Growing with purpose
Allstate’s purpose is to empower customers, create economic value for shareholders, provide opportunity for our team and improve communities. The strategy to create Transformative Growth businesses by building a digital personal property-liability protection company and expanding the circle of protection provided to customers is gaining momentum. The story of 2020 is covered in this Year in Review, and the independent directors’ perspective is in the Proxy Statement.
Allstate had significant accomplishments on multiple fronts by emphasizing long-term sustainability in 2020. Operationally, we adapted to a tumultuous environment, focusing on serving customers while generating an attractive return for shareholders. Customers were well served, receiving almost $1 billion in Shelter-in-Place Paybacks and other support to deal with the pandemic. Financial results were also attractive, with net income of $5.5 billion for the year and adjusted net income* of $4.6 billion. This represents an adjusted net income return on equity* of 19.8% for 2020.
Transforming existing businesses, improving Inclusive Diversity & Equity, addressing climate change and enhancing culture also have positive trajectories but are far from complete.
Transforming existing businesses
Allstate’s largest and most profitable business is providing personal property-liability protection for customers’ cars, homes and personal property. We are building a digital business model to provide affordable, simple and connected protection solutions while leveraging existing strengths. Affordability is being improved by lowering costs, which required reducing the workforce by approximately 9% in 2020. This enabled us to improve our competitive price position for auto insurance.
To fully serve customers we must do more than lower price by using our imagination to change, which is Allstate’s strategy and history. Customer access was expanded by merging the Esurance and Allstate direct operations and shifting direct sales to the Allstate brand. We will ensure Allstate agents continue to grow with additional customer support, new technologies and differentiated products. The acquisition of National General is expected to increase growth opportunities through independent agents.
Improving Inclusive Diversity & Equity
Inclusive Diversity & Equity is one of our core values. On most performance measures, Allstate is at or above industry results. In 2020, we made Juneteenth a company holiday and doubled employee diversity training. Employee pay, promotions and operating practices are reviewed for gender and ethnic equity every year. That said, we must do more, so a three-year plan with increased resources is being built so we are the most diverse digital protection solutions company.
- Allstate raised the hourly minimum wage for employees from $15 to $16 or $18 based on location. This is the second increase in five years.
- Over the last five years, the company has paid out $2.9 billion of common dividends and repurchased 24.9% of the common shares outstanding for $8.5 billion. At the same time, $5.9 billion was invested in growth through the acquisitions of SquareTrade, lnfoArmor and National General.
- We invested $14 million in equipment that employees needed to work from home effectively.
- Allstate took a stand to expand diversity on Wall Street by issuing $1.2 billion of senior notes through a syndicate of exclusively minority-, women- and veteran-owned business enterprises (MWVBEs). This was the first time a corporate bond offering of this size has been managed exclusively by MWVBEs.
- Allstate is proud to earn a place on the nonprofit CDP A-List and is committed to setting a science-based emissions reduction target.
- Allstate has been listed on the Dow Jones Sustainability Indices for the past three years for strong performance and management of environmental, social and governance practices.
Addressing climate change
The impact of climate change has been a priority at Allstate for 25 years as we have worked to mitigate the effect of more severe weather on customers’ homes and shareholder returns.
Substantial progress has been made to make homes safer through better building codes, and to improve affordability by pooling risks and modifying our business practices. As the climate continues to change, this expertise will serve customers and shareholders well, and support economically sustainable markets. The impact of climate change on the investment portfolio is also a key focus moving forward.
Our Shared Purpose was revised to ensure Allstate’s culture evolves to support Transformative Growth and adapt to a changing world, while building on our strengths. A broad purpose was reaffirmed and expanded to include affordable, simple and connected protection solutions. Equity is specifically identified as part of inclusive diversity. Greater clarity was brought to behaviors and operating standards that shape culture because everyone at Allstate is a leader in building the future.
Allstate is positioned for success far into the future with a world-class leadership team that has strategic vision, runs the business with precision, leads with the head and heart, and thoughtfully deploys capital. We look forward to fulfilling Allstate’s purpose.
Chair, President and CEO