All right, we'll get the next session started. I'd first like to welcome Tom Wilson, Chair, President, and Chief Executive Officer of The Allstate Corporation. Thank you very much for being with us. We're going to start with some opening remarks from Tom, we'll jump into Q&A. Well, good morning. Thank you for investing some of your time to help us tell our story. Jess Merten, our CFO, is with me, as is Mark Nogal. We start on slide one, this is our Surgeon General warning. We're going to make some comments today, we give you lots of other information, whether it's on our website or a 10-K. Please look at all that stuff so that you can be fully informed. Slide two talks about our strategy to increase shareholder value. The two ovals on the left are the two components of our strategy. The first is to increase property and liability market share through our transformative growth program. I'll talk about that in a minute. At the same time, we're expanding our protection solutions, whether it's identity protection, cell phone protection, your computer, your TV. The bullet on the right highlights our strategic priorities. First, most importantly, is to increase our auto insurance profitability. We'll talk some about that. Second is to continue to advance transformative growth, which should lead to a re-rating of an earnings multiple. The Protection Services businesses are generating very profitable growth, we're continuing to invest in expanding those both geographically and by product line. The other thing to note is, about a year ago, we implemented a strategy to reduce the risk in our investment portfolio. It was back last September, we saw inflation ripping through the auto insurance business, turning its profitability down. It had not yet hit rates in the investment portfolio, we de-risked the investment portfolio, cut the duration in half, sold down some equities, that's reduced the impact of the market downturn on our investment portfolio by about $2 billion this year. The concept there is we approach risk and return from an enterprise standpoint. You go to slide three, let's really start with auto insurance profitability, which will be the story you'll want to focus a lot on, which is how do we get to a mid-90s target combined ratio? The chart on the left, you can see we have a long history of achieving a target combined ratio, averaging about 92 for the five-year period from 2017 to 2021. Now, our performance is amongst the best in the industry. If you look at the industry average, we're about 6.5 points better than the industry. We know how to make money in auto insurance. There's a point there. The pandemic, obviously, has created a very volatile environment and required us to adapt pretty quickly. You can see 2020 is an outlier with a much better than target. That's because people quit driving. They quit driving, there weren't that many accidents, that obviously lowered our loss costs. In 2021, again this year, we both had higher frequency started to pick up because people started driving to work and around to go visit people. You also have the impacts of inflation, both on used car prices, parts prices, and increased severity in bodily injury. The cost of settling bodily injury claims has escalated. That's in part due to just more severe accidents. During the pandemic, people got used to driving really fast. When people got back on the road, they still like to drive really fast. You end up with more severe accidents, we track all that with our telematics servicing. As a result of that, both the increased frequency, increased severity, and prior year reserve increases, we also had high cat losses in the third quarter. You can see our profitability is not where we want it to be. Outlined on the right is our comprehensive approach to dealing with that. First, increasing rates. Two, reducing growth through stricter underwriting restrictions, continuing to focus on reducing expenses, modifying our claim practices to adapt to an increasingly high inflationary environment. Starting with rates. Since the beginning of the year, we've implemented rate increases of about 12% in the Allstate brand. That's through 10 months. We anticipate to continue to take increases this year and then into 2023. We are reducing operating expenses as part of transformative growth, including advertising. Our claim practices have been modified, particularly doing things like getting the customers in severe accidents earlier in the process rather than later in the process. We also have a number of strategic relationships with parts suppliers, rental car companies, all of which help us lower our costs and use predictive modeling to get people to the right place at the right price. If you go to slide four, this talks about auto insurance prices. Growth in our average premium per policy is accelerating. You can see that in our numbers. That's because of the rate increases we just talked about that we've done over the last 12 months. The difference is, though, when you write it, you get the higher premium, our written premiums are up, but then it takes a while to earn into the P&L because these are 6-month policies. The first day you get it, you don't get all the increase. It takes about a year before you get it all in. Over the last 12 months, we've implemented Allstate brand increases of 13.7%, or nearly $3.3 billion, which included 4.7% in the third quarter. You can see it's been accelerating through the year. The chart on this page is an estimation of when those rates that we implemented come through to the P&L. You can see in the third quarter, the estimated impact is $3.3 billion, of which only $660 million has come through into the P&L. We expect that to grow through the end of next year. As I mentioned, we also expect to continue to take rate increases. We're down to various states and negotiating with them. Most of the states are very open to it. There are a few that are laggards in recognizing that the costs are higher for customers. Slide five talks about the timing of that. You're like, okay, that's great. You're going to raise prices, reduce growth, make more money. When? Which is, of course, a key question for most shareholders. If you start on the left, this chart walks you through the when. For the first nine months of the year, the combined ratio was 109. That's that first blue bar. You got to normalize that, we take out the prior reserve increases that I just mentioned and normalize our catastrophes to a five-year average, that improves the combined ratio by about six points. The second green bar reflects the impact of the rate actions that we just talked about on the prior slide, as they are earned into premium, you can see that that would reduce the combined ratio by about eight points. There's an estimate as to how much goes through and what people do with deductibles, it's not exactly one for one, but we've tried to give you a sense for how big that number can be. Of course, we don't expect loss costs to stop here. We don't see an end to inflation at this point. Used car prices have leveled out, going down a little bit this year. Parts and labor, though, continue to go up, severe injuries continue to stay at pretty high levels. We don't see that coming down, that will put pressure up. Of course, we have to take future rate increases and the other reduced expenses and everything else to get it down into the mid-90s. We're highly confident we can get to that level. Go to slide six. This is our homeowners business. Bottom line is we're really good at it, much better than our competitors. We've generated $1.2 billion of adjusted net income on average over the last 10 years. The graph on the left shows us relative to our competitors, you can see our position. We've averaged 12 points better than the competition on the combined ratio there. We have a really integrated business model, which goes from top to bottom, I won't go through it right now, but it's not just price, it's not just policy terms, it's not just where you write it's not just your reinsurance programs, it's not just how sophisticated your pricing are or how good your claims are. It's all those things have to tie together, they are all linked as well, you have to adjust it all together. You can see the bottom line is we do quite well on that business. One of the things, inflation has been coming after the homeowners business as well, but we have an automatic adjustment in that policy called PIA. It goes up as the value of the house goes up, you can see our written premium is up almost 13% this year. Go to slide seven, this is transformative growth. Remember, it's our second priority on that first slide. This is a multi-year initiative with five facets and five phases, which is about increasing market share in the personal and property liability business. For a long time, we've had a premium-priced approach to the market. This is lowest-cost approach. It required us to do everything. We wanted to improve customer value, in part by lowering expenses so that we didn't have to give up shareholder money to do that. We're pretty far along in that process. Secondly, we wanted to make sure we expanded our access to customers, so that's selling direct under the Allstate brand at 7% cheaper than you can buy through an Allstate agent. You don't have to pay for it if you don't want an agent, and so that's helped us drive growth. We needed a new tech ecosystem to do that, and as well, we need new organizational capabilities. We're pretty far along in this. If Alex wants to get there, we'll talk about what we've learned along the way. We feel good about where we're at. We've slowed down a little bit because of auto insurance profitability, but not a lot. Let's go to slide eight. This is investments. As you may recall, as I just mentioned, we reduced our risk in the investment portfolio last October. That reduced the fixed income duration from 4.5 years to three. With some of it, we sold bonds, some of it we sold some derivatives because it was cheaper and easier. That's worked really well for us. We also took some high yield off the books and some equity. The result of all that is we've reduced our losses in the investment portfolio by about $2 billion, despite the fact that, as you know, the corporate bond index is down like 12% and the S&P is down in the 20s, depending on which day you look at it. Our net investment income is shown on the left, and we had good results to date, and we had good momentum on the shorter duration. As you'll see in the blue bar is the market base. That's basically stuff that comes off the corporate bond portfolio, and some equities, and that's performing well, but even with the shorter duration. As rates go up, as they already have, so you can see on the blue line and the red line on the right-hand side, the yield on the portfolio versus the current yield of an intermediate bond index there. When we decide to go risk on, that money will come straight through to the P&L. Let's go to slide nine. This is a bunch of businesses don't get much focus, but we think they have a lot of potential. We offer this wide range of protection, that's the bottom oval in that strategy. Whether that's at the workplace, our roadside services, car warranties, Protection Plans, so through Walmart, Costco, Target, Home Depot, our Allstate Identity Protection, those are all good, strong businesses. They're all growing quite rapidly. Not all of them, but most of them are growing quite rapidly. You can see they have revenues of $4.5 billion and over half a billion dollars of EBITDA, oftentimes get overlooked in our valuation. Let's go to end where we started. I'm going to really focus on the right-hand side of this chart, which is, as investors, how are we thinking about you and creating more value for you? First, we have to make more money in auto insurance. We talked about that. Highly confident we can get there. Second, we have to continue to maintain really strong returns in the homeowners business, which we're capable of and done for a while. Third, we need to advance transformative growth that should lead to a re-rating of the earnings multiple. Because if you look at our earnings multiple relative to other people, it's low. Fourth, we talked about growing Protection Services in our health and certain benefits business. Lastly, it's as rates rise, so does our investment income as we go forward. That's our plan. All of that means we think we can get to a 14%-17% return on equity in the future. Thank you. All right. We'll jump into some Q&A. I thought I would start, there was a lot of helpful information there, by the way. The piece that I thought was interesting was how much revenue you expected to get out of the rate increases that you've been implementing. The other piece of it is obviously what's happening to the severity as you're taking an extra rate. Are we getting close to a point where severity year-over-year comps begin to become much less extreme, and that rate really begins to earn in more to margin improvement? Are we sort of near that inflection? We've made a lot of progress. Over the last 18 months, we've really put through a lot of increase in prices. I can't say that we're done yet. Because we're not willing to say that inflation is going to level out or even that used car prices are down, we shouldn't take increased price. We're going to keep increasing price until we get to our target combined ratio. We may end up overshooting a little bit, don't know. It's not our goal to overshoot it. We're not backing off at this point, only because, Alex, it keeps showing up. First it's used car prices, now it's parts and labor, severe accidents. All we can do is price roll. What we've done is weight the moat, and when we're doing our pricing, we've weighted the near-term results more than the long-term results. That should continue to increase prices. Recently, you did a investor day on some of the claims practices, the reserving practices. It struck me that a fair amount of it, I think, was around courts being closed. There were a lot of blind spots for the industry. To what degree was that impactful to some of the PYD you've taken, and what are you seeing in terms of normalized levels, in terms of court backlogs and things like that? Are we at a point where actually that's not as much of a blind spot as it used to be? Well, first, nobody likes to put up $875 million of prior reserve increases, including us. We put it up because we thought we needed that to make sure that we had the right liability on the balance sheet. It's really not from last year or this year, it's really from the early pandemic years and a little bit before the pandemic. It really relates to more severe accidents. I don't know that I could really attribute. Doing attribution in claims is really hard to do, like trying to. We slice and dice it, like every which way known to man. I would say it's not really clear that it's court backlogs for us. It's just the accidents are a lot more severe. When they're more severe, they take longer to play out. Somebody breaks a finger, doesn't take so long. If they end up having mobility problems or something else, it takes a long time for that to play out. The medical treatment's longer, so it costs more. The more severe it is, the longer it takes, more likely you are to have an attorney come into the case. We will settle those cases if we believe it's the appropriate amount. Our backlog of pending cases being litigated is actually lower now than it was pre-pandemic. Because during the pandemic, we could see the courts were closed, we could see these severe cases, and we were like, "We need to close these things off and move on, and not have them be an unknown on the balance sheet." For us, it's not really related to court backlog. It's really related to severity of accidents. Yep. Got it. Last week, you all walked through, you've obviously got much more sophisticated ways of estimating reserves than somebody looking from the outside in our seats are able to assess it. How do inflation expectations and assumptions around what's going on, whether it's social inflation or the severity of accidents, how have you reflected that in things like loss development factors? Is there anything you can share about that process that can give some comfort to, at this point, after some of the work you've done, we've gotten to a point where you've got a healthy degree of conservatism layered in for some pressure that's still in the system. First, every time we put it up, we think it's the right number. As I said, as the case has developed, you learn new stuff. Sometimes I think from the outside, it's hard to see when you're looking at the math. On a physical damage claim, those things are done in like 90 days for the most part, if they're our customers. If they're somebody else's customers, it takes a little bit longer. The first reserve increases we put this year was those claims that were solved or settled by other insurance companies. We got a lot of requests from them later than we normally would have, even though we thought it was going to be 40% higher. We thought it'd be 40% higher, it was actually more than that. That was the first part of the reserve. The bigger piece that you're talking about really is bodily injury, and these are the severe cases. We haven't changed our processes, we haven't changed the inflation numbers. You just use about there's at least five different methods. You've got all these different inputs you put into it, and then you pick a number out of that. When you look at just nine months worth of development this year, that's really, in some cases, that's 25%-30% of the whole life of the settlement. When those numbers are climbing this year, as they have, we said, "Got to put more money in." There's nothing really. It's not like we said, oh, inflation was seven and we went to nine and that led to it. Sure. It's much more complicated. The thing, though, that should give you, I don't know if it's comfort or not, but it'll give you an insight into how we think about it, which is when Jess saw those numbers developing in the beginning of the third quarter with the work we were doing, we reached out to our external partners and said, "Hey, are you seeing what we're seeing?" They were like, "Look, we saw exactly what you saw at the end of last year. We saw exactly what you saw at the end of the second quarter. We were done exactly what you did, and we see the exact same thing in the third quarter." It isn't like we missed some numbers or we couldn't find anything. It was just the numbers just kept trending. Then we said, "Let's put up what we think is right, and that will fully recognize that these liabilities are covered. Got it. Yeah, that's very helpful. Does that make sense to you, Jess? Okay, I'm not trying to I thought I'd ask you a broad question about profitability versus growth. We're at a point in which obviously you're very much still focused on restoring the profitability that you've had over time. You've also got this transformative growth. There's always that struggle in this business in terms of balancing the two things. Where are we at with that? How do you see that moving forward over the next year or two? I'll go way up for a second, like, why do we do it? We're good at making money. I remember once some shareholder said, "What's your strongest muscle?" I was like, "I don't really know what to say about that." They were really talking about, what are you really good at as a business? Allstate's been really good at making money in auto insurance and home insurance. You can look at those numbers. We know how to make money. We know how to price. We know how to settle claims. Like, we know how to make money. You say, "Well, geez, why is your multiple half of somebody who looks a lot like us?" It's because they have more growth than we do. We came up with transformative growth, which was a way to rerate the stock, get growth and market share. How are we going to do that? I would say our prior strategy was really based on a premium product, good service, use that to grow. We managed to maintain share, but we really didn't pick up share with that. We said, you know what? Big driver in auto insurance and home insurance at this point is get the right price. How do we get the right price? Got to cut costs like crazy. We set a goal of $4.5 billion of cost. I think we're about 60% of the way done at this point. With a better price, we also decided we could simplify our product because our product is just a little complicated right now. As is everybody's, by the way. It would competitively differentiate us and make it available to more people, do a better job, lower your acquisition cost, put more money into it, all which requires a new tech system, and you need people to implement that. That's working. What I would say at this point is there's 5 phases. We're kind of in phase 3 and 4 right now, which is build the new and start to roll out the new. What we've shown, proven to ourselves is that the underlying assumptions are right. Underlying assumption 1, we could cut costs dramatically, and not ruin the business. We're well on our way. Are we done? No. We've got more work to do, of course. We've proven that. 2, did we prove that when we cut that, those costs, and cut our price, could we end up with higher growth and still get good margins? Yes. Before the pandemic set in, we had been reducing prices, I think like by 2% or 2.5% right before the pandemic started to set in. Our close rates went up. Could we sell through on the direct channel? Under the Allstate brand, get rid of the Esurance brand, cut $200 million out of advertising, and at 7% less than the agents, and not have all the agents quit and walk away. Yes, we've proved that. Could we build a tech system? Tech system is up and running. It's using AI in Illinois, and we just rolled it out to Tennessee. Building that is not a piece of cake. It wasn't like it was completely made up, but it was an underlying assumption we could build a system that would give a differentiated sales experience. We've proven that. When you step back and look at it, we feel like we've proved out the underlying assumptions. We did back off a little on growth because auto insurance profitability is sort of no sense doing a bunch of advertising if you're going to raise somebody's price by 15% the next time they call you. I think it's delayed when you'll see the realization of those market share gains. I don't have a specific month. Is it a year? Is it two years? It's not forever, though. Sure. When I think about some of those comments you made at the end there around price adequacy, there's always the dynamic between what some of the mutuals are doing that are also very big players in the market, obviously. How do you view your competitive positioning as you get a little more price adequacy in your book? I think you've been a little more aggressive with getting out ahead of some of the pricing action that needs to be taken relative to some of the mutuals. Do you feel like that's the case? Do you feel like you can take advantage of that in terms of the growth strategy? I think what gives us the most competitive advantage is reducing our expenses, and having that flow through prices as opposed to them not raising prices because they're losing money. State Farm, great company, we've competed with them forever. They're really smart people. They're not going to lose money forever. Okay, do they need to move as quickly as we do? I don't know. I think we're moving as fast as we can. I suspect they probably think they're moving as fast as they need to given their capital position and given their returns on capital they need. That said, they had a big downdraft in their capital this year, so that 20-plus%, a lot of their equity or capital is in equities. The last time that happened, last time they had a loss in underwriting and they had a loss in the capital markets and took their overall surplus down, that does drive me, they moved. I'm highly confident they will move their prices, just based on their history. I think from our standpoint, we're not seeing any one competitor be so much better priced than we are that it's not enabling us to grow. National General is growing like crazy, and we could grow it faster if we wanted to, and we're choosing not to. Got it. I thought maybe I'd shift gears a little bit to capital. I thought maybe you could just opine on just how you view the capital position today. If we think through the possibility of a downgrade, how much does that affect your business if that would happens? First, we got plenty of capital. Not worried about capital at all. Whether that's what our customers ask of us, given our brand name or what the regulators want us to have. I have no concerns about capital at all. The rating agencies, Jess won't let me talk to him anymore, because he thinks I'm mean to him. Whatever they decide to do won't have any impact on us. Okay. Any shifting in terms of your approach to buybacks during this period where you're still sort of working through getting the profitability back to where you want it? Yes, the answer is yes, but in a minor way. Remember, right now we're in the middle of a $5 billion share buyback. About 3 of that is because we sold the Life Company, and we didn't need that capital. If we don't need the capital, we give it back to shareholders. The rest was just money we earned, or had earned. That $5 billion program just slowed down by a couple of quarters, really, not a lot. We thought, you know what? We've always been good at capital. We got a lot of capital. We've always been conservative in the way we run our business with capital. We stretch it out by a couple. When we get to the end of that program, which will be sometime in sort of third quarter of next year, the board will decide what do we want to do. Part of that'll depend how much we're making in home insurance, how much we're making in auto insurance, how do we feel about the investment portfolio at that point. That's a decision. I think if you just look at our track record, and it doesn't often show up in the stock price, it's interesting. Our shares outstanding today are 8% lower than they were a year ago. In theory, one share of stock owns 8% more of the company today than it did a year ago. It just doesn't kind of roll through the stock prices. We do it because we think it's right for shareholders. Got it. Maybe on the regulatory front, you're going through a lot of rate increases. There was a little more opposition at first. It seems like some of it's easing. What's the latest update with those discussions and a willingness to allow you to take the rate you feel like you need? There's not 50 stories, there's a lot of different stories. In places like Texas and Illinois, where Texas, I think we're up over 50% this year. They understand it. They can see the numbers. They know we're not making it up. We're paying the money out, they know that they have to have a fully functioning market. If you get to places like California, less so. We got a rate increase recently in California, 6.9%, using Prop 103 methods. Our number's multiples of that. The only reason you take 6.9 is because they can approve 6.9, and you don't have to go through a bunch of hearings and consumers, which we would get because we're doing it according to pro forma. It just stretches the whole process out. We're going to implement 6.9% in California, then we'll immediately file for more because we need more. How cooperative they are, how helpful they are. We have the same issue with N.Y. N.Y.'s approved a bunch of other of our competitors right now, we're still in negotiations with about what our rate increase should be. This is where it gets a little bit on growth. If other people get rate increases and we don't at the same timing, remember I talked about one of the things in the auto profitability plan was underwriting restrictions, we just won't sell much business in N.Y. It really doesn't make sense to have our competitors give price increases. Suddenly they're more expensive than us, yeah, we can sell it's at a price we don't really want to sell it at. We do it by state. Yep, got it. The next one I wanted to ask you is just on reinsurance costs. Everybody's very hyper-focused on what's going on with reinsurance pricing right now, we're frequently getting the question of how impactful is this to Allstate? Anything you can share with us around just the renewal processes you get to your renewals, what that could look like, and what options do you have to potentially offset some of it? First, I think you're right to be concerned about the reinsurance markets. I think there's less capacity going to be available. One is over the last five years, they haven't made much money, if any at all. Second, the U.S. dollar, which is not often looked at, has really kicked a number of them in the rear, particularly the European people. They've lost a lot of money on that currency trade. That'll be an issue. I don't really think it's an issue for Allstate, I'll tell you that's my view. You can have your own view. First, we are one of the biggest buyers of catastrophe reinsurance, probably in the world, certainly in the U.S. We have a good spread of business, which is what they want. We've got business everywhere. When they're trying to figure out their aggregates and how they drive it, we are an attractive customer from that standpoint. Second, we have a program that basically is a third, a third, a third. Only a third of our overall program comes up for renewal every year. That's because when we built our homeowners business, remember I talked about building a sustainable profitability, we said, look, we don't want to be subject to some reinsurer deciding they want to raise our prices by 100% from what, and they're not in that call, but let's call it 10% from one year to the next. We have a staged program, not all of it expires. We still have two years left on the old prices as it goes to next year. Third, we recover most of that money in our homeowners premiums. Over the last 10 years, really, we've built out a system where when we write a check to Swiss Re or somebody else, we then go to the regulators and say, "Hey, guess what? Our costs are up. We need to raise the price for our homeowners." If you look at the overall long-term economics of our homeowner business, we feel like it's built to weather any changes, no pun intended, really, but to weather changes in the reinsurance market. It doesn't mean that you don't lose a point of combined ratio here or there on any given year. From a long-term economic value, we feel very good about the way that business is built. Got it. All right. I think we're at time, I will stop it there. Thank you very much- Thank you Thank you for being with us today. Enjoy. Thanks.