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Allstate Protection Growth Strategy

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Student International Business Council
Fall 2017

Publié dans : Business
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Allstate Protection Growth Strategy

  1. 1. McKinsey & Company | Allstate Protection Strategy Student International Business Council | Fall 2017
  2. 2. 2 Agenda Introduction Allstate Protection Brand Analysis Auto Insurance Analysis Recommendation Brand Consolidation Partnership Strategy Impact Risks Implementation Timeline Appendix
  3. 3. 3 McKinsey & Company SIBC Analysts Miles Wood Shawnee, KS Class of 2020 Business & ACMS Marcela Bertini São Paulo, Brazil Class of 2019 Business Analytics & Economics Dominic Bozzo Pittsburgh, PA Class of 2020 Computer Science Godsee Joy Silver Spring, MD Class of 2020 Economics & Peace Studies Andrew Herbst Columbia, SC Class of 2020 Finance & PLS Mackenzie Nolan Winnetka, IL Class of 2019 Political Science & Arabic Gabby Biltz Garrettsville, OH Class of 2021 Business Mariana Queiroz São Paulo, Brazil Class of 2020 Business Analytics & Economics Carlos Ariza Matos Santo Domingo, DR Class of 2021 Business Luis Bigott Miami, FL Class of 2020 Finance & ACMS
  4. 4. 4 Despite sustained revenue growth since 2010, Allstate is struggling to maintain margins in a highly competitive industry Sources: Allstate 10-K 36,769 29,394 32,013 31,400 32,654 33,315 34,507 35,239 35,653 36,534 29,744 32,039 30,240 29,919 31,277 29,620 29,495 30,588 32,043 33,460 4,636 (1,679) 854 911 787 2,306 2,280 2,850 2,171 1,877 ($5,000) $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenue($mm) Total Revenue Total Operating Exp. Net Income 5.1%6.1%8.1%6.6%6.9% 2.4%2.9%2.7% -5.7% 12.6%
  5. 5. 5 Allstate should consolidate key brands to enhance the customer experience and partner with Waymo to hedge shifting auto trends Brand Consolidation Auto Insurance Partnership Objectives Enhance Distribution Strategy Maintain Allstate Brand Hedge Risk with Auto Insurance Impact Ecosystem Improve Profitability Defensive Strategy To maintain focus on the customers, Allstate should constantly adapt to trends Build on Allstate’s current brand perception by offering high quality service across the board Avoid and counter threats that have the potential to disrupt Allstate’s business model Create a true one-stop-shop insurance provider and reinvent the customer experience Growing direct-to-consumer lines, while eliminating inefficiencies, will drive profits Investment in future markets positions Allstate to remain an industry leader $
  6. 6. 6 Agenda Introduction Allstate Protection Brand Analysis Auto Insurance Analysis Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix
  7. 7. 7Sources: Bain & Company, IBM As technology empowers convenience and customization, the P&L insurance industry must adapt to meet consumer expectations Historical Trend Impact P&L insurance companies have traditionally targeted an older demographic through an agent-focused strategy Traditionally low customer interaction P&L insurers tend to focus on traditional service lines Increasing importance of digital presence Millennials are twice as likely to buy their policies online instead of with a local agent Transition from a resource based economy to a shared economy Exponential growth of data Transformation of offerings Tailored products based on customer data Explore adjacent markets Digitization in response to a younger customer base Online platforms and services improve experience and add customer value Increase high-quality interactions with consumer to monetize brand loyalty Rise of consumer interaction as a key factor of brand loyalty Direct interaction may increase the Promoter Score by 20 percentage points Millennials Brand Significance Product Mix
  8. 8. 8 Allstate Protection’s highest potential brands are well-positioned to capitalize on the digital economy’s customer-centric trends Sources: Allstate 10-K, Squaretrade.com Value Proposition Coverage Distribution Strategy “You’re in Good Hands” Customer relationship is personal, respectful, and meaningful Cater to individual preferences and utilize different capabilities for distinct customer segments Provide independent warranties for consumer electronics and major appliances One stop shop for personal insurance lines Growth Potential Protection for computers, home entertainment, smartphones, cameras, appliances, and more Direct-to-consumer strategy with hassle-free, 24/7 customer service and record satisfaction ratings Excellent growth opportunities in niche insurance markets Affordable, direct-to- consumer insurance is increasingly more popular Premium insurance will remain relevant as it maintains relationships with affluent customers Independent agents offer personalized customer service and elicit high satisfaction ratings Direct-to-consumer strategy with convenient, speedy, and easy user experience online and by phone Primarily vehicle and property insurance with select alternative offerings
  9. 9. 9 However, as subsidiaries consistently underperform, Allstate’s bottom line is also increasingly pressured by DTC channels Sources: Allstate 10-K $(1,000) $(500) $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 2011 2012 2013 2014 2015 2016 NetOperatingIncome($mm) Allstate Esurance Squaretrade
  10. 10. 10 Meanwhile, Allstate’s trustworthy name continues to earn high consumer satisfaction ratings relative to other industry giants Sources: J.D. Power Rankings 891 886 874 867 867 863 862 861 858 857 853 833 800 810 820 830 840 850 860 870 880 890 900 The Hartford Erie Insurance Nationwide Allstate Farmers Progressive Travelers Liberty Mutual GEICO 21st Century State Farm Esurance ConsumerSatisfactionRating Average
  11. 11. 11 Agenda Introduction Allstate Protection Brand Analysis Auto Insurance Analysis Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix
  12. 12. 12Sources: PWC, McKinsey Insights, KPMG, Deloitte Looking ahead, as automation disrupts mobility trends, existing personal auto insurance premiums will decrease 60% by 2040 • Accident proof technology will decrease accidents by 90% . • Driverless vehicles might force auto insurers to shift the core of their business model, from protecting private customers to insuring car manufacturers. • Vehicle ownership is declining as 50% of 18-34 year old drivers already use shared mobility models • Product and premium mix for passenger vehicles shift from individual to commercial buyers • Increase in shared mobility models results in an increase in commercial lines. • Commercial lines will represent 49% of market premiums by 2030 and 67% by 2040 Autonomous Car Shared Mobility Commercial Lines $0 $50 $100 $150 $200 $250 2015 2020 2025 2030 2035 2040 PremiumNeed($bn) Personally owned driver-driven Shared driver-driven Personally owned autonomous Shared Autonomous Expected Premium Need in Personal Auto
  13. 13. 13 These trends, due to new technology in auto manufacturing, seriously threaten Allstate’s dependence on personal auto lines Sources: Allstate 10-K, McKinsey Insights, Waymo, KPMG Allstate’s Premiums Earned for Auto Insurance is Prone to Dramatic Decline Risk Reduction Factors LiDAR Sensors Telematics Technology Impact Liability Shift 68% of Premiums Earned Tesla crash rates have dropped 40% since Autopilot was introduced in 2015 Recent Crash Rates Vehicle manufacturers and tech companies are aiming to introduce driverless cars in 2020-22 Driverless Concept McKinsey estimates self-driving cars could eliminate 90% of auto accidents Driverless Crash Rates Auto insurance accounts for 42% of Property and Casualty insurance 80% of auto claims are collision claims Personal auto insurance could shrink 60% by 2040 $21,264 $8,506 $- $5,000 $10,000 $15,000 $20,000 $25,000 2016 2040 ($12,758)
  14. 14. 14 Agenda Introduction Allstate Protection Brand Analysis Auto Insurance Analysis Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix
  15. 15. 15 Allstate can improve operations and hedge auto by consolidating major brands and partnering with the future of transportation Days 65% Solution: Forward-looking Ecosystem Distribution: Underperforming Brands Product Mix: Dependence on Auto Lines Problem: Threatening consumer trends and disruptive technology Brand Consolidation Auto Insurance Partnership Brand Loyalty Distribution Strategy Waymo Brand consolidation will produce an additional $200 mm in annual profits by 2021 Allstate can successfully integrate and consolidate independent brands by 2020 2020$ Cannibalization, agent recoil, and customer trust risks have been addressed Impact Risks Implementation “You’re in Good Hands” Allstate name is associated with trust and customer satisfaction Expand brand loyalty to lower-end services Ecosystem that incorporates products for all consumer bases More organized expansion strategy, allowing for acquisition flexibility Decrease advertising expenses Rideshare taxi service Offer software, vehicle fleet, and passenger per ride insurance Allstate offers crucial data sources for human driving habits
  16. 16. 16 Agenda Introduction Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix Allstate Protection Brand Analysis Auto Insurance Analysis
  17. 17. 17 Allstate needs to consolidate key independent brands to improve organization, adapt to evolving trends, and allow room for growth Product Diversity & Consumer Choice Consolidated Services Primary Brand Trust Allstate Corp. Allstate Agent-based Allstate Digital Direct-to- consumer Allstate Technology Niche Economic Spectrum$$$ $
  18. 18. 18 The consolidated brand concept creates an ecosystem that will drive organic growth and eliminate subsidiary inefficiencies Sources: Allstate 10-K, NY Times, Bain Report, Squaretrade Organic Growth Operational Enhancements Advertising and Other G&A CostsEcosystem Advantage Cross Selling Strategy An ecosystem reinvents customer relationships in the insurance industry Build customer brand loyalty by offering convenient digital and traditional distribution channels Diversify product offerings and making product selection more accessible across subsidiaries Net Promoter Scores jump 20 to 30 points in an ecosystem Ecosystem framework integrates a comprehensive and diverse customer base Over 525,000 Esurance customers Over 238,000 Squaretrade customers Potential to move this expansive customer base to premium policies in the long term Brand recognition and respect is key to attracting and retaining policy holders Transfer of resources boosts Allstate marketing efforts by 31% instantly Allstate Advertising 2017: $59.7 mm Esurance Advertising 2017: $18.6 mm Following brand consolidation, Esurance advertising costs can be redirected to bolster Allstate’s presence Allstate’s advertising dollars have recently declined relative to competitors in the P&L insurance industry Impact More convenient and personalized insurance packages will boost satisfaction Timeline offerings will maintain relationships with customers, ensuring lasting revenue growth Organic growth of direct-to- consumer policies will boost margins significantly More effective use of capital will improve margins and solidify Allstate’s reputation A wider breadth of offerings will bring valuable millennials into the Allstate family Allocation of advertising dollars to a single organization will improve brand loyalty $$ $
  19. 19. 19 Agenda Introduction Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix Allstate Protection Brand Analysis Auto Insurance Analysis
  20. 20. 20 Partnering with Waymo to offer “backseat” insurance quells consumer fears in a rapidly advancing transportation atmosphere Sources: AlixPartners, AAA, Business Insider By 2020, Tech and Motor companies will implement self driving technology in one of two manners: rideshare or direct 55% 84% 78% Unlikely to consider a driverless car Fear “dropped call” phenomenon or other software malfunction Would trust the technology more if developed by a software giant Stiff Customer Segmentation Issues are Faced Across Generations Partner to Mitigate Consumer Fears: Backseat Insurance Google’s autonomous car project Trusted organization with competent engineers Rideshare taxi service Insurance partnership with Waymo Insure the software, vehicle fleet, and passengers on a per ride basis Allstate’s brand builds trust “You’re in Good Hands”
  21. 21. 21 • Shift from personal to commercial lines for Allstate • Data on human driving behavior • DriveSense • Arity • Brings light to data on human errors • Completes image of the driving experience This strategy hedges Allstate’s exposure to personal auto, while improving Waymo’s rider experience and algorithm development • Sensory awareness • Algorithms are enhanced through machine learning • Computers learn from mistakes • Neural Network: vehicle “minds” learn from each other Inputs to Autonomous Vehicles Critical Value-Adds from Allstate What’s Insured Data TransmissionCost Structure • Software • Vehicle fleet • Passenger
  22. 22. 22 Agenda Introduction Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix Allstate Protection Brand Analysis Auto Insurance Analysis
  23. 23. 23 Successful consolidation will net an additional $216 mm in annual underwriting income by 2021 Sources: Allstate 10-K, Bloomberg Projected Operating Income ($mm) Scenario Current State Base Case ($mm) Recommendation ($mm) Premiums Earned $30,377 $32,957 $38,560 Losses and Expenses $29,085 $31,794 $37,181 Underwriting Income $1,292 $1,162 (-$130) $1,378 (+$86) $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Base Case Recommendation
  24. 24. 24 Agenda Introduction Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix Allstate Protection Brand Analysis Auto Insurance Analysis
  25. 25. 25 5 11 11 5 14 54 Low price experts Univolveds Price-conscious advice hunters Self servicers Active shoppers Non-price conscious customers Price conscious customers Allstate can mitigate the risks of consolidation by emphasizing diversity of services and improving agent-carrier relations Sources: EY Risks Mitigation Strategies Price and Brand Conscious Customers The Agent Problem Highlight diversification of services Ensure advanced coverage for higher price Allow customization of insured products 10 32 44 12 1 Agent Perception of Direct-to-Consumer Future No threat at all Little Threat Some Threat A Lot of Threat Full Threat 80% would consider giving up a role in servicing to focus on sales and growth Incorporate Agent into Sales and Growth 40% question their preparedness to meet the needs of the next generation Prepare agents for the transition 34% want the carrier to have better communication with the agent or broker Ensure better carrier-agent relations
  26. 26. 26Sources: NCSL, PWC, MIT, Self Driving Coalition for Safer Streets Allstate can mitigate risks of consumer distrust and emerging market conditions by publicly addressing the strategy Risks Consumer Distrust Market Restrictions Due to Government Regulation Mitigation Strategies Advertising Lobbying Autonomous Vehicles Promote autonomous vehicles in states with legislature  Self Driving Coalition for Safer Streets  Partner with other interested companies  Use data of states with legislature to prove benefits and safety Build trust through relatable advertisements Increase customer awareness of the technologies benefits Use successful data to improve consumer confidence Partner with Waymo to give customer a “Test Drive” 23 22 5 Not yet considered Enacted Pending Executive Order States with Autonomous Vehicle Registration Allstate’s Intentions 54% 28% of consumers say that autonomous cars are dangerous of consumers say autonomous vehicles are susceptible to hacking 53% of consumers say they are scared of self-driving cars Sensitivity Benefitstocompany Self- Reported Digital Exhaust Profiling Data Sell to 3rd Parties Targeted Marketing Improve Product or Service Use Data Type
  27. 27. 27 Agenda Introduction Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix Allstate Protection Brand Analysis Auto Insurance Analysis
  28. 28. 28 Continue exploration of adjacent markets Officially introduce the product alongside rideshare taxis Launch marketing campaign to inform the public Secure formal partnership with Waymo Establish team dedicated to product development Within three years, Allstate can effectively consolidate its existing brands and begin repositioning for impending auto disruption Short Term: Brand Consolidation Long Term: Auto Insurance Partnership 2018 Conduct market research to discover consumer sentiment Gauge internal sentiment and calm resistance Integration of management teams 2019 Launch marketing campaign to introduce strategic initiative Educate market of the change’s implications Begin integrating policy holders into the Allstate infrastructure 2020 Fully integrate major independent brands Utilize technology to drive direct-to- consumer growth Continue exploring innovation strategies Phase 1: Market Research and Preparation Phase 2: Official Launch Phase 3: Comprehensive Integration
  29. 29. 29 Allstate’s brand consolidation offers immediate tangible impact, while the auto segment transformation defends its position Brand Consolidation Observed Issue Auto Insurance Partnership Objectives Solution Impact • Major independent brands, primarily Esurance and Squaretrade, are not profitable • Esurance performs poorly and lacks brand recognition relative to other low-cost insurers • Automated vehicles and the sharing economy threaten traditional auto insurance • Allstate’s annual revenue and income are heavily reliant on auto lines • Improve profitability by eliminating cost inefficiencies and expanding cross selling • Eliminate sources of confusion • Increase consumer satisfaction • Hedge risk associated with Allstate’s dependence on personal auto insurance • Innovate to remain competitive in the insurance industry • Consolidate brands under Allstate • Offer both low cost, direct-to-consumer policies and premium, agent-to-consumer policies • Implement cross-selling strategies • Partner with Waymo, Google’s autonomous driving project • Alleviate concerns with “backseat insurance” • Support tech development with driver data • Consistent growth over Allstate Protection’s base case • Net additional ~$200 mm in annual underwriting income by 2021 • Repositioned to capture future markets • Defend position as industry leader
  30. 30. 30 Agenda Introduction Recommendation Brand Consolidation Auto Insurance Partnership Impact Risks Implementation Timeline Appendix Allstate Protection Brand Analysis Auto Insurance Analysis
  31. 31. 31 Appendix A: Historical Financial Performance Sources: Allstate 10-K Historical Loss and Expense Ratios 2012 2013 2014 2015 2016 Allstate Loss Ratio 0.683 0.636 0.658 0.687 0.703 Allstate Expense Ratio 0.255 0.263 0.257 0.247 0.246 Allstate Combined Ratio 0.938 0.899 0.915 0.934 0.949 Esurance Loss Ratio 0.772 0.785 0.768 0.751 0.758 Esurance Expense Ratio 0.427 0.390 0.409 0.352 0.317 Esurance Combined Ratio 1.199 1.175 1.177 1.103 1.075 Squaretrade Loss Ratio 0.725 0.660 0.654 0.647 0.710 Squaretrade Expense Ratio 0.761 0.567 0.440 0.415 0.392 Squaretrade Combined Ratio 1.486 1.227 1.094 1.061 1.101 Consolidated Financial Performance ($mm) 2012 2013 2014 2015 2016 Total Premiums $ 25,699 $ 26,570 $ 27,873 $ 29,289 $ 30,378 Total Policy Benefits $ 17,641 $ 17,086 $ 18,493 $ 20,209 $ 21,455 Total Selling General & Admin Exp. $ 6,742 $ 7,179 $ 7,421 $ 7,443 $ 7,630 Underwriting Income $ 1,317 $ 2,304 $ 1,959 $ 1,637 $ 1,292
  32. 32. 32 Appendix B: Consolidated Income Statement (Base vs. Model) Sources: Allstate 10-K Base Case ($mm) 2017 2018 2019 2020 2021 Total Premiums $ 30,937 $ 31,682 $ 32,298 $ 32,776 $ 32,957 Total Policy Benefits $ 22,095 $ 22,717 $ 23,249 $ 23,597 $ 23,712 Total Selling General & Admin Exp. $ 7,727 $ 7,866 $ 7,977 $ 8,058 $ 8,071 Underwriting Income $ 1,114 $ 1,099 $ 1,072 $ 1,119 $ 1,173 Recommendation ($mm) 2017 2018 2019 2020 2021 Total Premiums $ 30,937 $ 31,816 $ 33,621 $ 35,848 $ 38,560 Total Policy Benefits $ 22,095 $ 22,818 $ 24,212 $ 25,825 $ 27,763 Total Selling General & Admin Exp. $ 7,727 $ 7,850 $ 8,285 $ 8,796 $ 9,413 Underwriting Income $ 1,114 $ 1,146 $ 1,124 $ 1,226 $ 1,383
  33. 33. 33 Appendix C: Projected Premiums Earned Sources: Allstate 10-K Projected Premiums Earned ($mm) 2017 2018 2019 2020 2021 Allstate Premiums $ 28,955 $ 29,621 $ 31,191 $ 33,156 $ 35,576 Esurance Premiums $ 1,697 $ 1,867 $ 2,054 $ 2,259 $ 2,485 Squaretrade Premiums $ 285 $ 328 $ 377 $ 434 $ 499 Total Premiums $ 30,938 $ 31,816 $ 33,622 $ 35,849 $ 38,560 Assumptions: Premiums 5Y CAGR 1Y CAGR Base Growth 2018 Growth 2019 Growth 2020 Growth 2021 Growth Allstate Premiums 1 2.9% 1.8% 2.3% 2.3% 5.3% 6.3% 7.3% Esurance Premiums 2 11.4% 2.2% 4.0% 10.0% 10.0% 10.0% 10.0% Squaretrade Premiums 3 44.5% 4.7% 4.0% 15.0% 15.0% 15.0% 15.0% 1. We expect Allstate Premiums to increase over the next 5 years as the brand consolidation enable cross-selling strategies and the ecosystem attracts younger generations. 2. We expect Esurance Premiums to grow at an accelerated rate due to their incorporation under the Allstate brand as well as the expansion of the Direct to Consumer market as a whole. a. Nike recently expanded Direct to Consumer channels, which grew sales at 30%. Considering Nike operates in the retail space, we took a percentage of their growth to use as a proxy. 3. We expect Squaretrade Premiums to grow at a higher rate due to the reasons listed in 2, as well as the growth of the niche insurance market.
  34. 34. 34 Appendix D1: Projected Loss and Expense Ratios Projected Loss and Expense Ratios 2017 2018 2019 2020 2021 Allstate Loss Ratio 0.711 0.714 0.717 0.717 0.716 Allstate Expense Ratio 0.246 0.247 0.248 0.248 0.248 Allstate Combined Ratio 0.957 0.961 0.965 0.965 0.964 Esurance Loss Ratio 0.762 0.746 0.731 0.717 0.702 Esurance Expense Ratio 0.301 0.240 0.245 0.250 0.255 Esurance Combined Ratio 1.061 0.986 0.976 0.966 0.957 Squaretrade Loss Ratio 0.744 0.759 0.774 0.789 0.805 Squaretrade Expense Ratio 0.381 0.240 0.228 0.217 0.206 Squaretrade Combined Ratio 1.122 0.999 1.002 1.006 1.011 Assumptions: Loss and Expense Ratios 5Y CAGR 1Y CAGR Base Growth 2018 Growth 2019 Growth 2020 Growth 2021 Growth Allstate Loss Ratio 0.6% 1.2% 0.4% 0.4% 0.4% 0.0% -0.1% Allstate Expense Ratio -0.7% -0.2% -0.3% 0.5% 0.5% 0.0% 0.0% Esurance Loss Ratio -0.4% 0.5% -2.0% -2.0% -2.0% -2.0% -2.0% Esurance Expense Ratio -5.8% -5.1% -5.0% 2.0% 2.0% 2.0% 2.0% Squaretrade Loss Ratio -0.4% 4.8% 2.0% 2.0% 2.0% 2.0% 2.0% Squaretrade Expense Ratio -12.4% -2.8% -1.0% -5.0% -5.0% -5.0% -5.0%
  35. 35. 35 Appendix D2: Projected Loss and Expense Ratios Assumptions: Loss and Expense Ratios2 5Y CAGR 1Y CAGR Base Growth 2018 Growth 2019 Growth 2020 Growth 2021 Growth Allstate Loss Ratio 1 0.6% 1.2% 0.4% 0.4% 0.4% 0.0% -0.1% Allstate Expense Ratio 2 -0.7% -0.2% -0.3% 0.5% 0.5% 0.0% 0.0% Esurance Loss Ratio 3 -0.4% 0.5% -2.0% -2.0% -2.0% -2.0% -2.0% Esurance Expense Ratio 4 -5.8% -5.1% -5.0% 2.0% 2.0% 2.0% 2.0% Squaretrade Loss Ratio 5 -0.4% 4.8% 2.0% 2.0% 2.0% 2.0% 2.0% Squaretrade Expense Ratio 6 -12.4% -2.8% -1.0% -5.0% -5.0% -5.0% -5.0% 1. Relatively consistent with the 5 year CAGR and adjusted for the expected decrease in risk in the auto industry as automation prevents traditional collisions. 2. An initial increase reflects expenses associated with the integration of Esurance and Squaretrade. Subsequently, the growth rate levels between the elevated growth rate and the base growth rate. 3. Relatively consistent with the 5 year CAGR and adjusted for the expected decrease in risk in the auto industry. 4. Consistent with the 5 year CAGR and 1 year CAGR. 5. The growth of the past five years will taper and will be further reduced by Allstate’s risk management resources. 6. Balanced between the 1 and 5 year CAGRs with the assumption that expenses will be reduced by synergies with Allstate brand.

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