THE ALLSTATE CORPORATION AND SUBSIDIARIES

SCHEDULE II —

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF OPERATIONS



($ in millions)	Year Ended December 31,
	2016			2015			2014
Revenues
Investment income, less investment expense	$	11		$	8		$	3
Realized capital gains and losses	2			—			—
Other income	55			66			67
	68			74			70

Expenses
Interest expense	295			292			321
Loss on extinguishment of debt	—			—			1
Pension and other postretirement benefit expense	10			(15		)	41
Other operating expenses	28			34			38
	333			311			401

Loss from operations before income tax benefit and equity in net income of subsidiaries	(265		)	(237		)	(331		)

Income tax benefit	(115		)	(108		)	(142		)
Loss before equity in net income of subsidiaries	(150		)	(129		)	(189		)

Equity in net income of subsidiaries	2,027			2,300			3,039
Net income	1,877			2,171			2,850

Preferred stock dividends	116			116			104

Net income applicable to common shareholders	1,761			2,055			2,746

Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses	433			(1,306		)	280
Unrealized foreign currency translation adjustments	10			(58		)	(40		)
Unrecognized pension and other postretirement benefit cost	(104		)	48			(725		)
Other comprehensive income (loss), after-tax	339			(1,316		)	(485		)
Comprehensive income	$	2,216		$	855		$	2,365

See accompanying notes to condensed financial information and notes to consolidated financial statements.

THE ALLSTATE CORPORATION AND SUBSIDIARIES

SCHEDULE II (CONTINUED) —

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF FINANCIAL POSITION



($ in millions, except par value data)	December 31,
	2016			2015
Assets
Investments in subsidiaries	$	26,929		$	25,047
Fixed income securities, at fair value (amortized cost $510 and $485)	513			485
Short-term investments, at fair value (amortized cost $219 and $277)	219			277
Cash	2			4
Receivable from subsidiaries	385			339
Deferred income taxes	348			302
Other assets	138			133
Total assets	$	28,534		$	26,587

Liabilities
Long-term debt	$	6,347		$	5,124
Pension and other postretirement benefit obligations	1,079			948
Deferred compensation	274			259
Dividends payable to shareholders	157			150
Other liabilities	104			81
Total liabilities	7,961			6,562

Shareholders’ equity
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 72.2 thousand issued and outstanding, and $1,805 aggregate liquidation preference	1,746			1,746
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 366 million and 381 million shares outstanding	9			9
Additional capital paid-in	3,303			3,245
Retained income	40,678			39,413
Deferred ESOP expense	(6		)	(13		)
Treasury stock, at cost (534 million and 519 million shares)	(24,741		)	(23,620		)
Accumulated other comprehensive income:
Unrealized net capital gains and losses	1,053			620
Unrealized foreign currency translation adjustments	(50		)	(60		)
Unrealized pension and other postretirement benefit cost	(1,419		)	(1,315		)
Total accumulated other comprehensive loss	(416		)	(755		)
Total shareholders’ equity	20,573			20,025
Total liabilities and shareholders’ equity	$	28,534		$	26,587

See accompanying notes to condensed financial information and notes to consolidated financial statements.

THE ALLSTATE CORPORATION AND SUBSIDIARIES

SCHEDULE II (CONTINUED) —

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS



($ in millions)	Year Ended December 31,
	2016			2015			2014
Cash flows from operating activities
Net income	$	1,877		$	2,171		$	2,850
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries	(2,027		)	(2,300		)	(3,039		)
Dividends received from subsidiaries	1,874			2,300			2,497
Realized capital gains and losses	(2		)	—			—
Loss on extinguishment of debt	—			—			1
Changes in:
Pension and other postretirement benefits	10			(15		)	41
Income taxes	13			77			(158		)
Operating assets and liabilities	43			26			(29		)
Net cash provided by operating activities	1,788			2,259			2,163

Cash flows from investing activities
Proceeds from sales of investments	389			399			351
Investment purchases	(243		)	(4		)	(1,174		)
Investment collections	60			—			155
Return of capital from subsidiaries	(1,500		)	50			1,200
Transfers to subsidiaries through intercompany loan agreement	(30		)	—			—
Change in short-term investments, net	58			397			(88		)
Net cash (used in) provided by investing activities	(1,266		)	842			444

Cash flows from financing activities
Proceeds from issuance of long-term debt	1,236			—			—
Repayment of long-term debt	(17		)	(20		)	(962		)
Proceeds from issuance of preferred stock	—			—			965
Dividends paid on common stock	(486		)	(483		)	(477		)
Dividends paid on preferred stock	(116		)	(116		)	(87		)
Treasury stock purchases	(1,337		)	(2,808		)	(2,301		)
Shares reissued under equity incentive plans, net	164			130			266
Excess tax benefits on share-based payment arrangements	32			45			41
Other	—			—			(2		)
Net cash used in financing activities	(524		)	(3,252		)	(2,557		)

Net (decrease) increase in cash	(2		)	(151		)	50
Cash at beginning of year	4			155			105
Cash at end of year	$	2		$	4		$	155

See accompanying notes to condensed financial information and notes to consolidated financial statements.

THE ALLSTATE CORPORATION AND SUBSIDIARIES

SCHEDULE II (CONTINUED) —

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTES TO CONDENSED FINANCIAL INFORMATION

1. General

The financial statements of the Registrant should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8. The long-term debt presented in Note 12 “Capital Structure” are direct obligations of the Registrant. A majority of the pension and other postretirement benefits plans presented in Note 17 “Benefit Plans” are direct obligations of the Registrant.

Participating subsidiaries fund the pension plans contributions under a master services cost sharing agreement. In addition, as a result of joint and several pension liability rules under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended, many liabilities that arise in connection with pension plans are joint and several across all members of a controlled group of entities.

2. Supplemental Disclosures of Cash Flow Information

The Registrant paid $287 million, $289 million and $332 million of interest on debt in 2016, 2015 and 2014, respectively.