Allstate (NYSE:ALL) executives used the company’s fourth-quarter 2025 earnings call to highlight a sharp improvement in profitability, progress on insurance affordability initiatives, and continued momentum in its “Transformative Growth” strategy to expand market share across personal lines. Management also detailed a new share repurchase authorization and an increased quarterly dividend, while fielding investor questions on regulatory scrutiny, competition, growth mix, claims capabilities, and state-specific product approvals.
Financial results and drivers
Allstate reported total revenues of $17.3 billion for the fourth quarter and $67.7 billion for full-year 2025. Net income applicable to common shareholders was $3.8 billion in the quarter and $10.2 billion for the year. Adjusted net income was also $3.8 billion, or $14.31 per share, for the quarter, and $9.3 billion, or $34.83 per share, for 2025.
Affordability focus: “costs, not profits”
In discussing industry-wide affordability, executives emphasized that auto insurance underwriting income over the last five years has been “close to zero,” arguing that improved affordability “will require a focus on costs, not profits.” Allstate broke down industry auto costs from 2020 to 2025 as:
- Physical damage at 43% of costs, with physical damage costs up 47% over five years
- Injury costs at 34% of premiums, with bodily injury costs up 52% over five years
- Expenses at 23%
Executives noted that used car prices rose 43% during the pandemic, increasing repair and replacement costs, and said that inflation has started to reverse, which they expect to help affordability given insurance is a “cost-plus product.” They also pointed to increased attorney involvement and higher settlements as key drivers of bodily injury inflation, citing Florida tort reforms as a factor enabling the state’s top five insurers to request rate reductions of 5.9% in 2025.
Allstate said uninsured and underinsured motorist costs increased 72% over the last five years, and suggested enforcement or laws requiring insurance coverage and raising mandatory coverage limits could mitigate the trend.
Company actions: SAVE and ASC product rollout
Management outlined several actions aimed at reducing customer premiums while maintaining margins. The company’s Show Allstate Customers Value Every Day (SAVE) program reduced premiums for 7.8 million customers by an average of 17% in 2025 through coverage optimization, discount application, and other renewal adjustments. Allstate also said it reduced auto insurance rates for its Affordable, Simple, Connected (ASC) products in 32 states, averaging a 9% reduction.
On the earnings impact, the company disclosed that the cumulative auto earned premium impact from rate decreases and SAVE actions reached $810 million by year-end, representing about 2% of 2025 auto earned premiums. Management stressed that affordability actions were executed alongside expense reductions and claims process improvements meant to preserve target margins.
Transformative Growth, distribution expansion, and Protection Services
Executives said the Transformative Growth initiative has reduced the adjusted expense ratio by 6.6 points since 2018, enabling more competitive pricing while maintaining margins. The company emphasized its “broadest distribution in the industry,” spanning Allstate agents, independent agents, and direct-to-consumer channels, and reiterated that its 2021 acquisition of National General strengthened independent agent capabilities and expanded non-standard auto offerings.
Allstate reported that marketing investment increased to $2.1 billion in 2025 from $900 million in 2019. Management said personal lines new business increased from 5.5 million in 2019 to 11.6 million in 2025, while total personal lines policies in force rose from 33.5 million to 38.1 million.
In Protection Services, Allstate said policies in force grew 3.3% to 172 million in 2025, with revenue up 11.7% to $3.3 billion. Adjusted net income for the segment was $218 million for the year. Management highlighted Protection Plans performance, noting domestic revenue increased 8.1% over the prior year quarter and international revenue increased 39.7%. The business generated $49 million in adjusted net income for the quarter, up 32.4% year-over-year.
Underwriting performance, claims initiatives, investments, and capital returns
In Property-Liability, Allstate reported earned premium growth of 4.4% in auto and 15% in homeowners for 2025, alongside auto policy growth of 2.3% and homeowners policy growth of 2.5%. The auto combined ratio improved by 10 points year-over-year; excluding reserve changes and lower catastrophes, management said the auto combined ratio was “about 90.” Homeowners recorded a combined ratio of 84.4, which management said reflected strong underlying performance and lower catastrophe losses.
Executives also described claims initiatives aimed at offsetting higher loss costs, including enhancements to physical damage inspections, adjuster training, and advanced computing, as well as an injury claims operating model redesign intended to accelerate appropriate payments and use predictive models to identify potentially injured parties earlier. When asked about the “inning” of claims process improvements, management characterized the effort as “middle innings,” described the approach as proprietary, and said later-stage benefits would increasingly come from artificial intelligence tools and insights.
Allstate said auto growth broadened geographically in 2025, noting it was growing policies in force in 38 states representing more than 70% of written premium, with 20 states growing at least 4%. Management also addressed headwinds from inactive brands, confirming that overall growth metrics include the drag from legacy Esurance and Encompass policies and noting Custom 360 as the replacement for Encompass as it continues to roll out.
On homeowners, executives reiterated targets for a recorded combined ratio in the low 90s and an underlying combined ratio in the low-to-mid 60s, reporting an underlying combined ratio of 57.9 for 2025. They also said homeowners is growing in 36 states and discussed gaining traction in direct sales where ASC has launched.
In investments, Allstate reported net investment income of $3.4 billion in 2025, more than $350 million higher year-over-year. The company said total portfolio carrying value increased from approximately $73 billion to $83 billion over 12 months, and reported a 6.1% total return for market-based assets and a 5.8% return for performance-based investments. Management also said it sold about $270 million of fund interests in the secondary market and moderated new commitments amid lower industry-wide private market distributions.
Finally, Allstate detailed shareholder returns and capital actions. The company returned more than $2.2 billion to common shareholders in 2025 through dividends and share repurchases. It announced an 8% increase in the quarterly dividend to $1.08 per share, payable April 1, 2026, and authorized a new $4 billion share repurchase program to begin after completion of the existing $1.5 billion authorization (expected to be completed in the first quarter of 2026). Management said Allstate has repurchased 18% of common shares outstanding over the last five years and 39% over the last ten years.
During Q&A, executives also addressed state-level regulatory dynamics and emphasized tort reform as a key lever to reduce consumer insurance costs. They acknowledged that New York and New Jersey remain states where Allstate is profitable but not yet growing, and said growth is dependent on ASC product approvals. Management said New Jersey received approval to implement ASC Auto in February, while New York approval is still pending.
About Allstate (NYSE:ALL)
Allstate Corporation is a publicly traded insurance company headquartered in Northbrook, Illinois, and is one of the largest personal lines property and casualty insurers in the United States. Founded in 1931 as a subsidiary of Sears, Roebuck and Co, Allstate has grown into a diversified insurer that serves millions of consumers and businesses through a mix of distribution channels and product offerings.
The company underwrites a broad range of insurance products, with primary emphasis on auto and homeowners coverage.
