Good morning. I'm Greg Peters. I cover insurance and insurance brokerage and technology stocks for Raymond James, and it is my pleasure to introduce our next presenter, The Allstate Corporation. Within our coverage universe, we have identified Allstate as our top pick for the year, and it's on the analyst's current favorite best pick list. From management today, we have John Griek, who runs their investor relations effort, and we have Mario Rizzo, who's the Chief Financial Officer. I'd like to turn it over to Mario.
Thanks, Greg. Morning, everybody. Thanks for taking the time to learn a bit more about why Allstate's an attractive investment. Before we begin, this is a statement that says there will be forward-looking statements and references to non-GAAP measures today. The presentation and more specific information are on our website at allstateinvestors.com. Let's start with a discussion of Allstate's strategy. Allstate's strategy is to grow by offering products and services that protect people from life's uncertainty. This picture shows how we deliver on that strategy. Starting with the upper oval, the personal property liability market has four consumer segments and provides protection by insuring automobiles, homes, boats, and personal liability, the traditional personal lines products. We use differentiated products, sophisticated analytics, telematics, and are building an integrated digital enterprise to grow market share in this protection space.
Our strategy also includes broadening our products and services to protect people from a range of other uncertainties, as shown in the bottom oval, by leveraging our brands, customer base, investment expertise, distribution, and capital. This began in 1957 with life insurance. In 1999, we acquired Allstate Benefits, which provides protection products such as life and disability insurance to employees at the work site. We purchased SquareTrade in 2017 and began offering commercial auto insurance to a transportation network company in 2018 and recently closed on the acquisition of InfoArmor to expand our presence in the identity protection space. This strategy creates shareholder value through customer satisfaction, unit growth, and attractive returns on capital. It also ensures we have sustainable profitability and a diversified business platform. The sustainability of our strategy is further enhanced by innovation.
Last year, we were recognized as one of the top 10 companies in the world on innovation by The Wall Street Journal and Drucker Institute. Also on this list were Amazon, Apple, DowDuPont, Alphabet, Intel, and Microsoft. Fortune also named us as one of the 50 companies out to change the world in each of the last two years for our work in QuickFoto Claim and telematics. Today, I want to spend some time focusing on these innovations and how they are driving growth in our property liability and service businesses. In some cases, we're also using innovation to create entirely new businesses. Before I go through these initiatives, let me set the stage by reviewing our current business performance. Allstate delivered strong operating results in 2018 while building for the future.
We achieved all five of our operating priorities, and our adjusted net income return on equity was 14.8%. Moving to the table on the bottom, revenue was $40.7 billion when you exclude capital gains and losses. Adjusted net income was $2.9 billion, or $8.07 a share. This gives us a current price earnings multiple of 11.5 times last year's earnings. A key driver of this success is the property liability businesses, which had a year of good returns and growth. In the left box, net written premium grew by 6% to $33.6 billion and generated $2.1 billion of underwriting income. Policies in force grew by 2.4% to 33.3 million, driven by 2.7% unit growth in Allstate brand auto and a 10.4% increase in Esurance, our direct business.
Moving over to the right, you can see written premium growth is higher than the increase in policies in force due to higher average premium. Esurance is now almost a $2 billion business, over two and a half times its size when we bought it seven years ago. The table on underwriting income shows we continue to earn great returns in homeowners insurance despite the wildfires in California and Hurricane Michael. If we move to the bottom of the oval on the strategy slide I discussed earlier, you can see the life and benefits businesses also generate both good returns and growth for us. Allstate Life, shown on the left, generated adjusted net income of $289 million last year, which was up 14% from the prior year as a lower tax rate and growth in premiums offset an increase in contract charges.
Allstate Benefits provides financial protection against the risk of accidents, illnesses, and mortality through workplace enrollment, with premiums and contract charges growing at nearly 7% annually for 18 consecutive years. Allstate Benefits had adjusted net income of $119 million in 2018. This business is four times the size it was when we bought it 19 years ago because we leveraged our brand, capital, and distribution capabilities. Allstate annuities, shown on the right, is a discontinued block of business that has a low return on equity because we choose to invest to optimize long-term economics versus current returns. About $12 billion of these liabilities are very long-dated, so we invest as if it were a pension liability. This requires us to put up more capital than if we invested in fixed income securities, but is the right thing to do to maximize shareholder economics.
The service businesses, which account for the rest of the protection products in the bottom oval, are growing rapidly but are not yet generating meaningful income because we are investing in innovation and growth. SquareTrade provides consumer protection plans on tablets, cell phones, computers, televisions, and other electronic items through large retail relationships. SquareTrade was acquired for $1.4 billion in the beginning of 2017. Since then, policies in force have grown from under 30 million to over 68.5 million at the end of the fourth quarter, a 129% increase in two years. SquareTrade written premium increased to $773 million in 2018. While a portion of the premium growth is due to an accounting change, policies in force increased by 77% due to the addition of a new large retail distribution partner, expansion of other partners, and growth in European cell phone insurance.
This acquisition is achieving the three milestones necessary to make the acquisition successful economically. Arity is our telematics platform company, which I will discuss in a few minutes. We also further expanded into identity protection, which we think is an underserved and growing market, with the acquisition of InfoArmor in October. Earlier this year at the Consumer Electronics Show in Las Vegas, we announced a new innovative approach to identity protection that we've been working on for three years and we're very excited about. Let's talk about telematics, specifically its impact on our insurance business and how we are using our skills and capabilities to build a platform business serving the personal transportation system. We are creating additional value in auto insurance through telematics.
We have been investing in telematics for nearly a decade to increase auto insurance pricing sophistication, improve the customer value proposition, and leverage our capabilities and data to create a new source of growth and profit. Let's start with what we do now. We began to use telematics in auto insurance in 2010 and now have a suite of products in the market. Drivewise and DriveSense are telematics-based offerings from Allstate and Esurance and represent the bulk of our proprietary connections. These products either use a customer's mobile phone or an onboard diagnostic port device to establish a connection. We launched Milewise in 2016 in two states and expanded to four more last year, allowing customers to pay for insurance by the mile. Streetwise is offered through our online insurance aggregator, Answer Financial, in conjunction with Arity to enable other insurance companies to benefit from telematics-based insights.
Arity is the telematics service provider to Allstate and is separate from the insurance companies. Auto insurance pricing will eventually be largely driven by telematics information because it is better than existing approaches. From a pricing standpoint, auto insurance policies today are priced by who you are, such as age and gender, or where you live, which is a proxy for where you drive. Telematics enables pricing to be based on how you actually drive. Telematics is also based on where, when, and how much you drive. This leads to increased pricing accuracy, lower subsidization between risks, and a highly personalized risk-based price. Telematics will be required to effectively compete in the auto insurance market. Allstate is using telematics to improve the customer experience by staying connected with customers. We provide customers with rewards for safe driving, safe driving tips that can lower their premium, and maintenance information.
If you have an OBD device in your car, we can tell you specifically what is wrong, how serious it is, and what it should cost to repair, and link you to repair facilities. Given these benefits, we believe telematics will be integrated into auto insurance business models. As a result, we created Arity outside the insurance companies to create more value for shareholders. In 2015, we defined a strategic platform to help us design Arity's business model. A strategic platform is a system of capabilities, assets, information, and shared intelligence. Platforms are broad and flexible and create multiple uses for a range of customers and partners. We would consider Apple, Facebook, and Amazon's marketplace to be platform businesses. Companies that control strategic platforms generate high economic returns. These returns reflect the benefits of reduced friction and cost between participants and improve returns through increased knowledge and analytics.
Platforms are also rapidly scalable. The transportation system can benefit from a telematics platform. A telematics platform enables companies to increase their speed to market in a connected car world. If you want to price auto insurance with telematics, you need data. Rideshare companies can use the Arity platform to enable them to select safer drivers and better manage operations. As more companies and industries use Arity, the breadth and depth of data and shared intelligence will grow. More data on the platform allows companies to refine and customize their models to specific business needs. Just like with credit scoring data, it is inefficient to have many companies collecting the telematics information individually for themselves. We decided to build Arity as a telematics platform to capture a portion of these additional economic benefits.
It has little downside to us since we needed to build these services for ourselves because we were so far ahead of most of the industry. Today, Arity has 12.5 million active connections, of which more than 1.5 million are through Allstate. Arity analyzes over 300 trips per second and created a proprietary driving score that can be used by insurers or shared mobility companies. Arity's scale continues to grow and is now adding 10 billion miles of driving data per month. Arity creates a substantial advantage for Allstate's insurance operations today, and we are actively working with other insurers to help them utilize telematics in auto insurance. We will keep their information confidential, and all parties benefit from the network effect of a consistent and large data set.
In addition to capturing economic value from our capabilities, this also provides us new sources of revenue from the transformation of the personal transportation system. Innovation in telematics is a core part of our strategy to compete and grow. At the core of insurance operations is data. We are building an integrated digital enterprise, or IDE, to profitably deliver innovative products and services that exceed customer needs by leveraging existing assets and capabilities. Advanced technologies such as telematics improve the quality of our data and analytics in areas such as pricing, risk, and claims settlement. An early example of IDE success is seen in claims. Our virtual estimating tools, including QuickFoto Claim, Virtual Assist, and aerial imagery, improve loss cost management, cycle time, and the customer experience.
QuickFoto Claim replace drive-in facilities and the time adjusters spent driving around to inspect cars with digital operating centers that settle claims based on customer-generated photographs. Claims are now settled in hours instead of days at a lower cost and with higher customer satisfaction. Over half of drivable claims were initiated with QuickFoto Claim in 2018. Virtual Assist is a video collaboration tool used for times when repair shops find hidden damage not included in the initial estimate. This used to be handled over the phone, or the repair shop would have to wait for an adjuster to drive to the shop and inspect the vehicle. This slows repair time and uses up valuable repair capacity while they wait to get an approval. Virtual Assist enables us to handle supplements to repairs electronically in minutes, not days.
This results in lower costs and faster repair times with the same accuracy. Everybody is happy in this scenario. Given our footprint with large collision shops, we are working to make this available to other insurers for a transaction fee. The concept is they save money, and we capture incremental profit. We are also leveraging this same technology, along with satellite imagery, fixed-wing aircraft, and drones, to expedite property claims. Aerial imagery vastly improves our speed to market, which is especially valuable when catastrophes limit access to roads. We are moving closer to providing our customers with a seamless digital claims experience. Speaking more broadly, we continue to look for new ways to provide additional value from our data. We are leveraging our operating capabilities and innovation to deliver strong financial performance and returns on capital. Adjusted net income return on equity was 14.8% in 2018.
We also returned $2.8 billion to shareholders last year through dividends and repurchasing 7% of our outstanding shares. Allstate currently trades at a valuation discount relative to peers despite these strong results. Adjusted net income for 2018 was up over 15.6% versus prior year. Shares outstanding decreased by 6.4%, and we delivered excellent returns. We also continue to invest in our businesses to drive sustained value creation. Our common share price has declined by about 7% since the beginning of 2018. When you compare Allstate's value to peers using a regression analysis of returns and book value multiples, it trades at a discount to less profitable or innovative companies. You can see, Allstate is below the value implied by this regression analysis, and we believe has continued meaningful upside valuation potential. We can open it up for questions.
Just to repeat the question, it's why does it benefit Allstate to essentially share our telematics capabilities and potentially our claims Virtual Assist capabilities? I'll start with telematics. As I said, we think telematics is going to be the next large transformation in auto insurance pricing, much like credit was 15, 20 years ago. I would think of the ability to score a driver based on telematics is the equivalent of a credit score that's used today for pricing. I think our view on telematics is somebody needs to be able to provide that score and needs the data to be able to provide that score, and it's most efficient for the entire industry or large portions of the industry to go to one central place, much like they go to one central place today to get credit scores.
I think the real competitive advantage is what you do with that driving score in your proprietary pricing algorithm. That's going to be unique to each company. We think that getting the data to be able to compete in that environment, somebody will facilitate the ability to do that. We would rather it be us through Arity because we think there's real revenue potential. In terms of what you do with that data to price your products and underwrite risk is really going to be unique to each insurance company, and that'll continue to be a capability that we keep in-house through our insurance brands. Ultimately, will the benefit to you to capitalize on that loss ratio? I think the loss ratio and share, again, come from how we leverage the data and the driving score.
I think the benefit from having Arity is we capture the economics of being able to provide the telematics data to a wide range of companies in the industry. Think about going to a central place today to get a credit score for pricing. You pay, there's a fee for that, right? I would view the Arity capabilities as the comparable equivalent to that, to create that repository of data that we can monetize, and that insurance companies can use. Plus there's use cases beyond the insurance industry, right? I talked about the volume of data we're ingesting today. That can come from a variety of apps on phones. The data can come to us in a variety of different ways, and we can build those data capabilities and then be able to leverage that long term. On telematics, I think it's the same thing.
Think about our claims process, as I mentioned with QuickFoto Claim. Rather than an adjuster having to spend time to go to see a car or have the customer come to a drive-in facility, they can now take pictures, and we're able to settle the claim using photos. With Virtual Assist, sometimes once the car gets into the shop and they actually start repairing the car, oftentimes there's additional damage you can't see through those initial photos, and that's where Virtual Assist comes in because it allows us to connect with the repair shop and be able to write supplements quickly. The repair shop owners love it because the car is sitting, it spends less time in their facility, and it gets repaired faster, and their throughput can increase.
Our thought is, if we're able to do this for ourselves, why not monetize the capability and be able to offer that same type of service more broadly for a fee? We think there's economics to be captured in that space. I guess the view would be someone will, because there's so much benefit both on the telematics side and with Virtual Assist, someone will create the capabilities. We already have the capabilities because we've got a jump start, why not leverage those capabilities and increase the economics to us? By the way, I don't know if I introduced John Griek, who heads our Investor Relations team. He's also up here and more than willing to answer additional questions. Yes, sir. Yeah. The gap is, like I mentioned, we can capture driving data.
One of the ways that in the 1.5 million connections we have with Allstate and Esurance, you can either have a plug-in device or an app on your phone that captures that same data. Well, that same capability allows us to embed the telematics data capture in other apps. We have a relationship with a third party where Arity is collecting data on their driver relationships, right? These aren't necessarily Allstate customers. That's why we're generating so much data every month. Really, that can be expanded beyond existing relationships. It's a significant opportunity for us to take in more and more data on a broader set of consumers and ultimately create that database that can be leveraged across the industry.
I think your point on privacy is a really important one, and obviously, as we build out these capabilities, we're hypersensitive to ensuring that the data that our customers provide us remains either it's anonymized or it's certainly protected and we're not exposing our personal information to be exposed for our customers or the consumers at large. We're building all the appropriate processes and security to ensure that that's the case. Clearly a focus area for us. Yeah. We're capturing it with their consent, obviously, right? Say more. It's a good question. I'm not a legal expert by any chance, but I think you hit on an important point because part of what's critical is obviously we need to capture the data, but the benefit we have is we have loss data that goes with that.
That really becomes the way that you can really observe. When I talked about how do companies use data and driving scores, it's really the ability to marry that up with loss data that really creates a competitive advantage, I think, from a pricing perspective. In terms of whether the data can be used if a customer gets in an accident, time of day, not 100% sure that I can answer that question. Yeah. I would say in both the auto and homeowner space, both of those businesses are in a really good state in the sense that we're showing unit growth and revenue growth when you combine both the growth in policy count as well as average prices. We still continue to generate really attractive combined ratios.
Part of why that's happening, why we're able to do both is, I think we're operating in an environment that's far more stable than it was a few years ago. A few years ago, we had to respond pretty aggressively to a spike up in auto accident frequency. We took prices up, as did a number of our competitors. Others may have started a little bit later, but are effectively through that cycle now. I think when we look at the growth we're getting, and I'll talk about auto insurance first, the thing we're most pleased about is, much of the growth we're getting is from keeping more of our existing customers. Retention is driving a significant part of our growth.
Growing by improving retention has much more favorable economics for us than growing on the back of new business, because new business tends to operate in auto at a higher loss ratio than renewal business. I think part of what's helping is the stability in the environment. Also, I talked about claims, QuickFoto Claim and integrated digital enterprise. That's the other thing we're benefiting from. We're benefiting from more rate stability, which creates less customer disruption, less shopping behavior of our own customers. I think we're also building capabilities to improve the customer experience, whether it's on the claims side or on the new customer onboarding and getting closed-loop feedback on customer interaction. I think we're doing a lot of the right things to invest in the customer experience, and we're operating in a stable pricing environment.
A combination of those two, I think, has really led to both retention improvement and new business productivity gains. We're also in the second half of last year, we started investing more heavily both in the Allstate brand and Esurance to drive more quote volume. We're making investments in growth. What we've seen so far is we're able to accelerate our growth and keep our margins at or better than where we target them to be. That's our goal, right? Yeah, we haven't really put a timeframe on it. I think part of what we're trying to do is just really tell the story around why we created Arity, what our strategy and our vision for it is. Because we spend so much time talking about the, and rightfully so, because they're bigger parts of our portfolio.
We talk so much about auto and home and Esurance and the property liability lines that we want to create the recognition for all of you on some of these smaller businesses. I put SquareTrade and InfoArmor in that category because I think as you think about Allstate and the valuation opportunity, I think there's a near-term opportunity which says, I take the chart that's up there, and I think there's a discount relative to the implied multiple that we believe, given our returns, we should be trading at. There's also kind of a, I won't say longer term, but it's more of a further out on the horizon where some of these smaller businesses that we've been able to grow aggressively or certainly have a plan to make a more meaningful part of our overall portfolio.
It's clearly an opportunity to create meaningful value with these businesses over time.
Okay. We're at the 30-minute time spot stop. Thank you very much for your presentation. There's a breakout in Cordova Six. Again, thanks for your time.
Thanks, everyone.