Allstate (ALL -1.57%), a leading personal property and casualty insurer best known for its "You're In Good Hands" slogan, released its second quarter results on July 30, 2025. The headline results showed significant outperformance: adjusted earnings per share were $5.94, crushing the $3.25 consensus estimate, while total revenue (GAAP) reached $16.6 billion, ahead of the projected $15.2 billion (GAAP). Net income for common shareholders (GAAP) was $2.1 billion, compared to $301 million a year earlier, reflecting a notable gain from a divestiture. Management outlined progress in underwriting profitability, a rebound in policy growth, and ongoing digital transformation. The quarter marked a clear step forward for the company on several key financial and operational metrics.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $5.94 | $3.25 | $1.61 | 269.6 % |
| Revenue (GAAP) | $16.6 billion | $15.21 billion | $15.7 billion | 5.7 % |
| Net Income Applicable to Common Shareholders (GAAP) | $2.1 billion | $301 million | NM | |
| Property-Liability Premiums Earned | $14.3 billion | $13.3 billion | 7.5 % | |
| Net Investment Income | $754 million | $712 million | 5.9 % |
Source: Analyst estimates for the quarter provided by FactSet.
Business Model and Recent Strategic Focus
Allstate operates as one of the largest personal property and casualty insurers in the United States. Its business centers on auto and homeowners insurance, supplemented by service offerings like protection plans and identity protection. With over 208 million policies in force, it leverages its strong brand and reach through direct sales, exclusive agents, and independent agents.
In recent years, the company has shifted toward digital transformation, cost reduction, and multi-channel product access. Management has focused on expanding product distribution, launching digitally-focused insurance products, and strengthening risk management through advanced pricing algorithms and expanded reinsurance. Key to its success is maintaining underwriting discipline, improving digital tools, and expanding strategic growth areas beyond traditional core insurance lines.
Quarter in Detail: Performance, Products, and Trends
The quarter saw Allstate deliver large gains relative to both last year's results and analyst forecasts. Property-liability premiums earned rose to $14.3 billion, while net investment income was $754 million. Net income attributable to shareholders (GAAP) was $2.1 billion, including a $643 million after-tax gain from divesting the Employer Voluntary Benefits business.
Underwriting profitability improved sharply. The property-liability combined ratio, a measure comparing insurance claims and expenses to premiums, dropped to 91.1 from 101.1 in the prior-year quarter. A combined ratio below 100 means that earned premiums exceeded claims and expenses. The improvement came from favorable reserve releases in auto insurance (notably a $415 million benefit from prior-year claims estimates). and lower catastrophe impacts relative to premium size, especially in homeowners. Auto insurance lines achieved a combined ratio of 86.0, down almost 10 points year over year, while homeowners logged 102.0, which still reflects pressure from catastrophe losses but is better than last year’s 111.5.
New digital products and distribution channels helped Allstate grow new business, particularly with the "Affordable, Simple, Connected" branded auto product now available in 36 states as of Q1 2025 and companion homeowners coverage reaching 6 states. The company also saw strong contributions from its Protection Services segment, which includes Allstate Protection Plans (warranty protection for consumer products), Dealer Services (vehicle service contracts), and identity protection. Protection Services revenue increased to $867 million, up 12.2%, led by a 16.6% gain in Protection Plans revenue. Arity, the company’s telematics and data analytics affiliate, posted 13.5% revenue growth.
Total policies in force rose 4.2%, led by growth in Protection Plans. Core personal auto policies increased 0.5%, and homeowners policies were up 2.3%. However, commercial policies in force fell 31.3%, moderating overall policy gains. Management pointed to improved new business volumes in Q1 2025 but acknowledged that customer retention, especially in auto, remains below historical averages, prompting ongoing investment in retention initiatives like the S.A.V.E. program.
The company’s investment portfolio reached $77.4 billion as of Q2 2025. Market-based investment income increased $66 million year over year, while performance-based strategies showed a drop, reflecting lower private equity returns. Allstate booked net investment losses of $144 million (GAAP), attributed to rebalancing and risk reduction moves. The company also completed strategic divestitures: the Employer Voluntary Benefits business closed April 1, with a $643 million gain realized, and the Group Health segment, sold July 1, is expected to provide a GAAP gain of approximately $500 million in Q3 2025.
The quarterly dividend was raised 9% to $1.00 per share. Share buyback activity reached $341 million. Allstate continues its long-term approach to shareholder returns, allocating capital for growth but also prioritizing buybacks and dividend growth when excess capital is available.
Looking Ahead: Management Outlook and Investor Focus
Management did not provide formal financial guidance for the upcoming quarter or rest of fiscal 2025. The company stressed its intention to expand distribution and digital product development, while remaining disciplined on underwriting and cost management.
An expected $500 million financial book gain related to the Group Health business divestiture will appear in Q3 2025 results. Investors should closely watch for sustained trends in policy growth, retention rates in core auto and homeowners lines, and ongoing exposure to catastrophe risks such as hurricanes and wildfires. Allstate’s capital position remains robust, with management indicating flexibility to invest in growth or return further capital to shareholders as conditions allow.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
