a terrific job for our customers at a lower price with better service. In fact, I believe it can help us add things that we don't currently provide because they're too expensive. So not only will it help us reduce costs, I think it will help us improve the value proposition. Now that's easy to say and hard to do. What we're doing is working with generative AI today to get more effective and more efficient at what we currently do. For example, when someone sues our customers, there's a lot of work involved to keep your customers safe and not lose money. Today, that is done by a computer. It’s helping us be better and more effective, reducing administrative costs and presumably making smarter decisions with a human in the loop. The Agentic AI really is a chance to do it completely differently. For example, how we communicate with you, what mode of communication we use, and what we communicate to you is dependent on who you are and what your relationship with us has been. That's hard to put all that knowledge in the brain of one individual who's on a phone at that point in time. It’s easier to put it in the hands of an agent who can process information quickly with advanced computing power. We believe there are many ways throughout the entire business chain to improve. We've developed a plan to try to build ALLIE. Just like we did transformative growth, it has components and phases. We're not ready to roll that out to everybody because we're in the design and build phase, but we believe the opportunity is so large that we should move quickly on this instead of waiting to see if someone else can develop it first. Regarding cost, it’s going to cost more, and we’ll manage our way through it.

I guess related to that, you talked about retention on Slide 9, personalizing experiences. You also mentioned how your business mix is changing a little bit. How is technology going to help you improve your retention? When I read this bullet point about personalizing experiences, it sounds more labor-intensive, not less.

I actually think that doing it well will involve less manual effort. Technology can assist you. For instance, if you visit our website today, we present you with three options: good, better, best. With technology, we could determine precisely which offers to show you. While this is not currently being done, it is a possibility. I believe there are numerous chances to enhance retention. I can share some insights into our retention efforts, as it's an area we need to focus on continually.

Yes, Greg. We are very focused, as I said in the presentation, on the S.A.V.E program and reaching out at the point of customization to ensure that we provide customers with the opportunity to tailor their coverage and save money. We've saved many customers more than 5%, and that involves looking for opportunities for discounts like EasyPay or paid in full, encouraging customers to use telematics, and truly tailoring their coverage options to meet their needs. Technology allows us to do that and better identify customers' needs where opportunities to save them money exist, which naturally improves retention. We're continuing to focus on increasing value for our customers as it relates to lowering prices and enhancing experiences.

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

My first question is around the exclusive agent channel within Allstate brands. I'm wondering how that has progressed in terms of agent count and retention year-to-date. How has that played out? How do you see that playing out over the next couple of years?

Andrew, it's a good question. Let me give you an overview of where we've come from. When we started Transformative Growth, we had over 10,000 Allstate agents. Today, we have 6,000. We are writing more business today than we were then. So productivity is way up. That's not just because we're doing more advertising; they're actually doing a terrific job of leaning into this. The team we have in place is doing great work. They're also extremely good at bundling auto and home, which builds sustainability. We believe the Allstate agent network is stronger today than it was then. We’ve added independent agents and direct response and expanded that. We're feeling good about where we are. Mario can talk about where we're going.

Yes. I want to plus up what Tom said about the performance of the agency system. When you look at our production, it's pretty equally distributed across all three channels. The Allstate agency channel is a core part of that. We're very interested in continuing to grow in the Allstate agency channel, and the productivity of the channel is impressive. They continue to invest in their businesses. Going forward, this will continue to be a key part of our strategy because we believe a significant percentage of people want to interact with a human on the other side, which in our case would be an Allstate exclusive agent. But we're going to ask our agents to adapt going forward just as they’ve adapted over the last five or six years as we've implemented Transformative Growth with a real focus on building new relationships. The Allstate agent is a key part of our growth strategy going forward. We will continue to expand their role, and we’re optimistic about the future.

Got it. And my follow-up goes back to Slide 4. Transformative Growth seems impressive, and Tom's comment that ALLIE is such a big opportunity that you don't want to wait to see if someone else does it. So can you share how you're positioned versus the competition? Is there any way to benchmark Allstate against the large bulk of the competition?

Nobody knows, really. I can’t speak for where they’re at. Most people are probably using generative AI, and I'm sure our competitors are using that, maybe not in as organized a program as ALLIE. I can’t speak for what they're doing strategically to try to redo the business model. We’ve been working on this for a while and felt like now it’s about time to start discussing our actions without going into specifics. I think they are all good companies, and I’m sure they’re smart people, working on it and doing it. Everybody has different outcomes. We did have discussions with a group of CEOs who were facing similar data problems. In Transformative Growth, the target state architecture we established has a particular way of moving and using data, which really set us up for this. Did we know exactly it would work this way? No. Did we think it made sense? Yes. Does technology follow the rules of logic? Yes.

And our next question comes from the line of Paul Newsome from Piper Sandler.

A couple of big picture questions I was hoping you could address. The biggest pushback I get for Allstate is concerns from investors that competition is going to lower prices quickly in response to recent profitability and squeeze margins such that you’re sort of at peak earnings. Two-part question: could you elaborate on how you see the market dynamic evolving over time? You’ve been through a number of years and seen much history. Then can you talk about the trade-off between pricing and PIF growth, and how you manage it?

Let me first provide some context before addressing your specific question about the balance between growth and economics. Our primary focus is profitability. We aim to increase the number of policies in force, which benefits shareholders and may enhance our price-to-earnings ratio. However, we won’t pursue growth unless it is profitable, whether through advertising or other means. We take our shareholders' capital very seriously. Regarding the competitive landscape, we are currently in a highly competitive environment, and it is not becoming more so. We actively compete for leads, pricing strategies, and claims service. Our performance in this competitive market over the last decade speaks for itself. While I cannot predict future market conditions, a review of our combined ratios and the value we have delivered to shareholders indicates we have performed well. In this landscape, Progressive remains robust with significant capabilities. I have observed that State Farm has gained market share in recent years, likely due to their strong capital position and focus on their core business. GEICO has seen a decline in share but could potentially recover by returning to their historical model, though this is not assured. Other competitors appear to be facing challenges. Our new business is performing well against shopping activity, which means we can efficiently attract customers. We have several avenues for growth, including homeowners insurance and specialty lines where we offer competitive products. Our market share in both standard and nonstandard segments is not where it should be, and we will need to adjust our strategies accordingly.

And our next question comes from the line of Elyse Greenspan from Wells Fargo.

My first question is on auto retention. I was hoping to get some more color on how it's trended for just active brands and when we should think about retention inflecting up, both for your active brands and overall.

Okay, Elyse. It's a good way to split the question between active and inactive brands because the decline in retention for some of those inactive brands is intentional as we aim to move customers to active ones. Another thing that will impact retention is the transition to our newer ASC products, which would offer additional insights that you have not highlighted already.

Yes, absolutely. We are providing our customers with opportunities to move to the affordable, simple, and connected (ASC) product as we roll it out by state. You've seen how many states we have implemented it. Our agents, both in the call center and exclusive agencies, are reaching out to customers and offering them these contemporary products with the most advantageous pricing. We believe this will significantly enhance retention. It allows customers to save money, while providing agents a chance to deepen relationships by offering our best products.

And my second question is just on capital. Given the strong results this year, you started to take dividends out of AIC in the quarter. I was surprised the buyback wasn't higher given that there's more capital at parent. Can you help me think about balancing buybacks versus now having more excess at parent? Are you holding on to capital for M&A? If so, where would potential M&A transactions be concentrated?

The share buyback program consists of an approved $1.5 billion commitment, and we purchase within the designated period we established according to that amount. So it's not something we change based on how well we perform. When we put up a $1.5 billion share repurchase program, we do so because we assume there will be more than $1.5 billion of additional capital available. We don’t set targets based on earnings prospects. The share repurchase program was intended for that specific time frame. Once it completes, we'll decide on future actions, likely by next year. In terms of using the funds otherwise, if we identify an opportunity for organic growth, we will pursue it. Our primary goal is to grow our Property-Liability business as cleanly and effectively as possible. Otherwise, we make decisions as opportunities present themselves, maintaining a disciplined approach.

And our next question comes from the line of Vikram Gandhi from HSBC.

My first question concerns the auto PIF, where it appears that growth largely came from nonstandard customers. How should we think about the longevity and profitability of this cohort in terms of expense and loss ratios?

I cannot give you specific attribution for a loss ratio or expense forecast. The numbers move around too much. What I can say, which might be your underlying question, is that it's all economic. We like the business. It doesn’t last as long, but we make good money on it relative to what it costs us to acquire those customers, even if they have a shorter lifespan. We don't have a specific target, but we evaluate whether we can be profitable during the time they remain with us. We like what we're doing; it's an economic decision. It does have a negative impact on retention, but that's just a math issue when looking at overall numbers.

That’s very helpful. My second question relates to the commercial lines. Are we at a definitive inflection point? Can we say that adverse prior year development is highly unlikely going forward? In short, have we sorted most of the back book issues?

Regarding commercial lines and all of our reserves, we believe they're appropriately reserved when we put the quarter up. Sometimes we are pleasantly surprised. You’re right, we’ve faced negative surprises in commercial lines over the last couple of years, but we did not have one this quarter. So we feel good about that. We believe we are always appropriately reserved.

Our next question comes from the line of Bob Jian Huang from Morgan Stanley.

My first question revolves around Slide 11, which outlines your outlook on various key metrics. What is your view on inflation moving forward? Six months ago, inflation and tariffs were major topics. How do you perceive inflation today? Is it more under control in your view? Do you anticipate it becoming a bigger problem?

Inflation impacts many aspects of our business. It ranges from the costs to fix and repair vehicles and bodily injury costs, which are influenced more by litigation environments. There's also inflation in our operating expenses. When it comes to our investment portfolio, we think about it broadly. I’ll pass it to John for a market perspective.

What I would say is let’s consider the overall market. After COVID, we experienced a lot of shifts in the supply chain and uncertainty. This year, changes in Washington policies have also created uncertainty. What we've seen is that inflation is not gone, but left tail risk and uncertainty have reduced. This is evident in the Fed's shift from tightening to easing. As you’ve noted from the quarter, the investment portfolio's duration has been extended modestly, indicating that we see potential for income and shareholder gains.

Keep in mind that bodily injury inflation isn't always as predictable. We applaud the political leadership in Florida for addressing this significant issue. The bravery in their actions will save consumers billions, and we're happy because that means lower costs for our customers. At times when consumers are very aware of their spending, other states should consider similar actions.

Greatly appreciating your detailed answer. On Slide 11, your remarks on interest rates and duration of your fixed income portfolio capture my attention. You strategically increased that duration. As the Fed fund rate potentially declines, should we anticipate moving even further into the higher duration for your fixed income portfolio? Or is your current duration sufficient?

There's never a need to specifically adjust any part of the portfolio, whether it’s duration or any other segment. However, we look for opportunities to manage risk effectively to support the company. Do you want to elaborate further, John?

I would point towards the mosaic you see on the left, which outlines the considerations we weigh when deciding on adjustments. Beyond market conditions, we contemplate various factors. Importantly, we do not chase yield in a chase-yield perspective. We pursue the best economic return for our shareholders.

In terms of competition, one noteworthy comment: One of the major firms said, 'If it weren't for you guys, we wouldn't need to meet every year because most others don't change that much.' This doesn't mean we're always correct, but it reflects that we continually adapt.

And our next question comes from the line of David Motemaden from Evercore ISI.

I just had a question about your advertising spend. When I look at the efficiency of ad spend in the third quarter, it seems to have declined significantly based on new auto apps versus dollars spent on advertising. You seem to be capturing your share of the shoppers out there. However, could you explain how you see that ramping up, especially as efficiency appears to be declining?

David, that's not the best measure of efficiency. Let me break that down. We have both upper funnel and lower funnel advertising. Upper funnel is more mass media, such as streaming and TV, to raise brand awareness. Our brand awareness is significantly up this year. When it comes to the lower funnel, our efficiency has improved this year compared to last year. We're working on more refined approaches for both upper and lower funnel strategies. Our partnerships are evolving to maximize overall effectiveness.

Got it. Understood. One last question, regarding New York and New Jersey: Can you provide an update on the new product filing and potentially reopening business? You have started implementing rate increases, which is working through your book. Is there a point where you might say you'll proceed without waiting for the new ASC product to get approved?

I'll make a general statement; Mario can shed some specifics on our current status. We're hopeful regulators will recognize that this is a better product for customers. We want to see New York and New Jersey take progressive steps for approving it for the benefit of consumers. How we proceed will be based on capital position and regulatory landscape.

Yes, David, we're generating underwriting profits in both states. We've exceeded the specifics you mentioned. We're actually writing some new business, although not as much as we previously did. We're not waiting solely on ASC approval. We evaluate our risk appetite with existing products and will open up underwriting if appropriate. Our agents are continuing to invest to enhance capacity and we're hopeful that ASC will allow us to significantly step up in New York and New Jersey. We remain profitable, which is a strong position to be in as we evaluate future options.

Thank you for your time this morning. We'll keep working on shareholder value by embracing change and being the best at what we do. We'll talk to you next quarter.

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